Basic Elements of a Business Plan UNT in rights reserved. Entrepreneurship Unit 3, Lesson 1 Copyright © Texas Education Agency, All Rights Reserved 1

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Goals The student can categorize a business plan and explain the need for a well-orchestrated business plan. The student can explain a marketing plan, including price competition, non-price competition, market analysis, competition, marketing research, market segmentation, demographics, and sales forecasting. The student can research business plan outlines, resources, and templates using web search engines. 3 Copyright © Texas Education Agency, All Rights Reserved

Goals (Continued) The student can identify a legal plan, including the appropriate form of legal organization, including sole proprietorship, partnership, corporation, and S corporation. The student can describe a leadership team The can create and present a well- orchestrated business plan and critically explain the contents. 4 Copyright © Texas Education Agency, All Rights Reserved

Terms Business Plan Sole Proprietorship Partnership Corporation S Corporation Marketing Plan 5 Copyright © Texas Education Agency, All Rights Reserved

Introduction A business plan is a proposal that describes the new business to potential investors.  Detailed Description – Describe what the business is, what it will sell, etc.  Ownership and Legal Structure Partnership Sole Proprietorship Corporation S Corporation 6 Copyright © Texas Education Agency, All Rights Reserved

Introduction Skills and Experience – Describe the experience and talents of those who are starting the business. Financial Plan – Detail the finances of the business. Details include how much you will be charging, expected revenue, and expenses and cash flow for business. 7 Copyright © Texas Education Agency, All Rights Reserved

Introduction Organization – This should explain how the organization is set up. Who is in charge? How are duties divided among any other employees? Marketing plan – This section explains how you plan on selling and promoting your product or service. Where will it be sold? To Whom? And how will you reach them? 8 Copyright © Texas Education Agency, All Rights Reserved

Ownership/Legal Structure The legal structure of the business will fall into one of four categories and should be explained in the business plan. Sole proprietorship – One person owns the company Partnership – Two or more people own the business 9 Copyright © Texas Education Agency, All Rights Reserved

Ownership/Legal Structure Corporation – Business is a separate legal entity. This method has least liability for owners’ personal assets. S Corporation – This setup is the same as corporations, but for taxing purposes, the income of the corporation is passed through to the individual shareholders; it is the shareholders who pay taxes on the corporations income instead of the corporation. 10 Copyright © Texas Education Agency, All Rights Reserved

Marketing Products/Services –Describe in detail Market –Demographics –Geographics –Psychographics –Product Benefits 11 Copyright © Texas Education Agency, All Rights Reserved

Marketing Competition –Who/What/Where Location –Where will your business be located and why did you choose that location? 12 Copyright © Texas Education Agency, All Rights Reserved

Marketing Competition is the struggle between companies for customers. Some companies choose to compete focusing on sale prices; this is called price competition. Non-price competition businesses focus on factors other than price to attract customers: quality, services, location, financing, or reputation. Copyright © Texas Education Agency, All Rights Reserved

Financial Management Identification of Risks –Human –Natural –Economic Financial Statements –Income statement –Balance sheet –Cash flow 14 Copyright © Texas Education Agency, All Rights Reserved

Risk Management Business Risks are the possibility of business loss or failure. There are three types of business risks. –Economic –Natural –Human Copyright © Texas Education Agency, All Rights Reserved

Risk Management Economic Risks occur from changes in the overall business conditions. These risks include the following: –type or amount of competition, –product obsolescence, and –government regulation. Copyright © Texas Education Agency, All Rights Reserved

Operations Critical for business success –Management on a day-to-day basis –Necessary equipment –Personnel needed for success 17 Copyright © Texas Education Agency, All Rights Reserved

Executive Summary Summarize goals and objectives for the business Emphasize your commitment to the success of the business 18 Copyright © Texas Education Agency, All Rights Reserved

Assignments  Franchise Assignment  Research a popular franchise and write a report that explains the history of the franchise, the success of the franchise, and the steps required to operate the franchise. This assignment will be evaluated using a rubric.  Compare the Competition  Compare two businesses that sell similar merchandise; comparing prices, product selection, customer service, community involvement, promotion, quality, reliability, public image, and financial success. Create a table to compare the businesses and decide which business has the better track record for current and future success. Explain the rationale for their selected business. This assignment will be evaluated using a rubric.  Business Ownership Assignment  Split the class into four groups. Each group will be assigned one form of business ownership (sole proprietorship, partnership, corporation, franchise). Each group has the responsibility of teaching the class about their form of business ownership. The oral presentation must include, but is not limited, to form of ownership and legal structure, decision makers for the business, taxes for the form of business ownership, advantages and disadvantages for the form of business ownership, and examples of businesses for each form of ownership. This assignment will be evaluated using a rubric. 19 Copyright © Texas Education Agency, All Rights Reserved