Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 1 Lesson 3.2 What Goes into a Business Plan? Goals List and describe the basic elements of a business plan. Describe how to pull a business plan together.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Elements of a Business Plan Regardless of the business, all business plans serve the same basic ______________. All should contain the same three basic components: Introductory materials _________________ Appendix Chapter 1 Slide 2

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Basic Elements of a Business Plan The main body of the business plan will contain the _____ of the information about the business idea. A lot of time and effort will go into writing the main body of the plan, and it should be compiled ___________ the other components in the business plan. Chapter 1 Slide 3

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 4 Basic Elements of a Business Plan The main body of a business plan should be organized into the following elements: 1.________________ 2.Marketing 3.Financial Management 4.________________ 5.Concluding Statement

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Nora Ellis and Samantha Richards are qualified child-care providers who have worked together at a day care center for many years. The center frequently has to turn away children because it does not have the room or the staff to care for more toddlers. Because of the high demand for quality day care services, Nora and Samantha know they are well positioned to meet this need. They decide to work together to create a business plan. Chapter 1 Slide 5

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 6 Introduction The introduction should contain the following information: A detailed description of business ______ Ownership and legal structure of the business Your skills and _______________ The competitive advantages of the business (advantages you have over your competitors)

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 7 Describe how you came up with your business Can help lenders, investors, and others understand what your business is about Outline the business goals for the Short-term _____________________ Long-term Detailed Description Introduction

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: In their first year of business, they want to get financing that will allow them to lease or buy a facility, equip it, and staff it with eight employees. During the second and third years, they want to invest in more equipment and possibly expand their facility to accommodate more children. They have not yet thought about their long term objectives. Writing a business plan will force them to think about these goals. Chapter 1 Slide 8

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 9 Detail your form of _______________ sole proprietor, partnership, or corporation Provide information relevant to your form of business identify leadership team and/or list number of shareholders Important because each legal form of business has an effect on how the business works and makes ______________. Ownership and Legal Structure Introduction

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 10 list all of your relevant business __________ paid work volunteer work hobbies list all of the relevant business experience of your leadership team Skills and Experience of the Leadership Team Introduction

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Nora and Samantha have master’s degrees in early childhood education. Together, they have more than 35 years of experience in day care, including 15 years in management. To show that they are well qualified to run a center, they include copies of their resumes and letters of reference from satisfied parents. Chapter 1 Slide 11

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 12 Performance Quality Reliability Distribution Price Promotion Public image or ____________ ______________ Introduction

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 13 Marketing The marketing section of the business plan should describe: Products and/or services Market Industry ______________

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Describe your products and services How they _________ from those already on the market Highlight ______________________ Explain benefits customers will receive Example:Nora and Samantha describe their vast experience in the day care industry. They also promote their plan for four large outdoor play structures and a state-of-the-art day care facility. Chapter 1 Slide 14

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Describe your Market Who are your prospective _____________ How large the market is for your product/service How you plan to enter the market How you plan to deal with _____________ Chapter 1 Slide 15

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: Nora and Samantha’s prospective customers are the parents of the 1,000 to 1,500 children between the ages of two and five who live in their area Nora and Samantha determine that 90 percent of the families would be able to afford their center. They will advertise in local newspapers and send out fliers to their target market. They will also offer two months of care at a discounted rate for new customers. Chapter 1 Slide 16

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Describe your ____________ You will need to perform research to determine: External factors affecting your business, such as high competition or a lack of certain suppliers __________________ of the industry, including growth forecasts Economic trends of the industry Technology trends that may affect the industry Chapter 1 Slide 17

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: When providing information on the industry in which they will operate, Nora and Samantha include population data for their area. This information shows that demand for their service could grow over time. They also cite government sources reporting that the demand for day care services is expected to grow steadily. Chapter 1 Slide 18

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Marketing Describe your Location Lenders and investors want to know your location Location is a critical factor to _____________ Chapter 1 Slide 19

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. What Went Wrong? Read What Went Wrong on page 75. Answer the three Think Critically questions. Be prepared to share with the class. Chapter 1 Slide 20

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example Nora and Samantha describe their plan to start the business in a prime location, in the heart of a suburb where most families have young children and both parents work outside the home. Chapter 1 Slide 21

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 22 Financial Management The financial section of your business plan consists of three elements: Identification of ____________ Financial statements Funding request and _________________

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Financial Management Identification of Risks Prospective lenders and investors will want to know what risks your business faces and how you plan to deal with them. Do not be afraid to list potential _________. Lenders will be reassured to see that you have clearly thought through potential problems and have a __________ for dealing with them Chapter 1 Slide 23

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Identification of Risks (continued) Risks typically faced by new businesses: Competitors cutting ____________ Costs exceeding projections ______________ for your product or service declining over time Chapter 1 Slide 24 Financial Management

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 25 A new business must include _____________ financial statements in its business plan An existing business must include current as well as projected statements ______________________________ a financial statement based on projected revenues and expenses Financial Statements Financial Management

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Funding Request and Return on Investment borrowed money—how much and how you plan to use it _______________________ and personal financial statement anticipated return on investment Chapter 1 Slide 26 Financial Management

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example Nora and Samantha believe the biggest risk they face is safety. They must show concerned parents that they have addressed all safety issues that could arise on a daily basis as well as during emergencies. Nora and Samantha have prepared a pamphlet entitled “Safety and Your Child” to use as part of their marketing package. They include a copy of this pamphlet with the business plan. Nora and Samantha have also included pro forma financial statements for their business, which show how much money and profit they expect to ear. They require $140,000 to start their business. Together they are contributing $85,000 of their own money. This means they need a bank to loan them $55,000. They include this information in t heir business plan as well. Chapter 1 Slide 27

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 28 Operations Explain the following: daily business management hiring and personnel procedures _________________ lease or rental agreements _________________ Procedures for production and delivery

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Operations Explain the following: Plan for __________ the operations of your business. You may plan to operate for many years until you retire You may have a short-term plan in which you operate and grow a successful business and then sell it You must have a ___________________ Chapter 1 Slide 29

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 30 the way an entrepreneur intends to extract his or her __________ from a business after it is operating successfully Details the strategy and how much money he/she expects to gain Plans for harvest could include: selling business, passing business onto other family members, merging with another company, going public by sharing stock, closing and selling the assets (such as building and equipment) Gives you control over how you will ___________ _________________ of your business harvest strategy (exit strategy) Operations

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Example: As part of the operations section of their business plan, Nora and Samantha describe hiring plans to ensure their day care center is well staffed. They also devote a section to health and safety issues. They describe procedures for dealing with allergies, illnesses, and injuries because these are common occurrences among preschool children. Currently, Nora and Samantha plan to run their business for the long term and then sell it upon retirement. Chapter 1 Slide 31

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 32 Concluding Statement Summarize _________ and objectives. Emphasize your commitment to the success of your business.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 33 List the elements of the main body of a business plan and explain why each one is important.

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 34 Complete the Business Plan _______________ elements Every business should begin with: _____________, title page, table of contents, statement of purpose, and an executive summary

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Complete the Business Plan cover letter a letter that introduces and explains an accompanying ___________ or set of documents The cover letter for your business should include: Your name Name of your ________________ Your address and telephone number Briefly describe your business Briefly describe business potential for success Amount of _______________ needed Chapter 1 Slide 35

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 36

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 37 ________________ Name of your company Date The owner of the company Title of the owner Address and phone number of company __________________________ Listing of the material included in a publication Should be accurate Sections listed in proper order Page numbers are correct

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Statement of Purpose a brief explanation of why you are asking for a __________ and what you plan to do with the money No more than one or two _____________________ Chapter 1 Slide 38

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 39

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 40 a short restatement of the report should capture the _____________ of reader If unconvincing, lender may decide not to read your entire business plan no longer than one or two pages be written in a clear, simple style An executive summary should: describe your business concept What makes your idea unique include projections for sales, costs, and profits identify physical needs Inventory, land, building, equipment state the requested ____________________ Executive Summary

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Executive Summary (continued) Although the executive summary appears before the body of the business plan, it should be written ________ the business plan has been completed To write the executive summary, go through the business plan and find the most important and _________________. Then, draft an outline based on these points Chapter 1 Slide 41

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 42

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 3 Slide 43 includes _______________________ that provide additional information to support the body of the report Appendix

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Documents that might be contained in the appendix include: ______________ of the business owner for the past three years Personal financial statement of the owner Copy of proposed lease or purchase agreement for the building space Copy of _________ and other legal documents Copy of resume of the owner Letters of recommendation Copes of letters of intent from suppliers Copies of any large sales contracts you have already negotiated Chapter 1 Slide 44

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Put It All Together The business plan should be: Neat, well organized, inviting to read _______________________ Hand-written business plans are not acceptable Printed on standard-sized white paper Follow a standard _____________ Chapter 1 Slide 45

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 46

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 1 Slide 47 Why should you include supporting documents in your business plan?

Entrepreneurship: Ideas in Action 5e © 2011 Cengage Learning. All rights reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 3.2 Assessment Directions: Open your Chapter 3 assessment and answer the 3.2 Assessment questions on page 80. Type the questions and bold your answers. Label this section as “3.2 assessment”. Save and upload. Chapter 1 Slide 48