The purpose of a business plan is two-fold – To obtain financing – To have a plan of operation What is the most common source of funding for new businesses? Why do you think so few individuals obtain financing through banks and or the government? The Business Plan

The 5 C’s of Credit Lending institutions create their funding policies around the "5 C's of Credit," Character (Capability) refers to your willingness to repay. Most lenders will use your credit score. Capital is what you're company is willing to contribute, like a down payment. Collateral is viewed by banks as security. Cash flow is your company’s profitability. Conditions may include variables you cannot control such as economic trends and competition.

There are four major components to a business plan: Description and analysis Organizational plan Marketing plan Financial plan

Description and analysis Introduces the business concept – Type of ownership – Business philosophy (mission and vision statements) – Supporting research data that point to the success of your business

Description and analysis Identifies product/service offering Self-analysis – Education and training – Special strengths – Plan for personal development

Description and analysis Trading area and market segment analysis – What do you need to know? Population figures Demographics Market trends Economic factors – Trends in employment – Interest rates – Tax rates (local, state, and federal) – Disposable income in trading area – BPI (Buying Power Index-factors total population, total income, and total retail sales for markets) _Statistical_Areas

Description and analysis Operational plan for the proposed location – Location – Competing and complementary businesses Market saturation – Hours of operation (What utility?) – Visibility – Customer safety – Customer accessibility – Zoning –

Organizational Plan Type of ownership Steps in establishing business Personnel needs/job descriptions Organization chart (vertical vs. horizontal)

Marketing Plan Pricing policies (factoring costs, demand, and competition) Promotional activities – What are the 4 components of the promotional mix? – Provide a rationale for the selection of activities and the related costs (Budget)

Financial Plan Equity capital (Selling off ownership-no debt to be repaid) – Personal savings – Partners – Shareholders Debt capital (Funds obtained with interest owed-interest is tax deductible) – Banks – Credit unions – Suppliers – Previous owners – SBA – Friends/relatives