SMALL BUSINESS MANAGEMENT Chapter Four The Business Plan

Getting Started Establishing the Business Advantages of Organizing a Business from Scratch Disadvantages of Organizing a Business from Scratch

Components of the Business Plan There are ten components in a plan. 1. Prepare a Table of Contents 2. Executive Summary and background 3. Describe the Management Team 4. Describe the Business Objective 5. Plan the Marketing Approach

Components of the Business Plan 6. Describe the Selection of the Location 7. Determine the Physical Facilities 8. Plan the Financing 9. Plan the Personnel 10. Investigate the Legal Requirements

Components of the Plan 1. Prepare a Table of Contents overview of the plan quick access to the various parts of the plan

Components of the Plan 2. Executive Summary and Background Statement Completed at the end of the complete plan history of the project to date statement of the intended mission of the venture

Components of the Plan 3. Describe the Management Team resume and background of those making the decisions for the organization

Components of the Plan 4. Establish the Business Objective Business Size Production Levels Performance Levels

Components of the Plan 5. Plan the Marketing Approach Have a clear concept of the target market. Understand the target market’s needs, wants and purchasing habits answer the following questions where, when, what, how much, why Be aware of any uncontrollable factors that might affect the marketing of the product or service

Components of the Plan Be aware of any uncontrollable factors that might affect the marketing of the product or service such as existing or pending legislation relevant to the business state of the economy in the market extent and strategies of the competition cultural norms of the market new technologies that might offset the business

Components of the Plan Plan the Marketing Program the Product or Service the Distribution System the Promotion Plan the Pricing Plan

Components of the Plan 6. Describe the Selection of the Location the Trading Area the Economic Base Attitude of the Trading Area towards New Businesses Competition Costs

Components of the Plan The Site the Buy-or-Lease Decision accessibility, site costs, restrictions, site history, proximity to other businesses, physical characteristics the Buy-or-Lease Decision cost of the lease, length of the lease, restrictions, repairs and lease hold improvements, insurance coverage Running the Business from One’s Home

Components of the Plan 7. Determine the Physical Facilities insurance types loss or damage to the property business interruption liability and disability life insurance insurance decisions what kind to purchase, how much to purchase, from whom to purchase the insurance

Components of the Plan 8. Plan the Financing establish capital requirements make feasibility projections determine the sources of funding plan the accounting, bookkeeping and computer systems determine the financial evaluation measures

Components of the Plan 9. Plan the Personnel Administrative structure Employee recruitment and training Personnel Policies

Components of the Plan 10. Investigate the Legal Requirements Legal Structure (four styles) 1.Sole Proprietorship advantages and disadvantages 2. Partnership Limited, General 3. Cooperative one member-one vote vs each share a vote

Components of the Plan 4. Corporation advantages and disadvantages of a corporation steps in incorporation selection of the business name development of the share structure, directors, restrictions on share transfers, etc. description of the company operations acquiring the necessary supports

Components of the Plan Joint Ventures Licenses and Taxes Patents Federal Government income tax, goods and services taxes, excise tax Provincial Government income tax, licenses, sales tax Municipal Governments licenses, property taxes, business taxes Patents registration, search, application

Appendices Appendix A - Checklist for a Small Business Plan Appendix B - Sample Business Plans (2) The Sock Hop, Quality Cuts Appendix C - Incorporation of Companies and Associations Appendix D - Jurisdiction of Licenses and Taxes

CONCEPT CHECKS 1. What are the advantages and disadvantages of owning a small business? 2. What steps are involved in preparing a business plan? 3. What criteria must be evaluated before choosing a trading area? 4. When is it advantageous to lease instead of owning?

CONCEPT CHECKS 5. What information should be investigated before construction starts and purchasing equipment? 6. Why is insurance purchased? What are some small business insurance types? 7. What major financial aspects should be planned in advance of business operation? 8. What are four legal structures that an owner can utilize?

CONCEPT CHECKS 9. What are the advantages and disadvantages of Incorporation? 10. What level of government issues business licenses? 11. What taxes are levied by the Federal Government? 12. What are the steps required to register a patent?