Lesson 5.2 What goes into a business plan? Mrs. Leonard Entrepreneurship

Seven Basic Elements of a Business Plan Although business plans differ, all should include some basic information in the following areas: History and __________________ of your idea ______________ and Objectives for your company Products or services you will offer Form of _________________ Management and Staffing _______________________ Current and Projected Financial Statements

1st Element: History and Background Something must have sparked an ____________ for your business… Describing how you came up with your idea can help lenders, investors, and others understand how your business will ____________________________ EX. Child care worker who worked at day care center for many years… center turned away children because it did not have proper staff or room – you decide to open a center of your own Your business plan could explain the high-demand for quality day-care services and you are well positioned to meet this need

Summarize your Business Idea Assignment Directions: Answer the following questions about your business on another sheet of paper. Summarize your business idea in 50 words or less. Where did your idea originate from? (examples: specific experience, observations, inspiration) If your idea is for a new product or service, describe how you expect to get it accepted into the market. If your idea is for an improvement or variation of an existing product or service, describe why consumers will use it instead of what is already available

Goals and Objectives Your business plan should outline your _______________ (now – 1 year), medium-term (2-5 years), and long-term goals(5 years – beyond) Describes _________ you want your company to be in the future Could be short-term or very clear what you want to do with your business EX. Childcare Center – Short term goals – want to get financing that will allow you to lease or buy a facility, equip the facility, and staff it with eight employees ______________________goals – invest in more equipment and possibly expand their facility to accommodate more children Long-term goal – expand to a regional chain of centers

Goals Assignment What are your goals for your business? Short Term – Medium Term – Long Term – What steps do you need to take to achieve each of these goals?

Products or Services This part of your business plan should describe the ___________________ or services you company plans to produce and sell Explain how these products or services _______________ from those already on the market Highlight unique features of your products or services Explain the ____________ customers will receive by purchasing from your company Two parts: Industry Locations

Products and Services: Industry This section describes the industry you will operate in Include: External factors affecting your business, such as high _________________ or a lack of certain suppliers Growth potential of the industry ______________________________ of the industry Technology trends that may affect the industry Forecasts for industry __________________ You will need to research government documents, articles and books on industry leaders, the Internet, or other reliable sources to find what you need to include ________________ (makes the business plan more convincing)

Products and Services: Location This section should describe the _____________ of your business Lenders what to know exactly where your business will be because the location of a business is critical to its __________________ Ex. Child care center Industry – included population data to show demand for service will grow over time (cite sources) Location – in the heart of the community where most families have children and both parents work outside the home

Form of Ownership This section details your form of ownership (ex. Sole proprietorship, partnership, or corporation) Provide information relevant to your form of business: Ex. Who are your __________________? How many shareholders do you have? This section is important because the _______________ of business has an effect on how the business works and makes profit Banks are interested in this information

Management and Staffing This section should show that you and the people who will be working for you have the ____________, maturity, and common sense to manage your business well People who manage your company are critical to its success Ex. Child care center – You and your partner have master’s degree’s in childhood education Together you have more than 35 years of experience Include copies of resumes and letters of recommendations from satisfied parents

Marketing In this section explain who your prospective customers are, how large the market is for your product or service, how you plan to enter that market, and how you plan to deal with ____________________ List your companies _____________ over the competition Performance, Quality, Price, Promotion, Reliability, Distribution, Public image or reputation Ex. Child care center Customers – parents of the 1,00 to 1,500 children between the ages of 2 -5 who live in the area Determine that 90% of the families would be able to afford their center Advertise in local newspapers and send fliers out to families in target market Offer a discounted rate for 2 months for new customers

Current and Projected Financial Statements The __________________ of your plan consists of three elements: 1. Identification of risks Prospective lenders and investors will want to know what ____________ your business faces and how you plan to deal with them Lenders will be reassured to see that you have clearly thought through the potential problems and will not be caught by surprise without a plan for dealing with them Examples of risks that you could include are competitors cutting prices, costs exceeding projections, and demand for your product or service __________________________

Current and Projected Financial Statements A new business must include __________________ __________________ in its business plan An existing business must include current as well as projected statements ________________ financial statement - a financial statement based on projected revenues and expenses

Current and Projected Financial Statements Funding request and return on investment You also must indicate how much you need to _____________ and how you plan to use the money You should give investors an idea of how much money they could expect to earn on their investment in your business You should also include how much money you are __________________ in the business

Current and Projected Financial Statements Ex. – Child care center Main risk – parents considering center unsafe Prepare a pamphlet entitled “Safety and your Child” Will be used as a part of _____________________ (included in business plan) Projected financial statements $140,000 to start business Each partner is contributing $85,000 Bank will need to loan them $55,000

Additional Elements of the Business Plan Some businesses need to provide additional information in their business plan A business that has _________________________ or must meet legal restrictions and regulations would include a legal issues section in the business plan To identify any special sections that you should include, ask yourself what you would want to know about a business before you would ____________ it money Ex. Child-care center Devote a section of business plan to health and safety issues Describe procedures for dealing with allergies, illnesses, and injuries, and emergencies (fire)

5.2 Assessment List the seven elements of a business plan. Directions: Answer the following assessment questions about Chapter 5.2 with your Chapter 5 Assessment questions. Save your Assessment. Make sure to write the questions and the answers. Next, answer the 5.2 TF/MC worksheet. Put your completed worksheet in your notebook. List the seven elements of a business plan. Why should some businesses include additional information in their business plan Why should you include management and staffing issues in your business plan? 5.2 TF/MC worksheet