Business Plans Part 2 Taken from

Initial Business Plan Assignment Mission/Objectives – what’s the true nature of your business (don’t be too narrow), how will you build customer satisfaction, what is your workplace philosophy, what value to the customer do you offer Keys to success – limit to three and focus on those Target Market – good educated guess Competitive Advantage – what distinguishes you and your product Basic Strategies – how will you develop the company and products Initial break-even chart

Simplified Business Plan Outline Executive Summary Company Summary Product Description Market Analysis Summary Strategy and Implementation Summary Management Summary Financial Plan

Company Summary - Legal Types of Business Entities –Sole Proprietorship Pros - simple, inexpensive up front Cons - personal responsibility to creditors Tax treatment is straight through to your personal return –Partnership Pros – partnership agreement serves as legal core, defines levels of risk, buy-out agreements, etc. Cons – requires good attorney, can be complex Tax treatment is usually straight through to your personal return

Company Summary - Legal Types of Business Entities (Cont.) –C Corporation Pros – used by majority of companies, best shielding from liability, best non-tax benefits, best for raising money and going public Cons – profits taxed twice Tax treatment – C Corporation pays its own taxes –S Corporation Pros – used by smaller firms (25 owners maximum), profits taxed once Cons – less shielding from liability than C Corp. Tax treatment – S Corporation can pass profits or losses directly to owners

Company Trademarks Trademarks law protects product names, logos, trade names, slogans. US Patent and Trademark Office website

Company Names Can’t reserve a name completely, but company has rights to its identity. Types –Your own name –“Doing Business As” (county registration) –Corporation (state registration)

Company Internet Domain Names Can look in NSI Registrar database using searchers such as - to find available second-level names (example.com or example.biz) and - to find links to help register names.

Company Location & Facilities Describe –Offices and locations and function of each –Size (square footage) –Lease arrangements (etc.) –Internet services –All location & facilities factors that sell your company

Company Strategy Describe –Value proposition ex. reliability and service for a price –Competitive Edge Proprietary technology protected by patents Website name Headstart in area

Company Start-Up Costs Start-Up Expenses – include only those that come before the start of the plan. Those that come after go in profit and loss table. Expenses – those items that are deductible against income

Start-Up Plan - Expenses Legal$1,000 Stationery, etc.$3,000 Brochures$5,000 Consultants$5,000 Insurance $350 Expensed Equipment$3,000 Other$1,000 Total Start-up Expense $18,350

Start-Up Plan - Assets Cash Requirements $25,000 (cash may need to change as you get better estimates for cash flow) Other Short-Term Assets$7,000 Total Short-Term Assets $32,000 Long-Term Assets 0 Total Assets $32,000

Total Start-Up Plan Requirements Total Start-up Expense $18,350 Total Assets $32,000 Total Start-Up Requirements $50,350

Start-Up Funding – Investments Investor 1 $20,000 Investor 2 $20,000 Other $10,000 Total Investment $50,000

Start-Up Funding – Liabilities Short-Term Liabilities Unpaid Expenses$350 Short-Term Loans $0 Interest-Free Short-Term Loans $0 Subtotal Short-Term Liabilities$350 Long-Term Liabilities $0 Total Liabilities $350

Start-Up Table Summary Total Start-Up Expenses$18,350 Total Assets$32,000 Total Start-Up Requirements$50,350 Total Investment$50,000 Total Liabilities $350 Total Investment and Liabilities $50,350 Loss at Start-Up (- Start-Up Expenses) ($18,350) Total Capital (Assets – Liabilities) $31,650 Total Capital and Liabilities$32,000 Must Match

Rule of Accounting Capital = Assets – Liabilities This is company’s Net Worth

Product Description Describe the product –What the product is –How much it cost –Who purchases it Think about customer needs and benefits –Use this to as possible way of generating new ideas Do competitive comparison –What buyer choices are available –How does you product line compare to other companies Describe what goes into your product –What are the sources of vital components

Product Description (cont.) Describe how technology with affect your business –Is it a positive or a threat? Describe future products –How will they be developed –What is the relationship to present products –What are the market needs Include sales literature –Advertisements –Brochures –Tech. Specs.