DEVELOPING A BUSINESS PLAN Chapter 2

Lesson 2.1 Why a business plan is important

What is a Business Plan?  describes all the steps necessary to open and operate a successful business.  Describes your product/service, how you will produce it, and who will buy it  Explains who is going to run the business  States how it will win over customers & keep them  Provides detailed financial information (earning a profit)

Why a business plan?  Three Purposes: 1. To explain the idea behind your business and how your product or service will be sold, 2. To set specific objectives and describe how your business expects to achieve them, 3. To describe the backgrounds and experiences of the people running the business. *Remember to anticipate questions potential investors will want to have answered.

Prewriting/Brainstorming  What is my product/service?  Why is my product/service unique?  Who are my customers?  Where will future customers come from?  Who is on my business team?  How will I finance my business?

Importance of a Business Plan  Makes you think about all aspects of your business  Giving you more confidence in your idea  May help to secure financing  Cannot get a loan without it  Helps communicate your ideas to others  You know your business in and out which allows you to explain it properly  Serves as a tool to manage your business  Can guide you in decision making

Homework:  Describe the importance of a business plan in your own words.  Answer the who, what, where, when, why, and how of your business. (1-2 sentences to answer each)

Lesson 2.2 What goes into a business plan

Elements of a Business Plan 1. Introduction 2. Marketing 3. Financial Management 4. Operations 5. Concluding Statement

1. Introduction  Detailed Description  Ownership and Legal Structure  Skills and Experience  Competitive Advantage

2. Marketing  Products and Services  Market  Industry  Location

3. Financial Management  Identify Risks  Financial Statements (current & pro-forma)  Funding Request and Return on Investment

4. Operations  Day-to-day operations  Hiring and personnel procedures  Insurance and lease or rental agreements

5. Concluding Statement  Summary of goals and objectives  Emphasize your commitment to success of business

Lesson 2.3 How to Create an Effective Business Plan

Research your industry  Community  Government  Professional  Printed  Online  SBA  SBDC  SCORE  Chamber of Commerce  Trade Associations  Professional Consultants  Financial Institutions

Mistakes to look at  Unrealistic Financial Projections  Undefined Target Market  Poor Research  Ignored Competition  Inconsistencies in the Business Plan