1. Developing a business plan
Chapter 2

2. Why a business plan is important
Lesson 2.1

3. 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)

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

5. 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?

6. 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

7. 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)

8. What goes into a business plan
Lesson 2.2

9. Business Plan NOT all the same
Retailer focuses on inventory vs. Consulting focuses on employee credentials
Small, home-based, sole-owner vs. Large corporation with numerous offices all over

10. Three Basic Components
Introductory Elements
Main Body
Bulk of info with details
Written first and used to write the other two parts
Appendix

11. Main Body has 5 Sections:
Introduction
Marketing
Financial Management
Operations
Concluding Statement
Where the inspiration came from, your vision, and the goals of the business

12. 1. Introduction Detailed Description & Goals
Inspiration, vision, and direction
Ownership and Legal Structure
Number of owners effects business operations
Skills and Experience
Paid, volunteer, hobbies
Competitive Advantage
Performance, quality, reliability, distribution, price, promotion, public image/reputation

13. 2. Marketing Products and Services Market Industry Location
How is it different? Unique?
Market
Prospective customers and size of market
Industry
Research: external factors, growth potential, economic trends, and technology trends
Location
Critical for success

14. 3. Financial Management Identify Risks
How will you deal with these risks?
Financial Statements (current & pro-forma)
Funding Request and Return on Investment
How much will you borrow?
How will you use the money?
Return on investment.
Who is managing financial records?

15. 4. Operations Day-to-day operations Hiring and personnel procedures
Insurance and lease or rental agreements
Equipment necessary to run your business

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

17. Introductory Elements
Cover Letter
Title Page
Table of Contents
Statement of Purpose
Why are you asking for a loan and what will you do with the money?
Executive Summary
Short restatement of the report

18. Appendix Supporting Documents
What would you want to know about a business before lending it money?
Personal tax returns
Personal financial statement
Copy of lease or purchase agreement
Copy of Business license
Copy of resume
Letters of recommendation
Copies of letters of intent from suppliers
Copies of contracts

19. Putting It All Together
Best opportunity to convince people of:
Your idea
Your talent
Ability to make it successful
Attractive, neat, organized document

20. How to Create an Effective Business Plan
Lesson 2.3

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

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