1. SMALL BUSINESS MANAGEMENT
Chapter Four
The Business Plan

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

3. 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

4. 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

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

6. 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

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

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

9. 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

10. 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

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

12. 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

13. 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

14. 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

15. 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

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

17. 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

18. 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

19. 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

20. 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

21. 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?

22. 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?

23. 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?