1. 5-1 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.

2. 5-2 Planning, Organizing, and Managing a Small Business Importance Of Planning Importance Of Planning Strategic, Operational, & Financial Planning Strategic, Operational, & Financial Planning Need & Purpose Of A Business Plan Need & Purpose Of A Business Plan Chapter 5

3. 5-3 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Planning The Process Of Setting Objectives And Determining Actions To Achieve Those Objectives.

4. 5-4 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Criteria For Planning  Be Prepared  Be Patient  Know When To Get Help  Form Support System  Know Power Of Vertical Integration  Never Rest On Laurels Keith Brofsky/Getty Images

5. 5-5 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Planning & Other Managerial Functions

6. 5-6 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Planning Provides Internally: 1) Course Of Action 2) Bases For Change 3) Means To Delegate Javier Pierini/Getty Images

7. 5-7 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Planning Provides Externally: 1) Interest From Investors/Lenders 2) Guide Owner/Managers In Operations 3) Give Direction/Motivation To Employees 4) Attracts Customers & Prospective Employees Ryan McVay/Getty Images

8. 5-8 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Reasons To Neglect Planning  Day-To-Day Activities Get In Way  Fear Of What It Might Reveal  Lack Of Planning Knowledge  Feeling Future Cannot Be Planned For  Requires:  Original Thinking  Time  To Difficult Jason Reed/Getty Images

9. 5-9 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Types Of Planning Strategic- Before Starting Business Strategic- Before Starting Business Business Plan to Attract: Business Plan to Attract: Investors Investors Financiers Financiers Prospective Employees Prospective Employees Operational- Continuous Before & After Business Starts Operational- Continuous Before & After Business Starts Jim Arbogast/Getty Images

10. 5-10 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Strategic Planning Comprehensive Long- Term Direction To Help Business Accomplish Its Mission.

11. 5-11 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Parts Of Strategic Plan Mission: Long-Term Direction Objectives: Short-Term Ends Strategies: Means To Achieve Objectives For Total Firm Functional Area

12. 5-12 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Areas For Strategic Planning Business Selection Business Selection Determining Mission Determining Mission Deciding On Start, Buy, Franchise Deciding On Start, Buy, Franchise Choosing Product/Service Choosing Product/Service Identifying Target Market Identifying Target Market Picking Legal Structure Picking Legal Structure Shaping Financial Needs Shaping Financial Needs Selecting Location Selecting Location Ryan McVay/Getty Images

13. 5-13 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. SWOT Analysis StrengthsWeaknesses 1)2)3)4)1)2)3)4) OpportunitiesThreats 1)2)3)4)1)2)3)4)

14. 5-14 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Strategic Umbrella

15. 5-15 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Setting Objectives

16. 5-16 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. External Environment Clients Economy Legal & Political Factors Changing Demographics Foreign Competition

17. 5-17 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Internal Resources (Competitive Edge) Human Human Physical Physical Financial Financial Royalty-Free/CORBIS

18. 5-18 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Mission/Strategy John Smith, General Agent

19. 5-19 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Operational Planning Sets Policies, Procedures, And Standards For Achieving Objectives.

20. 5-20 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Parts Of Operational Plan  Polices: Guides For Consistent Action  Methods & Procedures: Manner Of Operating  Budgets & Standards: Measures Of Control For Activities Jules Frazier/Getty Images

21. 5-21 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Areas Of Operational Planning Choosing Location Choosing Location Planning Facilities Planning Facilities Developing Sources Of Supply Developing Sources Of Supply Planning HR Needs Planning HR Needs Setting Up Legal Structure Setting Up Legal Structure Determining Approach To Market Determining Approach To Market Establishing Record System Establishing Record System Setting Up Schedule Setting Up Schedule

22. 5-22 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Financial Planning $ Estimating Income/Expense $ Estimating Initial Investment $ Locating Sources Of Funds Royalty-Free/CORBIS

23. 5-23 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Income And Expenses Net Profit ExpensesVariableFixed

24. 5-24 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Estimating Annual Income/Expense/Net Profit

25. 5-25 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Sources Of Funds Your Own Funds Funds From Others Equity Investors Lenders

26. 5-26 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Purposes Of Business Plan Keeps On Target Keeps On Target Keeps Creativity Focused Keeps Creativity Focused Concentrates Power On Goal Concentrates Power On Goal Patagonik Works/Getty Images

27. 5-27 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Plan Should Include A. Proposed Product B. Expected Market C. Industry Strengths & Weaknesses D. Marketing Policies E. Operations/Production Methods F. Financial Aspects C Squared Studios/Getty Images

28. 5-28 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Preparing Business Plan Business Current Status Business Current Status Where Would Business Like To Be- Objective Where Would Business Like To Be- Objective What Will It Take To Get Business To Objective- Strategy What Will It Take To Get Business To Objective- Strategy Owner Should Prepare Owner Should Prepare Create Action Steps Create Action Steps Monica Lau/Getty Images

29. 5-29 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Components Of Business Plan I. Cover Sheet II. Executive Summary III. Table Of Contents IV. History V. Description Of Business VI. Definition Of Market VII. Description Of Products & Services VI. Management Structure VII. Objectives & Goals VIII. Financial Data IX. Appendixes

30. 5-30 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Outline Of Executive Summary

31. 5-31 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Writing The Plan Be Honest Be Honest Use The Third Person Use The Third Person Use Transitional Words Use Transitional Words Avoid Redundancies Avoid Redundancies Use Short, Simple Words Use Short, Simple Words Use Visuals Use Visuals

32. 5-32 McGraw-Hill/Irwin© 2006 The McGraw-Hill Companies, Inc. All rights reserved. Preparation For Presentation Adequacy Of Research & Development Adequacy Of Research & Development Validity Of Research Validity Of Research Understanding Of Business Understanding Of Business Financial Projections Financial Projections Priority Of Objectives Priority Of Objectives Ability To “Make It Happen” Ability To “Make It Happen”