a business plan...why - greg spann

8/8/2019 A Business Plan...Why - Greg Spann

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CAPITAL SBDCSouthern University

Developing a Business Planfor Your Small Business

Presented by:

Gregory A. Spann

1933 Wooddale Boulevard, Suite EBaton Rouge, LA 70806-1514

Phone: (225) 922-0998


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PURPOSE OF BUSINESS PLAN

It helps to guide the business operation by forcing theentrepreneur to take a critical, objective look at every

aspect of the business venture in order to set realistic goals

and to make informed business decisions.

Specifically, the business plan can help to determine:

- If you are the right person to start or operate the

selected business.

- If there is a market for the product/service you plan

to offer.

- If the proposed venture will be profitable.


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PURPOSE OF BUSINESS PLAN

If you should need financial assistance, it enables a lendinginstitution to evaluate the potential success of the business.


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BUSINESS PLAN OUTLINE

Executive Summary

General Company Description

Products and Services Plan

Technical Description of Product (for a manufacturer) Marketing Plan

Industry Profile

Customer Profile & Target Market(s) Market Size & Trends

Competition Profile

Distribution Strategies


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BUSINESS PLAN OUTLINE

Marketing Plan (Contd)

Promotional Methods Pricing Strategies

Management Plan

Operational and Facility Plan

Financial Plan

Start-Up Costs

Break-even Analysis

Pro Forma Financial ProjectionsIncome Statement

Cash Flow Statement

Balance Sheet Statement

Appendix


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ENTREPRENEURIAL MYTHS

Bootstrapping the business. Living-off the business too soon. Being your own boss. Getting rich overnight. Having nothing to lose. It takes money to make money.


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RISKS & REWARDS

Summarize risks of proposed business venture or expansion

Summarize how risks will be addressed

Estimate expected benefits or returns


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LOWERING START-UP RISKS

Gain experience in management and in the type ofbusiness you plan to start.

Plan ahead.

Make sure you have your family's support. Be prepared to persevere. Use facts to substantiate your "hunches" before acting on

them. Don't be afraid to quit.


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TRAITS OF SUCCESSFULENTREPRENEURS

Desire Initiative/Assertiveness Energy Need for Achievement Perseverance Responsibility Willingness to Take

Moderate Risks

Problem Solving Persuasive Self-Confidence Well-Developed Ego Value of Money Self-Discipline

Market Awareness


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BUSINESS CONCEPT

What business are you in? Why is this the right business for you to be in? What would you like your business to be famous for? What do you sell? Why will people buy from you? Who are your competitors?

How can you stand out from the crowd?


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MISSION STATEMENT

A clear, concise written description of a firmsbusiness philosophy for making the entrepreneurs

vision a reality. In a few sentences, it should convey

how your business will meet its goal and distinguish

itself from the competition. It is imperative that a

mission statement be simple, believable, and

achievable.


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SAMPLE MISSION STATEMENT

The mission of Ms. Blissfuls BridalBoutique is to become the premier bridal shop

committed to providing the highest quality

bridal merchandise at fair market prices. Thecompanys products and services will reflect

the owners belief that, as a specialty business

creating a once-in-a-lifetime event, hercustomers will be able to secure all of their

wedding needs in one place.


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YOUR MISSION STATEMENT

Step 1: Describe the purpose of your business.______________________________________________________________________________________________________

________________________________________________________________________________________________________________________________________________________

_Step 2: Create a Mission Statement (20 words or less).

____________________________________________________________________________________________________

__


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LEGAL AND ORGANIZATIONAL

STRUCTURE

Building a management team and the key players Advantages and disadvantages of each legal form of

ownership

Sole Proprietorship

Partnerships

General

Limited

CorporationsC and S

Limited Liability Company (LLC)

Non-Profit Corporation


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LEGAL FORMS OF OWNERSHIP

SOLE PROPRIETORSHIP

ADVANTAGES

Costs

Control

Profits

Flexibility


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SOLE PROPRIETORSHIP

DISADVANTAGES

Unlimited liability

Less available capital

Limited scope of management

Business life


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PARTNERSHIPS

General

Limited

ADVANTAGES (of General Partnership)

Pooling of expertise and capital

Continuity Taxation


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PARTNERSHIPS

DISADVANTAGES (of General Partnership)

Unlimited liability

Responsible for partners actions/decisions

Business life precarious

Hardest entity to end if a dispute arises


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CORPORATIONS

C and S

ADVANTAGES (of C Corporation) Limited liability

Access to capital

Perpetual life

Transfer of ownership

Ability to attract management


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CORPORATIONS

DISADVANTAGES (of C Corporation)

Costs

Taxation

Government regulation and paperwork

NOTE: The S Corporation gives you the benefit of limited liabilityprotection and is taxed as a partnership. However, there are certain

eligibility requirements.


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LIMITED LIABILITY COMPANY (LLC)

ADVANTAGES

Limited liability

Taxation More flexibility than S Corporation

DISADVANTAGES

Relatively new (state law is still evolvingregarding treatment)

Restrictions on members and transfers of interest

Organizational costs


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PRODUCTS AND SERVICES PLAN

Describe your products and services offering Discuss intellectual property (patents, trademarks, etc.)

Explain uniqueness of products and services vs. competition

What is your main selling point? Discuss future products


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INTELLECTUAL PROPERTY

Patents

Trademarks and Trade Names

Copyrights

Trade Secrets Customers and Valued Employees

Contracts and Leases

Employment contracts Buy-out agreements

Non-compete agreements

Non-disclosure agreements


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Dollars

Sales Curve

Profit Curve

Time

Introduction

Stage

Growth

Stage

Maturity

Stage

Decline

Stage

0

THE PRODUCT LIFE CYCLE


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ENTRY STRATEGIES

The major goal of an entry strategy is to make customers

aware of the availability of your product or service offeringand give them a compelling reason to buy it from you, insteadof the competition.

There are three common options in selecting your business

opportunity:

You can start your business from scratch. You can buy an existing business. You can purchase a franchise business.


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FACTORS INFLUENCING ENTRY

STRATEGIES:

Time Market Size and Direction Geographic Location and

Density of Customers Buying Patterns ofCustomers

The Need to Overcome andErect Barriers to Entry

Nature of Competition

Expected CompetitiveReaction

Capital Required toLaunch Venture

Threat of New Entrants Threat of Substitute

Products

Relative Bargaining Powerof Suppliers

Relative Bargaining Powerof Customers


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MARKETING RESEARCH

Marketing research is a systematic process ofgathering, recording, and analyzing data for

helping you to make marketing decisions.


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HOW TO CONDUCT MARKET

RESEARCH

Step 1: Define the Problem

Step 2: Collect the Data

Step 3: Analyze and Interpret the DataStep 4: Act on the Data or Findings


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RESEARCH

Step 1: Define the ProblemThe most crucial step in market research is definingthe problem clearly and concisely. A common mistake is

to confuse a symptom with a true problem.

Example:

Dwindling sales is not a problem; it is a symptom.


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HOW TO CONDUCT MARKET RESEARCH

Step 2: Collect the Data

Search for Secondary Data and Primary Data

Business owners need to collect the following information

about their target customers:

1. Geographic. Where are my customers located?

2. Demographic. What are the characteristics of my

customers (age, gender, education level, income,

marital status, etc.)?

3. Psychographic. What drives my customers buying

pattern or behavior (lifestyles, beliefs, opinions,

perceptions, motivations, attitudes, etc.)?


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RESEARCH

Step 3: Analyze and Interpret the DataThe business owner must attach some meaning to the

research data by transforming it into useable information.

What do the facts mean?

Do the results suggest any changes in the way the

business is run?

Are there new opportunities the owner can takeadvantage of?


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RESEARCH

Step 4: Act on the Data or FindingsThe research process is not complete until the businessowner acts on the information collected. In many

instances, the action needed is obvious once the

entrepreneur has interpreted the results of the research.


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CHANNELS OF DISTRIBUTION

(for Consumer Goods)

Manufacturer Manufacturer Manufacturer Manufacturer

Wholesaler Wholesaler

Retailer

Consumer Consumer

Retailer

Consumer Consumer


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President

orOwner/Manager

Production/Operations Marketing Finance

SAMPLE

ORGANIZATIONAL CHART


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FINANCIAL PLAN

What will it cost to start or expand the business? Sources and uses of financing (including collateral)

What is your break-even point?

Financial statements for past three-years (for existingcompany)

Financial projections for three-year period (includingassumptions):

Income statement

Cash flow statement

Balance sheet


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FIVE C'S OF CREDIT

CHARACTER CAPITAL COLLATERAL

CAPACITY CONDITIONS


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FIVE QUESTIONS TO TEST YOUR LOAN

READINESS

HOW MUCH DO YOU NEED TO BORROW?

WHAT WILL YOU DO WITH THE LOAN PROCEEDS?

WHEN WILL YOU PAY THE LOAN BACK?

HOW WILL YOU PAY THE LOAN BACK?(How will you generate cash flow?)

WHAT IF SOMETHING GOES WRONG?(What is your contingency plan?)


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a business plan...why - greg spann

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