business planning basics for hm educators pwp

Cindy Dvergsten, Holistic Management Certified EducatorWhole New Concepts LLC

[email protected]

Presented December 9th, 2011 for Certif ied Educator Conference Call

Overview

Introductions : What brings you to this call today?

Do you have a business plan?

What is the purpose of having a business plan?

What is a business plan?

Key components of a business plan.Feasibility studies support the business planFinancial Statements

Financing and Profitability considerations

Group Discussion

Copyright © 2011 Whole New Concepts LLCBusiness Planning Basics

Why Plan a Business?

“By failing to plan you are planning to fail”Proverb

“It pays to plan ahead. It wasn't raining when Noah built the ark.”Proverb

“Expect the best, plan for the worst, and prepare to be surprised.”Denis Waitley

“Good fortune is what happens when opportunity meets with planning.”Thomas Edison

In reality, business plans can take a long time to write, require that you have a tremendous amount of data at your fingertips, depend in part on projections, and often are responsible for creating a long list of research you still need to conduct and other work you need to complete.

But despite all of that, business plans can be one of the most effective tools for the small business owner who is starting, growing and even managing a business.


Top Ten Reasons to Have a Business Plan

1. Forces you to look at the whole business 2. Focuses attention on important issues3. Guides adaptation and innovation by testing feasibility4. Helps to clarify and communicate your goals and objectives5. Provides a means of assigning priorities6. Provides a framework for daily decision‐making and better management7. Helps maintain a proactive business attitude8. Serves as a benchmark to track performance9. Stimulates development of new and emerging business opportunities10. Helps you to access capital, acquire business partners,

and attract employees

Additional reasons?


The Business Planning Cycle


The owner assumes the lead in the process

The planning process involves everyone in the family and business

The plan reflects reality (feasibility has been determined)

There is a contingency plan for the worst-case scenario

The goals and objectives are achievable and clear

The plan is flexible

The plan is used to run the business, reviewed often, and revised when necessary


Basic Outline for a Business PlanSection I Executive SummaryThe executive summary is the first section of your small business plan that is typically written last. It provides an overview of all of the other sections in the business plan.

Section II Company DescriptionGeneral Description of BusinessVision and Mission StatementsBusiness Goals and Objectives

Section III Background InformationIndustryBusiness Fit in the IndustryExperience & Past Performance

Section IV Organizational MattersBusiness StructureManagement & PersonnelOperating Controls & Risk Mgt.


Section V Marketing PlanProducts/Services (benefits & features)Market Analysis (identify customer, niche, geographic area, competition, demand, etc.)Pricing & Delivery Marketing Strategies (how to attract & promote business, serve customers etc.

Section VI Financial PlanCosts of goods sold, Operating Expenses Start up ExpensesSales Projections Cash Flow ProjectionsFinancial Statements

Income Statement (P&L)Balance Sheet (Owners Equity/Net worth)

Basic Outline for a Business PlanAppendix

The appendix of your business plan includes information that supports your statements, assumptions and reasoning used in the other sections of your business plan. This may include graphs, charts, statistics, photos, marketing materials, research and other relevant data.


Basic Feasibility ConsiderationsSCOPE

What is the business opportunity? What is the purpose? What are your goals? What are the features and benefits?

SWOT ANALYSIS (strengths, weaknesses, opportunities, threats) Your business Your industry Your target market Your competition

FINANCIAL FEASIBILITY What are your capital requirements? Do you need outside funding? Why will your idea be profitable? When will you reach your break-even point? What rate of return do you expect?

FEASIBILITY OF SALES VOLUME How, when, and where will you generate revenue? How much will it generate? Why are these projections realistic?

Additional Feasibility Considerations

MARKETING FEASIBILITYHow will you communicate with customers?Why, when, how, where, and how much will they buy?What price will they pay?What price, promotion, and placement strategies will you use?

FEASIBILITY OF PERSONNEL

Do you have the right mix of personnel, with the right training?Have they bought into the business idea?What functions will be outsourced?

LOGISTICAL FEASIBILITY

What are your product and performance specifications? How will you ensure that they are met?Can you get enough of the supplies and materials you need? What’s the turnaround time? Is your supply chain adequate?Do you have the equipment you need?


Additional Feasibility Considerations

LEGAL FEASIBILITYDoes the idea meet local, state, and federal regulations?Do you need to protect intellectual property?What contracts, permits, licenses and leases are required?

ENVIRONMENTAL FEASIBILITYWill implementing the concept reduce, reverse, or offset environmental damage?What is the environmental impact of resource extraction, manufacturing, storage, shipping, consumer use, and disposal?Can you reduce external costs and increase external benefits?

SOCIAL FEASIBILITYHow does each aspect of your product and your business affect workers, neighbors, and communities at home and abroad?Can you reduce external costs and increase external benefits?


Financial Statements Used in Business Planning


Income Statement



Balance Sheet Profit & Loss Statement

Performance Reports




Cost of GoodsSold



Owners EquityStatement



Annual Cash FlowStatement


Reasons Businesses Seek Financing


Research and development Growth or start-up expenses Purchase a business Seasonal working capital Permanent working capital Equipment acquisition Real estate acquisition Other: ______________________

Three Ways to Increase Profitability


1. Increase your sales volume (without increasing your costs)

2. Reduce your fixed costs (without causing a decrease in your sales volume)

3. Increase your contribution margin by:• Increasing the sales price

(without decreasing volume)• Decreasing variable costs (reduce inputs)• Changing product or service mix to those with

contribution margins (without decreasing volume)

Contribution Margin (C) is Unit Revenue (Price, P) minus Unit Variable Cost (V): C = P − V

Discussion

Do you have personal experiences about business planning to share?

How do you feel about business planning?

What are the barriers you or other you know of have faced incompleting business plans?

What does the practice of Holistic Management contribute to the business planning process?

Other thoughts or comments?

What “gem” are you going to take away from today’s presentation and discussion?


Cindy Dvergsten, Holistic Management Certified EducatorWhole New Concepts LLC

[email protected]

Presented December 9th, 2011 for Certif ied Educator Conference Call