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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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LEGAL FORMS OF OWNERSHIP
SOLE PROPRIETORSHIP
DISADVANTAGES
Unlimited liability
Less available capital
Limited scope of management
Business life
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LEGAL FORMS OF OWNERSHIP
PARTNERSHIPS
General
Limited
ADVANTAGES (of General Partnership)
Pooling of expertise and capital
Continuity Taxation
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LEGAL FORMS OF OWNERSHIP
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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LEGAL FORMS OF OWNERSHIP
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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LEGAL FORMS OF OWNERSHIP
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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LEGAL FORMS OF OWNERSHIP
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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HOW TO CONDUCT MARKET
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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HOW TO CONDUCT MARKET
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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HOW TO CONDUCT MARKET
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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