Planning and Organizing a BusinessDeveloping a Business Plan

Small Businesses Business that is independently operated, is

not dominant in its field, and meets certain size standards in terms of number of employees and annual receipts

Fill niche markets Niche: a place or position in the community

or industry suitable for a person or thing

Entrepreneurship The American economy is based on the

free enterprise system, or capitalism

Means we have the right to own our own business and to make a profit, also means we can lose money

Entrepreneurs People who have the initial vision,

diligence, and persistence to follow through

Accepts all risks pertaining to forming and operating a small business

Performs all business functions associated with a product/ service, fulfilling social responsibilities, and meeting legal requirements

Reasons to take risk of starting own business

Work for yourself, make own decisions Income is all yours Can test own theories and ideas on how

to run a business Set own hours Set prices and control inventory Solve own problems Perform all human resources functions:

hiring, training, firing

Personal Characteristics of Entrepreneurs Independent Self- Confident Energetic Organized Visionary Persistent Optimistic

Committed Problem Solver Self- Nurturing Risk Taker Flexible Emotionally Stable Action- Oriented

Challenges of Entrepreneurship Total responsibility

In charge of everything, success or failure depends on 1 person (the owner)

Long, Irregular Hours Financial Risks

Analyzing Your Business Venture Recognizing a need

Determine what types of businesses are needed

Thousands of firms go bankrupt each year because they provided the wrong type of product or service

Start Up Factors to Consider What financial resources are needed to

get started? What labor does the business need? What management requirements exist? Does a market exist for the

product/service? Where should the business be located? Should you buy a business or start a new

one?

Applying Business Fundamentals Entrepreneurs must learn some business

basics Keep size of the business consistent with the

capital resources available. Devote adequate time to the development of

management capabilities. Keep all employees fully employed. Study and improve the business continually. Maintain an adequate cash operating fund so

that you will not have to borrow at high interest rates.

Use as much of the profits as possible to expand the business.

Set the prices at a level that will result in reasonable profit while still being lower than your competition.

Treat customers courteously and fairly Treat employees fairly.

Conducting a Business Survey Survey that a business conducts to determine

that market potential for a selected business Questions to answer:

What resources are needed? Are these resources available? What are the costs of these resources? What level of management is required? Does the prospective owner have the

experience necessary to operate the business?

Are there 1 or more markets for the product? At what prices can the products/services be

sold? How reliable are the potential markets? What is the potential for future growth?

Preparing a Business Plan Written description of a new business

venture that describes all aspects of the proposed business

Helps you focus on exactly what you want to do, how you will do it, and what you expect to accomplish

Essential for receiving help from potential investors and financial institutions

Business Plan Outline Introduction Company Description Product and/or Service Management Plan Marketing Plan Legal Plan Location Analysis Business Regulations Capital Required Financial Plan Financing Arrangements Competition Operating Plan Appendix.

Cover Sheet Acts as a title page Should include:

Name, address, telephone number of the company

Names, titles, addresses, telephone numbers of the owners

Month and year the plan was prepared Name of the person who prepared the

plan

Introduction Aka: statement of purpose

Keywords= who, what, where, when, why, how

Summarize: Your company Who the management is and what each

manager’s strengths are What your objectives are and why you will be

successful If you need financing, why you need it, how

much you need, and how you intend to repay the loan or investors

Table of Contents Lists the major topics in your business

plan Makes it easier for lenders or investors

to review your plan quickly and find areas of particular interest

Summary description of the business In a couple of paragraphs, give a broad

overview of the nature of your business Tell why and when the company was

formed Mission (project short and long term goals) Business Model (describe the model for

your company and why it is appropriate) SWOT Analysis (identify and describe

strengths, weaknesses, opportunities, and treats that will be faced)

Products or Services Describe what you sell Include information about your sources

of supply

Intellectual Property Address issues concerning copyrights,

trademarks, and patents Back up your statements with

supporting documents such as registrations, photographs, licenses

Location Describe your projected or current

location, including advantages and disadvantages

Project costs associated with that location

Legal Structure Describe the legal structure of your

business and why it is advantageous List owners

Management List the people who are or will be

running the business Describe their responsibilities and

abilities Project their salaries

Personnel Detail how many employees you will

have, and in what positions What are the necessary qualifications

for each position? How many hours will employees work,

and at what wage? Project future need for additional

employees

Accounting What system will you use for daily

accounting? Who will you use as a tax accountant? Who will be responsible for periodic

analysis of financial statements?

Legal Who will you retain as an attorney?

Insurance What kinds of insurance will you carry?

Consider property, liability, life, health, and disability)

What will this coverage cost? Who will you use as a carrier? Will you

use an insurance agent?

Security Address inventory control and theft of

information What will it cost?

Goal Setting Write down your goals Organize your goals

Immediate goals Short-term goals Long-term goals

Reaching your Goals Manage your time

Avoid procrastinating Judge your time Schedule your time Establish priorities Break goals into manageable units

SMART Goals

Specific

Measurable

Attainable

Realistic

Timely

Specific: answer Who is involved? What do I want to accomplish? Where (Identify a location) When (Establish a time frame) Which (Identify requirements) Why (specific reasons, purpose or

benefits of accomplishing the goal.

Measurable: establish concrete criteria for measuring progress toward the attainment of the goal How much? How many?

Attainable: make sure they can come true

Realistic: must be a goal which you are both willing and able to work towards.

Timely: give a time frame