Transcript Cover Page - Trinity Washington University

How to Write a
Business Plan
Presenter:
Telaekah Brooks, JD
Dean, School of Professional Studies
Trinity Washington University
What is a Business Plan ?
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A road map
A dynamic, living document that describes who
you are, what you sell, how much money you
will need, who will work for you, and so on.
Business plans often include strategies for
expansion or risk.
Why Develop a Business Plan ?
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The process of putting a business plan together, including the
thought you put in before you write it, forces you to take an
objective, critical, emotional look at your business project in its
entirety.
The finished product is an operating tool which, if properly used
will help you manage your business and work effectively toward
its success.
The completed business plan communicates your ideas to others
and provides the basis for corporate buy-in and ownership.
BUSINESS PLAN FORMAT
What is the correct model ?
The Three Basic Sections of a
Business Plan
 Description
 Marketing
 Financials
of the business
1. Description of Your
Business
•Mission
Statement
•Legal Structure
•Products & services
•Location
•Management & personnel
•Insurance
•Taxes
•Security
•Recordkeeping
Mission Statement
Your mission statement states, in the
broadest terms possible, what your business
hopes to be and do. “To help people work more
efficiently and comfortably,” or “To provide
healthy, energizing juices,” or “To take the
anxiety out of tax preparation.”
Mission Statement Exercise
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In just a few sentences the mission statement
should communicate the essence of your
company to both your stakeholders and to the
public.
What values would you like your business have?
What is the purpose of your business?
What is your vision for the future of your business?
Mission Statement: (50 words or less)
Legal Structure
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Sole Proprietorship
Partnerships
General Partnerships
 Limited Partnerships
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Limited Liability Company
Corporations
S Type Corporations
 C Type Corporations
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Sole Proprietorships
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In a sole proprietorship, you have all of the
control and all of the liability. It is the easiest to
start, and usually does not require significant
licensure. You run the show and keep the
money.
Major Downside: You are completely, 100%
personally liable if something goes wrong.
General Partnerships
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General Partnerships
These are relatively easy to start by requiring only 2
or more people. This type of business requires little
licensure and is easy to run.
 All partners share in the management of the
business, the profits, and the personal liability.
 Major Downside: You can be liable for the actions
of your partner, and it is sometimes difficult to
manage disputes.
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Limited Partners
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Limited Partnerships
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Limited Partnerships are a little more complicated to start
and do require some incorporation in most states.
Though you can start an LP with just 2 people, there is a
catch:
At least one partner is limited and one is general. The limited
partner is like a silent partner- they get to avoid most liability,
but have to give up management control to get it.
The general partner has management control- and is fully
liable if something goes wrong.
Major Downside: It is hard for limited partners to resist the
urge to manage.
Limited Liability Companies
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LLCs were designed to provide you with the best of
two worlds:
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The flexibility and ease of ownership found in a sole
proprietorship
And, the restricted personal liability of a corporation.
These can be started with just one owner/member and little
investment. They do require incorporation in most states.
Major Downside: More complicated than a sole
proprietorship- but the restricted liability can be worth it.
Corporations
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S Type Corporations
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These require formal incorporation in every state.
You are required to have a Board of Directors, which sets
policy and controls the President of the corporation.
It can be a complicated process, Board members and Officers
have little personal liability, and shareholders are taxed on
dividends.
Major Downside: Most small business owners try to run
corporations like sole proprietorship- forgetting to keep good
corporate records and “buy” ownership in their business.
More on Corporations
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C Type Corporations
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This type of structure also requires formal incorporation in all
states.
This is the most complex business structure, which is subject
to stricter regulations by the gov’t.
Though the personal liability of owners is shielded, there is
not total protection against lawsuits.
Shareholders, Board members, and officers run the business
Major Downside: Complicated management structure,
“double taxation” on earnings.
Product & Services
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Most businesses are built around products and/or
services already available. A fish market for example
has a simply described product line (seafood); the
service element involves how they process the product
and satisfy their customers.
If your products or services are unique, state-of-the-art,
or otherwise noteworthy, take advantage of it. Such
differentiation is valuable, tends to be fleeting, and
attracts imitators.
Products & Services cont’d
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The Internet has a wealth of information that can lead you to
better understand your product or service and its place in the
market.
Using Google.com to search for “Maine + seafood” yielded
51,900 responses. Don’t faint—of the 51,900 responses only the
first 20 had much to offer, including descriptions of seafood
products, services, and trade association studies. A search for
“Maine + seafood + retail” yielded a mere 4,780 sites. Some of
the other sites observed were very specific: seafood retailers
(from everywhere, even though “Maine” was a qualifier) with a
description of their prices and products. Some were general:
aquaculture.
A general rule for conducting a Web search is to make your
descriptors as specific as possible. This will give you more useful
results.
Location
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Factors to consider:
Type of building
 Organization of space
 Parking
 Transportation accessibility
 Traffic
 Community residents
 Target Market
 Incentives
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Space
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Plan your space
How much space should you set aside for
offices? How much storage do you need?
How will you utilize your storefront? What
about signage?
How much display space do you need?
Let’s talk basic consumer economics
Management & Personnel
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About your principals:
Business Background
 Management Experience
 Educational Background
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About your staff:
Types of staff you will need
 Duties and responsibilities
 Policies and procedures (employee handbook)
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Personnel Con’t
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Timesheets
Work Schedules
Classes of employees
Pay rates/tables
Full- time vs. part- time vs. independent
contractor
Benefits
Insurance
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General Business Liability Insurance
Workmen’s Compensation
Bonding
Performance bonds
 Tender bonds
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General Liability Insurance
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A Commercial General Liability (CGL) insurance
policy is the first line of defense against many
common claims.
General Liability insurance covers claims of bodily injury or
other physical injury or property damage. It is frequently offered
in a package with Property insurance to protect your business
against incidents which may occur on your premises or at other
covered locations where you normally conduct business.
Commercial General Liability enables your business to continue
operations while it faces real or fraudulent claims of certain types
of negligence or wrongdoing.
Workmen’s Compensation
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This insurance protects you, the business owner, from
financial devastation in the event that an employee is
injured on the job. It also helps the employee return to
work with little or no loss of income. It provides:
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Legal protection for the business owner
Income, medical and rehab benefits for employee workrelated injuries
Payment to surviving family members if your employee is
fatally injured on the job
Employer’s liability insurance (including damages due to a
third party) for care and loss of services for consequential
body injury to a family member
Bonds
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Performance Bonds
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Most capital works projects require this type of bond.
This bond is an indicator that your company has the
necessary skills and capabilities to carry out the required work
and comply with the terms of the contract.
Tender Bonds
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Bid or Tender bonds provide a financial fallback for the
contracting agency in the event that you are unable to finish
the contract.
Taxes
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Corporate franchise tax
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Sales and Use Taxes
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The general rule here is that you must pay sales tax for all retail products
that you sell. You can usually elect to pay monthly or quarterly.
Personal Property Tax
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In most states, your business will have to pay corporate income taxes on
income made in that state. Rates will vary based upon location
Many states require you to pay taxes on the aggregate value of your
business possessions.
Employer Taxes
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Some can be deducted from the gross salaries of your employeeswithholding taxes
Some come out of your pocket
Security
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Facilities & equipment
Security of employees
Intellectual property
Client records and business files
Personnel records
Internet/network security
Recordkeeping
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Database managements
Filing systems and procedures
Reporting mechanisms
Manual vs. automated
Software usage
2. Marketing
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Who are your customers?
What benefits do you provide them?
How many are there?
How many do you need?
What are there current buying patterns?
Where do they currently buy?
How will they know about you?
What are your major risks and opportunities?
Your Target Market
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For Individuals
• Age
• Gender
• Race and ethnic group
• Hobbies
• Lifestyle
• Reading, listening, and viewing patterns (newspapers,
magazines, TV, radio)
• Education
• Social class
• Occupation
• Income level
• Family life cycle
Competition
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Who are your five nearest competitors?
How is their business? Steady, increasing,
decreasing?
What are the similarities and differences
between their business and yours?
What have you learned from watching their
business? What works for them and what
doesn’t?
How will your operation be better than theirs?
Your Industry
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Background Industry Information
Current/Future Trends
The Business Fit in the Industry
Marketing Strategies
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Advertising
Print
 Radio
 Television
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Promotion
Design of Materials
Pricing
Press Relations
Risk and Opportunities
A SWOT Analysis may be helpful in identifying Risks
and Opportunities
SWOT Analysis (your
organization’s major Strengths
and Weaknesses, and the most
important Opportunities and
Threats internal to your
organization).
Sample SWOT
Factor
Strength
Quality
X
Training
Capital
Management
X
Operations
X
Production
Staff
X
Weakness
X
X
X
CONT’D
Factor
Opportunities
Customer Base
X
Competition
Technology
X
Political Climate
Regulatory Bodies
X
Economic Environment
Legal
Threats
X
X
X
X
3. Financials
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How much capital do you need?
How can you maintain cash flow and Liquidity?
How much working capital do you need?
What kind of budgets should you follow?
How can you control your finances?
How much growth can you afford?
Financials
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Uses and Sources
Profit & Loss Statements
Income Statement
Balance Sheet
Cash Flow Projections
Break Even Analysis
Start Up Costs
The Balance Sheet
The balance sheet show the business’s financial situation on a given day only. The formula for the
balance sheet is:
Assets = Liabilities + Owner’s equity
Assets are economic resources owned by the business, purchased with the funds supplied by creditors
or owners.
Liabilities are amounts owned by the business to creditors. Owner's equity is amounts owned by the
business to
the owners.
Break-Even Analysis
A. Total sales:
B. Fixed costs:
C. Gross margin:
D. Gross margin as % sales: (C÷A)
E. Break-Even Sales: (B÷D)
F. Profit goals:
G. Sales required to reach profit goal
may be calculated: [(B+F)÷D]
$_______
$_______
$_______
_______%
$_______
$_______
$_______
Operating Expenses
Fixed
Variable
Salaries
Sales Commissions
Payroll
Boxes, Paper, Etc.
Benefits
Both
Travel for Sales
Utilities
Postage
Overtime Personnel & Extra
Licenses
Telephone
Labor for Manufacturing
Insures
Etc.
Freight Out
Advertising
Office Supplies
Legal & Accounting
Maintenance & Cleaning
Depreciation
Interest
Etc.
Cash Flow Projections
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Plot out the revenue that you are expecting to
come in over a 12-month schedule
Plot out your expected expenses over the same
period
Make sure to include stable monthly expenses
(utilities, rent, etc) and contract receivables
Business Plan Checklist
Prepare Objectives and Mission
□Growth plan description
□ Stage of development
□ Mission Statement
□ Objectives
Compile the financial Plan
□ Financial worksheets
□ Cash flow projections
□ Financial statements
□ Additional financial information
Prepare Background Information
□ Industry analysis and trends
□ The business “fit” in the industry
Assemble Appendices
□ Timetable
□ Supporting documents
Design the Organization
□ Business structure
□ Management
□ Personnel
□ Outside services/advisors
□ Risk management
□ Operating controls
Write Executive Summary
□ Analyze target readers
(investors/leaders) and write accordingly
□ Consolidate and summarize all accumulate data
□ Adjust original business concept as needed
Prepare the Marketing Plan
□ Description of products or services
□ Market analysis
□ Competitor analysis
□ Market size and trends
□ Sales volume potential
□ Marketing mix strategy
□ Explain market strategy
□ Price
□ Placement
□ Product
□ Promotion
Finishing Touches
□ Proofread and edit document
□ Create/collect graphs, charts, and photographs
□ Reread entire business plan
□ Determine overall feasibility of plan
□ Give plan to friends, advisors, or family for review
□ Make changes as necessary
Business Resources
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US Small Business Administration
(www.sba.gov)
Service Corps of Retired Executives
(www.score.org)
Maryland State Department of Assessments and
Taxation Corporate Charter
Division Telephone: (410) 7671340 http://www.dat.state.md.us
Marketing Resources
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1. American Demographics, the monthly magazine, has an excellent home page at
<www.marketingtools.com>. American Demographics is the magazine of record
for demographic research. They make using census data simple and effective.
2. Princeton University’s Survey Research Center home page
<www.princeton.edu/—abelsonf index.html> is a must-visit. It contains a
number of links to other sites, and is of value in itself.
3. The National SBDC Research Network home page
<www.smallbiz.suny.edu/> is your entry into the SBDCs extraordinary
wealth of information.
4. SCORE On Line <www.score.org> has one-on-one marketing research
advice as well as plenty of helpful links.
5. Hoover’s Online (“The ultimate source of information on businesses”) is
terrific for getting financial information on publicly traded companies
<www.hoovers.com/>
Contact Information
Telaekah Brooks, JD
Dean, School of Professional Studies
Trinity Washington University
(202) 884-9620
[email protected]