Transcript CHAPTER 1
ROADMAP TO SUCCESS: HOW TO WRITE A BUSINESS PLAN Foundation Communities Community Tax Center PART 1: LAYING THE FOUNDATION I. II. III. IV. V. Introductions Overview of Course Why Develop a Business Plan? Strategic Planning – A Brief Overview Components of Your Business Plan Your Plan’s “Curb Appeal” WHAT IS A BUSINESS PLAN ? Summary of your business and the future you hope to create Realistic but conveys energy and optimism Step by step plan to achieve your goals “A goal is a dream with a deadline” – Steve Smith WHY DO A BUSINESS PLAN? Clarifies direction for you and your team Foundation for raising capital A way to track progress of your business Protects your financial future STRATEGIC PLANNING GOALS CONSTRAINTS RESOURCES Success Occurs at the Intersection of: Goals, Constraints, and Resources GOALS Own My Own Business CONSTRAINTS Financial Legal: Permits, Licenses etc. RESOURCES Find Money: Savings/Equity Borrow, etc. “Bootstrap” Become informed Connect with SBDP Staff Talent/Education/Ability Take Courses Hire Talent Work Hard Environmental Mitigate, Choose Another Site BUSINESS PLAN TIPS Takes 40 + hours to complete, 20 – 30 pages maximum Be concise; less is more Appearance counts – easy to read, professional COMPONENTS OF YOUR BUSINESS PLAN Cover Sheet Table of Contents Executive Summary Company Overview Product and Service Description Market Analysis Marketing Sales Strategy Internet Strategy Management & Personnel Team Financial Projections APPENDIX COVER SHEET Introduces your business to prospective funders Keep it clean and simple Full legal name of business Location: Address, Street, City, State, Zip Telephone numbers and email addresses Main contact person(s) TABLE OF CONTENTS Road map for prospective Funder or Investor Statement about you Organized Visionary Structured EXECUTIVE SUMMARY Write this section last One section that everyone will read Must capture and hold interest of reader Encapsulates the entire Business Plan Shows clarity of your goals Who you are What you want Where you are going MISSION STATEMENT Who You Are What You Do (Products & Services) For Whom (Customers) Why (What your Customer wants) “It’s not what you sell, it’s what you stand for” – Roy Spence FRITO LAY MISSION STATEMENT Satisfy our Customers by providing fresh, tasty snack products throughout all segments of our business COMPANY OVERVIEW Provides information on your company including where you’ve been How your company fits into your industry and marketplace Your growth potential Economic trends that are favorable to your company BUSINESS ENTITIES Sole Proprietorship General Partnership Limited Partnership (LP) Limited Liability Partnership (LLP) Limited Liability Company (LLC) Corporations C Corporation S Corporation PRODUCT & SERVICE DESCRIPTION Specifics on what your business does Service Industry Product Sales NIC/SIC Code (http://www.osha.gov/pls/imis/sic_manual.html) Competitive Comparison Pricing Strategy PART 2: YOUR BUSINESS PLAN Market Analysis Marketing and Sales Strategy Internet Strategy Marketing is the process of creating and retaining customers in large enough numbers to be profitable MARKET ANALYSIS Market Segmentation –who will buy your products Define target market strategy How current market is underserved or not served effectively Competition & buying patterns Define a unique niche within the existing marketplace MARKETING & SALES STRATEGY Science of planning for and executing a promotional campaign Develop marketing strategy Product Price Place Promotion Budget INTERNET STRATEGY Sell products or information only Internet sales integrated with inventory Website Viral Marketing / Facebook MANAGEMENT & PERSONNEL PLAN Experience Maturity Vision Drive Leadership YOUR MANAGEMENT TEAM INTERNAL Yourself Partners (if Applicable) Key Staff (If Applicable) MANAGEMENT TEAM -EXTERNAL EXTERNAL CPA: with Small Business Experience Attorney: With Small Business Experience Financial Planner: with Small Business Experience Board of Directors PART 3: FINANCIAL PLAN Start Up Costs Break Even Analysis Projected Profit and Loss Projected Cash Flow – The Lifeblood of Your Business! BREAK EVEN ANALYSIS The point at which a businesses is neither making a profit nor experiencing a loss BREAK EVEN ANALYSIS: FIXED COSTS • Costs that generally remain the same month to month and are not dependent upon the number of Sales. • What you would have to pay regardless of whether you had any customers walk in. BREAK EVEN ANALYSIS: FIXED COSTS Personnel (with exceptions) Lease/Mortgage Utilities Debt Financing Insurance BREAK EVEN ANALYSIS: VARIABLE COSTS •Costs that vary directly with: • the number of units sold, or • the number of clients served BREAK EVEN ANALYSIS: FIXED COSTS SAMPLE (CLASS PROJECT) Designer Bags Fixed Costs Variable Costs Variable Income Break Even Profit CASH FLOW STATEMENTS Shows the effects on Cash of operating and Financing Activities Indicator of Ability to Generate Positive Cash Flows Pay Liabilities Pay Dividends Could indicate need for additional Financing BALANCE SHEET Provides a ‘snapshot’ of a business’s financial position at a given point in time Assets: What a business Owns Liabilities: What a business Owes Net Worth (Equity) NET WORTH = ASSETS – LIABILITES BALANCE SHEET: ASSETS Cash Inventory Receivables Prepaid Expenses Plant & Equipment Office Equipment Machinery Land & Facilities Goodwill BALANCE SHEET: LIABILITIES Current Liabilities Current Debt Payables Credit Cards Long Term Liabilities Long Term Debt (Loans) Payments to Investors Equity Paid in Capital Retained Earnings PROJECTED CASH FLOW: THREE THINGS TO REMEMBER: 1. 2. 3. Cash is King Cash is King Cash is King Class Test FINANCIALS: PRACTICAL PLAN HOW/WHERE DO I START? Spreadsheets (2) Start up Costs (what are the things I need to get started and how much do they cost?) 12 Month Cash Flow (Detailed Line Item Income and Expense) Read Sample Plan through a couple of times highlight and make notes! APPENDIX Keep it uncluttered! Biographies and resumes of key team Supporting documents Brochures, flyers, magazine articles References Past lenders Suppliers Trade creditors BUSINESS PLANNING RESOURCES City of Austin SBDC Gold Book Silver Book Services available through other organizations Networking Resource Guide for Small Businesses Bronze Book Resource directory of local women and ethnic minority professional associations HOW TO WRITE A BUSINESS PLAN RECAP Components of a Business Plan The Planning Process Researching Target Markets, Demographics, Competitors Financials: Start Up Costs, Cash Flow, Break Even, Balance Sheet Relate Business Planning Components to Own Business Other Resources for Assistance ROADMAP TO SUCCESS: HOW TO WRITE A BUSINESS PLAN Questions Comments, Ideas Suggestions or Thoughts? Thank You!