Objective 2.09

Develop a concept for new business venture to evaluate its success potential

Developing Personal Financial Goals

 Your goals should be realistic  Your goals should be specific  Your goals should have a clear time frame  Your goals should help you decide what type of action to take

Make a Financial Plan

 Assess your present financial situation  Identify and prioritize your personal financial goals  Identify alternative courses of action  Evaluate your alternatives  Create and maintain a budget that supports financial goals  Review and revise your plan as your financial goals evolve

The Business Plan

 A business plan is a document that decribes a new business and a strategy to launch that business

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Parts of a Business Plan

Executive Summary-is a brief recounting of the key points contained in a business plan  Management Team Plan-your qualifications and any partners  Company Description-outlines the company's basic background information, business concept, and goals and objectives  Product and Service Plan-describes the features and benefits of the business's products and services  Vision and Mission Statements-sets forth the guiding principles by which a company functions  Industry overview-must address basic trends and growth within the industry  Market Analysis-presents your market research and features a customer demographic profile that defines the traits of the company's target market

 Competitive Analysis-focuses on demonstrating that the proposed business has an advantage over its competitors  Market Plan-describes a company's marketing mix strategies or how it plans to market, promote, and sell its products or services  Operational Plan-includes information about all the processes that take place n the business  Organizational Plan-offers information about the business's legal structure, methods of and responsibilities for record keeping, ad legal and insurance issues  Financial Plan-presents past and current finances and financial forecasts and explains the assumptions made when calculating forecast figures  Growth Plan-looks at how the business will expand in the future

 Contingency Plan-examines the assumptions in the business plan and the greatest risks to the business and suggests plans to minimize the risk  Cover Page-first page of the business plan and includes the company's name, address, phone number, web site address, e mail address, and company logo  Title Page-follows the cover page and includes the company name; names, titles, and addresses of the owners; date the business plan was issued; and the name of the person who prepared the business plan  Table of Contents-details the components of the business plan and includes the titles of the major sections and subsections of the business plan, and the page number where each section and subsection is located

 Supporting Documents-includes items, exhibits, and documentation relevant to the business Items to include:  Copies of the owner's resumes, personal financial statements, and tax returns  For franchised business, a copy of franchise contract  For franchised businesses, all supporting documents provided by the franchisor  For partnerships, a copy of the partnership agreement  For corporations, a copy of the Articles of Incorporation  Photos, blueprints, and detailed specifications of products  An organizational blueprint  Photos and blueprints of the layout of the business's facilities  A map of the business location  Copy of proposed lease or purchase agreement for building space  Copy of contracts, licenses, and other legal documents  Copies of purchase orders and letters of intent from supplies  Business cards, press releases, marketing materials, market research highlights

Developing a Business Plan

 Make a research Plan and Gather Data  List the questions you want answered  Set up a notebook to organize your data  Record your findings from your research in the appropriate sections in the notebook  Write a draft  Compile a draft of your business plan after you finish your research

 Common mistakes in preparing business plans     Projecting exaggerated growth levels Trying o be a Jack-of-All-Trades Claiming performance that exceeds industry averages Underestimating the need for capital

 Sources of business plan information-there are state, local, and national organizations and government agencies that offer resources to entrepreneurs      Small Business Administration (SBA)-a federal agency that provides services to small businesses and new entrepreneurs Service Corps of Retired Executives (SCORE) dedicated to provide free ace-to-face and e-mail counseling to small businesses Small Business Development Centers (SBDCs) program administered by the SBA Chambers of Commerce-provide information about the local economy Trade Association-offers technical and general assistance to entrepreneurs in a specific profession or industry

– Packaging and presenting the business plan appearance of a business plan is important and several guidelines should be followed: • Bind the plan so that it lies flat. A spiral binding works well • Use index tabs to separate sections so readers can find information easily • Use an easily readable 12-point type font, such as Times New Roman • Use old subheadings and bullets to facilitate finding information • If you have a logo for your business, include it at the top of every page • Number each copy of the business plan

 Performing Management Functions-when managers use a series of activities for managing     Planning Organizing Directing Controlling  These four functions occur in that order

 Planning-is the act of setting goals, developing strategies, and outlining tasks and timelines to meet those goals    Strategic plans-long range objectives based on long-term goals Tactical plans-midrange objectives based on long term goals Operational plans-short-term objectives that help achieve tactical plans

 Planning purchases    Planning-known as procurement, is the buying of all the materials needed by the organization Model inventory-a target inventory of what you think you will need to keep in-stock Vendors-businesses that sell you inventory Two questions you should ask to achieve balance between too much and too little are:   How many months' supply should be on hand?

How much of an investment would that represent?

 Organizing-is the grouping of resources in combinations that will help you reach your objectives  Directing-the process of guiding and supervising employees, often one-on-one, while they work  Controlling-the process of comparing your expected results with actual performance  Quality control program-a set of measures built into the production process to make sure that products or services meet certain standards and performance requirements

 Technology is used for business planning, bookkeeping, budgeting, and financial analysis.

 Business plan software helps with writing a business plan which walks you through the creation of the plan step-by-step.

Laws That Affect Start-Up of a Business

 Permits and Licenses   Permit-is a legal document giving official permission to run a business License-a certificate that shows you have the necessary education and training to do a job  Location – Several Law affects where you can locate a business such as:   Zoning laws and building codes Leasing

 Contracts - binding legal agreement between two or more persons or parties     Agreement-happens when both parties accepts each others terms Consideration-is what is exchanged for the promise Capacity-is the legal ability to enter into a binding agreement Legality-final contract element

Resources

Allen, K.R. & Meyer, E.C. (2006).

Entrepreneurship and small business management

(pp. 5, 45, 100-109, 104-105, 158-161, 307-309, 331, 324-325). Woodland Hills, CA: Glencoe/McGraw-Hill.