Transcript Business Plan Components of the Business Plan

Business Plan
Components of the Business Plan
FEASIBILITY STUDY
• Is there a demand for the product or
service?
• Can that demand be fulfilled on a profitable
basis?
• Overview of Business-Market
• Competitive Advantage, Strengths and
Weaknesses
• Rough Pro formas
Why do a Business Plan?
Submit to funders
Sales purposes
External and Internal uses
Why Write a Business Plan?
Record your
dreams
Bank requires
plan for a loan
Investor needs it
to decide to fund
business or not
Roadmap to
Lifeline - guides Update yearly
your destination you through
hard times
You will know Plan influences Focus on
the industry and your decisions upcoming
market in-depth
issues-what ifs
External Business Plan
Bankers and Investors
Focus on provider of
funds
Form of selling
documents
Explains concept in
detail
Marketing and finance
Highlights
management
Internal Business Plan
• Focus on Internal
Operations
• Purpose is
Implementation
• Briefly covers concept
• Quantitative emphasis
• Highlights obj. to be
accomplished
The Mission Statement
• Some of the basic attributes of mission statement are:
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It is normally less than 50 words and very succinctly
written
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It establishes what your company does and is
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It specifies where you want to take your company
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The American Red Cross
American Red Cross
The American Red Cross, a humanitarian organization led
by volunteers and guided by its Congressional Charter and
the Fundamental Principles of the International Red Cross
Movement, will provide relief to victims of disasters and
help people prevent, prepare for, and respond to
emergencies.
Outline for a Business Plan
• BASIC COMPONENTS
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Executive Summary
Company Description
Marketing Plan
Management Team
Production
Financial Plan
Critical Risks
Harvest Plan
Supporting Documents
EXECUTIVE SUMMARY
• Write a GREAT executive summary
• Needs to be substantiated with data
• Should include: company status, product or
service, customer benefits, forecasts,
investor information, and plans for
repayment
• Appears first-written last
COMPANY DESCRIPTION
• Description of the business…form of
organization, industry, trademarks, etc.
• Product or service
• History of the business
• Location
MARKETING PLAN
• Address the competition, market potential, and
strategy
• Sales forecasts are the basis for the rest of the plan
• Identify and Describe target market
• Conduct research to determine market potential
• Research industry to determine growth potential
and competition
• Compare strengths and weaknesses
• Describe pricing and packaging
Define TARGET MARKET
FACTS
• Description: gender,
income level, age,
education, etc.
• Location of
customers
• Number of customers
Target Market
Customer Profile
Industry Trends-FACTS
• Detail trends-tell why
• Growth 5-10 yrs.
Compare rate – GNP
• Detail
national,regional,
state, and local data
• Discuss time and $ to
remain competitive
Defining the Market
• Determine size, YOU
MUST show demand
and potential
profitability
• Market Segmentation
• Marketing Strategy4Ps
• Note mkt. Changes in
share and in demand
Advertising
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Geared to your target market:
Know media to reach your target market
Radio, magazines, tv
Discuss what %of sales and when these
costs will be incurred. 3-5%generally
• Describe all methods of advertising and
promotion
EXAMINE COMPETITION
DIRECT AND INDIRECT
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Know Type and Size, how they compete
Compete on Price-no loyalty-not retain C
Know Annual Sales, Mkt. Share statistics
Monitor current activity
Develop a PROACTIVE Mkt. Strategy
Create a matrix of strengths & problems
Rank:1=Weak to 10=Strong
Getting Market Data
Secondary Data
• Reference Librarians: CD-ROM
databases: Text:Resources
• Journals, Periodicals, Trade
Associations, Government Publications
• SBA, U.S. Census Bureau, U.S. Dept. of
Commerce, Local Chamber of
Commerce,
• County Planning Department
Primary Data
• Surveys-Surveymonkey.com Zoomerang,
telephone, mail, personal interviews,
focus groups
• Observation
• Include information in the body of the
Business Plan
• Include actual surveys in
Supporting Documents section
Sales Forecast
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246,400
20.1%
49,527
29%
14,363
97%
13,932
X 9.2
128,175
X9
1,153,575
X$12.45
MSA Population
Ratio of People ages 19-23
People with income<$16,000
Customers with appropriate age and income
Customers that will frequent a closer location
Appropriate customers dining out
Average visits monthly/customer
Potential restaurant visits/month
Months in a 2 semester school year
Potential dinners sold/9months
Avg. amount of $ spent on dinner
• $14,362,055 Sales Forecast Niceville MSA
Marketing Plan
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Customers
Industry Trends
Defining the Market-size, need, uniqueness
Competition
Packaging and Pricing
Market Strategy-Advertising & Promotion
Distribution
MANAGEMENT TEAM
• Bottom line is that management team needs to be
able to make the business happen
• Identify skills and abilities of team and their area
of expertise and how it relates to the business
• Include complete resumes for each member
• Identify the ownership structure and compensation
• Identify the Board of Directors and outside
consultants or advisors
Importance of the Management Team
• How capable is the management team to run
a business?
• Venture capitalists scrutinize the
management team
• Management team is critical to long-term
success of business
Areas to Address in this Section
• Include information on management team,
the organizational structure, ownership
structure and the Board of Directors
• Begin with an assessment of the business
owner – strengths and weaknesses, skills
and experience
• Determine positions needed to start and run
the business
Information about Ownership
• Include names, % of ownership, form of
ownership, type of stock, experience and
how it relates to the business
• Identify person who controls stock – skills
and responsibilities
• Investors want this information
Organization Chart
• Identifies positions and areas of
responsibility and how it relates to other
positions
• Include a NARRATIVE description of the
chart
• Undefined areas of responsibility can
become contentious
PRODUCTION
• Includes production processes, time
schedule, and research and development
• Identify methods of production
• Discuss status of product development
FINANCIAL PLAN
• Financial statements include Income statements,
Balance sheets, and Cash Flow Statements for
three to five years
• Include a set of assumptions and basis for numbers
in statement
• Base numbers on sales projections from marketing
plan
• Include a breakeven analysis
Exit or Harvest Plan
• Estimate when you plan on getting out.
• Cross train so that the business is not dependent
on you (worth 30-50% less)
• Review financial statements to reflect as much
profit and growth as possible (eliminate any
personal expenses and monitor how much salary
you take out)
• Decide who might purchase your firm-takes 12-18
months to sell generally.
OTHER IMPORTANT DATA
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Critical risks
Timeline chart
Milestones and Priorities
Develop contingency plans to meet crises
SUPPORTING DOCUMENTS
• Statements regarding:
– Industry Trends, Market Potential, and
Management
• Documents included:
– Demographic market documentation
– Legal contracts
– Resumes of owners and managers
– Articles of incorporation or Partnership
agreements
– Organizational charts and diagrams