Transcript CH 04.PPT
Part 2: Preparing for Small Business Ownership Chapter 4 The Business Plan Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Getting Started Establishing the Business Advantages of Organizing a Business from Scratch Disadvantages of Organizing a Business from Scratch Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. The Small Business Plan There are ten components in a plan: 1. Prepare a table of contents. 2. Prepare a synopsis of the plan in an executive summary and background statement. 3. Describe the management team. 4. Describe the business objective. 5. Plan the marketing approach. Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. The Small Business Plan Components of the Plan (cont.) 6. Describe the selection of the location. 7. Determine the physical facilities. 8. Plan the financing. 9. Plan the personnel. 10. Investigate the legal requirements. Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 1. Prepare a table of contents. – – Overview of the plan Quick access to the various parts of the plan Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 2. Prepare synopsis of the plan in an executive summary and background statement. – – – completed at the end of the complete plan history of the project to date statement of the intended mission of the venture Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 3. Describe the management team. – résumé and background of those making the decisions for the organization Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 4. Establish business objectives. – – – Business Size Production Levels Performance Levels Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 5. Plan the marketing approach. – – Have a clear concept of the target market. Understand the target market’s needs, wants and purchasing habits Answer the following questions: where, when, what, how much, why. Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 5. Plan the marketing approach (cont.) – Be aware of any uncontrollable factors that might affect the marketing of the product or service such as existing or pending legislation relevant to the business. state of the economy in the market. extent and strategies of the competition. cultural norms of the market. new technologies that might offset the business. Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 5. Plan the marketing program (cont.) the product or service the distribution system promotion pricing Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 6. Describe the selection of the location. – the trading area – the Economic Base attitude of the trading area towards new businesses Competition Costs Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 6. Describe the selection of the location. – The Site – The Buy-or-Lease Decision – accessibility, site costs, restrictions, site history, proximity to other businesses, physical characteristics cost of the lease, length of the lease, restrictions, repairs and lease hold improvements, insurance coverage Running the Business from One’s Home Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 7. Determine the physical facilities. – insurance types – loss or damage to the property business interruption liability and disability life insurance insurance decisions what kind to purchase, how much to purchase, from whom to purchase the insurance Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 8. Plan the financing. – – – – – establish capital requirements make feasibility projections determine the sources of funding plan the accounting, and bookkeeping systems determine the financial evaluation measures Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 9. Plan the personnel. – – – Administrative structure Employee recruitment and training Personnel Policies Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 10. Investigate the legal requirements. – Legal Structure (four styles) 1. Sole Proprietorship – 2. Partnership – – advantages and disadvantages Limited, General advantages and disadvantages 3. Cooperative – one member-one vote vs each share a vote Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 10. Investigate the legal requirements. (cont.) 4. Corporation – – advantages and disadvantages of a corporation steps in incorporation selection of the business name development of the share structure, directors, restrictions on share transfers, etc. description of the company operations acquiring the necessary supplies Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Components of the Plan 10. Investigate the legal requirements. (cont.) – 5. Joint Ventures Licenses and Taxes Federal Government – Provincial Government – income tax, licenses, sales tax Municipal Governments – – income tax, goods and services taxes, excise tax licenses, property taxes, business taxes Intellectual Property Protection – Balderson 7e Copyright © 2008 by patent steps McGraw-Hill Ryerson. All rights reserved. search and file Concept Checks 1. What are the advantages and disadvantages of owning a small business? 2. What steps are involved in preparing a business plan? 3. What criteria must be evaluated before choosing a trading area? 4. When is it advantageous to lease instead of owning? Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Concept Checks 5. What information should be investigated before construction starts and purchasing equipment? 6. Why is insurance purchased? What are some small business insurance types? 7. What major financial aspects should be planned in advance of business operation? Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Concept Checks 8. What are four legal structures that an owner can utilize? 9. What are the advantages and disadvantages of incorporation? 10. What level of government issues business licences? Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved. Appendices Appendix A - Checklist for a Small Business Plan Appendix B - Sample Business Plans (2) – The Sock Hop, Quality Cuts Appendix C - Incorporation of Companies and Associations Appendix D - Jurisdiction of Licenses and Taxes Balderson 7e Copyright © 2008 by McGraw-Hill Ryerson. All rights reserved.