The Business Plan

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					The Business Plan
Provided by My Own Business, Content Partner for the SME Toolkit


    1. What is a Business Plan?imonial
        Antoinette Douglas
        Mother Love Family Day Care
        "Find out what it is that you really want to do, go to college, and get an education in that field."


        The primary value of your business plan will be to create a written outline that
        evaluates all aspects of the economic viability of your business venture including a
        description and analysis of your business prospects.

        Since this course is broken down into twelve of the most important aspects to consider
        in starting a business, your business plan can follow this same format. Included in this
        session and in each of the following sessions there is a sample business plan outline
        covering each subject. When you put these all together, you will have a starting model
        for your overall plan.

        A business plan is an essential step for any prudent entrepreneur to take, regardless
        of the size of the business. This step is too often skipped, but we make it easy for you
        by providing a format to build your plan as you progress through this course.

        Business plans can vary enormously. Libraries and bookstores have books devoted to
        business plan formats. But this course is a place to start. You can then go on from
        here to design one that would be ideal for your particular enterprise.

        Be aware now that most start-up entrepreneurs are reluctant to write down
        their business plan. It is therefore strongly recommended that you complete
        each segment of the plan as you progress through this course. We make it
        easy for you by providing sample plans for both product and service
        businesses and also an attractive blank form that you can download onto MS
        Word and customize yourself.

    2. Why Prepare a Business Plan? Test
        Ezequiel Padilla
        Jugos Tropicales Mexican Food
        "When your business is doing well, consider buying the property if it is possible."


        Your business plan is going to be useful in a number of ways. Here are some of the
        reasons not to skip this valuable tool.

                 First and foremost, it will define and focus your objective using appropriate
                  information and analysis.
                 You can use it as a selling tool in dealing with important relationships including
                  your lenders, investors and banks.
                 You can use the plan to solicit opinions and advice from people, including
                  those in your intended field of business, who will freely give you invaluable
                  advice. Too often, entrepreneurs forge ahead ("My Way!") without the benefit
                  of input from experts who could save them a great deal of wear and tear. "My
                  Way" is a great song, but in practice can result in unnecessary hardships.
                 Your business plan can uncover omissions and/or weaknesses in your planning
                  process.

        What to Avoid in Your Business Plan Place some reasonable limits on long-term,
        future projections. (Long-term means over one year.) Better to stick with short-term
   objectives and modify the plan as your business progresses. Too often, long-range
   planning becomes meaningless because the reality of your business can be different
   from your initial concept.

   Avoid optimism. In fact, to offset optimism, be extremely conservative in predicting
   capital requirements, timelines, sales and profits. Few business plans correctly
   anticipate how much money and time will be required.

   Do not ignore spelling out what your strategies will be in the event of business
   adversities.

   Use simple language in explaining the issues. Make it easy to read and understand.

   Don't depend entirely on the uniqueness of your business or even a patented
   invention. Success comes to those who start businesses with great economics and not
   necessarily great inventions.

3. Business Plan Format: A Systematic Assessment of all the Factors
   Critical to Your Business Purpose and Goals

   Mari Lohr
   Graphic Artist
   "Being in business for you is not for everyone."




   Here are some suggested topics you can tailor into your plan:

            A vision statement: This will be a concise outline of what your business
             purpose and goals will be.
            The people: By far the most important ingredient for your success will be
             yourself. Focus on how your prior experiences will be applicable to your new
             business. Prepare a resume of yourself and one for each person who will be
             involved with you in starting the business. Be factual and avoid hype. This part
             of your business plan will be read very carefully by those with whom you will
             be having relationships, including lenders, investors and vendors. Templates
             for preparing resumes are available in your library, Kinko's, bookstores and
             the Internet under "resumes."

             However, you cannot be someone who you are not. If you lack the ability to
             perform a key function, include this in your business plan. For example, if you
             lack the ability to train staff, include an explanation how you will compensate
             for this deficiency. You could add a partner to your plan (discussed in Section
             4) or plan to hire key people who will provide skills you don't have. Include
             biographies of all your intended management.

            Your business profile: Define and describe your intended business and exactly
             how you plan to go about it. Try to stay focused on the specialized market you
             intend to serve.
            Economic assessment: Provide a complete assessment of the economic
             environment in which your business will become a part. Explain how your
             business will be appropriate for the regulatory agencies and demographics
             with which you will be dealing. If appropriate, provide demographic studies
             and traffic flow data normally available from local planning departments.
             Cash flow assessment: Include a one-year cash flow that will incorporate your
              capital requirements (covered in Lesson #7). Include your assessment of what
              could go wrong and how you would plan to handle problems.
             Include your marketing plan and expansion plans.
             Refer to helpful government websites such as the Small Business
              Administration. See "Resources" on the home page of this website.




         6. Six Steps to a Great Business Plan

              Start-up entrepreneurs often have difficulty writing out business plans. This
              discipline is going to help you in many ways so don't skip this planning
              tool! To make it easier, here are six steps that will get you to a worthwhile
              plan:

                   1. Write out your basic business concept.
                   2. Gather all the data you can on the feasibility and the specifics of your
                      business concept.
                   3. Focus and refine your concept based on the data you have compiled.
                   4. Outline the specifics of your business. Using a "What, where, why,
                      how" approach might be useful.
                   5. Put your plan into a compelling form so that it will not only give you
                      insights and focus but, at the same time, will become a valuable tool in
                      dealing with business relationships that will be very important to you.
                   6. Review the sample plans we furnish and download the blank format to
                      a MS Word document. Fill this in as you progress though the course.




  7. Check Out If Your Plan Includes The Following Necessary Factors
     Which Will Produce A Successful Business

Testimonial
     R.D. McDonnell
     Architect
     "You'll identify issues that you might not otherwise consider when you put them down on paper."




             A sound business concept. The single most common mistake made by
              entrepreneurs is not picking the right business to begin with. The best way to
              learn about your prospective business is to work for someone else in that
              business before beginning your own. There can be a huge gap between your
              concept of a fine business and reality.
             Understanding of your market. A good way to test your understanding is to
              test market your product or service before your start. You think you have a
              great kite that will capture the imagination of kite fliers throughout the world?
              Then hand-make some of them and try selling them first.
             A healthy, growing and stable industry. Remember that some of the great
              inventions of all time, like airplanes and cars, did not result in economic
              benefit for many of those who tried to exploit these great advances. For
              example, the cumulative earnings of all airlines since Wilber Wright flew that
              first plane are less than zero. (Airline losses have been greater than their
              profits.) Success comes to those who find businesses with great economics
              and not necessarily great inventions or advances to mankind.
          Capable management. Look for people who you like and admire, have good
           ethical values, have complementary skills and are smarter than you. Plan to
           hire people who have the skills that you lack. Define your unique ability and
           seek out others who turn your weaknesses into strengths.
          Able financial control. You will learn later the importance of becoming
           qualified in accounting, computer software and cash flow management. Most
           entrepreneurs do not come from accounting backgrounds and must go back to
           school to learn these skills. Would you bet your savings in a game where you
           don't know how to keep score? People mistakenly do it in business all the
           time.
          A consistent business focus. If you think of specific products or services
           you will find that specialists will outperform non-specialists. Zero in on
           something you can do so well that you will not be subject to competing with
           someone with a lower price.

8. Business Plan for Sessions 1 and 2: The Business Profile, the Vision
   and the People.

   Now is the time for you to review the sample plans we have provided. This will help
   you in formatting your own plan. For some tips on appropriate information to fill in,
   refer to the sample business plans:

   Sample Business Plan (Product): Widget Corporation
   Sample Business Plan (Service): Smith E-Commerce Consulting

   You can now begin to assemble your business plan. If you have not yet selected
   a business, you can pick one out to practice on. Remember, we have provided
   attractive, individual business templates for each session that you can download as
   Microsoft Word documents or as printer friendly web pages. So start now!

   Section 1: The Business Profile
   Section 2: The Vision and the People

   Instructions on filling in the business plan template:

       1. Each box has a permanent title in CAPITAL LETTERS
       2. Below each title is a sentence starting with an "Insert here" sentence. This will
          suggest information to insert. The boxes will enlarge as you take up more
          room so use all the space you need.
       3. After completing each box, delete the "Insert here" sentence, which will leave
          only the permanent title of the box and the information you have filled in.

             We suggest that you fill in each section of the business plan
                        as you proceed through the course.

   The template for all sessions 1-12 can also be downloaded into your computer as a
   single document:

   Section 1-12: Business Template

   Include sufficient research findings and background materials. Make it interesting up
   by the use of background data, your biography, charts, demographics and research
   data. When your business plan is completed, print off and assemble the 12 sections.

   Many other business plan formats are available in libraries, bookstores and software.
SESSION 2 Quiz: The Business Plan

  1. The best place to find more information on designing your own individualized
     plan is:

         A.       Your lawyer

         B.       Your accountant

         C.       The Public Library, industry or government "Business Plan" websites, or
              bookstores

         D.       Business Planning Consultants

  2. The primary reason to prepare a business plan before you begin is to create a
     tool to deal with investors and financing sources.

         A.       True

         B.       False

  3. In preparation of financial projections for your business plan, it is as
     important to estimate long range sales and earnings as it is to project short-
     term objectives.

         A.       True

         B.       False

  4. A potential investor or lender is going to look over your business plan and in
     his or her mind this question will arise: Where is the tough person to make
     the really difficult decisions, handle negotiations skillfully and exercise
     restraint? Your business plan should provide the answer by:

         A.       Projecting yourself in this image (assuming you're not!)

         B.       Making a point of stating that your team of consultants including your
              lawyer and accountant will be employed to maintain a disciplined business
              approach

         C.       Facing this issue and stating it in your business plan: your business will
              need tough and skillful management. Answer this need in a way that satisfies
              you as well those who will be doing business with you.

  5. Preparation of a business plan is optional for some small businesses.

         A.       True

         B.       False

  6. Your business plan could EXCLUDE:

         A.       All the subjects covered in sessions of this course.

         B.       Personal biographies of management.

         C.       Financial statement projections and cash flow projections.

         D.       Your marketing and expansion plans.
       E.     Your plans to build a new vacation home with your profits.

7. If your business plan includes the exploitation of an invention, and provided
   you do not blunder in major decisions, your success can be most likely
   assured.

       A.     True

       B.     False

8. Let's assume that your business plan is based on starting a real estate related
   business. This business plan session would lead you to most favorably
   consider:

       A.     Residential and commercial sales.

       B.     Industrial and commercial development.

       C.     Room additions and industrial construction.

       D.     Specialize in one of above.

       E.     None of the above.

9. In order to test your understanding of your market, the safest approach
   would be to:

       A.     Rely on your personal instinct.

       B.     Conduct a survey among your friends.

       C.     Test market your product or service.

				
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