Youth Aboriginal Business Plan Competition Dream it. Plan it. Start it. It all starts with YOUth!
Youth Business Plan Workbook Business Plan Category
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Table of Contents
WHAT ARE THE CHARACTERISTICS OF AN ENTREPRENEUR?........................... 2
Other Qualities of Successful Entrepreneurs Are:......................................................2
BEFORE YOU BEGIN ..................................................................................... 2 BUSINESS DESCRIPTION............................................................................... 3
What type of business will you run? ........................................................................4 Human Resources ..................................................................................................5 Customers/Target Market .......................................................................................6 Pricing Your Product/Service ...................................................................................7 Advertising & Promotion .........................................................................................8 Location ................................................................................................................8 Competition ...........................................................................................................9 Start Up Costs...................................................................................................... 10 Financing............................................................................................................. 11 Loan Payment Chart............................................................................................. 12 Monthly Sales ...................................................................................................... 13 Monthly Expenses ................................................................................................ 15
MARKETING ................................................................................................. 6
FINANCIAL PLAN ........................................................................................ 10
WHY IS THIS YOUR DREAM BUSINESS? ....................................................... 17 ADDITIONAL MATERIALS ............................................................................ 17 WRITING YOUR BUSINESS PLAN ................................................................. 18 APPENDIX .................................................................................................. 19
Resources To Help You Gather Information & Write Your Business Plan .................. 19 Common Marketing Terms.................................................................................... 19 Promotional Ideas ................................................................................................ 20
Youth Business Plan Workbook
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Dream it. Plan it. Start it. It all starts with YOUth! If you could start any type of business, what would it be? Take a minute to dream about owning your own business… about being your own boss… about becoming an entrepreneur!
WHAT ARE THE CHARACTERISTICS OF AN ENTREPRENEUR?
Entrepreneurs are individuals who: • See opportunities and have the courage to go after them • Are willing to learn • Learn from their mistakes and are not afraid to try again • Enjoy challenges • Find creative solutions to problems There are many rewards to being a successful entrepreneur. You can run your business according to your values and belief systems. You can also make things happen in your community.
Other Qualities of Successful Entrepreneurs Are:
• • • Drive: energy, commitment, willingness to work hard Personality: confidence, leadership, optimism, comfort with risk, ability to make decisions Skills: planning and organization, ability to innovate, communication
BEFORE YOU BEGIN
Please remember that there are no right or wrong answers. A business plan first and foremost, should be written by YOU! It is your road map that outlines how you will manage and operate your business. A well thought out business plan can be the difference between your business’s success or failure. The business plan is a formal presentation of your business idea. It contains all the steps you will take to develop it now and in the future. The business plan has two functions: 1. Personal – You will get a real sense of what you will do and how you will do it. 2. External - For lenders, suppliers, advisors, investors and others who may assist you with start-up. This is a business planning guide created in a workbook format. Remember that not all businesses will need all the information requested in this guide. No one business plan will work for every business – cookie cutters are for cookies, not for business plans. Once you have completed the workbook (you can use point form in the workbook if you want), you will be ready to write your own business plan!
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Youth Business Plan Workbook BUSINESS DESCRIPTION
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Business Name: ________________________________________________________ What is your business idea? Describe your product or service in detail.
Will this be a seasonal business (such as landscaping or snow clearing) or a year-round business?
When will you be open for business? E.g.. Monday to Friday, 9:00 AM to 6:00 PM.
How is your business different from what is out there (How is it unique)? Describe the key features of your product or service. Think about why customers will choose to buy your product and/or service instead of another company’s.
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What need or want does your product or service satisfy?
What type of business will you run?
An early decision you need to make is the form of business you will use. The choices are sole proprietorship, partnership and incorporation. Each type of business has pros and cons (see definitions of highlighted words on the following page). Who Only you Often very small businesses with few or no employees (lawn cutting, massage therapist) You and one or more people Pros • Any profits are yours • Easiest to set up • Not very expensive • Possible tax benefit Cons • You carry all risks • You and your business are one and the same. You are responsible for all debts–the bank can seize personal assets (your house, car, etc.) in case of default. • Disagreements with partner = problems • All partners share responsibility for debts similar to a sole proprietorship. So if one person makes a bad decision, all the partners pay for it. • More expensive and complicated to set up • More paperwork and regulations to be met
Sole Proprietor
Partnership
• Easy to set up • Very flexible • Partners contribute knowledge and assets
Incorporation
You are separate from your business Often businesses with a lot of assets and/or debt (restaurants, gyms).
• May reduce taxes • You and your business are separate - you will only be personally responsible for the personal assets you pledge as security for your business. The business will be responsible for the rest.
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Definitions: Asset – Things of value that you or your company owns. Examples include vehicles, houses, equipment, money and term deposits. Debt – Something owed, such as money, goods, or services. It is an obligation to pay or render something to someone else. Default – When you or your company is behind in monthly payments. When your company does not make some or all of its payments it is said to be in default. Security – When you or your company gets a loan, you will often be required to pledge assets as security on the loan to protect the person lending you the money in case you can’t make all of your payments. Examples include buildings/land, your house, equipment (if you are getting a loan to buy a fork lift, the fork lift will often be pledged as security), etc. Seize – If you don’t make your payments, the bank can take (seize) your assets pledged as security. The form of business that is best for my business is ________________________ because _______________________________________________________________ _______________________________________________________________________.
Human Resources
Describe the strengths and weaknesses of the owner(s). Will you need hire employees? For example, will you need to hire a bookkeeper, a graphic designer, counter staff, etc? What role will you, as the owner, play in the business? For example, if you are starting a pet grooming business, you may do the grooming and be the bookkeeper. You may hire an employee to take appointments and do other tasks.
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Youth Business Plan Workbook
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MARKETING Customers/Target Market
Describe your typical customer. Think about their age range, gender, hobbies, lifestyle, recreation activities, home location and income bracket (if they are relevant). For example, your typical customer for an upscale hair salon may be females between the ages of 25 and 50, making over $30,000/year, and the daughters of mothers making over $30,000/year, living within 50km of Town X, etc.
Where will your customers come from? Even though your business may be located in town X, your typical customers may be from town X and from the surrounding towns of Y and Z. If you are selling products or services on the Internet, your customers may be from different parts of the world. This is called the trading area. List all the towns and/or major centres within your trading area. For example, if the salon from the previous example was located in Selkirk, customers may come from Selkirk, Petersfield, St. Andrews, Stonewall, Gimli, and Teulon.
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Pricing Your Product/Service
When setting the price for your product or service there are a few things you should consider: • How much are your customers willing to pay for your product or service? For example, you have determined that you need to charge $30 per lawn cut to make a profit. Are your customers willing to pay $30? How much is the competition charging for the same/similar product or service? For example, the other video store in town rents movies for $5/day. If you are selling the same product and want to charge $4/day will you still make a profit? If you charge $6/day will people rent movies from you? Is your product or service unique? Is it low, mid or high quality? The price often reflects the quality and/or uniqueness of the product. For example, a cheeseburger from a fast food restaurant such as McDonalds may sell for under $2 while a cheeseburger from a fine dining restaurant may sell for $5 or more. If you were selling cheeseburgers, what would make your different from a McDonald’s cheeseburger? What does it cost you to sell your product or service? You need to also consider your costs to ensure there will be a profit after all expenses have been paid. This is called cost per unit plus mark-up. For example, if it costs you $1.50 for all the ingredients to make a cheeseburger you might consider selling it for $4.50 ($1.50 x 3). This difference between the price you are selling the cheeseburger for and the cost of the ingredients should cover all other expenses (wages, rent, etc.) and leave you with a profit.
•
•
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Take some time to think about your pricing strategy. Describe how you will price your product or service and why.
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Youth Business Plan Workbook
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Advertising & Promotion
Promotional techniques include advertising, sales promotions, personal selling or publicity. Please see the appendix located at the back of this booklet for a list of common marketing terms and promotional ideas. How will you advertise and promote your business? Can you think of inexpensive ways to advertise your business?
How often will you advertise? Are there times of the year when you should do extra advertising?
How much do you plan to spend on advertising and promotions per month? Your 1st few months may be higher, as you build recognition for your business.
Location
Where will your business be located? Is it important that you be close to customers? Competition? Suppliers?
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Competition
Describe your competitors. Who is your competition? Consider the length of time they have been in business, location, price, hours of operation and services/products offered. Competitor’s Name Location Description Strengths Weaknesses *Direct or Indirect
*Direct Competitors are the businesses in your market area that offer the same or similar products or services. Indirect competitors are different types of business that compete for the same or similar customers. For example, a video store has other video stores as direct competitors. Indirect competitors are cable/satellite TV, movie theatres, live events or anything that may fulfill the customer’s need to be entertained.
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Youth Business Plan Workbook
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Now that you have analyzed the competition, how will you compete with them? Why will you be successful?
FINANCIAL PLAN Start Up Costs
Estimate what will it cost you to get started in the business. Do you have to buy a building, land, equipment, initial inventory, do renovations, etc.? For example, if you are starting a restaurant and you are buying the land and building your start-up costs might look like this: Land & Building $50,000 Equipment (stoves, deep fryers, tables etc.) - $50,000 Renovations (painting, new flooring) $4,000 Initial Inventory (food) $1,000 Total Start-Up $105,000 List your start up costs and calculate the total amount you need to start your business.
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Youth Business Plan Workbook
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Financing
How will you finance your business? Some options include personal savings, loans from banks and credit unions and private loans from family and friends.
Complete the following exercise:
Step 1: Calculate Amount of Loan A) Total Start-up Costs (from previous page) B) Amount from personal savings & family (can be zero) Amount of loan (A minus B) $______________ $______________ $______________
Step 2: Calculate Loan Payment Instructions: 1. Determine how much you need to borrow (amount of loan from Step 1). 2. Referring to the Loan Payment Chart on the next page, look for the amount closest to the amount you need to borrow in the column called Amount of Loan. 3. The corresponding monthly payment is how much you will enter in the monthly expenses table on page 16 for your loan payment. Examples: If the amount of your loan is $12,500, your loan payment will be $875 per month. If the amount of your loan is $7,000, your loan payment will be $525 per month. My loan payment is $______________ per month
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Loan Payment Chart
Monthly Payment $70 $175 $350 $525 $700 $875 $1,050 $1,225 $1,400 $1,575 $1,751 $1,926 $2,101 $2,276 $2,451 $2,626 $2,801 $2,976 $3,151 $3,326 $3,501 $3,676 $3,851 $4,026 $4,201 $4,376 $4,551 $4,726 $4,901 $5,077 $5,252 Monthly Payment $5,427 $5,602 $5,777 $5,952 $6,127 $6,302 $6,477 $6,652 $6,827 $7,002 $7,177 $7,352 $7,527 $7,702 $7,877 $8,052 $8,227 $8,403 $8,578 $8,753 $8,928 $9,103 $9,278 $9,453 $9,628 $9,803 $9,978 $10,153 $10,328 $10,503
Amount of loan $ 1,000.00 $ 2,500.00 $ 5,000.00 $ 7,500.00 $ 10,000.00 $ 12,500.00 $ 15,000.00 $ 17,500.00 $ 20,000.00 $ 22,500.00 $ 25,000.00 $ 27,500.00 $ 30,000.00 $ 32,500.00 $ 35,000.00 $ 37,500.00 $ 40,000.00 $ 42,500.00 $ 45,000.00 $ 47,500.00 $ 50,000.00 $ 52,500.00 $ 55,000.00 $ 57,500.00 $ 60,000.00 $ 62,500.00 $ 65,000.00 $ 67,500.00 $ 70,000.00 $ 72,500.00 $ 75,000.00
Amount of loan $ 77,500.00 $ 80,000.00 $ 82,500.00 $ 85,000.00 $ 87,500.00 $ 90,000.00 $ 92,500.00 $ 95,000.00 $ 97,500.00 $ 100,000.00 $ 102,500.00 $ 105,000.00 $ 107,500.00 $ 110,000.00 $ 112,500.00 $ 115,000.00 $ 117,500.00 $ 120,000.00 $ 122,500.00 $ 125,000.00 $ 127,500.00 $ 130,000.00 $ 132,500.00 $ 135,000.00 $ 137,500.00 $ 140,000.00 $ 142,500.00 $ 145,000.00 $ 147,500.00 $ 150,000.00
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Monthly Sales
There are several methods of forecasting (predicting) what your sales will be. In this workbook, the Bottom Up method is used. The Bottom Up method is based on how much you can produce or sell in one day. If you sell a single product or service, answer the following questions to determine your monthly sales: 1. Calculate the number of hours you will work per day: 2. How many days per month? 3. Calculate the amount of product or service that can be produced: 4. What will you charge the customer? Example: Yard Buddy wants to work 7.5 hours/day. He takes weekends off so he only works 21 days out of every month. Total hours per day = 7.5 Number of hours per yard = 2.5 Total yards/day = 3 (7.5/2.5) The charge per yard is $30 The calculation is 3 yards @ $30/yard = $90.00/day $90/day x 21 days/month = $1,890/month Based on the amount of work this Yard Buddy can do, we see he can earn $1,890/month.
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If you sell more than one product or service, you may want to use the chart below to calculate your monthly sales.
Breakdown of Business Sales/Services by Item
(e.g. lawns cut/fertilized; haircuts/perms; meals served- Breakfast, Dinner, Supper, coffee; floral arrangements and gifts; loaves of bread, cakes etc.)
Daily Sales of Item
Multiplied by days business open per month
Equals Monthly Sales
Total Estimated Sales (sum of monthly sales)
For example, Hayley’s Hair Salon may have the following monthly sales: Hayley’s Salon plans to do 10 hair cuts/day @ $30 each = $300, 3 manicures/pedicures @ $25 and that 5 customers per day will spend at least $10 on products = $50.
Breakdown of Business Sales/Services by Item
(e.g. lawns cut/fertilized; haircuts/perms; meals served- Breakfast, Dinner, Supper, coffee; floral arrangements and gifts; loaves of bread, cakes etc.)
Daily Sales of Item
Multiplied by days business open per month
Equals Monthly Sales
Haircuts/perms Manicure/pedicure Make-up/Nail Polish
$300 $75 $50
21 21 21
$6300 $1575 $1050 $8925
Total Estimated Sales (sum of monthly sales)
Based on this, we see that Hayley’s Hair Salon can earn $8925/month.
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Youth Business Plan Workbook Monthly Expenses
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This workbook looks at two types of expenses, Cost of Sales (often referred to as Cost of Goods Sold) and Operating Expenses. Cost of sales are the direct costs of buying and/or producing an item for sale. It is a percentage of sales. Remember the cheeseburger example on page 7; the cost to produce the cheeseburger was $1.50 with a selling price or $4.50. Therefore, the cost of sales is 33% ($1.50/$4.50). The more you sell, the more your cost of sales will be. If sales are $100 the Cost of Sales is $33, if sales are $200 the Cost of Sales is $66. Operating expenses are the costs of running your business. Your operating expenses will include some or all of the following in the table below, plus other related costs. Typical ranges are given but you must determine usage based on the nature and size of your operation, number of employees, etc. Using the example above, Hayley’s Hair Salon may have the following expenses: Type or Expense A) Cost of Sales Perms, Shampoo, Product that is resold (make-up, nail polish) B) Operating Expenses Loan Payment Rent Utilities – Gas, Hydro, Water Vehicle, Travel Bank charges Insurance, licences Telephone, fax, internet Advertising & Promotion Office (supplies, postage, etc.) Wages (2 employees @$12/hr, 40 hrs/week) Professional services (accountant, lawyer) Maintenance/Repairs Total Operating Expenses Total Expenses (A + B) $2231 + 5755 = $7986 $2500 loan = $175 monthly payment If you don’t own your own building, you will have to pay rent $100 to $250/month $50 to $200/month $20/month $50 to $100/month $50 to $100/month $50 to $750/month $25/month $8.00 to $14/hour Accounting - $2,000/year Legal - $1,000/year $100/month $175 $325 $250 $50 $20 $100 $100 $250 $25 $4160 $200 $100 $5755 $7986 *usually 20%-40% of sales Sales of $8925 x 25% $2231 Typical Range Monthly Costs
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Youth Business Plan Workbook
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Use the table to calculate your company’s monthly expenses: Type or Expense A) Cost of Sales *usually 20%-40% of sales B) Operating Expenses Loan Payment Rent Utilities – Gas, Hydro, Water Vehicle, Travel Bank charges Insurance, licences Telephone, fax, internet Advertising & Promotion Office (supplies, postage, etc.) Wages (2 employees @$12/hr, 40 hrs/week) Professional services (accountant, lawyer) Maintenance/Repairs Other Other Total Operating Expenses Total Expenses (A + B) Total Operating Expenses + Cost of Sales
*Monthly payment you calculated on page 11 If you don’t own your own building, you will have to pay rent
Typical Range
Monthly Costs
$100 to $250/month $50 to $200/month $20/month $50 to $100/month $50 to $100/month $50 to $750/month $25/month $8.00 to $10/hour Accounting - $2,000/year Legal - $1,000/year $100/month
Financial Summary What are your total monthly sales? What are your total monthly expenses? What is your profit/loss per month (sales less expenses) $_____________ $_____________ $_____________
What is your profit/loss per year $_____________ (Profit/loss per month times number of months your business is open per year)
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In the example above, Hayley’s Hair Salon has sales of $8925 per month and expenses of $7986. Per month the company makes $939. Hayley’s Hair Salon is open year round and makes a profit of $11,268 per year.
WHY IS THIS YOUR DREAM BUSINESS?
In a paragraph, please explain why this is your dream business.
ADDITIONAL MATERIALS
Please feel free to attach materials that describe your business. Examples may include brochures, flyers, posters, business card, menu (restaurant), your company logo, pictures of your product, etc. BE CREATIVE… this is YOUR business dream!
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WRITING YOUR BUSINESS PLAN
Congratulations, you are ready to write your business plan! Use the information you have put into this workbook to write your business plan. Here’s a checklist of what you need to include: Title Page – Include the name of your business, your logo (if you created one), the list of members in your group that created the plan, the name of the school you come from, the grade your are in and the date you submitted it. Completed Registration Form Table of Contents Business Description – This is a one page summary of your business. It is the first section of a business plan but it should be written last. The purpose of the business description of the business plan is to provide your readers with an overview of the business plan. Think of it as an introduction to your business. It is often referred to as the Executive Summary. Write a paragraph and/or insert a table for each of the sections below: Marketing Plan o Customers/Target Market o Pricing o Advertising & Promotion o Location o Competition Financial Plan o Start Up Costs o Financing o Monthly Sales o Monthly Expenses o Summary – write a paragraph summarizing your financial plan Why This is My Dream Business Appendix – If you have created additional materials, include them in your appendix.
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APPENDIX Resources To Help You Gather Information & Write Your Business Plan
Aboriginal Canada Portal www.aboriginalcanada.gc.ca Aboriginal Youth Mean Business A directory of support services dedicated to assisting Aboriginal Youth. www.aymb.ca Canada/Manitoba Business Service Centre A one-stop shop for starting a business. The Canada/Manitoba Business Service Centre has information about programs, services and regulations, an extensive research library, and business information officers that you can talk to about your business idea. Phone: 204-984-2272 or 1-800-665-2019 www.CanadaBusiness.ca/manitoba Community Futures Program Offers business planning assistance and general business counseling. Visit www.cfmanitoba.ca to find one near you (rural Manitoba) Statistics Canada Demographic Information (population, etc.) www.statcan.ca Strategis Canada’s Business and Consumer Site www.strategis.ic.gc.ca Don’t forget about: Business Owners, Teachers, Parents and Friends – ask anyone who will listen!
Common Marketing Terms
Definitions: Advertising: Advertising is bringing a product (or service) to the attention of potential and current customers. Advertising is typically done with signs, brochures, commercials, direct mailings or e-mail messages, personal contact, etc. Publicity: Publicity is free. An example is when the media writes an article about you in the newspaper. Organizations usually have little control over the message in the media, at least, not as they do in advertising because reporters and writers decide on the content. Promotions: Promotion keeps the product in the minds of the customer and helps stimulate demand for the product. For example, having a sale in your store or offering a coupon.
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Youth Business Plan Workbook Promotional Ideas
• • • • • • • • • • • • • • • • • • • • • • • • • •
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• • • • • • • •
Balloons Billboards Brochures and Pamphlets Bumper Stickers Bus and Taxi Signs Business Card Business Lunches Business Networking Buttons Calendars Charitable Events Classified Ads Community Involvement Contests Co-Op Advertising Decals Demonstrations Direct Mail – Coupon Co-Op Advertising Discount Coupons Discount Premium Books Door Hangers Emails Employee Events Envelopes Exterior Building Signs Fliers or Circulars Folders and Binders Free Information Free Trials Home Parties Internet Letterhead Magazine Ads Multiple Purchase Offers News Releases
• • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • •
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Newsletters Newspaper Inserts Package Inserts Personal Letters Place Point-Of-Purchase Signs Postcards Print on the Box/Container Program and Yearbook Ads Proposals Referral Incentives Sales Calls Sampling Sidewalk Signs Signs at Sporting Events Signs Draped on the Building Skywriting Special Events Special Sales Sponsorships Statement Stuffers Stickers Take One Racks Talks and Presentations Tape or Ribbon Telephone Hold Messages Television Tours T-Shirts Two-For-One Offers Vehicle Signs Video Commercials at Checkout Counters Video Tapes Window Signs
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