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Business Plans

Business Plans. Why Is It Important?. A business plan is a written document that describes all the steps necessary for opening and operating a successful business Describe what your business will produce, how you will produce it, and who will buy it

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Business Plans

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  1. Business Plans

  2. Why Is It Important? • A business plan is a written document that describes all the steps necessary for opening and operating a successful business • Describe what your business will produce, how you will produce it, and who will buy it • Explain who will run your business and who will supply it • State how your business will win over customers from competitors and how you will keep them • Provide detailed financial info that shows how your business will earn a profit successfully

  3. What Will You Produce • To convince investors that your business idea is solid, you will need a completely new product or service or one that is better or less expensive than ones that already exist. • You will need to identify your target customer and show how you will obtain new customers and keep them.

  4. Objectives or Goals • A business plan helps you set goals and how you plan on achieving them. • Goals • Short Term: the first year • Medium Term: years 2-5 • Long Term: 5 years and beyond • Describes products and services to be introduced in the next five years • Possible expansions to the business

  5. Experience • A business plan describes the background and experience of the people running the business • This aids in the bank/investors decision based on how well they think a company can meet objectives

  6. 5 Basic Elements • 1. Introduction • 2. Marketing • 3. Financial Management • 4. Operations • 5. Concluding Statement

  7. Introduction • A detailed description of the business and goals • The ownership of the business and legal structure • Partnership, Proprietorship, Corporation • The skills and experience you bring to business • The advantages you and your business have over competitors • Performance, Quality, Reliability, Distribution, Price, Promotion, Public Image

  8. Marketing • Describe your product • Good or Service • Identify the market • To whom and where will you be selling your product. • What is the industry? • External factors such as competition and lack of suppliers • Growth potential of industry • Economic trends of industry • Technology trends t • Where will you be located? • Location, Location, Location • Can be critical to your success so therefore it is critical to investors and lenders.

  9. Financial Management • This forces you to look at potential risks and costs and expenses of your business • Identification of Risks • Investors will want to know potential risks and how you will face them. Do not be afraid to list potential problems. Every business faces risks. • Ex: Competitors cutting prices, costs exceeding projections, demand declining • Financial Statements • All business plans must include projected financial statements • Pro forma financial statement: a financial statement based on projected revenues and expenses • Funding Request and Return on Investment (ROI) • How much you need to borrow and how you plan to use the $

  10. Operations • In this section one should explain how the business will be managed on a day-to-day basis and discuss hiring and personnel procedures. • Describe the equipment that will be necessary for production • How products will be delivered should also be mentioned

  11. Concluding Statement • Summarize the goals and objectives you have for your business • Emphasize your commitment to the success of the business

  12. Completing the Business Plan • A business plan should include a cover letter: a letter that introduces and explains an accompanying document or set of documents • It should also include a Statement of Purpose: a brief explanation of why you are asking for a loan and what you plan to do w/ the money. • No more than two paragraphs • An executive summary: is a short restatement of the report. It should capture the interest and make them want to read more.

  13. Executive Summary • Your summary should include • A description of your business concept and communication about what is unique about your idea • Projections for sales, costs, and profits • Your needs (inventory, land, building, equipment) • Amount you are intending to borrow

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