Developing Your Idea into a Business Plan

1. Developing Your Idea into a Business Plan April 22, 2010 Russell Springs, Kentucky

2. 17 centers across Kentucky • Nationwide network of centers • Services • No cost, confidential 1-to-1 business consultations • Affordable business workshops and seminars • Access to research to make informed business decisions • Loan packaging resources • www.ksbdc.org • Kentucky Small Business Development Centers

3. Richmond Office (BTC 145) 859.622.1384 • Somerset Office 606.678.3042 • Serves 15 Counties • www.ekubiz.com • EKU Small Business Development Center

4. Understand the importance of a business plan • Identify some components of a business plan • Learn of resources that may assist one in developing a business plan • Objectives

5. A business plan is a document that summarizes the operational and financial objectives of a business and contains the detailed plans and budgets showing how the objectives are to be realized. • Because the business plan contains detailed financial projections, forecasts about your business's performance, and a marketing plan, it's an incredibly useful tool for business planning. • For anyone starting a business, it's a vital first step. • What is a Business Plan?

6. It provides a business blueprint to follow. • If you don’t plan, you may likely fail. • Forces the business owner to look at the business in an objective and critical manner. • It helps to focus ideas and serves as a feasibility study of sorts of the business’ chance for success and growth. • The finished plan provides the basis for seeking lender financing. • Why Planning is Important

7. Who • What • When • How • Where • Why • A Good Business Plan Will Answer…

8. Typical Business Plan Components

9. Executive Summary • A brief description of the company’s history • The company’s objectives • A brief description of the company’s products or services • The market the business will compete in • A brief description of the key management team • A description of funding requirements, including source and use of funds • Usually no more than two pages in length

10. Product or Service Description • Product or Service Description • Provide a thorough explanation of your product offering or services • Do not overwhelm the reader with technical explanations or industry jargon • Discuss the competitive advantage you have over the competition • Address pricing strategies in this section

11. Marketing Strategy • Investors are looking to fund those with a thorough knowledge of their target markets • Include marketing research data if you are launching a new product • For existing businesses, provide an overview of who are your customers and their purchasing habits • Address: • Who are your customers? • What’s the size of the target market? • What are the demographics of your market? • Where are your customers? • Is there a peak season for your product or a steady demand?

12. Marketing Plan • In your marketing plan, include ideas on: • Advertising • Direct Marketing • Public Relations • Promotional Materials • Trade Shows • If you have samples of marketing materials, make sure you include them with your plan

13. Identify your closest competitors. Where are they located? How long have they been in business? Are they successful? • You need to understand your competition’s strengths and weaknesses • Identify in what ways your business is superior to the competition • Competitor Analysis

14. Investors must feel confident that the management team knows its stuff • This section of the plan must communicate to the reader that the management team is capable and competent to carrying out the plan • Each management team member should include: • A personal history of work principles (successes) • Work Experience • Resumes may be included • Management Team

15. How do you plan to staff? • How many people will be needed? • When will they be most needed? • What skills must employees possess? • What is the pay rates for various positions? • Will there be benefits? If so, what and how much will they cost? • As the company builds, how do you expect to grow with employees? • Staffing Plan

16. Financial Plan • You need an accounting system that will provide at least the following: • Balance Sheet • Income Statement • Cash Flow Statement • If you are seeking lender financing for your business, you will be required to develop financial forecasts for at least the next three years. • Financial Plan

17. Resumes • Quotes or Estimates • Major Equipment List • Letters of Support • Lease Agreements • Legal Documents relevant to the business • Supporting Documentation

18. U.S. Small Business Administration http://www.sba.gov/smallbusinessplanner/plan/writeabusinessplan/index.html • Kentucky Cabinet for Economic Development http://www.thinkkentucky.com/SMBD/BusinessPlanOutline.aspx • Sample Business Plans www.bplans.com • Kentucky Small Business Development Centers www.ksbdc.org • Business Planning Resources

19. Once completed, the plan should become an operational tool to measure the success of the business. • Update the plan as milestones are reached. • The Finished Product

20. The thought process and research that goes into writing a business plan can help minimize, if not eliminate, many of the reasons that businesses fail! • A final thought…