Preparation & Review of Business Plan

BrooklynENTREPRENEURIAL ASSISTANCE CENTER

Business Plan: the Basics

• What is a business plan?

• Why write a business plan?

• Feasibility of a business plan

• Anatomy of a business plan

• Common mistakes of a business plan

• A good business plan

• Tips!

What is a business plan?

• A business plan is a document that reviews the operations, finances and objectives of a business.

• A business plan contains the detailed arrangement, target dates and resources showing how the operations, finances and objectives are to be realized.

What is a Business Plan:And why you should have one!

• Most people compare business plans to road maps which indicate how to get from one point to another. There is some truth to that. However, a business plan is more than just a map. It is also a guide that can help identify "how" to get to your destination, save money and make the right investment.

Have you ever been in a guided tour?

• If you have been in a guided tour then you know what I am trying to relate. With a map you can see the points of interest. With a guide you can decide which places you'd want to go back and spend more time to make your trip more meaningful.

• In the same way, preparing a business plan can help you identify the areas that you should spend more time to make your business launch much more successful.

Starting a business without planning can be dangerous and even costly!

• Like in guided tours, planning for your businesscan warn you about places not to go or the things you shouldn’t do.

• On a tour, you are suggested about the better places to shop and dine. You even get advise as to how to make your adventure "cost-effective."

• Similarly, investing in a business plan can help determine the best strategy to launch your business, define your strengths and weaknesses, and identify opportunities and threats right from the start.

Why write a business plan?

From the Business Owner’s Perspective:• Feasibility/Viability:

Does my business make sense?• Operating assessment:

Have I covered all my basics? • Communicates your business to others:

Will other people understand what I’m doing?• Serves as a basis for a financing proposal:

Will I be able to attract investors and raise capital for my business?

• A blueprint and communication tool for your business: Do I know what I’m doing, where I’m going?

Other’s Perspective

Banks• Banks want to understand that you know your

business; this builds confidence to lend you money• Banks want to know if your business has the capacity

to repay a loan [will you generate enough cash flow]Investors• Much like banks, investors want to feel confident that

you know your business inside out before giving you $$• Investors are looking for better than average returns,

may possibly come on board, and want to know your business’ exit strategy [when to pull the plug]

Feasibility of a business plan

• What is the demand for my product/service?

• Is there a market for my offering?

• Who are the competitors in my market?

• Is this a “niche market” product/service?

• How will I reach my target market?

• What is the potential financial growth of this business ?

• Do I have management, sales, marketing, finance and operations experience?

Other questions to ponder…

• What is the cost to develop my product?

• Do I have sufficient funds to start my business?

• Is financing available and do I qualify for it?

• What’s the cost to continue to operate my business?

Personal Expenses + Business Expenses = Target Revenue

5 W’s of Business Plan Feasibility

• Who? - potential customers for your product or service

• What? - product or service provided by business

• Where? - business location and customers

• When? - business launch/expansion

• Why? - business viability

• How? - business operation, products/services

Anatomy of a Business Plan

Before getting into the nitty-gritty of the plan, lets review all the components that should be included in your document:

1. Cover Sheet2. Table of Contents3. Executive Summary4. Company Description5. Product/Service6. Target Market7. Industry Analysis8. Competitive Analysis9. Sales & Marketing10. Management11. Operations12. Financial Analysis13. Appendix (supporting documentation)

Executive Summary

1. Executive Summary

This is the section where you “tell your story” and capture the reader’s attention. This section includes a summary of the whole plan and is simply stated in one-to-two pages. Although this section is found at the beginning of the plan, it is recommended that you write it last, after you have explained your business strategy in whole.

Company Description

II. Company Description

In this section, you will describe the nature of your business. What is your business selling or providing? Explain the business structure (sole proprietor, corporation, partnership), your business model, location, and business goals and objectives. You should also include the amount of money needed to start your business. Include milestones for your business.

Product/Service

III. Product or Service

This section of the plan explains why you’re (going) in business and provides a complete explanation of your product or service, the need this product will fill in the market, your company’s unique selling proposition (USP), and other relevant information about what you are going to sell or provide.

Market & Industry Analysis

IV. Market & Industry AnalysisIn this section, you will explain the reasons for starting the business by describing the market, the consumers and the competitors. This part of the plan must include the necessary data to justify your business success by presenting independent sources that support your reason to go into business. This section explains why people would want to buy your product/service and explain your business competitive advantages. Include a SWOT analysis here.

Marketing Plan

V. Marketing PlanThis part of the plan explains how you intent to reach your target audience and provides a clear and explicit description of the product’s (service) plan, pricing strategy, promotional strategy and distribution. The marketing plan explains how your company will be positioned in the marketplace and how much it will cost you. In this section you will also explain branding strategies and identify your company’s corporate image.

Operations

VI. Operations

This section explains the day-today cycle of your business’ operations. You should include: the business location, manufacturing, distribution, purchasing decisions, hours of operation, and a time-and-action calendar that illustrates how these steps will take place.

Management

VII. Management

This section explains who are your businesskey players, their roles and responsibilities. Also a management plan for expansion should be included.

Sales & Financing Plan

VIII. Sales & Financing Plan

This section describes your sales objectives and will illustrate your business growth during the first three years. This part of the plan supports the Marketing Plan section and shows the need for financing your businessoperations.

Financial Projections

IX. Financial Projections

In this section you will show your company’s financial growth in numbers! How much money (if any) will your company make the first, second and third year? Explain your breakeven point. Include in this section cash flow statements, profit and loss statements, the company’s balance sheet, and a statement of assumptions describing your methodology for arriving at your sales objectives.

Appendix & Supporting Docs

X. Appendix & Supporting Documents

An important part of the plan is the documents that support your businessresearch. You must also include the management résumé, personal financial statements, copies of receipts for inventory purchased, leases, and any other supporting documentation that is compelling to your business plan.

Common Mistakes

Often times, entrepreneurs make the following mistakes:• The plan has not contact information, table of

content or cover sheet.• The plan lacks research or inaccurate data• The target market is poorly defined or not clear• Competition not identified and no SWOT analysis• Financials do not make sense. • Inconsistencies along the plan• Sepllnig nad Garmamr

A Good Business Plan

• Clearly defines product/service

• Clearly defines target market and provides thorough research

• Identifies competitive advantage, USP

• Includes a strong step-by-step marketing plan

• Includes a milestone chart

• Clearly articulates operations and management

• Includes realistic financial expectations and charts

• Is proof-read, clear of spelling mistakes and grammar

Tips!

• Be concise! Try to articulate your business plan in 20 pages (+/-). Line spacing no less than 1.5 and 1” margins. Financials and Appendix are not included as part of your business plan page count.

• Engage your reader. Write as if you’re talking, not preparing scientific research or thesis. Let the plan articulate from your head to the paper with ease, as if you’re explaining it to a 12-year old!

• Highlight or focus on business trends, features and benefits of your product/service, new technologies, etc.

• Answer the Who, When, What, Why, Where and How?• Presentation: Prepare the plan in nicely bounded copies,

free of stains. Also make a PDF in case you have to email it.