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Writing a Winning Business PlanPart I
Presented by SCORE, Chapter One, Washington, DC
washingtondc.score.org 202-619-1000
Ed Coleman and Matt Evans Presenting
If you’re an entrepreneur, don’t go it alone—SCORE’s more than 10,000
business experts can give you real-world advice and know-how. Our
counselors represent every business area. Some have worked as
executives at Fortune 500 companies, while others were small business
owners themselves.
Your relationship with SCORE can last just a few sessions or a number of
years, based on your needs. You decide the level of assistance you’d like,
and SCORE will ensure that you make the most of your time.
Don’t Go Alone!SCORE Can Help You Find the Way Ahead
SCORE, a national, non-profit Association with over 10,000 volunteers in 300 chapters, is a resource partner of the US Small Business Administration (SBA). SCORE Chapter One (Washington, DC Chapter) has 70 Counselors located in D.C., Maryland and Northern Virginia.
SCORE offers the following services:• Low-cost workshops - listing and registration at washingtondc.score.org
• Individual free one-on-one counseling/mentoring
• Free onsite team visits to local businesses
SCORE teams provide counseling to assist you to:• Increase the value of your business
• Identify and solve operating problems
• Recognize and capitalize on new business opportunities
• Develop business plans
• Find sources and qualify for financing
SCORE Services
Workshop OutlineWhat we’ll cover this morning
• Introduction– Purpose of a business plan
• Content of the Business Plan– Business Description– Product/Service– Marketing Plan– Operational Plan– Management and Organization– Startup Expenses and Capitalization– Financial Statements– Executive Summary
• Case Study• Sources of Research
“If you don’t know where you’re going, any road will do.”
The White Rabbit in Alice in Wonderland, Lewis Carroll
What’s Your Plan?
Purpose of a Business Plan
• Get organized and focused
• Set SMART goals (Specific, Measurable, Attainable, Realistic, Time-bound)
• Enhance market knowledge
• Create measures
• Set priorities
• Become aware of strengths, weaknesses and risks
• Serves as the Companies resume
– Informs suppliers, personnel , etc
• Raise money– Explain how money will be used or repaid
Process of Business PlanningRepeat until you’re comfortable it can be done!
Define
Product
Identify
Market
Identify
Competition
Define
Marketing
Plan
Project Sales
Plan
Operations
Define
Organization
Estimate
Needed
Resources
Analyze
Finances
Value Proposition
Target Market
Competition SWOT
Marketing Campaign
Sales Projection
Profit/Loss
Cash Flow
Balance Sheet
Breakeven Point
Benchmarks
Start up Funds
Sources of Funds
SWOT
Strengths (S)
What are your key strengths?•Product/Service?•Key Staff?•Funding?
Weaknesses (W)
Where are you weak? • Staff?• Finances?• Experience?
Opportunities (O)
What do you see as the best opportunity for you to launchthe business?
Threats (T)
What is the major threat to your success?
Positive NegativeE
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al
Inte
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Business Plan Format
• Cover Letter – introduces the company and engages the reader
• Non-Disclosure Statement
• Table of Contents
• Executive Summary
• Company Direction – Brief vision and/or mission statements
• Company Overview
• Products and Services
• Market Analysis
• Marketing Plan
• Financial Plan
• Supporting Documentation
CONTENT OF BUSINESS PLAN
Description of the Business
• What business am I in?
– Give the context of the plan and the scope of operation
• Business Type
– Merchandising
– Service
– Manufacturing
• Product or Service
• New, Franchise, Purchased
• Why Business will Grow and Be Profitable?
• Source of Personal Knowledge of Business
Product/Service
• Description
• Solves What Need? And for Who?
• Consumer Offering and/or Business to Business (B to B) offering?
• Comparison with Competitive Offering
• What Niche
• Follow-On Offering
• Value Proposition
a Need?
Market AnalysisBusiness to Consumer (B2C)
• Define the Characteristics of the Customer– Age
– Gender
– Income Level
– Occupation
– Education
– Location
– Other Characteristics of Target
Market AnalysisBusiness to Business (B2B)
• Type of Business
• Size of Business
• Location
• Product Line/Service
• Who Makes Buying Decisions?
• When Do They Buy?
• Why Do They Buy?
• Characteristics of Buying Decision
• Purchase Financing Approach
• Hot Buttons & Top Ten Prospects
Market AnalysisBusiness-Government
• Agency(ies) Targeted– Primary product/service needs
– Preferred contract vehicles• GWAC
• GSA
• Individual contracts– Small Business
– Set Asides
– Agency Annual Budget (nominal)
– Location
– Company/Personal Security Clearances Required?
– Teaming partners available/necessary?
Market Analysis (cont.)Investigate Key Competitors
• Price
• Service
• Advertising
• Product Line/Service
• Employee Training
• Strengths/Weaknesses
Investigate Key Competitors
• Quality
• Location
• Image
• Their Target Market
• Finance: Method/Strength
Compare Yourself With the Competition
Market Analysis (cont.)Industry Trends
• Current Trends
• Projected Trends
• Develop Future Action
Industry Trends
Relate these to your Target Market
Marketing StrategiesPricing
• Cost Your Product
• Add Profit Levels
• Compare With Competition
• Sell the Sizzle, not the process
• Test Prices Against Market Research Data
• Evaluate Volume Discounting
• Select Price
Marketing Strategies (cont.)Placement/Delivery
• Channels of Distribution– Direct vs. Indirect
• Salespeople
• Representatives
• Distribution Systems
• Location– (‘Brick ‘n Mortar’)
• Accessibility
• Visibility
• Safety
• Parking
• Closeness to Customers
• Zoning Laws
• Online (Web Site)• Ease of use
• Optimized for Search Engines (SEO)
• Purchase & delivery process
Marketing Strategies (cont.)Classical Promotion Tools
Inexpensive – Word of Mouth– Door to Door Flyers– News Releases– “Social Media”– Events
More Expensive– Brochures– Internet Web Site– Classified Ads– Yellow Pages– Radio/TV– Advertising Agency– Mailing List– Trade Shows– Educational and Social Events
Your Web Site is the Key
WEBSITE(SEO)
SocialMedia
campaigns
Web
Advertising
Rating Sites
PartnerLinks
Internet Marketing
Popular Social Media Technology
Social Networking
> Target your audience by age,
gender, seniority, geography,
or job function
> Pay per click or by
impressions
> Stop your ads at any time
Social Networking
> Connect with more than 955
million potential customers
> Choose you audience by
location, age, and interests
> Test simple image and text-
based ads and use what works
Microblogging
> Connect with customers and
quickly share information
> Gather market intelligence
> Build relationships with people that
care about your company
YouTube Billions of daily views
Online Video Community
> Promote your content
> Share promotional videos and
customer testimonials
> Target audience by keyword
Google Places
Business Finder> Be found by your customers
> Stand out by engaging customers
with photos, offers, etc.
> Get insight on your listing to make
smarter business decisions
Blogs
Online Conversation
> Word of mouth
> Communicate promptly
> Obtain feedback on products,
service, trends, and industry
Marketing Strategies (cont.)Sales Projection
• Pull it all together and estimate what your sales will be.
• Document
• DocumentWait for it…
• Document
Operational Plan
• Overview of operations
• Location Considerations
• Staffing Plan
– Compensation Approach
– Employee Handbook Highlights (if appropriate)
– Training Plan Highlights
– Resumes as Appendices
• Suppliers
• Distribution Chain
Management & Organization
• Forms of Organization
– Sole Proprietorship
– Partnership
– Corporation (“C” or “S”)
– Limited Liability Company
• Board of Directors (if applicable)
• Officers
• Organizational Chart
• Key Personnel
• Advisors/Consultants
• Training
• Define Future Needs
Startup Expenses & Capitalization
• Identify the initial expenses you will need to cover:– Rent deposits
– Leasehold improvements
– Equipment, furniture, and fixtures
– Pre-opening expenses (staff, licenses, etc.)
– Inventory
• Where will the money come from?– Owners cash infusion
– Friends and Family
– Investor funding
– Commercial loans/mortgages
• Show that you understand the timelines involved
Financial Statements
• Income (Profit/Loss) Statement– Monthly for First Year & Annual for Three*-Year Projection
• Cash Flow statement– Monthly for First Year & Annual for Three-Year Projection
• Balance Sheet
• Breakeven Analysis
• Benchmark Comparisons
* 3-year projections ok for basic plans, VCs/Angels may want up to 5 years
Funding Sources
• Source Depends on level of Requirement Needed• Requirement: <$25,000
– Personal Funds (Savings, Credit Cards, 401(k), etc.)
• Requirement: $25,000 - $250,000– Personal Funds– Home Equity– Friends & Family– Angel Investors
• Requirement: $250,000-$1,000,000– Angel Investors– Venture Capital Firms
• Requirement: $1M - $10M+– Venture Capital Firms
• New – e.g. Crowd Funding
Executive Summary
• Written Last
• Top Priority
• Highlight Value Proposition
• 1 to 2 Pages Maximum
• Pitch Your Business– Compelling Business Concept
– How you Will Generate Revenue
– Marketing Plan to capture Customers
– Identify Market Opportunity and Size
– Supply Key Assumptions for Financials
– Highlight 12-month Cash Flow Projection
– What do you want?
CASE STUDY REVIEW
SOURCES OF RESEARCH
Sources for Research
• SCORE (www.score.org) 202-169-1000
• SBA (www.sba.gov) 202-272-0345
• Local County Economic Development
• Local County Public Library (both in-house and online)– Research USA (profiles of 10M+ companies)
• Local County Employment Center
• Chambers of Commerce
• Banks
• Market Research Firms
Sources for Research (cont.)
• Thomas Register of American Manufacturers – www.thomasregister.com
• Annual Statement Studies, RMA – http://www.rmahq.org/RMA/. (available at pubic libraries and online thru library)
• Trade Associations – Encyclopedia of Associations (available at SCORE or public libraries)
• Small Business Sourcesbook (available at SCORE or public libraries)
• State Governments – Check each jurisdiction
• Dun and Bradstreet (company profile) www.dnb.com
Example: RMA
Industry Data
Note: data derived from corporate tax returns which are optimized for lowest possible tax liabilities. (Maximize current expenses, minimize profits. Balance sheet might show slightly different profile.)
The American Community Survey (ACS) is an ongoing survey that provides data
every year – giving communities the current information they need to plan
investments and services.
American Community Survey
Sources for Research (cont.)
• Competition (advertising, web sites, annual reports)
• Suppliers
• Customers
Be Sure to Complete Your Course Evaluation
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• Owner/Investor funding too low
• Relevant owner experience non-existent
• No signed lease for location
• Low cost per square foot for lease (assumed $30 when $45 is more likely)
• Assumed that business could fully ramp up in 30 days
• No seasonality to the sales projection
• No details/sources for market analysis
• No details for competitive analysis
Case Study Deficiencies
