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Writing a Business Plan

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Title: Writing a Business Plan


1
Writing a Business Plan
A Seminar presented by SCORE DC At Germantown
Library Germantown, MD. 20874 Tuesday, April 16,
2013
SCORE is pleased to present this seminar in
partnership with the Germantown Library.
2
Writing a Business Plan
A Seminar presented by SCORE DC At Germantown
Library Germantown, MD. 20874 Tuesday, April 16,
2013
Presenter Som Karamchetty Som.karamchetty_at_scorevo
lunteer.org
SCORE is pleased to present this seminar in
partnership with the Germantown Library.
3
Imagination
Before we jump into the discussion, please spend
five minutes imagining your business
  • Customers coming in to your business
  • Buying your products or services
  • Paying money and thanking you for a great product
  • Your visits to the bank and depositing lots of
    funds
  • Suppliers delivering raw material of good quality
    at great prices
  • Your production humming, workers singing
  • Packing and delivering orders
  • Billing and receiving money
  • Your location, incorporation, executive suite
  • Visiting bank for funds to set up production
  • Greeting your managers and cheerful employees
  • Paying taxes and bills gladly
  • Marketing for great customers
  • Selling your products and services

4
Back of the Envelope Business Plan?
  • For entrepreneurs who aren't seeking external
    start-up financing from venture capitalists or
    angel investors
  • Just do basic financial projections, e.g. cash
    flow,
  • Launch the business
  • Fine-tune the business model as you go.

For the rest of us
5
Outline of Talk
  • Business Essentials
  • Why a Business Plan
  • Developing a Business Plan
  • Format of a Plan
  • Business description
  • Product/Service
  • Market Analysis
  • Marketing Strategies
  • Management Team
  • Financial Statements
  • Executive Summary
  • Resources for writing a Business Plan
  • What goes where into a business plan
  • Understanding your Business
  • Getting off the Ground

Back up
6
Business Essentials
7
Entrepreneur
I have this great business idea
I need a team of good Business partners
I need money to start My Business
8
Investor
I have to grow My money by investing
I need an Entrepreneur
With a great business idea
9
Manager
I like to Run a business
I need an Entrepreneur
With a great business idea
10
Bring them together
11
With a Business Plan
12
And an organization
13
Got a business
14
Why a Business Plan
15
Clarity for you
I want to Start a Business
I want To be my own boss
I want to make a Billion
I will hire
I will Occupy the penthouse suit
16
Spousal Support
Not with the Childrens College Money!
Honey, I want to open an apparel store
17
Parental Support
If I lend him 100K, will he succeed in his
business?
18
Help from Grandpa
He is a brilliant kid. But, can he run a
restaurant business
19
Help from Friend
John will invest if we can convince him?
Do we quit our jobs?
We can make millions In IT security business
20
Approaching an Investor
Will I get a 20 return on my investment?
21
Visiting a Lender
L o a n
Our interest rate is12.
We need Collateral.
We look for a credit score of 800.
22
Friends to Partner
I have designs for furniture.
I have the money!
50 50
60 40
23
A Conversation with an Investor
How much profit will we make?
40,000 a year
What is my share of the company?
25
How much you want me to invest?
50,000
I get 10K on my 50 grand. That is 20 per cent
24
The Same Conversation in the Reverse Order
I expect 20 per cent ROI
How much you want me to invest?
50,000
I should get 10K on my 50 grand.
How much profit will we make?
40,000 a year
What is my share of the company?
25
25
Go on
How do you make that much profit?
My revenue is 400,000
My expenses are 360, 000
That leaves a profit of 40,000
26
Go on
How did you figure out 400,000 revenue
We maintain, services and fix 2,000 computers. We
charge on average 200 per computer.
27
Go on
And your expenses are?
Salaries 220,00 (includes 70,000 for
me) Advertisements 5,000 Rent 35,000 Vehicle
expenses 18,000 Phone and Internet 2,000
Utilities 12,000 Office expenses 10,000
Spare parts 40,000 Depreciation 8,000 Taxes
2,000 Miscellaneous 10,000
28
Go on
Why do you need 50,000 investment from me?
40,000 for equipment
10,000 for a used van
I will invest 5,000 that will be for other
initial expenses.
29
Go on
Are you sure of getting 2,000 computers?
The IT manager at Horizon Schools assured me a
contract for about 1,200 computers. The kids
are rough with their systems all the time. I
hope to advertise for more work from other
people I know.
30
Go on
Are you sure of getting 2,000 computers?
The IT manager at Horizon Schools assured me a
contract for about 1,200 computers. The kids
are rough with their systems all the time. I
hope to advertise for more work from other
people I know.
Have a Great Market Plan
Have a Great Market Promotion Plan
31
Go on
That is a deal then!
32
Bank Loan Request
http//www.score.org/sites/default/files/Bank_Loan
_Request_1.pdf
33
Bank Loan Request
  • ADVENTURE WORKS is a high-end design and
    remodeling firm
  • ADVENTURE WORKS was formed by Brian Groth as a
    Sole Proprietorship
  • The Company experienced steady growth
  • ADVENTURE WORKS is involved in four distinct
    activities .
  • The company's Short Term Objectives (within the
    next three years) are
  • Its Long term objectives are
  • To implement these objectives the company needs
  • A loan of 100,000 at Prime plus 2.
  • This loan to be used for current near term
    expenses
  • including __________________, ______________ and
    ____________ It will be repaid in five years.
  • 2. A line of credit of 50,000 to take advantage
    of discounts available, avoid associated
    penalties,
  • and expand into high profit areas requiring
    positive cash flow.
  • The prospects for ADVENTURE WORKS continued
    growth are excellent, with 2000 construction and
  • design contracts underway already exceeding
    550,000
  • Market research shows that the population in
    Springfield has increased by 200,000 between 1985
    and 2003.

34
Your Business Plan
  • should answer specific questions
  • from those you approach
  • for money or other help

35
Developing a Business Plan
36
What is a Business Plan?
  • Defines the business
  • Identifies goals
  • Serves as the companys resume
  • Illustrates the operational and financial aspects
    of the business
  • Assists in resource allocation
  • Minimizes the number of unpredicted complications
  • Explains how borrowed funds will be repaid
  • Informs personnel, suppliers and others about
    company operations and goals

37
Purpose of Writing a Business Plan
  • Get organized and focused
  • Set goals
  • Enhance market knowledge
  • Create measures
  • Become aware of
  • risks
  • strengths and
  • weaknesses
  • Develop priorities strategies
  • Set milestones

38
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices

39
Business Plan Layout
  • Cover Letter introduces the company, summarizes
    plan content and engages the reader.
  • Non-Disclosure Statement
  • Title Page
  • Table of Contents Details the contents included
    in the plan.
  • Executive Summary Summarizes the plans major
    points.
  • Company Direction Lists vision and mission
    statements of where the company is headed.

40
Business Plan Layout (cont.)
  • Company Overview Provides information on the
    companys legal name, current stage of
    development, etc.
  • Products and Services Explains what they are,
    why they were chosen, pricing, etc.
  • Market Analysis Presents research and
    conclusions regarding the industry the business
    caters to and its potential customers and
    competitors. It also describes why the products
    and services will be competitive.

41
Business Plan Layout (cont.)
  • Marketing Plan Outlines how the product/service
    awareness will be developed, projected interest
    and demand for the companys product/service
    based on market analysis.
  • Financial Plan Lists current financial status,
    projections for growth, details funding needs and
    explains how the loan will be paid back.
  • Supporting Documentation Provides background
    information (detailed information that did not
    fit into other sections of the plan).

42
Description of the Business
  • What business am I in?
  • Business Structure
  • Business Type
  • Merchandising
  • Service
  • Manufacturing
  • Product or Service
  • New, Franchise, Purchased
  • Why Business will Be Profitable?
  • Growth opportunities
  • Source of Personal Knowledge of Business

43
Product/Service
  • Description
  • Comparison with Competitive Offering
  • Niche
  • Follow-On Offering
  • Consumer Offering?
  • Business to Business (B to B)?
  • Solves What Problem or Need?
  • Creates a Need?

44
Market Analysis
Business to Consumer (B to C)
  • Define the Characteristics of the Customer
  • Age
  • Gender
  • Income Level
  • Occupation
  • Education
  • Location
  • Other Characteristics to Target
  • Or Will you Market Business to Business (B to
    B)?

45
Market Analysis (cont.)
Business to Business (B to B) or Business to
Government (B to G)
  • Type of Business
  • Size of Business
  • Location
  • Who Makes Buying Decisions?
  • When Do They Buy?
  • Why Do They Buy?
  • Characteristics of Buying Decision
  • Purchase Financing Approach
  • Hot Buttons Top Ten Prospects

46
Market Analysis (cont.)
Investigate Key Competitors
  • Price
  • Service
  • Advertising
  • Product Line/Service
  • Employee Training
  • Strengths/Weaknesses
  • Quality
  • Location
  • Image
  • Their Target Market
  • Finance Method/Strength

Compare Yourself With the Above Competition
47
Market Analysis (cont.)
Industry Trends
  • Current Trends
  • Projected Trends
  • Develop Future Action

Your Target Market
  • Project market Potential
  • Modify Later, Based on Competition and Pricing

48
A Growing Market
Our Share 25

Our Share 12

Now
3 years
  • Examples
  • Websites
  • Social Media
  • Online Education
  • Online Grocery Shopping
  • Home Cleaning

49
A Growing Share
Our Share 25

Our Share 12

Now
3 years
  • Strategy to get there
  • Improved Product
  • Marketing
  • Brand
  • Signing a Brand Ambassador

50
Marketing Strategies
Pricing
  • Cost Your Product
  • Add Profit Levels
  • Compare With Competition
  • Test High/Medium/Low Prices Against Market
    Research Data
  • Evaluate Volume Discounting
  • Select Price

Document Well Lenders and investors like to see
sources of data
51
Marketing Strategies (cont.)
Promotion
  • More Expensive Promotion
  • Brochures
  • Classified Ads
  • Yellow Pages
  • Radio/TV
  • Web Page/Internet
  • Advertising Agency
  • Mailing List
  • Advertising Budget
  • Inexpensive Promotion
  • Word of Mouth
  • Door to Door
  • Flyers
  • News Releases
  • Social Media

Placement
Return on Advertising Dollars
52
Location
  • Places of Business
  • Home (Zoning Laws)
  • Incubator Office
  • Main Street Mall
  • Industrial Parks
  • Criteria
  • Accessibility
  • Visibility
  • Safety
  • Parking
  • Closeness to Customers
  • Importance of Address

53
Management
  • Forms of Organization
  • Sole Proprietorship
  • Partnership
  • Corporation (C or S)
  • Limited Liability Company
  • Board of Directors (if applicable)
  • Officers
  • Organizational Chart
  • Advisors/Consultants
  • Training

Management Team
Personnel
54
Financial Planning
Contents of Financial Plan
  • Breakeven Analysis
  • Capital Equipment
  • List of Assumptions
  • Balance Sheet
  • Opening day balances
  • First 12 months projections
  • Next four years projections
  • Income Statement
  • First 12 months projections
  • Next four years projections
  • Cash Flows
  • First 12 months projections

55
Financial Statements Overview
Income Statement Main Accounts
  • Revenues
  • Cost of Goods
  • Gross Profits
  • Operating Expenses
  • Depreciation
  • Operating Profits
  • Interests
  • Taxes
  • Net Income

56
Executive Summary
  • Top Priority
  • 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

57
Resources
58
Business Plan Templates Workshops
  • http//www.score.org/resources/business-plans-fina
    ncial-statements-template-gallery
  • http//www.score.org/events/workshops/developing-b
    usiness-plan
  • http//www.score.org/onlineworkshops/quick-start-b
    usiness-plan

Low-cost SCORE Business Plan workshop http//washi
ngtondc.score.org/localworkshops
59
Resources for Market Analysis
Sources for data and information
  • http//www.census.gov/econ/index.html
  • Business magazines
  • Newspapers
  • Associations
  • Government reports
  • http//www.business.gov/we-have-moved.html
  • http//www.sec.gov/answers/form10k.htm
  • http//www.sec.gov/edgar/quickedgar.htm
  • http//sdatcert3.resiusa.org/ucc-charter/CharterSe
    arch_f.aspx
  • http//www.thomasnet.com/
  • http//en.wikipedia.org/wiki/Thomas_Register
  • http//library.dialog.com/bluesheets/html/bl0535.h
    tml
  • http//www.globalspec.com/
  • http//www.hoovers.com/
  • http//www.iqsdirectory.com/

60
Bureau of Census Data,
  • http//www.census.gov/econ/
  • http//www.census.gov/retail/mrts
  • http//www.census.gov/econ/census/media/category_p
    ages/restaurants/data_highlights.htmlsnapshots
  • http//factfinder2.census.gov/faces/nav/jsf/pages/
    searchresults.xhtm?refresht
  • http//www.census.gov/retail/marts/www/marts_curre
    nt.pdf

61
Source
http//business.usa.gov/
62
SCORE
  • Counselors to Americas small business
  • Resource partner of the U.S. Small Business
    Administration
  • 13,000 volunteer members in 364 chapters
    nationwide
  • Free counseling at chapter locations and at
    businesses
  • Free In-person Counseling at Rockville Library
  • Online counseling nationwide (www.score.org)
  • Low cost workshops (http//washingtondc.score.org/
    )

63
Contact Us
SCORE DC, Chapter One 740 15th St., N.W.,
Washington, DC 20005 Phone (202)
272-0390 http//washingtondc.score.org/ www.score.
org

Nearest Counseling Location Rockville Library,
(240) 777-0001
64
Writing a Business Plan
A Seminar presented by SCORE DC At Germantown
Library Germantown, MD. 20874 Tuesday, April 16,
2013
Presenter Som Karamchetty Som.karamchetty_at_scorevo
lunteer.org
Please do come back for Free Counseling from
SCORE.
65
Back up
For discussion
66
What goes whereinto a Business Plan
Saying the same things again
67
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

Who we are Our mission What we produce Who needs
our products Why we will thrive We know this
business We need money How we will use it How we
will pay it back We are trustworthy
68
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

Our Name Our location Our products Who we
serve Our team Our capabilities Our status in the
community
69
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

What we produce Our quality Our delivery Our
price Customer care
70
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

Customer needs Our products address them Size of
market Competition Our share Our niche When we
get to our share How we get to our share Market
promotion methods Market budget
71
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

tbd
72
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

About the owner Personal background Credit
record Assets Liabilities
73
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

Capital needs What we bring Investment need
requested Loans requested How we spend
74
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

Sales Forecast Revenue Expenses Profit
Loss Cash Flow Balance Sheet Breakeven Analysis
75
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

Supplemental information
76
Format of a Business Plan
  • Executive Summary
  • General Company Description
  • Products and Services
  • Marketing Plan
  • Operational Plan  
  • Management and Organization  
  • Personal Financial Statement  
  • Startup Expenses and Capitalization  
  • Financial Plan  
  • Appendices
  • Refining the Plan

77
Understanding Your Business
There are similarities in businesses And there
are differences.
78
Processes in a BusinessRetail
Supplier
Customer
79
Processes in a BusinessConsulting
Expert
Customer
80
Processes in a BusinessNovel Product
Prototype
Demonstrate
Manufacture
Design
Idea
Customer
81
Processes in a BusinessIntermediates
(Export/Import)
Manufacture
Transport
Warehouse
82
Processes in a BusinessWholesale
Transport
Warehouse
83
Processes in a BusinessWarehousing Distribution
Warehouse
Distribution
84
Processes in a BusinessDistribution
Distribution
85
Processes in a BusinessRetail
Retail
Customer
86
Processes in a Business
Prototype
Demonstrate
Manufacture
Design
Idea
Transport
Warehouse
Distribution
Retail
Customer
87
Processes in a Business
Prototype
Demonstrate
Manufacture
Design
Idea
Transport
Warehouse
Distribution
Retail
Customer
88
Processes in a Business
Prototype
Demonstrate
Manufacture
Design
Idea
Transport
Warehouse
Distribution
Retail
Customer
89
Processes in a Business
Prototype
Demonstrate
Manufacture
Design
Idea
Transport
Warehouse
Distribution
Retail
Customer
90
Processes in a Business
Prototype
Demonstrate
Manufacture
Design
Idea
Transport
Warehouse
Distribution
Retail
Customer
91
Variety of Businesses
Many
92
Getting off the Groundor Start-up Costs
93
Land
94
Building
95
Equipment/Machinery
96
Electricity
97
You will need money for all these items right in
the beginning.
98
Have a great business!
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