The Business Plan

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SME Toolkit - The Business Plan                                       http://us.smetoolkit.org/us/en/content/en/612/The-Business-Plan...



         http://us.smetoolkit.org/us/en/content/en/612/The-Business-Plan


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         SME Toolkit
         The Business Plan
         Provided by My Own Business, Content Partner for the SME Toolkit


                What is a Business Plan?
                Why Prepare a Business Plan?
                      What to avoid in your business plan
                Business Plan Format
                      Vision statement
                      The people
                      Business profile
                      Economic assessment
                Six Steps to a Great Business Plan
                      Basic business concept
                      Feasibility and specifics
                      Focus and refine concept
                      Outline the specifics of your business
                      Put your plan into a compelling form
                      Review sample plans
                Business Plan's Necessary Factors
                      Understanding your market
                      Healthy, growing and stable industry
                      Capable management
                      Able financial control
                      Consistent business focus
                      Mindset to anticipate change
                SESSION 2 Business Plan




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         What is a Business Plan?
         The primary value of your business plan will be to
         create a written outline that evaluates all aspects of the    Testimonial


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SME Toolkit - The Business Plan                                       http://us.smetoolkit.org/us/en/content/en/612/The-Business-Plan...


         economic viability of your business venture including a        Antoinette Douglas
         description and analysis of your business prospects.           Mother Love Family
                                                                        Day Care
         Since this course is broken down into twelve of the
         most important aspects to consider in starting a
         business, your business plan can follow this same
                                                                        "Find out what it is that you
         format. Included in this session and in each of the            really want to do, go to
         following sessions there is a sample business plan             college, and get an education
         outline covering each subject. When you put these all          in that field."
         together, you will have a starting model for your overall                Transcription - html
         plan.

         A business plan is an essential step for any prudent entrepreneur to take,
         regardless of the size of the business. This step is too often skipped, but we make
         it easy for you by providing a format to build your plan as you progress through
         this course.

         Business plans can vary enormously. Libraries and bookstores have books devoted
         to business plan formats. But this course is a place to start. You can then go on
         from here to design one that would be ideal for your particular enterprise.

                Be aware now that most start-up entrepreneurs are reluctant to
                write down their business plan. It is therefore strongly
                recommended that you complete each segment of the plan as you
                progress through this course. We make it easy for you by
                providing sample plans for both product and service businesses
                and also an attractive blank form that you can download onto MS
                Word and customize yourself.

         [Back to top]

         Why Prepare a Business Plan?
         Your business plan is going to be useful in a number of
         ways. Here are some of the reasons not to skip this            Testimonial
         valuable tool.                                                 Ezequiel Padilla
                                                                        Jugos Tropicales
                First and foremost, it will define and focus your       Mexican Food
                objective using appropriate information and
                analysis.
                You can use it as a selling tool in dealing with    "When your business is doing
                important relationships including your lenders,     well, consider buying the
                                                                    property if it is possible."
                investors and banks.
                You can use the plan to solicit opinions and                   Transcription - html
                advice from people, including those in your
                intended field of business, who will freely give you invaluable advice. Too



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SME Toolkit - The Business Plan                                     http://us.smetoolkit.org/us/en/content/en/612/The-Business-Plan...


                often, entrepreneurs forge ahead ("My Way!") without the benefit of input
                from experts who could save them a great deal of wear and tear. "My Way"
                is a great song, but in practice can result in unnecessary hardships.
                Your business plan can uncover omissions and/or weaknesses in your
                planning process.

         What to Avoid in Your Business Plan Place some reasonable limits on
         long-term, future projections. (Long-term means over one year.) Better to stick
         with short-term objectives and modify the plan as your business progresses. Too
         often, long-range planning becomes meaningless because the reality of your
         business can be different from your initial concept.

         Avoid optimism. In fact, to offset optimism, be extremely conservative in
         predicting capital requirements, timelines, sales and profits. Few business plans
         correctly anticipate how much money and time will be required.

         Do not ignore spelling out what your strategies will be in the event of business
         adversities.

         Use simple language in explaining the issues. Make it easy to read and understand.

         Don't depend entirely on the uniqueness of your business or even a patented
         invention. Success comes to those who start businesses with great economics and
         not necessarily great inventions.

         [Back to top]

         Business Plan Format: A Systematic Assessment of all the
         Factors Critical to Your Business Purpose and Goals
         Here are some suggested topics you can tailor into your
         plan:                                                        Testimonial
                                                                      Mari Lohr
                A vision statement: This will be a concise outline Graphic Artist
                of what your business purpose and goals will be.
                The people: By far the most important ingredient
                for your success will be yourself. Focus on how
                your prior experiences will be applicable to your "Being in business for
                new business. Prepare a resume of yourself and yourself is not for everyone."
                one for each person who will be involved with               Transcription - html
                you in starting the business. Be factual and avoid
                hype. This part of your business plan will be read very carefully by those
                with whom you will be having relationships, including lenders, investors
                and vendors. Templates for preparing resumes are available in your library,
                Kinko's, bookstores and the Internet under "resumes."

                However, you cannot be someone who you are not. If you lack the ability to


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SME Toolkit - The Business Plan                                   http://us.smetoolkit.org/us/en/content/en/612/The-Business-Plan...


                perform a key function, include this in your business plan. For example, if
                you lack the ability to train staff, include an explanation how you will
                compensate for this deficiency. You could add a partner to your plan
                (discussed in Section 4) or plan to hire key people who will provide skills
                you don't have. Include biographies of all your intended management.

                Your business profile: Define and describe your intended business and
                exactly how you plan to go about it. Try to stay focused on the specialized
                market you intend to serve.
                Economic assessment: Provide a complete assessment of the economic
                environment in which your business will become a part. Explain how your
                business will be appropriate for the regulatory agencies and demographics
                with which you will be dealing. If appropriate, provide demographic studies
                and traffic flow data normally available from local planning departments.
                Cash flow assessment: Include a one-year cash flow that will incorporate
                your capital requirements ( covered in Lesson #7). Include your assessment
                of what could go wrong and how you would plan to handle problems.
                Include your marketing plan and expansion plans.
                Refer to helpful government websites such as the Small Business
                Administration. See "Resources" on the home page of this website.

         [Back to top]

         Six Steps to a Great Business Plan
         Start-up entrepreneurs often have difficulty writing out business plans. This
         discipline is going to help you in many ways so don't skip this planning tool! To
         make it easier, here are six steps that will get you to a worthwhile plan:

             1. Write out your basic business concept.
             2. Gather all the data you can on the feasibility and the specifics of your
                business concept.
             3. Focus and refine your concept based on the data you have compiled.
             4. Outline the specifics of your business. Using a "What, where, why, how"
                approach might be useful.
             5. Put your plan into a compelling form so that it will not only give you
                insights and focus but, at the same time, will become a valuable tool in
                dealing with business relationships that will be very important to you.
             6. Review the sample plans we furnish and download the blank format to a MS
                Word document. Fill this in as you progress though the course.

         [Back to top]

         Check Out If Your Plan Includes The Following Necessary
         Factors Which Will Produce A Successful Business



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SME Toolkit - The Business Plan                                         http://us.smetoolkit.org/us/en/content/en/612/The-Business-Plan...




                A sound business concept. The single most              Testimonial
                common mistake made by entrepreneurs is not            R.D. McDonnell
                picking the right business to begin with. The best Architect
                way to learn about your prospective business is to
                work for someone else in that business before
                beginning your own. There can be a huge gap
                between your concept of a fine business and            "You'll identify issues that you
                reality.                                               might not otherwise consider
                                                                       when you put them down on
                Understanding of your market. A good way to paper."
                test your understanding is to test market your
                                                                                  Transcription - html
                product or service before your start. You think
                you have a great kite that will capture the imagination of kite fliers
                throughout the world? Then hand-make some of them and try selling them
                fi rst.
                A healthy, growing and stable industry. Remember that some of the great
                inventions of all time, like airplanes and cars, did not result in economic
                benefit for many of those who tried to exploit these great advances. For
                example, the cumulative earnings of all airlines since Wilber Wright flew
                that first plane are less than zero. (Airline losses have been greater than their
                profits.) Success comes to those who find businesses with great economics
                and not necessarily great inventions or advances to mankind.
                Capable management. Look for people who you like and admire, have
                good ethical values, have complementary skills and are smarter than you.
                Plan to hire people who have the skills that you lack. Define your unique
                ability and seek out others who turn your weaknesses into strengths.
                Able financial control. You will learn later the importance of becoming
                qualified in accounting, computer software and cash flow management.
                Most entrepreneurs do not come from accounting backgrounds and must go
                back to school to learn these skills. Would you bet your savings in a game
                where you don't know how to keep score? People mistakenly do it in
                business all the time.
                A consistent business focus. If you think of specific products or services
                you will find that specialists will outperform non-specialists. Zero in on
                something you can do so well that you will not be subject to competing with
                someone with a lower price.

         [Back to top]

         Business Plan for Sessions 1 and 2: The Business Profile, the
         Vision and the People.
         Now is the time for you to review the sample plans we have provided. This will
         help you in formatting your own plan. For some tips on appropriate information to
         fill in, refer to the sample business plans:



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