What Is A Business Plan?

Read Transcript The primary value of your business plan will be to create a written outline that evaluates all aspects of the economic viability of your business venture including a description and analysis of your business prospects. Since the My Own Business, Inc. course is bro en down into !" of the most important topics to consider in starting or operating a business, your business plan can easily be organi#ed into this same format. Included in this session, and in each of the following sessions, there is one$page business plan template, which you can fill in and print. %Session & contains templates for both Sessions ! and &.' (hen you put these all together, you will have completed your personali#ed, overall plan. We suggest that you fill in each section of the business plan, found at the end of each session, as you proceed through the course. )ach of the !" Business *lan Sections can be downloaded from our (eb site and provide you with a single, attractively presented document. To begin, let+s ta e a preview loo at each of the !" Business *lan Sections, -lic to view each of the !" business plan sections .eep in mind that creating a business plan is an essential step for any prudent entrepreneur to ta e, regardless of the si#e of the business. This step is too often s ipped, but we have made it easy for you by providing this ready format to build your plan as you progress through this course. Business plans can vary enormously. /ibraries and boo stores have boo s devoted to business plan formats. This course is a starting point. 0ou can then go on 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 customi e yourself. 0our business plan will become your roadmap to chart the course of your business. But at the outset you cannot predict all of changing conditions that will surface. So after you have opened for business, it is important that you periodically review and update you plan.

Why Prepare A Business Plan?

Read Transcript 0our business plan is going to be useful in a number of ways

1irst and foremost, it will define and focus your ob2ective using appropriate information and analysis. 0ou can use it as a selling tool in dealing with important relationships including your lenders, investors and ban s. 0our business plan can uncover omissions and3or wea nesses in your planning process. 0ou can use the plan to solicit opinions and advice from people, including those in your intended field of business, who will freely give you invaluable advice. Too often, entrepreneurs forge ahead %4My (ay54' without the benefit of input from e6perts who could save them a great deal of wear and tear. 4My (ay4 is a great song, but in practice can result in unnecessary hardships.

To help get started in lining up appointments, you can fill in and use the following template. (e have also provided a larger blan template for you to use at the end of this session. 7ames include your investors, family members, ban er, lawyer, attorney, business mentors, trusted business friends, potential customers, competitors %distant ones', potential landlords, and the 8.S. -lic to :iew Small Business 9dministration.

Read Transcript What to Avoid in Your Business Plan *lace some reasonable limits on long$term, future pro2ections. %/ong$term means over one year.' Better to stic with short$term ob2ectives and modify the plan as your business progresses. Too often, long$range planning becomes meaningless because the reality of your business can be different from your initial concept. 9void optimism. In fact, to offset optimism, be e6tremely conservative in predicting capital re;uirements, timelines, sales and profits. 1ew business plans correctly anticipate how much money and time will be re;uired. <o not ignore spelling out what your strategies will be in the event of business adversities. 8se simple language in e6plaining the issues. Ma e it easy to read and understand.

<on+t depend entirely on the uni;ueness of your business or even a patented invention. Success comes to those who start businesses with great economics and not necessarily great inventions.

Business Plan Format Read Transcript The Business *lan format is a systematic assessment of all the factors critical to your business purpose and goals. =ere are some suggested topics you can tailor into your plan,

A ision !tatement" This will be a concise outline of your business purpose and goals. #he People" By far, the most important ingredient for your success will be yourself. 1ocus on how your prior e6periences will be applicable to your new business. *repare a r>sum> of yourself and one for each person who will be involved with you in starting the business. Be factual and avoid hype. This part of your Business *lan will be read very carefully by those with whom you will be having relationships, including lenders, investors and vendors. Templates for preparing r>sum>s are available in your library, .in o+s, boo stores and the Internet under 4r>sum>s.4

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=owever, you cannot be someone who you are not. If you lac the ability to perform a ey function, include this in your business plan. 1or e6ample, if you lac the ability to train staff, include an e6planation how you will compensate for this deficiency. 0ou could add a partner to your plan %discussed in Section "' or plan to hire ey people who will provide s ills you don+t have. Include biographies of all your intended management. Your Business Profile" <efine and describe your intended business and e6actly how you plan to go about it. Try to stay focused on the speciali#ed mar et you intend to serve.

&conomic Assessment" *rovide a complete assessment of the economic environment in which your business will become a part. )6plain 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. 'ash flo( assessment" Include a one$year cash flow that will incorporate your capital re;uirements %covered in Session @'. Include your assessment of what could go wrong and how you would plan to handle problems. Include your mar eting plan and e6pansion plans. Refer to helpful government (eb sites such as the Small Business 9dministration. See 4Resources4 on the home page of this (eb site.

!i) !teps #o A *reat 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 s,ip this planning tool- To ma e it easier, here are si6 steps that will produce a worthwhile plan, !. (rite out your basic business concept. &. Aather all the data you can on the feasibility and the specifics of your business concept. B. Focus and refine your concept based on the data you have compiled. ". .utline the specifics of your business. 8sing a 4what, where, why, how4 approach might be useful. C. 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. D. /evie( the sample plans we furnish and download the blan format to a MS (ord document. 1ill this in as you progress though the course.

0oes Your Plan Include the Follo(ing 1ecessary Factors

A !ound Business 'oncept" The single most common mista e made by entrepreneurs is not selecting the right business initially. The best way to learn about your prospective business is to wor for someone else in that business before beginning your own. There can be a huge gap between your concept of a fine business and reality. 2nderstanding of Your $ar,et" 9 good way to test your understanding is to test mar et your product or service before your start. 0ou thin you have a great ite that will capture the imagination of ite fliers throughout the worldE Then craft some of them and try selling them first. A 3ealthy, *ro(ing and !table Industry" Remember that some of the great inventions of all time, li e airplanes and cars, did not result in economic benefit for many of those who tried to e6ploit these great advances. 1or e6ample, the

cumulative earnings of all airlines since (ilber (right flew that first plane are less than #ero. %9irline 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 man ind. 'apable $anagement" /oo for people you li e and admire, who have good ethical values, have complementary s ills and are smarter than you. *lan to hire people who have the s ills that you lac . <efine your uni;ue ability and see out others who turn your wea nesses into strengths. Able Financial 'ontrol" 0ou will learn later the importance of becoming ;ualified in accounting, computer software and cash flow management. Most entrepreneurs do not come from accounting bac grounds and must go bac to school to learn these s ills. (ould you bet your savings in a game where you don+t now how to eep scoreE *eople mista enly do it in business all the time. A 'onsistent Business Focus" 9s a rule, people who speciali#e in a product or service will do better than people who do not speciali#e. 1ocus your efforts on something that you can do so well that you will not be competing solely on the basis of price. A $indset to Anticipate 'hange" <on+t commit yourself too early. 0our first plan should be written in pencil, not in in . .eep a fluid mindset and be aggressive in ma ing revisions as warranted by changing circumstances and e6panding nowledge. Include Plans for 'onducting Business .nline" 9ccording to the Fanuary &GGC Trend31orecasting Report of The <ilenschneider Aroup, in the 8.S. alone, the &GG" holiday season online shopping 2umped by more than &CH from &GGB. %In &GGC it 2umped another &CH5' -onsumer and business$to$business online sales are set to e6pand e6ponentially in the coming decade, and small retailers can reach an ever$increasing pool of customers. Be sure to see the how$to details in the following Session !G, )$commerce.

Formulate 4and /eformulate5 Your Business Plan <onald 7. Sull, associate professor of management practice at the /ondon Business School, in an article in the MIT Sloan Management Review issue of fall &GG", offers some practical suggestions on managing inevitable ris s while pursuing opportunities. =ere is a capsulation of his suggestions on how to formulate %and reformulate' your business plan,

Be fle6ible early in the process and eep it fluid. <on+t commit too early. )6pect your first plan to be provisional and sub2ect to revision. 9s yourself if your e6perience or e6pertise gives you the right to an opinion on your specific opportunity. Identify your potential deal illers, variables that are li ely to prove fatal to the venture. -learly identify what you see as the ey drivers of success. (hat are you betting on hereE

Raise money only in sufficient amount to finance the e6periment or evaluation you ne6t envision, with a cushion for contingencies. <elay hiring ey managers until initial rounds of e6perimentation have produced a stable business model. 9t some point, ta e the plunge and test your product or service on a small scale in the real world through customer research, test mar eting, or prototypes. Test and refine your business model before e6panding your operations.

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*repare a complete business plan for any business you are considering. 8se the business plan templates furnished in each session. -omplete sections of your business plan as you proceed through the course. Research %use search engines' to find business plans that are available on the Internet. C. *ac age your business plan in an attractive it as a selling tool. D. Submit your business plan to e6perts in your intended business for their advice. I. Spell out your strategies on how you intend to handle adversities. @. Spell out the strengths and wea nesses of your management team. ?. Include a monthly one$year cash flow pro2ection. !G. 1reely and fre;uently modify your business plans to account for changing conditions. #.P #&1 0.1+#! !. Be optimistic %on the high side' in estimating future sales. &. Be optimistic %on the low side' in estimating future costs. B. <isregard or discount wea nesses in your plan. Spell them out. ". Stress long$term pro2ections. Better to focus on pro2ections for your first year. C. <epend entirely on the uni;ueness of your business or the success of an invention. D. *ro2ect yourself as someone you+re not. Be brutally realistic. I. Be everything to everybody. =ighly focused specialists usually do best. @. *roceed without ade;uate financial and accounting now$how. ?. Base your business plan on a wonderful concept. Test it first. !G. S ip the step of preparing a business plan before starting.