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Business Plan for a Startup Business

The business plan consists of a narrative and several financial worksheets. The narrative template is the body of the business plan. It contains more than 150 uestions divided into several sections. !ork through the sections in any order that you like" e#cept for the Executive Summary, which should be done last. $kip any uestions that do not apply to your type of business. !hen you are finished writing your first draft" you%ll have a collection of small essays on the various topics of the business plan. Then you%ll want to edit them into a smooth&flowing narrative. The real value of creating a business plan is not in having the finished product in hand' rather" the value lies in the process of researching and thinking about your business in a systematic way. The act of planning helps you to think things through thoroughly" study and research if you are not sure of the facts" and look at your ideas critically. It takes time now" but avoids costly" perhaps disastrous" mistakes later. This business plan is a generic model suitable for all types of businesses. (owever" you should modify it to suit your particular circumstances. )efore you begin" review the section titled Refining the Plan" found at the end. It suggests emphasi*ing certain areas depending upon your type of business +manufacturing" retail" service" etc.,. It also has tips for fine&tuning your plan to make an effective presentation to investors or bankers. If this is why you%re creating your plan" pay particular attention to your writing style. -ou will be .udged by the uality and appearance of your work as well as by your ideas. It typically takes several weeks to complete a good plan. /ost of that time is spent in research and re&thinking your ideas and assumptions. )ut then" that%s the value of the process. $o make time to do the .ob properly. Those who do never regret the effort. 0nd finally" be sure to keep detailed notes on your sources of information and on the assumptions underlying your financial data.

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Business Plan

OWNERS
-our )usiness 2ame 0ddress 3ine 1 0ddress 3ine 1 4ity" $T 5IP 4ode Telephone 6a# 7&/ail

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I.

Table of Contents

I.Table of 4ontents.................................................................................3 II.7#ecutive $ummary............................................................................8 III.9eneral 4ompany :escription............................................................5 I;.Products and $ervices........................................................................< ;./arketing Plan....................................................................................= ;I.>perational Plan...............................................................................15 ;II./anagement and >rgani*ation.......................................................10 ;III.Personal 6inancial $tatement.........................................................11 I?.$tartup 7#penses and 4apitali*ation................................................11 ?.6inancial Plan....................................................................................13 ?I.0ppendices.......................................................................................1< ?II.@efining the Plan.............................................................................1=

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II.
!rite this section last.

Executive Summary

!e suggest that you make it two pages or fewer. Include everything that you would cover in a five&minute interview. 7#plain the fundamentals of the proposed businessA !hat will your product beB !ho will your customers beB !ho are the ownersB !hat do you think the future holds for your business and your industryB /ake it enthusiastic" professional" complete" and concise. If applying for a loan" state clearly how much you want" precisely how you are going to use it" and how the money will make your business more profitable" thereby ensuring repayment.

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III.

eneral Company !escription

!hat business will you be inB !hat will you doB /ission $tatementA /any companies have a brief mission statement" usually in 30 words or fewer" e#plaining their reason for being and their guiding principles. If you want to draft a mission statement" this is a good place to put it in the plan" followed byA 4ompany 9oals and >b.ectivesA 9oals are destinationsCwhere you want your business to be. >b.ectives are progress markers along the way to goal achievement. 6or e#ample" a goal might be to have a healthy" successful company that is a leader in customer service and that has a loyal customer following. >b.ectives might be annual sales targets and some specific measures of customer satisfaction. )usiness PhilosophyA !hat is important to you in businessB To whom will you market your productsB +$tate it briefly hereCyou will do a more thorough e#planation in the Marketing Plan section,. :escribe your industry. Is it a growth industryB !hat changes do you foresee in the industry" short term and long termB (ow will your company be poised to take advantage of themB :escribe your most important company strengths and core competencies. !hat factors will make the company succeedB !hat do you think your ma.or competitive strengths will beB !hat background e#perience" skills" and strengths do you personally bring to this new ventureB 3egal form of ownershipA $ole proprietor" Partnership" 4orporation" 3imited liability corporation +334,B !hy have you selected this formB

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I".

Pro#ucts an# Services

:escribe in depth your products or services +technical specifications" drawings" photos" sales brochures" and other bulky items belong in Appendices,. !hat factors will give you competitive advantages or disadvantagesB 7#amples include level of uality or uni ue or proprietary features. !hat are the pricing" fee" or leasing structures of your products or servicesB

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".

$ar%etin& Plan

$ar%et researc' ( W'y)

2o matter how good your product and your service" the venture cannot succeed without effective marketing. 0nd this begins with careful" systematic research. It is very dangerous to assume that you already know about your intended market. -ou need to do market research to make sure you%re on track. Dse the business planning process as your opportunity to uncover data and to uestion your marketing efforts. -our time will be well spent.

$ar%et researc' ( *o+)

There are two kinds of market researchA primary and secondary. $econdary research means using published information such as industry profiles" trade .ournals" newspapers" maga*ines" census data" and demographic profiles. This type of information is available in public libraries" industry associations" chambers of commerce" from vendors who sell to your industry" and from government agencies. $tart with your local library. /ost librarians are pleased to guide you through their business data collection. -ou will be ama*ed at what is there. There are more online sources than you could possibly use. -our chamber of commerce has good information on the local area. Trade associations and trade publications often have e#cellent industry&specific data. Primary research means gathering your own data. 6or e#ample" you could do your own traffic count at a proposed location" use the yellow pages to identify competitors" and do surveys or focus&group interviews to learn about consumer preferences. Professional market research can be very costly" but there are many books that show small business owners how to do effective research themselves. In your marketing plan" be as specific as possible' give statistics" numbers" and sources. The marketing plan will be the basis" later on" of the all& important sales pro.ection.

Economics
6acts about your industryA !hat is the total si*e of your marketB !hat percent share of the market will you haveB +This is important only if you think you will be a ma.or factor in the market.,

Page E of 30 4urrent demand in target market. Trends in target marketCgrowth trends" trends in consumer preferences" and trends in product development. 9rowth potential and opportunity for a business of your si*e. !hat barriers to entry do you face in entering this market with your new companyB $ome typical barriers areA o (igh capital costs o (igh production costs o (igh marketing costs o 4onsumer acceptance and brand recognition o Training and skills o Dni ue technology and patents o Dnions o $hipping costs o Tariff barriers and uotas 0nd of course" how will you overcome the barriersB (ow could the following affect your companyB o 4hange in technology o 4hange in government regulations o 4hange in the economy o 4hange in your industry

Pro#uct
In the Products and Services section" you described your products and services as you see them. 2ow describe them from your customers% point of view.

Page F of 30 ,eatures an# Benefits 3ist all of your ma.or products or services. 6or each product or serviceA :escribe the most important features. !hat is special about itB :escribe the benefits. That is" what will the product do for the customerB

2ote the difference between features and benefits" and think about them. 6or e#ample" a house that gives shelter and lasts a long time is made with certain materials and to a certain design' those are its features. Its benefits include pride of ownership" financial security" providing for the family" and inclusion in a neighborhood. -ou build features into your product so that you can sell the benefits. !hat after&sale services will you giveB $ome e#amples are delivery" warranty" service contracts" support" follow&up" and refund policy.

Customers
Identify your targeted customers" their characteristics" and their geographic locations" otherwise known as their demographics. The description will be completely different depending on whether you plan to sell to other businesses or directly to consumers. If you sell a consumer product" but sell it through a channel of distributors" wholesalers" and retailers" you must carefully analy*e both the end consumer and the middleman businesses to which you sell. -ou may have more than one customer group. Identify the most important groups. Then" for each customer group" construct what is called a demographic profileA 0ge 9ender 3ocation Income level $ocial class and occupation 7ducation

Page 10 of 30 >ther +specific to your industry, >ther +specific to your industry,

6or business customers" the demographic factors might beA Industry +or portion of an industry, 3ocation $i*e of firm Guality" technology" and price preferences >ther +specific to your industry, >ther +specific to your industry,

Competition
!hat products and companies will compete with youB 3ist your ma.or competitorsA +2ames and addresses, !ill they compete with you across the board" or .ust for certain products" certain customers" or in certain locationsB !ill you have important indirect competitorsB +6or e#ample" video rental stores compete with theaters" although they are different types of businesses., (ow will your products or services compare with the competitionB Dse the 4ompetitive 0nalysis table below to compare your company with your two most important competitors. In the first column are key competitive factors. $ince these vary from one industry to another" you may want to customi*e the list of factors. In the column labeled $e" state how you honestly think you will stack up in customersH minds. Then check whether you think this factor will be a strength or a weakness for you. $ometimes it is hard to analy*e our own weaknesses. Try to be very honest here. )etter yet" get some disinterested strangers to assess you. This can be a real eye&opener. 0nd remember that you cannot be all things to all people. In fact" trying to be causes many business failures because efforts become scattered and diluted. -ou want an honest assessment of your firmHs strong and weak points.

Page 11 of 30 2ow analy*e each ma.or competitor. In a few words" state how you think they compare. In the final column" estimate the importance of each competitive factor to the customer. 1 I critical' 5 I not very important.
Table -. Competitive /nalysis
,actor $e Stren& t' Wea%ne ss Competitor / Competitor B Importance to Customer

Pro#ucts Price 0uality Selection Service Reliability Stability Expertise Company Reputation 1ocation /ppearance Sales $et'o# Cre#it Policies /#vertisin& Ima&e

Page 11 of 30 2ow" write a short paragraph stating your competitive advantages and disadvantages.

Nic'e
2ow that you have systematically analy*ed your industry" your product" your customers" and the competition" you should have a clear picture of where your company fits into the world. In one short paragraph" define your niche" your uni ue corner of the market.

Strate&y
2ow outline a marketing strategy that is consistent with your niche. Promotion (ow will you get the word out to customersB 0dvertisingA !hat media" why" and how oftenB !hy this mi# and not some otherB (ave you identified low&cost methods to get the most out of your promotional budgetB !ill you use methods other than paid advertising" such as trade shows" catalogs" dealer incentives" word of mouth +how will you stimulate itB," and network of friends or professionalsB !hat image do you want to pro.ectB (ow do you want customers to see youB In addition to advertising" what plans do you have for graphic image supportB This includes things like logo design" cards and letterhead" brochures" signage" and interior design +if customers come to your place of business,. $hould you have a system to identify repeat customers and then systematically contact themB Promotional Bu#&et (ow much will you spend on the items listed aboveB )efore startupB +These numbers will go into your startup budget., >ngoingB +These numbers will go into your operating plan budget.,

Page 13 of 30 Pricin& 7#plain your method or methods of setting prices. 6or most small businesses" having the lowest price is not a good policy. It robs you of needed profit margin' customers may not care as much about price as you think' and large competitors can under price you anyway. Dsually you will do better to have average prices and compete on uality and service. :oes your pricing strategy fit with what was revealed in your competitive analysisB 4ompare your prices with those of the competition. 0re they higher" lower" the sameB !hyB (ow important is price as a competitive factorB :o your intended customers really make their purchase decisions mostly on priceB !hat will be your customer service and credit policiesB Propose# 1ocation Probably you do not have a precise location picked out yet. This is the time to think about what you want and need in a location. /any startups run successfully from home for a while. -ou will describe your physical needs later" in the Operational Plan section. (ere" analy*e your location criteria as they will affect your customers. Is your location important to your customersB If yes" howB If customers come to your place of businessA Is it convenientB ParkingB Interior spacesB 2ot out of the wayB Is it consistent with your imageB Is it what customers want and e#pectB !here is the competition locatedB Is it better for you to be near them +like car dealers or fast food restaurants, or distant +like convenience food stores,B !istribution C'annels (ow do you sell your products or servicesB @etail

Page 18 of 30 :irect +mail order" !eb" catalog, !holesale -our own sales force 0gents Independent representatives )id on contracts

Sales ,orecast
2ow that you have described your products" services" customers" markets" and marketing plans in detail" it%s time to attach some numbers to your plan. Dse a sales forecast spreadsheet to prepare a month&by&month pro.ection. The forecast should be based on your historical sales" the marketing strategies that you have .ust described" your market research" and industry data" if available. -ou may want to do two forecastsA 1, a Jbest guessJ" which is what you really e#pect" and 1, a Jworst caseJ low estimate that you are confident you can reach no matter what happens. @emember to keep notes on your research and your assumptions as you build this sales forecast and all subse uent spreadsheets in the plan. This is critical if you are going to present it to funding sources.

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"I.

Operational Plan

7#plain the daily operation of the business" its location" e uipment" people" processes" and surrounding environment.

Pro#uction
(ow and where are your products or services producedB 7#plain your methods ofA Production techni ues and costs Guality control 4ustomer service Inventory control Product development

1ocation
!hat ualities do you need in a locationB :escribe the type of location you%ll have. Physical re uirementsA 0mount of space Type of building 5oning Power and other utilities

0ccessA Is it important that your location be convenient to transportation or to suppliersB :o you need easy walk&in accessB !hat are your re uirements for parking and pro#imity to freeway" airports" railroads" and shipping centersB

Page 1< of 30 Include a drawing or layout of your proposed facility if it is important" as it might be for a manufacturer. 4onstructionB /ost new companies should not sink capital into construction" but if you are planning to build" costs and specifications will be a big part of your plan. 4ostA 7stimate your occupation e#penses" including rent" but also including maintenance" utilities" insurance" and initial remodeling costs to make the space suit your needs. These numbers will become part of your financial plan. !hat will be your business hoursB

1e&al Environment
:escribe the followingA 3icensing and bonding re uirements Permits (ealth" workplace" or environmental regulations $pecial regulations covering your industry or profession 5oning or building code re uirements Insurance coverage Trademarks" copyrights" or patents +pending" e#isting" or purchased,

Personnel
2umber of employees Type of labor +skilled" unskilled" and professional, !here and how will you find the right employeesB Guality of e#isting staff Pay structure Training methods and re uirements !ho does which tasksB

Page 1= of 30 :o you have schedules and written procedures preparedB (ave you drafted .ob descriptions for employeesB If not" take time to write some. They really help internal communications with employees. 6or certain functions" will you use contract workers in addition to employeesB

Inventory
!hat kind of inventory will you keepA raw materials" supplies" finished goodsB 0verage value in stock +i.e." what is your inventory investment,B @ate of turnover and how this compares to the industry averagesB $easonal buildupsB 3ead&time for orderingB

Suppliers
Identify key suppliersA 2ames and addresses Type and amount of inventory furnished 4redit and delivery policies (istory and reliability

$hould you have more than one supplier for critical items +as a backup,B :o you e#pect shortages or short&term delivery problemsB 0re supply costs steady or fluctuatingB If fluctuating" how would you deal with changing costsB

Cre#it Policies
:o you plan to sell on creditB :o you really need to sell on creditB Is it customary in your industry and e#pected by your clienteleB

Page 1E of 30 If yes" what policies will you have about who gets credit and how muchB (ow will you check the creditworthiness of new applicantsB !hat terms will you offer your customers' that is" how much credit and when is payment dueB !ill you offer prompt payment discountsB +(intA :o this only if it is usual and customary in your industry., :o you know what it will cost you to e#tend creditB (ave you built the costs into your pricesB

$ana&in& 2our /ccounts Receivable If you do e#tend credit" you should do an aging at least monthly to track how much of your money is tied up in credit given to customers and to alert you to slow payment problems. 0 receivables aging looks like the following tableA
Total /ccounts Receivable /&in& Current 34 !ays 54 !ays 64 !ays Over 64 !ays

-ou will need a policy for dealing with slow&paying customersA !hen do you make a phone callB !hen do you send a letterB !hen do you get your attorney to threatenB

$ana&in& 2our /ccounts Payable -ou should also age your accounts payable" what you owe to your suppliers. This helps you plan whom to pay and when. Paying too early depletes your cash" but paying late can cost you valuable discounts and can damage your credit. +(intA If you know you will be late making a payment" call the creditor before the due date., :o your proposed vendors offer prompt payment discountsB

Page 1F of 30 0 payables aging looks like the following table.

Total /ccounts Payable /&in& Current 34 !ays 54 !ays 64 !ays Over 64 !ays

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"II. $ana&ement an# Or&ani7ation

!ho will manage the business on a day&to&day basisB !hat e#perience does that person bring to the businessB !hat special or distinctive competenciesB Is there a plan for continuation of the business if this person is lost or incapacitatedB If you%ll have more than 10 employees" create an organi*ational chart showing the management hierarchy and who is responsible for key functions. Include position descriptions for key employees. If you are seeking loans or investors" include resumes of owners and key employees.

Professional an# /#visory Support

3ist the followingA )oard of directors /anagement advisory board 0ttorney 0ccountant Insurance agent )anker 4onsultant or consultants /entors and key advisors

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"III. Personal ,inancial Statement

Include personal financial statements for each owner and ma.or stockholder" showing assets and liabilities held outside the business and personal net worth. >wners will often have to draw on personal assets to finance the business" and these statements will show what is available. )ankers and investors usually want this information as well.

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I8.

Startup Expenses an# Capitali7ation

-ou will have many startup e#penses before you even begin operating your business. It%s important to estimate these e#penses accurately and then to plan where you will get sufficient capital. This is a research pro.ect" and the more thorough your research efforts" the less chance that you will leave out important e#penses or underestimate them. 7ven with the best of research" however" opening a new business has a way of costing more than you anticipate. There are two ways to make allowances for surprise e#penses. The first is to add a little KpaddingL to each item in the budget. The problem with that approach" however" is that it destroys the accuracy of your carefully wrought plan. The second approach is to add a separate line item" called contingencies" to account for the unforeseeable. This is the approach we recommend. Talk to others who have started similar businesses to get a good idea of how much to allow for contingencies. If you cannot get good information" we recommend a rule of thumb that contingencies should e ual at least 10 percent of the total of all other start&up e#penses. 7#plain your research and how you arrived at your forecasts of e#penses. 9ive sources" amounts" and terms of proposed loans. 0lso e#plain in detail how much will be contributed by each investor and what percent ownership each will have.

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8.

,inancial Plan

The financial plan consists of a 11&month profit and loss pro.ection" a four& year profit and loss pro.ection +optional," a cash&flow pro.ection" a pro.ected balance sheet" and a break&even calculation. Together they constitute a reasonable estimate of your companyHs financial future. /ore important" the process of thinking through the financial plan will improve your insight into the inner financial workings of your company.

-9($ont' Profit an# 1oss Pro:ection

/any business owners think of the 11&month profit and loss pro.ection as the centerpiece of their plan. This is where you put it all together in numbers and get an idea of what it will take to make a profit and be successful. -our sales pro.ections will come from a sales forecast in which you forecast sales" cost of goods sold" e#penses" and profit month&by&month for one year. Profit pro.ections should be accompanied by a narrative e#plaining the ma.or assumptions used to estimate company income and e#penses. @esearch 2otesA Meep careful notes on your research and assumptions" so that you can e#plain them later if necessary" and also so that you can go back to your sources when it%s time to revise your plan.

,our(2ear Profit Pro:ection ;Optional<

The 11&month pro.ection is the heart of your financial plan. This section is for those who want to carry their forecasts beyond the first year. >f course" keep notes of your key assumptions" especially about things that you e#pect will change dramatically after the first year.

Pro:ecte# Cas' ,lo+

If the profit pro.ection is the heart of your business plan" cash flow is the blood. )usinesses fail because they cannot pay their bills. 7very part of your business plan is important" but none of it means a thing if you run out of cash. The point of this worksheet is to plan how much you need before startup" for preliminary e#penses" operating e#penses" and reserves. -ou should keep updating it and using it afterward. It will enable you to foresee shortages in time to do something about themCperhaps cut e#penses" or perhaps negotiate a loan. )ut foremost" you shouldn%t be taken by surprise. There is no great trick to preparing itA The cash&flow pro.ection is .ust a forward look at your checking account.

Page 18 of 30 6or each item" determine when you actually e#pect to receive cash +for sales, or when you will actually have to write a check +for e#pense items,. -ou should track essential operating data" which is not necessarily part of cash flow but allows you to track items that have a heavy impact on cash flow" such as sales and inventory purchases. -ou should also track cash outlays prior to opening in a pre&startup column. -ou should have already researched those for your startup e#penses plan. -our cash flow will show you whether your working capital is ade uate. 4learly" if your pro.ected cash balance ever goes negative" you will need more start&up capital. This plan will also predict .ust when and how much you will need to borrow. 7#plain your ma.or assumptions" especially those that make the cash flow differ from the Profit and Loss Pro ection. 6or e#ample" if you make a sale in month one" when do you actually collect the cashB !hen you buy inventory or materials" do you pay in advance" upon delivery" or much laterB (ow will this affect cash flowB 0re some e#penses payable in advanceB !henB 0re there irregular e#penses" such as uarterly ta# payments" maintenance and repairs" or seasonal inventory buildup" that should be budgetedB 3oan payments" e uipment purchases" and ownerHs draws usually do not show on profit and loss statements but definitely do take cash out. )e sure to include them. 0nd of course" depreciation does not appear in the cash flow at all because you never write a check for it.

Openin& !ay Balance S'eet

0 balance sheet is one of the fundamental financial reports that any business needs for reporting and financial management. 0 balance sheet shows what items of value are held by the company +assets," and what its debts are +liabilities,. !hen liabilities are subtracted from assets" the remainder is owners% e uity. Dse a startup e#penses and capitali*ation spreadsheet as a guide to preparing a balance sheet as of opening day. Then detail how you calculated the account balances on your opening day balance sheet. >ptionalA $ome people want to add a pro.ected balance sheet showing the estimated financial position of the company at the end of the first year. This is especially useful when selling your proposal to investors.

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Brea%(Even /nalysis
0 break&even analysis predicts the sales volume" at a given price" re uired to recover total costs. In other words" it%s the sales level that is the dividing line between operating at a loss and operating at a profit. 7#pressed as a formula" break&even isA

)reak&7ven $ales I

6i#ed 4osts 1& ;ariable 4osts

+!here fi#ed costs are e#pressed in dollars" but variable costs are e#pressed as a percent of total sales., Include all assumptions upon which your break&even calculation is based.

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8I.

/ppen#ices

Include details and studies used in your business plan' for e#ampleA )rochures and advertising materials Industry studies )lueprints and plans /aps and photos of location /aga*ine or other articles :etailed lists of e uipment owned or to be purchased 4opies of leases and contracts 3etters of support from future customers 0ny other materials needed to support the assumptions in this plan /arket research studies 3ist of assets available as collateral for a loan

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8II. Refinin& t'e Plan

The generic business plan presented above should be modified to suit your specific type of business and the audience for which the plan is written.

,or Raisin& Capital

,or Ban%ers )ankers want assurance of orderly repayment. If you intend using this plan to present to lenders" includeA o 0mount of loan o (ow the funds will be used o !hat this will accomplishChow will it make the business strongerB o @e uested repayment terms +number of years to repay,. -ou will probably not have much negotiating room on interest rate but may be able to negotiate a longer repayment term" which will help cash flow. o 4ollateral offered" and a list of all e#isting liens against collateral ,or Investors Investors have a different perspective. They are looking for dramatic growth" and they e#pect to share in the rewardsA o 6unds needed short&term o 6unds needed in two to five years o (ow the company will use the funds" and what this will accomplish for growth. o 7stimated return on investment o 7#it strategy for investors +buyback" sale" or IP>, o Percent of ownership that you will give up to investors o /ilestones or conditions that you will accept o 6inancial reporting to be provided

Page 1E of 30 o Involvement of investors on the board or in management

,or Type of Business

$anufacturin& Planned production levels 0nticipated levels of direct production costs and indirect +overhead, costsChow do these compare to industry averages +if available,B Prices per product line 9ross profit margin" overall and for each product line ProductionNcapacity limits of planned physical plant ProductionNcapacity limits of e uipment Purchasing and inventory management procedures 2ew products under development or anticipated to come online after startup

Service Businesses $ervice businesses sell intangible products. They are usually more fle#ible than other types of businesses" but they also have higher labor costs and generally very little in fi#ed assets. !hat are the key competitive factors in this industryB -our prices /ethods used to set prices $ystem of production management Guality control procedures. $tandard or accepted industry uality standards. (ow will you measure labor productivityB Percent of work subcontracted to other firms. !ill you make a profit on subcontractingB 4redit" payment" and collections policies and procedures

Page 1F of 30 $trategy for keeping client base

*i&' Tec'nolo&y Companies 7conomic outlook for the industry !ill the company have information systems in place to manage rapidly changing prices" costs" and marketsB !ill you be on the cutting edge with your products and servicesB !hat is the status of research and developmentB 0nd what is re uired toA o )ring productNservice to marketB o Meep the company competitiveB (ow does the companyA o Protect intellectual propertyB o 0void technological obsolescenceB o $upply necessary capitalB o @etain key personnelB (igh&tech companies sometimes have to operate for a long time without profits and sometimes even without sales. If this fits your situation" a banker probably will not want to lend to you. ;enture capitalists may invest" but your story must be very good. -ou must do longer&term financial forecasts to show when profit take&off is e#pected to occur. 0nd your assumptions must be well documented and well argued. Retail Business 4ompany image PricingA o 7#plain markup policies. o Prices should be profitable" competitive" and in accordance with company image. InventoryA

Page 30 of 30 o $election and price should be consistent with company image. o Inventory levelA 6ind industry average numbers for annual inventory turnover rate +available in @/0 book,. /ultiply your initial inventory investment by the average turnover rate. The result should be at least e ual to your pro.ected first yearHs cost of goods sold. If it is not" you may not have enough budgeted for startup inventory. 4ustomer service policiesA These should be competitive and in accord with company image. 3ocationA :oes it give the e#posure that you needB Is it convenient for customersB Is it consistent with company imageB PromotionA /ethods used" cost. :oes it pro.ect a consistent company imageB 4reditA :o you e#tend credit to customersB If yes" do you really need to" and do you factor the cost into pricesB