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From Backpacks to Briefcases. How to develop your own business plan. Hank Jordan, CMC www.atl.devry.edu/hjordan. Outline of a Business Plan. I. Executive Summary II. Company Description A. Legal Form of Business B. Company’s Mission C. Names of Top Management

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From Backpacks to Briefcases. How to develop your own business plan. Hank Jordan, CMC www.atl.devry.edu/hjordan

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From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

From Backpacksto Briefcases.How to develop yourown business plan.Hank Jordan, CMCwww.atl.devry.edu/hjordan


Outline of a business plan

Outline of a Business Plan

I. Executive Summary

II. Company Description

A. Legal Form of Business

B. Company’s Mission

C. Names of Top Management

D. Location and Geographic Information

E. Company’s Development Stage

F. Company’s Products or Services

G. Specialty Business Information


Outline of a business plan continued

Outline of a Business Plan continued

III. The Industry Analysis

A. Size and Growth Trends

B. Maturity of Industry

C. Vulnerability to Economic Factors

D. Seasonal Factors

E. Technological Factors

F. Regulatory Issues

G. Supply and Distribution

H. Financial Considerations


Outline of a business plan continued1

Outline of a Business Plan continued

IV. The Target Market

A. Demographics/Geographics

B. Lifestyles and Psychographics

C. Purchasing Patterns

D. Buying Sensitivities

E. Size and Trends of Market


Outline of a business plan continued2

Outline of a Business Plan continued

V. The Competition

A. Competitive Position

B. Market Share Distribution

C. Barriers to Entry

D. Future Competition


Outline of a business plan continued3

Outline of a Business Plan continued

VI. Marketing and Sales Strategy

A. Company’s Message

B. Marketing Vehicles

C. Strategic Partnerships

D. Other Marketing Tactics

E. Sales Force and Structure

F. Sales Assumptions


Outline of a business plan continued4

Outline of a Business Plan continued

VII. Operations

A. Plant and Facilities

B. Manufacturing/Production Plan

C. Equipment and Technology

D. Variable Labor Requirements

E. Inventory Management

F. Supply and Distribution

G. Order Fulfillment and Customer Service


Outline of a business plan continued5

Outline of a Business Plan continued

VII. Operations continued

H. Research and Development

I. Capacity Utilization

J. Quality Control

K. Safety, Health and Environmental Concerns

L. Shrinkage

M. Management Information Systems


Outline of a business plan continued6

Outline of a Business Plan continued

VIII. Management and Organization

A. Principals/Key Employees

B. Board of Directors

C. Consultants/Specialists

D. Management to Be Added

E. Organizational Chart

F. Management Style/Corporate Culture


Outline of a business plan continued7

Outline of a Business Plan continued

IX. Development and Exit Plans

A. Long-Term Company Goals

B. Growth Strategy

C. Milestones

D. Risk Evaluation

E. Exit Plan


Outline of a business plan continued8

Outline of a Business Plan continued

X. The Financials(grouped by year)

A. Sales Plan

B. Staffing Plan

C. TQM Plan

D. Marketing Plan

E. Operations Plan

F. Capital Budget

G. Cash Budget


Outline of a business plan continued9

Outline of a Business Plan continued

X. The Financials(continued)

H. Income Statement

I. Balance Sheet

J. Cash Flow

K. Break Even Analysis

L. Plan Assumptions

M. Use of Funds

XI. Appendix


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Time saving tips

Time Saving Tips

  • Develop a research plan

  • Prioritize the most important areas

  • Organize your documentation

  • Use technology

  • When stuck - get help


Considerations for your business

Considerations for Your Business

When you sell a service,

You sell yourself.


Common factors of service businesses

Common Factors of Service Businesses

1. Intangible product;

2. Subjective judgment of Quality;

3. Relatively few barriers to entry;

4. Perishable product;

5. Time lapses between use;

6. Quality depends on the actual service provider.


Trends in business

Trends in Business

Faster delivery speed

Branching out/franchises

One stop shopping/personal banker


Strategies for improving your business

Strategies for Improving Your Business

1. Make your product more tangible;

2. Develop a distinct image;

3. Cultivate referral sources;

4. Stay in touch with your customers;

5. Encourage timely purchases;

6. Stress quality and employee education;

7. Find ways to use excess capacity.


Internal planning for existing businesses corporations

Internal Planning for ExistingBusinesses & Corporations

Define specific objectives such as:

Total revenues

Sales per employee

Revenues per customer

Profit margin

Inventory levels and Production time

Collection activity


Performance objectives

Performance Objectives

Measurable: objective not subjective

Reasonable:reachable goal

Time Specific:by a certain date

Motivational:not too hard, not too easy


Problem solving plan

Problem Solving Plan

1.Define the problem

2.Assemble the team

3.Consider solutions

4.Recommend activities

5.Implement activities

6.Measure activities

Plan - Do - Check - Act


Customer analysis current customers

Customer Analysis - current customers

Products/Services purchased?

Number of units purchased?

Sales $ this year?

Sales $ last year?

Sales $ prior year?


Customer analysis new customers

Customer Analysis - new customers

Reason for purchase?

How was sale secured?

Sales $ this year?

Sales $ last year?

Sales $ potential?


Customer analysis lost customers

Customer Analysis - lost customers

Products/Services purchased?

Reason for loss?

Potential for regain?

Last annual purchase $?

Previous $ high annual?


I the executive summary

I - The Executive Summary

1. Your basic business concept makes sense;

2. Your business had been thoroughly planned;

3. That management is capable;

4. A clear-cut market exists;

5. Your business has competitive advantages;

6. Your financial projections are realistic;

7. Investors have an excellent chance to get a return.


I the executive summary continued

I - The Executive Summary (continued)

  • Your executive summary is the single most important part of your business plan.

  • It must motivate the reader to consider your plan.

  • Prepare your Executive Summary last, only after your entire plan has been completed.


Ii company description

II - Company Description

Names:

Legal or corporate name

Doing business as ...

Brand or trade names

Subsidiary companies


Company description continued

Company Description (continued)

Legal form:

Legal form of business

State incorporated

County for business license

Owners or major stakeholders


Company description continued1

Company Description (continued)

Management/Leadership:

Chairperson of the board

President

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Advisory board members


Company description continued2

Company Description (continued)

Location:

Company headquarters

Place of business

Branches

Geographic area served


Company description continued3

Company Description (continued)

Developmental stage:

When company was founded

When product or service introduced

Milestones reached

Significant developmental indicators


Company description continued4

Company Description (continued)

Financial status:

Last year’s total sales

Last year’s pretax profit

Current number of employees

Amount of funds sought

Basic use for funds sought

Major financial obligations


Company description continued5

Company Description (continued)

Products and services:

General description

Number and type of lines

Number in each line

Patents and licenses:

Patents held and pending

Trademarks held and pending

Licenses held and pending


Iii industry analysis

III - Industry Analysis

  • A description of your industry

  • Current trends in your industry

  • Strategic opportunities that exist in your industry


Your economic sector

Your Economic Sector

Service

Manufacturing

Retail

Distribution

Note: your business may belong to more than one


Size and growth rate

Size and Growth Rate

Two years ago

Last year

This year

Next year

Five years out


Industry maturity

Industry Maturity

Introduction

Growth

Mature

Decline


Sensitive to economics

Sensitive to Economics

Which of these will affect your business?

Little business expansion

Increased unemployment

High interest rates

High inflation

Weakened dollar


Seasonality

Seasonality

How many seasons does your business have?

Holidays

Summer

Winter

Spring

Fall


Technological change

Technological Change

How will changes in technology affect . . .

your products

your services

your costs

your business


Regulation and certification

Regulation and Certification

National

State

County

What effects will they have on your business?


Plan preparation form

Plan Preparation Form

Industry description

Industry trends

Strategic opportunities


Iv the target market

IV - The Target Market

Demographic

Geographic

Psychographic


Market size and trends

Market Size and Trends

  • What is the current size?

  • What is the rate of growth?

  • Are changes occurring in your market?

  • Are social values affecting your market?

  • What else is affecting your market?


Strategic opportunities

Strategic Opportunities

  • Alliances with other businesses?

  • Who makes the decision to buy?

  • How are these decisions made?

  • How can you get your message to them?

  • Compare your business to the competition?


V the competition

V - The Competition

Know who your major competitors are?

On what basis do you compete?

Who are your potential future competitors?

What barriers exist for new competitors?


Customer perception factors

Customer Perception Factors

  • Product or service features

  • Convenience

  • Quality

  • Durability

  • Image or intangibles

  • Customer relations

  • Social image


Internal operational factors

Internal Operational Factors

  • Financial resources

  • Marketing program

  • Economies of scale

  • Operational efficiencies

  • Strategic partnerships

  • Company esprit de corps


Market share distribution

Market Share Distribution

List each competitor and show . . .

Percent of total revenues

Percent of total units sold

Trend of market share (up or down)


Barriers to entry

Barriers to entry

Patented process

Trademarks

High start up costs

Substantial expertise required

Lack of suppliers or distributors

Market already saturated

Sophisticated machinery


Vi marketing and sales strategy

VI - Marketing and Sales Strategy

This section should cover . . .

How do you make customers aware of your product?

What message are you trying to convey?

What methods will you use?

How will you get the actual sales?


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


The four p s of marketing

The Four P’s of Marketing

Product: quality, features, style, options, packaging, guarantees, services, spares

Price: list, discounts, allowances, credit terms, payment terms, rental, lease

Place: numbers and types, locations/availability, inventory levels, transportation

Promotion: advertising, personal selling, sales promotion, point-of purchase, publicity


The five f s of customer wants

The Five F’s of Customer Wants

1.Functions: does it work?

2.Finances: is it worthwhile?

3.Freedom: easy to use?

4.Feelings: do I really feel better?

5.Future: will I have support?

Am I receiving true benefits?


Marketing vehicles

Marketing Vehicles

Brochures:leaflets, flyers

Print media:newspapers, magazines

Broadcast media: radio, television

Advertising specials:caps, pens, calculators

Direct mail:brochures, coupons

Public relations:news articles, specials

Sampling:free products, coupons


Strategic partnerships

Strategic Partnerships

Cooperative advertising: two companies mentioned in the advertisement;

Licensing: let someone else use your product as part of their product;

Distribution agreement: let someone else carry your product;

Bundling: let another company include your product as part of a total package.


Sales process and productivity

Sales Process and Productivity

1. How do you identify potential customers?

2. Should you use cold calling?

3. How do you qualify potential customers?

4. Who should be allowed to contact customers?

5. How frequently should you follow up?

6. What are your sales goals?

7. How do you capture all of this information?


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Vii operations

VII - Operations

Theory into practice.

Master the basics.

Define standards of performance.


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


What your operations section should cover

What Your OperationsSection Should Cover

Issues that . . .

1. Are essential to your business

2. Will help you succeed

3. Will provide a competitive advantage

4. Will overcome frequent problems


Facilities selection considerations

Facilities Selection Considerations

Location

Lease versus Purchase

Improvements

Utilities/Maintenance

Exit clauses

Other key factors


Inventory management and control

Inventory Management and Control

1.How much is enough?

2.How much is too much?

3.When and where to purchase supplies?

4.What type of system to use?

5.Who is responsible for its accuracy?

6.Which distribution methods to use?


Order fulfillment and customer service

Order Fulfillment and Customer Service

Who is the best in your industry?

Utilize benchmarking.

L.L. Bean

Ritz Carlton

Federal Express

Motorola

What makes them the best?


Order fulfillment and customer service continued

Order Fulfillment and Customer Service continued

1. Who specifically processes orders?

2. How are orders checked?

3. What percent are incorrect?

4. How and when do you ship?

5. Who is responsible for extra costs?

6. What service programs do you offer?

7. What is your return policy?

8. How do you solicit customer feedback?


Assessing your production plan

Assessing your production plan

Workforce: level or chase strategy?

Productivity: output divided by input.

Capacity: time available for work.

Quality: cost of quality (Cost of doing it right

+ Cost of doing it wrong).


Staffing chart or plan

Staffing Chart or Plan

1.Level or chase strategy?

2.How many employees at start-up?

3.Skills required?

4.How will you attract qualified people?

5.How will you keep qualified people?

6.Who is going to keep track of payrolls?


Research and development

Research and Development

  • New products in development?

  • New services in development?

  • Who is doing the development?

  • How much company time is spent on R&D?

  • What equipment is needed for R&D?

  • What are the trends in your industry?

  • What is your competition spending on R&D?


Other operational issues

Other Operational Issues

How are you ensuring safe working conditions?

How are you protecting the environment?

How are you complying with governmental regulations?

How are you providing adequate insurance protection?

How are you managing start up activities?


Start up costs

Start Up Costs

Facilities: Initial rent/Purchase

Equipment: Furniture, Equipment, Telephones, Vehicles, Other

Materials: Initial inventory

Supplies: Production materials, Packaging supplies, Brochures, Samples, Other

Fees: Permits, Inspections, Licenses

Other Costs: Accounting, Legal, Insurance, Marketing, Salaries, Unanticipated costs


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Viii management and organization

VIII - Management and Organization

Your management team:

Key employees and Principals

Board of directors

Advisory committee

Consultants and specialists

Key people to be added


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Your management team

Your Management Team

Do your key players . . .

Possess the necessary skills

Have a record of success

Have a team member attitude

As a whole are they effective


Management compensation and incentives

Management Compensation and Incentives

Salary

Bonuses

Commissions

Profit sharing

Equity

Stock


Consultants and other specialists

Consultants and other Specialists

Management consultants

Marketing consultants

Designers and Engineers

Industry specialists

Attorneys

Accountants


Management structure and style

Management Structure and Style

1.How will decisions be made?

2.What are the lines of authority?

3.How much employee involvement do you want?

4.Do you believe in empowerment?

5.What will be the corporate culture?

6.Do you have a clear set of company policies?

7.How will you handle sexual harassment?


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Ix development and exit plans

IX - Development and Exit Plans

You can’t reach a goal you haven’t set.

What do you want your business to look like in two, three, five years?

Your long terms plans should include goals, milestones, risks and an exit plan.


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


What are your goals

What are your goals?

1. Steady provider?

2. Innovator?

3. Quality leader?

4. Industry leader?

5. Niche leader?

6. Exploiter?


Growth strategies

Growth Strategies

1.Market penetration

2.Promotion and support

3.Expansion

4.Increase focus

5.Diversify

6.Refocus

Plan - Do - Check - Act


Milestones

Milestones

  • How will your investors know you are making sufficient progress towards your goals?

  • A milestone list focuses on the specific objectives you intend to achieve by date.

  • Progress comes slowly, be conservative.


Risk evaluation

Risk Evaluation

  • Work on solving today’s problems and avoiding tomorrows.

  • Every enterprise involves risk.

  • Risks include . . .


Exit plan

Exit Plan

How do investor’s get their money back?

1. Go public5. Buy out

2. Acquisition6. Franchise

3. Sale7. Hand down

4. Merger8. Close


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


X the financials

X - The Financials

Numbers are merely the reflection of . . .

the decisions you make.


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Numbers represent your decisions

Numbers represent your decisions

Every business decision leads to . . .

a number,

which taken together form the basis of . . .

your financials.


Can i use my visa card to pay for my mastercard bill

Can I use my Visa card topay for my MasterCard bill?


What do you mean i m broke

What do you mean I’m broke?

I still have checks!


Getting control of your finances

Getting control of your finances

1.Read your statements.

2.Set policies and stick with them.

3.Use automation where practical.

4.Do not be afraid to get help.

Remember YOU are making management decisions based on this information.


Types of financial forms

Types of Financial Forms

1.Income Statement - are we making a profit?

2.Cash Flow Projections - can we pay our bills?

3.Balance Sheet - how much are we worth?


General financial terms you should know

General Financial Terms you should know

Accounts payableCurrent liabilities

Accounts receivableDebt

Accumulated depreciationDepreciation

AssetsEquity

Assets currentFixed costs

Assets fixedGross profit

CashLiabilities

Cost of goodsLong term liabilities


General financial terms continued

General Financial Terms continued

Net profit

Net worth

Other or Intangible assets

Profit

Pro forma

Others?


Guidelines for preparing your financials

Guidelines for Preparing Your Financials

1.Be conservative

2.Be honest

3.Use standard terminology

4.Get realistic advice

5.Follow practices in your industry

6.Choose the appropriate accounting method

7.Be consistent


Income or p l statement

Income or P & L Statement

Income:

Gross Sales - Returns & Allowances = Net Sales

- Cost of Goods = Gross Profit

Expenses: -

Salaries & wages; Employee benefits; Payroll taxes

Sales Commissions; Professional Services; Rent;

Maintenance; Equipment Rental; Furniture &

Equipment; Depreciation and Amortization; Insurance;

Interest; Utilities; Telephone; Office supplies; Postage and Shipping; Marketing & Advertising; Travel; Other.

Net income before taxes

- Provision for taxes on income

Net Income After Taxes (Net Profit)


Cash flow projections

Cash-Flow Projections

Why is this the single most important financial statement?

If you can’t pay your bills, you are not going to stay in business.


Cash flow items

Cash-Flow Items

Cash salesReserve

CollectionsOwner’s draw

Interest IncomeNet cash flow

Loan proceedsOpening cash balance

Cost of goods

Operating expenses


The balance sheet

The Balance Sheet

Provides a snapshot of the overall financial worth of the company.

It accounts for all the company’s assets minus all the company’s liabilities.

The remaining amount is figured to be the net worth of the company.


Sources and use of funds

Sources and Use of Funds

Equity Financing: selling ownership via . . .

Preferred stock

Common Stock

Debt Financing: taking out loans via . . .

Mortgage loans

Short and Long Term Loans

Investment from Principals: you or other key individuals will contribute


Assumption sheet

Assumption Sheet

Contains information you have already gathered.

Total sales per product line

Total payroll costs

Calculate gross margin per product line

Total costs and timing for additional expenses

Changes in costs or timing of financing

Other costs such as . . .


Break even analysis

Break Even Analysis

Why do you need to know this?

You need to know . . .

Fixed expenses

and

Gross profit margin (GPM)


From backpacks to briefcases how to develop your own business plan hank jordan cmc atl devry

Financial Flow Chart

Sales Plan

Production Plan

Staffing Plan

TQM Plan

Marketing Plan

Operations Plan

Cash Budget

Capital Budget

Income Statement

Balance Sheet

Cash Flow


Xi appendix

XI - Appendix

State and Federal forms

Drawings and layouts

Photographs

Surveys

Other


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