Create Your Business PlanCreate Your Business Plan

A A SCORESCORE Seminar Seminar

Sponsored by Southwest Florida Sponsored by Southwest Florida SCORESCORE Chapter 219 Chapter 219In cooperation with Edison CollegeIn cooperation with Edison College

Session 2

AgendaAgenda

Last session covered the first three narrative Last session covered the first three narrative sections of a Business Plan; The Market, The sections of a Business Plan; The Market, The Business and The Marketing Plan.Business and The Marketing Plan.

Today we will cover three more narrative Today we will cover three more narrative sections; The Operational Plan, The sections; The Operational Plan, The Management Plan and The Business Support Management Plan and The Business Support Plan.Plan.When these are completed, you will have identified the When these are completed, you will have identified the “costs”“costs” that that will enable you to project the financial feasibility of the Business. will enable you to project the financial feasibility of the Business.

The Operational Plan - NarrativesThe Operational Plan - Narratives

LocationLocation

ProductionProduction

PersonnelPersonnel

Suppliers Suppliers

InventoryInventory

Accounting and Credit PoliciesAccounting and Credit Policies

The Operational Plan - LocationThe Operational Plan - Location

General comments:General comments:In a retail business, this is one of the most In a retail business, this is one of the most important decisions. It must be safe and important decisions. It must be safe and convenient for your clients.convenient for your clients.In an industrial/manufacturing business, it must In an industrial/manufacturing business, it must be close to viable receiving and shipping transit.be close to viable receiving and shipping transit.In a service business, your headquarters or In a service business, your headquarters or equipment storage, should be centrally located equipment storage, should be centrally located to your target clients and have adequate access to your target clients and have adequate access to the needed highway routes.to the needed highway routes.Whether you own or lease, this will be one of Whether you own or lease, this will be one of your major “cost” items.your major “cost” items.

Operational Plan - LocationOperational Plan - Location

Describe the qualities you need in a location.Describe the qualities you need in a location.Describe the type of building, amount of space, and Describe the type of building, amount of space, and physical layout (drawing in appendix).physical layout (drawing in appendix).Where will it be located?Where will it be located?Will you own or lease and what will it Will you own or lease and what will it costcost??Will there be build out/renovations and at what Will there be build out/renovations and at what costcost??Assure property meets zoning restrictions, including Assure property meets zoning restrictions, including operating hours.operating hours.What are the utilities (electric, gas, water, sewer, What are the utilities (electric, gas, water, sewer, telephone, cable, Internet) and at what telephone, cable, Internet) and at what costcost??Describe accessibility to clients, suppliers and product Describe accessibility to clients, suppliers and product transportation, including parking needs and proximity to transportation, including parking needs and proximity to freeways, airports, railroads and shipping centers.freeways, airports, railroads and shipping centers.

Operational Plan - ProductionOperational Plan - Production

If a manufacturing business, describe the If a manufacturing business, describe the production process and techniques (flowchart in production process and techniques (flowchart in appendix). If a service business, describe route appendix). If a service business, describe route and scheduling. If retail cover items like hours, and scheduling. If retail cover items like hours, security, customer calls.security, customer calls.Identify the equipment needs and Identify the equipment needs and costcost..Describe the quality control methods and Describe the quality control methods and costcost..Describe customer service requirements and Describe customer service requirements and costcost..Describe the inventory control process and what Describe the inventory control process and what triggers replenishment. triggers replenishment. “C”“C”

Operational Plan - PersonnelOperational Plan - Personnel

What are the number and types (skilled, What are the number and types (skilled, unskilled, professional, positions) of employees?unskilled, professional, positions) of employees?When will they be needed, based on sales When will they be needed, based on sales forecast?forecast?Where will they be found? Are these skills Where will they be found? Are these skills available?available?What is the compensation (salary, bonus, stock) What is the compensation (salary, bonus, stock) structure (structure (“C”“C”)?)?What are the training methods and requirements What are the training methods and requirements ((“C”“C”)?)?

Operational Plan - PersonnelOperational Plan - Personnel

Personnel Planning Worksheet

Sales Volume 10,000$ 30,000$ 50,000$ 70,000$ 90,000$ 110,000$ 120,000$ 140,000$ 160,000$ 200,000$

Positions Pay Answering Service $200/mth 1 1 1 0 0 0 0 0 0 0Secretary (FT) $1500/mth 0 0 0 1 1 1 1 1 1 1Clerk (PT) $500/mth 0 0 0 0 0 1 1 1 1 0Clerk (FT) $1000/mth 0 0 0 0 0 0 0 0 0 1Serviceman $2000/mth 0 0 1 1 1 1 1 1 1 2Salesman $2500/mth 0 0 0 0 0 0 0 1 1 1

A potentially useful planning tool. It will help you identify when recruitment and hiring should occur, plus it will help later in your financial section.

Operational Plan - SuppliersOperational Plan - Suppliers

Identify key suppliers (name and location).Identify key suppliers (name and location).

History and reliability of each.History and reliability of each.

Describe your current relationship.Describe your current relationship.

Can they meet your current and future projected Can they meet your current and future projected requirements?requirements?

What are their credit, delivery and discount What are their credit, delivery and discount policies (policies (cost and cash flowcost and cash flow)?)?

Are supply costs changing and, if so, explain Are supply costs changing and, if so, explain how this will be reflected in pricing?how this will be reflected in pricing?

Need to assure you understand suppliers capability and their impact on your cost and cash flow.

Operational Plan - InventoryOperational Plan - Inventory

Describe the types of inventory that will be Describe the types of inventory that will be needed; Raw Materials, Supplies, Finished needed; Raw Materials, Supplies, Finished Goods.Goods.

Average Value in Stock (Average Value in Stock (carrying costcarrying cost).).

Address buildup requirements due to sales Address buildup requirements due to sales growth and/or seasonal sales factors.growth and/or seasonal sales factors.

Address lead-time for ordering (Address lead-time for ordering (cost and cost and cash flowcash flow).).

Operational Plan – Accounting and Operational Plan – Accounting and Credit PoliciesCredit Policies

Credit Sales PolicyCredit Sales Policy

Managing Accounts ReceivableManaging Accounts Receivable

Managing Accounts PayableManaging Accounts Payable

Credit to SCORE Association Startup Business Plan

Credit Sales PolicyCredit Sales Policy

Is selling on credit customary in this industry and Is selling on credit customary in this industry and expected by clients?expected by clients?

Will you sell on credit?Will you sell on credit?

Describe policy of clients’ credit eligibility, how Describe policy of clients’ credit eligibility, how much and how credit worthiness will be checked.much and how credit worthiness will be checked.

Describe terms of payment that will be used; Describe terms of payment that will be used; pre-pay, net 30, discount for early pay. pre-pay, net 30, discount for early pay. (cash flow)(cash flow)

Describe how Describe how costcost of extending credit will be of extending credit will be built into price.built into price.

Credit to SCORE Association Startup Business Plan

Accounts ReceivableAccounts Receivable

Describe your policy for dealing with slow-Describe your policy for dealing with slow-paying clients.paying clients.

At what point will you make phone calls?At what point will you make phone calls?

At what point will you send a letter?At what point will you send a letter?

At what point will you involve your attorney At what point will you involve your attorney or a credit agency?or a credit agency?

Credit to SCORE Association Startup Business Plan

Accounts PayableAccounts Payable

Describe your policy for paying Suppliers.Describe your policy for paying Suppliers.

Paying too early depletes cash.Paying too early depletes cash.

Paying too late can cost valuable Paying too late can cost valuable discounts, damage credit and cause discounts, damage credit and cause supply disruptions.supply disruptions.

Credit SCORE Association Startup Business Plan

10 Minute Break10 Minute Break

The Management PlanThe Management Plan

For each involved person, describe (in resume For each involved person, describe (in resume form):form):Background, education, experience and related Background, education, experience and related business experience.business experience.Duties, responsibilities and decision-making Duties, responsibilities and decision-making authority.authority.Compensation.Compensation.Age and physical condition.Age and physical condition.

The purpose is to establish the competency levels of management, assure The purpose is to establish the competency levels of management, assure there is agreement regarding responsibilities, and to identify any significant there is agreement regarding responsibilities, and to identify any significant

risks (skills, health, etc.) to the business.risks (skills, health, etc.) to the business.

The Business Support PlanThe Business Support Plan

There are at least four parties who will be There are at least four parties who will be important to and, in varying ways, involved important to and, in varying ways, involved in any business:in any business:

Legal ServicesLegal Services

Accounting ServicesAccounting Services

Insurance Agent/Broker ServicesInsurance Agent/Broker Services

Banking ServicesBanking Services

The Business Support Plan – General CommentsThe Business Support Plan – General Comments

Instead of being intimidated by these Instead of being intimidated by these professionals, recognize that:professionals, recognize that:

You are their customer.You are their customer.

You will be paying for their services.You will be paying for their services.

They must earn the right to keep your They must earn the right to keep your business by serving you.business by serving you.

You are in control of whom to hire and You are in control of whom to hire and retain.retain.

The Business Support Plan – General CommentsThe Business Support Plan – General Comments

For each category, identify 3 candidates and For each category, identify 3 candidates and schedule an interview:schedule an interview:Is he/she accepting new clients?Is he/she accepting new clients?Does he/she have experience in your type of Does he/she have experience in your type of business?business?What services does he/she recommend and What services does he/she recommend and offer and at what offer and at what costcost? ? Afterwards, ask yourself if you “feel good” about Afterwards, ask yourself if you “feel good” about how you were treated and whether you think the how you were treated and whether you think the candidate was “interested in your success”.candidate was “interested in your success”.

The Business Support Plan – LegalThe Business Support Plan – Legal

Legal entity (sole proprietorship, partnership, Legal entity (sole proprietorship, partnership, limited liability company, S Corp, C Corp).limited liability company, S Corp, C Corp).

Tax filing requirements (Tax filing requirements (or advice from IRSor advice from IRS).).

Lease/Property Purchase contract review.Lease/Property Purchase contract review.

Contract documents (sales contracts, purchase Contract documents (sales contracts, purchase orders, employee, technology rights).orders, employee, technology rights).

Contract disputes and/or litigation.Contract disputes and/or litigation.

Buying/Selling a business.Buying/Selling a business.

What is the rate (What is the rate (costcost) schedule?) schedule?Look for someone with whom you are comfortable and who is interested in your business and its success!

The Business Support Plan - AccountingThe Business Support Plan - Accounting

Wide range of choices:Wide range of choices:Do it yourself (small business accounting Do it yourself (small business accounting software or ledger bookkeeping).software or ledger bookkeeping).Set up “chart of accounts”.Set up “chart of accounts”.Tax accounting, filings and advice.Tax accounting, filings and advice.Operating Income Statements (advice), Balance Operating Income Statements (advice), Balance Sheets, Transaction reports.Sheets, Transaction reports.Accounts Payable, Payroll, Accounts Accounts Payable, Payroll, Accounts Receivable, Depreciation Schedules.Receivable, Depreciation Schedules.What is the rate (What is the rate (costcost) schedule.) schedule.

Look for someone with whom you are comfortable and who is interested in your business and its success!

The Business Support Plan - InsuranceThe Business Support Plan - Insurance

Assure insurer is licensed to conduct Assure insurer is licensed to conduct business in the State of Florida (Florida business in the State of Florida (Florida Insurance Guaranty Association – FIGA).Insurance Guaranty Association – FIGA).Seek a Commercial Insurance Agent Seek a Commercial Insurance Agent (CPCU)(CPCU)Communicate periodically to assure Communicate periodically to assure business operations are properly covered.business operations are properly covered.Seek advice from Florida Department of Seek advice from Florida Department of Financial Services.Financial Services.

The Business Support Plan – InsuranceThe Business Support Plan – InsuranceWhat coverage is required and what are the premiums (What coverage is required and what are the premiums (“C”“C”)?)?

Worker’s Comp (Worker’s Comp (State State requiredrequired, varies by , varies by industry)industry)Commercial auto (Commercial auto (State State requiredrequired))BondBondLiabilityLiabilityProfessional LiabilityProfessional LiabilityComprehensive Comprehensive Extra ExpenseExtra ExpenseHealthHealth

Property (replacement vs. Property (replacement vs. cost value)cost value)FloodFloodWindstorm Windstorm Errors & OmissionsErrors & OmissionsBoiler & MachineryBoiler & MachineryBusiness InterruptionBusiness InterruptionCargo & TransportationCargo & TransportationNamed PerilNamed PerilFidelityFidelity

Look for someone with whom you are comfortable and who is interested in your business and its success!

The Business Support Plan - BankingThe Business Support Plan - Banking

First and foremost, does the Bank do First and foremost, does the Bank do commercial banking and lending?commercial banking and lending?Startup (really)?Startup (really)?Minimum/maximum lending thresholds.Minimum/maximum lending thresholds.Location and authority level of lending Location and authority level of lending personnel.personnel.Lending criteria and rates (Lending criteria and rates (costcost).).Who are the primary and secondary Who are the primary and secondary contacts?contacts?

The Business Support Plan - BankingThe Business Support Plan - Banking

Then, what other services are offered?Then, what other services are offered?

Free, unlimited checking (two accounts, Free, unlimited checking (two accounts, one for taxes?).one for taxes?).

Business credit card and its limit.Business credit card and its limit.

Line of Credit.Line of Credit.

Direct deposit/Retirement Savings Plan Direct deposit/Retirement Savings Plan administration.administration.

Personal wealth planning.Personal wealth planning.Look for someone with whom you are comfortable and who is interested in your business and its success!

Instructor CommentInstructor Comment

The business owner normally contacts Business The business owner normally contacts Business Support companies on an as-needed basis, only Support companies on an as-needed basis, only when services are required and for which cost when services are required and for which cost

will be incurred.will be incurred.

If they are truly interested in your business, they If they are truly interested in your business, they should be contacting you at least once a year to should be contacting you at least once a year to

see how your business is going and if their see how your business is going and if their services are satisfactory.services are satisfactory.

They make money, if you make money!They make money, if you make money!

Homework Assignment – Session 2Homework Assignment – Session 2

Prepare Business Plan NarrativesPrepare Business Plan NarrativesThe Operational PlanThe Operational PlanThe Management PlanThe Management PlanThe Business Support PlanThe Business Support Plan

When completed you should have all the financial (cost) information When completed you should have all the financial (cost) information necessary to predict with reasonability the long-term viability of the necessary to predict with reasonability the long-term viability of the Business.Business.

Turn in a copy at the next sessionTurn in a copy at the next sessionSupplemental MaterialSupplemental Material

Personnel Planning WorksheetPersonnel Planning WorksheetA/R and A/P Write-upA/R and A/P Write-upSmall Business Tax Workshop DVD Small Business Tax Workshop DVD (IRS)(IRS)

Small-Business Owners’ Insurance GuideSmall-Business Owners’ Insurance Guide((Florida Department of Financial Services)Florida Department of Financial Services)

Session 2 Lab – Time PermittingSession 2 Lab – Time Permitting

Break into groups of three.Break into groups of three.

Network with each other about sources to Network with each other about sources to investigate for input to these sections of investigate for input to these sections of

the Business Plan.the Business Plan.

Seek clarification from instructors.Seek clarification from instructors.