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The Second Step of Starting a Business:Writing a Business Plan
119 Technology Center, University Park, PA 16802814-863-4293 [email protected]
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About the SBDC• Eighteen Centers in Pennsylvania
• More than 1,000 Centers Nationwide
The SBDC network provides free confidential one-on-one consulting to current or potential small business owners and free and low-cost educational programs.
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www.pasbdc.org
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www.facebook.com/PennStateSBDC
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One-third fail in the first year, 50% go under within five years
• Poor Management • Poor Marketing • Poor Finances
How to minimize your chances of failure? Write a business plan!
Why do businesses fail?
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Business Planning
What is a business plan?
Who needs a business plan?
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Business PlanningFive Reasons for Writing a Business Plan
• It forces you to look at your entire business
• It becomes a tool to help you manage your business• It demonstrates your goals and objectives to others• It provides a basis for your financing proposal• It creates a ‘yardstick’ to measure your progress
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Business PlanningCommon Questions
• Can you write my plan for me?• How long does it need to be?• I know everything about my business. Do I need to write it? • I don’t need a bank loan, so do I still
need a plan?• How long will it take to write a plan?• How do I get started?
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Business PlanningFormatting Issues
• It should look like a professional document. It should be typed and free of grammatical errors.
• Always write it in the third person—don’t use the words I, me, we, our, us, etc.
• All sections of the plan ‘talk’ to each other, so proofread it to check for mistakes.
• Include an appendix with supporting documentation.
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Business Planning
Three Major Sections of a Business Plan
• The Company• Marketing• The Financial Plan
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Business Planning
Title Page
• Business Name• Owners’ Names• Address• Phone Numbers• Website• Email Addresses• Logo• Date
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Business Planning
Table of Contents
• Bullet point list• Prepare after all other sections are complete
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Business PlanningExecutive Summary
• Business purpose and goals• Products or services• Customers• Marketing strategy• Management team• Funding needed—your ‘ask’• Written after all other sections are complete
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Business PlanningExecutive Summary—Your Mission Statement
• What are your values?• What is your mission?• It should be short and to the point
The Scooter Store: “To provide freedom and independence to people with limited mobility.”eBay: “eBay’s mission is to provide a global trading platform for practically anyone can trade practically anything.”
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Business PlanningOrganization and Management
• Business history, purpose and goals• Corporate structure• Management team experience• Individual roles• Legal and Tax issues• Advisors and support• Opportunities and threats
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Business PlanningProducts and Services
• Products, services, or production process• Facility and infrastructure needs• Suppliers• Pricing• Future expansion opportunities
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Business PlanningThe Industry
• Industry trends• Strengths and weaknesses• Regulatory and technology issues• Trade associations
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Business Planning
Human Resources
• Employees• Independent Contractors• Compensation and Benefits• Payroll Processing
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Business Planning
• What if…• Data backup• Alternative suppliers• Teaming up with other
businesses• Insurance
Disaster Preparedness
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Marketing Plan
Starting the Marketing Plan
• What exactly am I selling?• Is there a market niche that I can capture?• Who exactly am I selling to?• What do I know about my potential customers?• Who are my competitors and what are they doing?
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Marketing Plan
The Customers
• Target market—think bull's-eye• Size of the market• Characteristics and demographics• How to get a message in front of them• Master the bull's-eye before you move to
the next ‘ring’ on the target
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Marketing Plan
The Competition
• Direct vs. indirect• Strengths• Weaknesses• Differentiation
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Marketing Plan
Promotional Strategies
• Which media are most appropriate for your audience?• What will you do at start-up and then on an ongoing basis?• What is your mix of traditional vs. non-traditional methods?• What will all of your efforts cost?
Like the entire plan itself, your marketing plan is never ‘done.’ You will regularly be making updates and adjustments.
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Financial Plan
Start-up Costs
Recurring Monthly Expenses
Projected Financial Statements
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Financial Plan
Estimating Revenues
• Cash sales• Credit terms to customers• Seasonal variations• Make a ‘grid’
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Financial Plan
Other Concerns
• Inventory levels and lead times• Production cycle and lead times• Credit terms from suppliers• Capital expenditures• Loan repayment terms
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Cashflow Statement
“A summary of the inflows and outflows of cash in over a certain period of time.”
“What will my checkbook look like over the next few months or year?”
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Breakeven Analysis
Answers the questions:• How many units do I need to sell?• How many guests do I need to serve?• How many clients do I need to capture?• How much do I need to bill out each week?
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Resources
Penn State SBDCwww.sbdc.psu.edu
SBDCNetwww.sbdcnet.org
U. S. Small Business Administrationwww.sba.gov
Central PA Chapter of SCOREwww.scorecpa.org
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For Additional Assistance:
200 Innovation Boulevard, Suite 119, University Park 152 East Market Street, Suite 100, Lewistown
814-863-4293 717-247-1280www.sbdc.psu.edu
