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Writing a Winning Business

Plan Part 1

Presented By: Mickey Shattow

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With SCORE, You Are Not Alone on Your Journey

For over 50 years, SCORE has served

as America’s premier source of free

business mentoring and education.

As a resource partner of the U.S.

Small Business Administration (SBA),

SCORE has helped more than 11

million entrepreneurs through

mentoring, workshops and educational

resources since 1964.

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SCORE Can Help You Find the Way Ahead

• Free one-on-one business

counseling and mentoring

• Business advisory services

• Low cost local workshops

• Free templates and recorded

webinars

To meet with a mentor or learn more

about SCORE’s resources, visit

washingtondc.score.org

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• Before You Begin Writing

• Purpose of a business plan

• Business planning process

• Analyzing your strengths & weaknesses

• Content of the Business Plan

• Business Description

• Product/Service

• Marketing Plan

• Operational Plan

• Management and Organization

• Startup Expenses and Capitalization

• Financial Statements

• Executive Summary

• Case Study

• Sources of Research

Workshop Outline – What We’ll Cover This Morning

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“If you don’t know where you’re

going, any road will do.”

The White Rabbit in Alice in Wonderland,

Lewis Carroll

What’s Your Plan?

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• Figure it out: Is this a feasible idea???• Tell your story• Know your audience• Get organized and focused• Set SMART goals (Specific, Measurable, Attainable, Realistic, Time-bound)• Enhance market knowledge• Set priorities• Become aware of strengths, weaknesses and risks• Serves as the Company’s resume for investors, suppliers, personnel,

partners• Raise money—Included uses of cash and repayment process

Don’t rely on business plan templates

Purpose of a Business Plan

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Define

Product

Identify

Market

Identify

Competition

Define

Marketing

Plan

Project Sales

Plan

OperationsDefine

Organization

Estimate

Needed

Resources

Analyze

Finances

Value Proposition

Target Market

Competition SWOT

Marketing Campaign

Sales Projection

Profit/Loss

Cash Flow

Balance Sheet

Breakeven Point

Benchmarks

Start up Funds

Sources of Funds

Process of Business Planning

Repeat until you’re comfortable it can be done!Idea???

Creating a

business plan is

an iterative

process

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SWOT

Strengths (S)

What are your key strengths?•Product/Service?•Key Staff?•Funding?

Weaknesses (W)

Where are you weak? • Staff?• Finances?• Experience?

Opportunities (O)

External Changes• Markets• Technology• Cultural/Social Trends

Threats (T)

What are major threats to your success?• Competition• Technology Advances• Legal/Regulation

Positive Negative

External

Internal

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Content of Business Plan

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• Cover Letter – introduces the company and engages the reader

• Non-Disclosure Statement

• Table of Contents

• Executive Summary

• Company Overview/Direction

• Products and Services

• Market Analysis

• Marketing Plan

• Financial Plan

• Supporting Documentation

Business Plan Format

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• What business am I in?

• Give the context of the plan and the scope of operation

• Business Type

• Merchandising

• Service

• Manufacturing

• Product or Service

• New, Franchise, Purchased

• Why Business will Grow and Be Profitable?

• Source of Personal Knowledge of Business

Company Overview/Direction

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• Description

• Solves What Need? And for Who?

• Consumer Offering and/or Business to Business (B to B) offering?

• Comparison with Competitive Offering

• What Niche?

• Follow-On Offering

• Value Proposition

Product/Service

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• Define the Characteristics of the Customer

• Age

• Gender

• Income Level

• Occupation

• Education

• Location

• Other Characteristics of Target

Market Analysis – Business to Consumer (B2C)

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• Type of Business

• Size of Business

• Location

• Product Line/Service

• Who Makes Buying Decisions?

• When Do They Buy?

• Why Do They Buy?

• Characteristics of Buying Decision

• Purchase Financing Approach

• Hot Buttons & Top Ten Prospects

Market Analysis – Business to Business (B2B)

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• Agency(ies) Targeted

• Primary product/service needs

• Preferred contract vehicles

• GWAC

• GSA

• Individual contracts

• Small Business

• Set Asides

• Agency Annual Budget (nominal)

• Location

• Company/Personal Security Clearances Required?

• Teaming partners available/necessary?

Market Analysis – Business-Government

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• Price

• Packaging

• Service

• Advertising

• Product Line/Service

• Employee Training

Market Analysis – Competitive Analysis

Know Your Competition!

• Quality

• Location

• Image

• Their Target Market

• Finance: Method/Strength

• Strengths/Weaknesses

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• Current Trends

• Projected Trends

• Develop Future Action

Market Analysis – Industry Trends

Relate these to your Target Market

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Marketing Strategies – Pricing – “The Dark Art”

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• Know the costs for manufacturing/delivering your product

• Add Profit Levels

• Compare With Competition

• Sell Benefits, not the process

• Test Prices Against Market Research Data

• Evaluate Volume Discounting

• Select Price

• Some Thoughts on Pricing…

https://youtu.be/XiJqSUTZUTA?list=PLjqbtC2k1wXr-BKfFCSfhceIDwQN7mcLy

Market Strategies – Pricing – “The Dark Art”

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• Inexpensive

• Word of Mouth

• Door to Door Flyers

• News Releases

• “Social Media”

• Events

Marketing Strategies – Classical Promotion Tools

• More Expensive

• Brochures

• Internet Web Site

• Classified Ads

• Yellow Pages

• Radio/TV

• Advertising Agency

• Mailing List

• Trade Shows

• Educational and Social

Events

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• Channels of Distribution

• Direct vs. Indirect

• Salespeople

• Representatives

• Distribution Systems

• Location

• (‘Brick ‘n Mortar’)

• Accessibility

• Visibility

• Esthetics (internal & external)

• Safety

• Parking

• Closeness to Customers

• Zoning Laws

Sales Strategies– Placement/Delivery

• Online (Web Site)

• Ease of use

• Optimized for Search Engines

(SEO)

• Purchase & delivery process

• 3rd Party Sites

• Social Media

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Your Web Site is the Focal Point

WEB

SITE(SEO)

Social

Media

E-mail

campaigns

Web

Advertising

Review

Sites

Partner

Links

Internet Marketing

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Popular Social Media Technology

LinkedIn

Social Networking

> Target your audience by

age, gender, seniority,

geography, or job function

> Pay per click or by

impressions

> Stop your ads at any time

Facebook

Social Networking

> Connect with more than 955

million potential customers

> Choose you audience by

location, age, and interests

> Test simple image and text-

based ads and use what works

Twitter

Microblogging

> Connect with customers and

quickly share information

> Gather market intelligence

> Build relationships with people that

care about your company

YouTube Billions of daily views

Online Video Community

> Promote your content

> Share promotional videos and

customer testimonials

> Target audience by keyword

Google Places

Business Finder> Be found by your customers

> Stand out by engaging customers

with photos, offers, etc.

> Get insight on your listing to make

smarter business decisions

Blogs

Online Conversation

> Word of mouth

> Communicate promptly

> Obtain feedback on

products, service, trends, and

industry

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Developing Sales Projections

Pull it all together and estimate what your sales will be.

•Be explicit in your assumptions•Be realistic•Get documentation wherever possible•Avoid “hockey stick” sales forecasts

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• Overview of operations

• Location Considerations

• Staffing Plan

• Compensation Approach

• Training Plan Highlights

• Recruitment of Key Players

• Suppliers

• Distribution Chain

Operational Plan

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• Forms of Organization

• Sole Proprietorship

• Partnership

• Limited Liability Company

• Tax Classification (“C” or “S”)

• Not for Profit

• Board of Directors (if applicable)

• Officers

• Management Team – Include bios for all senior team members

• Advisors/Consultants

• Define Future Needs

Management & Organization

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• Identify the initial expenses you will need to cover:

• Rent deposits

• Leasehold improvements

• Equipment, furniture, and fixtures

• Pre-opening expenses (staff, licenses, etc.)

• Inventory

• Initial Operating Expenses

• Where will the money come from?

• Owners cash infusion

• The “3 Fs”

• Investor funding

• Commercial loans/mortgages

• Understand the timelines involved!

Startup Expenses & Capitalization

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• Income (Profit/Loss) Statement

• Monthly for First Year & Annual for Three*-Year Projection

• Cash Flow statement

• Monthly for First Year & Annual for Three-Year Projection

• Balance Sheet

• These analyses allow you to do:

• Breakeven Analysis

• Benchmark Comparisons

* 3-year projections ok for basic plans, VCs/Angels may want up to 5 years

Financial Statements

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• Source Depends on level of Requirement Needed

• Requirement: <$25,000

• Personal Funds (Savings, Credit Cards, 401(k), etc.)

• Requirement: $25,000 - $250,000

• Personal Funds

• Home Equity

• Friends & Family

• Angel Investors

• Requirement: $250,000-$1,000,000

• Angel Investors

• Venture Capital Firms

• Requirement: $1M - $10M+

• Venture Capital Firms

• New – e.g. Crowd Funding

Funding Sources

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• Written Last

• Top Priority

• Highlight Value Proposition

• 1 to 2 Pages Maximum

• Pitch Your Business

• Compelling business concept

• How you will Generate Revenue

• Marketing plan to capture customers

• Identify market opportunity and size

• Supply Key Assumptions for Financials

• Highlight 12-month Cash Flow Projection

• What do you want?

Executive Summary

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SOURCES OF RESEARCH

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• Competition (advertising, web sites, annual reports)

• Suppliers

• Customers

• Employees

Sources for Research

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• SCORE (www.score.org) 202-169-1000

• SBA (www.sba.gov) 202-272-0345

• Local County Economic Development

• Local County Public Library (both in-house and online)

• Research USA (profiles of 10M+ companies)

• Local County Employment Center

• Chambers of Commerce

• Banks

• Market Research Firms

Sources for Research

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• Thomas Register of American Manufacturers –

www.thomasregister.com

• Annual Statement Studies, RMA – http://www.rmahq.org/RMA/.

(available at pubic libraries and online thru library)

• Trade Associations – Encyclopedia of Associations (available at

SCORE or public libraries)

• Small Business Sourcesbook (available at SCORE or public libraries)

• State Governments – Check each jurisdiction

• Dun and Bradstreet (company profile) www.dnb.com

Sources for Research

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Example: RMA

Note: data derived from corporate tax returns which are optimized for lowest possible tax liabilities.

(Maximize current expenses, minimize profits. Balance sheet might show slightly different profile.)

Industry Data

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Source: www.hoovers.com

Example:

Hoovers

Competitive Data

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The American Community Survey (ACS) is an ongoing survey that

provides data every year – giving communities the current

information they need to plan investments and services.

American Community Survey

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CASE STUDY REVIEW

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• No non-disclosure

• Owner/Investor funding too low

• Relevant owner experience non-existent

• No signed lease for location

• Low cost per square foot for lease (assumed $30 when $45 is more

likely)

• Assumed that business could fully ramp up in 30 days

• No seasonality to the sales projection

• No details/sources for market analysis

• No details for competitive analysis

Case Study Deficiencies

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• Your business plan is a reflection of you and your business

• Make sure it:

• Is complete and consistent

• Includes contact info

• Has a non-disclosure statement

• Is current and reflects the latest info and assumptions

Some Final Thoughts

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Be Sure to Complete Your Course Evaluation

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