Business Plans

1
Business Plans

• Part 2
• Taken from http//www.bplans.com/hurdleonline
• http//www.sba.gov/starting/indexbusplans.html

2
Initial Business Plan Assignment

• Mission/Objectives whats the true nature of
  your business (dont be too narrow), how will you
  build customer satisfaction, what is your
  workplace philosophy, what value to the customer
  do you offer
• Keys to success limit to three and focus on
  those
• Target Market good educated guess
• Competitive Advantage what distinguishes you
  and your product
• Basic Strategies how will you develop the
  company and products
• Initial break-even chart

3
Simplified Business Plan Outline

• Executive Summary
• Company Summary
• Product Description
• Market Analysis Summary
• Strategy and Implementation Summary
• Management Summary
• Financial Plan

4
Company Summary - Legal

• Types of Business Entities
• Sole Proprietorship
• Pros - simple, inexpensive up front
• Cons - personal responsibility to creditors
• Tax treatment is straight through to your
  personal return
• Partnership
• Pros partnership agreement serves as legal
  core, defines levels of risk, buy-out agreements,
  etc.
• Cons requires good attorney, can be complex
• Tax treatment is usually straight through to your
  personal return

5
Company Summary - Legal

• Types of Business Entities (Cont.)
• C Corporation
• Pros used by majority of companies, best
  shielding from liability, best non-tax benefits,
  best for raising money and going public
• Cons profits taxed twice
• Tax treatment C Corporation pays its own taxes
• S Corporation
• Pros used by smaller firms (25 owners maximum),
  profits taxed once
• Cons less shielding from liability than C Corp.
• Tax treatment S Corporation can pass profits or
  losses directly to owners

6
Company Trademarks

• Trademarks law protects product names, logos,
  trade names, slogans.
• US Patent and Trademark Office website
  www.uspto.gov

7
Company Names

• Cant reserve a name completely, but company has
  rights to its identity.
• Types
• Your own name
• Doing Business As (county registration)
• Corporation (state registration)

8
Company Internet Domain Names

• Can look in NSI Registrar database using
  searchers such as
• www.networksolutions.com/cgi-bin/whois/whois
• to find available second-level names
  (example.com or example.biz) and
• to find links to help register names
• .

9
Company Location Facilities

• Describe
• Offices and locations and function of each
• Size (square footage)
• Lease arrangements (etc.)
• Internet services
• All location facilities factors that sell your
  company

10
Company Strategy

• Describe
• Value proposition
• ex. reliability and service for a price
• Competitive Edge
• Proprietary technology protected by patents
• Website name
• Headstart in area

11
Company Start-Up Costs

• Start-Up Expenses include only those that come
  before the start of the plan. Those that come
  after go in profit and loss table.
• Expenses those items that are deductible
  against income

12
Start-Up Plan - Expenses
Legal 1,000 Stationery, etc. 3,000 Brochur
es 5,000 Consultants 5,000 Insurance
350 Expensed Equipment 3,000 Other 1,000
Total Start-up Expense 18,350
13
Start-Up Plan - Assets
Cash Requirements 25,000 (cash may
need to change as you get better estimates for
cash flow) Other Short-Term Assets 7,000 Total
Short-Term Assets 32,000 Long-Term
Assets 0 Total Assets
32,000
14
Total Start-Up Plan Requirements
Total Start-up Expense 18,350 Total
Assets 32,000 Total Start-Up
Requirements 50,350
15
Start-Up Funding Investments
Investor 1 20,000 Investor 2
20,000 Other 10,000 Total
Investment 50,000
16
Start-Up Funding Liabilities
Short-Term Liabilities Unpaid Expenses 350
Short-Term Loans 0 Interest-Free
Short-Term Loans 0 Subtotal Short-Term
Liabilities 350 Long-Term Liabilities
0 Total Liabilities 350
17
Start-Up Table Summary
Total Start-Up Expenses 18,350 Total
Assets 32,000 Total Start-Up
Requirements 50,350 Total Investment 50,000
Total Liabilities 350 Total
Investment and Liabilities
50,350 Loss at Start-Up (- Start-Up Expenses)
(18,350) Total Capital (Assets
Liabilities) 31,650 Total Capital and
Liabilities 32,000
Must Match
18
Rule of Accounting
Capital Assets Liabilities This is
companys Net Worth
19
Product Description

• Describe the product
• What the product is
• How much it cost
• Who purchases it
• Think about customer needs and benefits
• Use this to as possible way of generating new
  ideas
• Do competitive comparison
• What buyer choices are available
• How does you product line compare to other
  companies
• Describe what goes into your product
• What are the sources of vital components

20
Product Description (cont.)

• Describe how technology with affect your business
• Is it a positive or a threat?
• Describe future products
• How will they be developed
• What is the relationship to present products
• What are the market needs
• Include sales literature
• Advertisements
• Brochures
• Tech. Specs.