client requests and assignments

Business Plan AssistanceFor SCORE 34 Mentors

Client Requests and Assignments

Client Requests for “Business Plan Assistance”

The two most frequent areas of assistance asked by new clients of SCORE are:

• Starting a Business• The Business Plan

Both are so vague that it is not clear what knowledge the client has or whether it is even the right question to ask.

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First--Get to Know Your Client

• Have your client talk about their current work, their family and their financial position (i.e. own home, credit score, etc.)—very important if client needs a loan

• Listen more; talk less– have the client get comfortable talking to you

• Identify their strengths and weaknesses (so you can be prepared to address areas of which they are not aware (e.g., accounting).

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A Simple Start to Business Planning

A Business Plan [BP] is the end product not the next step.

Most clients can’t handle the complexity and confusion of even the outline of a BP

Use the following 5 Assignments to outline the really key issues before working on the full business plan

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Five Initial Assignments

Answer* each on 1 page of paper:

1. What is my vision of the new business?2. Can I make money on an individual sale?3. How much must I sell in a month to make a profit?4. How much cash do I need to start.5. Do I have stakeholders buy-in?

* Use details in the referenced SCORE Briefs

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Assignment 1 - Vision

1. What is my vision of the new business?

Assignment: Have client write a one page newspaper article about their next year in business, Use the required details outlined in:- Brief # 20.10 Instructions for One Page Newspaper Article

Note: - Most clients can write a simple newspaper article whereas a “business plan” is just not yet in their comfort zone. This will also force them to focus on the key issues. -If client is already in business, then do both Part A and Part B of the Assignment #1

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Assignment 2 – Make Money

2. Can I make money on an individual sale?

Assignment: Have client complete a one page form that will identify the estimated gross margin [with no overhead] on a sale. Use one of:

- Brief # 20.21 One Page Gross Margin Calculation - Product - Brief # 20.22 One Page Gross Margin Calculation – Service

Note: Ignore the fixed costs, just see if the product/service sales price has enough margin to cover the “variable” costs. We will deal with volume and fixed costs later

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Assignment 3 – Break Even Point

3. How much must I sell in a month to make a profit? Assignment: Have client complete a one-page form that estimates fixed costs and then determines the volume of sales needed to make any monthly profit. Use instructions in Briefs: - Brief # 20.31 One Page BEP Calculation - Product - Brief # 20.32 One Page BEP Calculation - Service

Note: client estimates costs and then must up the sales volume until there is enough gross margin to cover it!

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Assignment 4 - Cash

4. How much cash do I need to get started? Assignment: Have client complete a one-page form that estimates the startup expenses and two months of operating capital needed (inventory, A/R) and then identifies where that cash will come from. Use instructions in: - Brief # 20.40 One Page Needed Cash Calculation

Note: client estimates items and amounts then struggles with where all this money will come from. A rough but a good introduction that will let you know whether their business idea has the “smell” of practical.

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Assignment 5 - Stakeholder

5. Do I have stakeholder buy-in?

Assignment: Have client complete the check list to introduce and document potential stakeholder issues.

Use:-Brief # 20.50 – Stakeholder Buy-in Check List

Note:

- Stakeholders are any persons [wife, kids], groups [bank], organizations [employer], or system who affects or can be affected by the proposed business. -Client will probably find this eye opening as they likely will not have thought about a lot of the support/time/other stakeholder issues. This will be used for subsequent discussion of participation in the business.

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Use of Initial Five Assignments

Having simply raised these fundamental issues in the clients language, you have: 1. Identified the KEY issues to be dealt with before all of the

confusion and secondary questions of a business plan are tackled.

2. Likely raised real questions in the client ‘s mind about continuing. Not committing family assets to a failure is a WIN!

3. Determine if an economic basis for the business exists.

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Other Frequently Used Briefs:

• Pricing Procedures for Retail (Brief # 07.00)• Pricing Your Service (Brief # 07.01)• Pricing For Manufacturers (Brief # 07.02)• Legal Structure (Brief # 02.00)• Partnership Agreements (Brief # 02.09)• Balance Sheet (Brief # 04.07)• Income Statement (Brief # 04.05)• Cash Flow Projections (Brief # 04.09)• Your Business Accountant (Brief # 04.01)• Your Business Attorney (Brief # 08.00)

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