business plan webinar for veterans
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Arkansas Small Business and Technology Development Center powerpoint from recent webinar Business Plans for Arkansas Military VeteransTRANSCRIPT
© ASBTDC 2009 All Rights Reserved
ASBTDC Services
• Training• Consulting• Market Research• Innovation
© ASBTDC 2009 All Rights Reserved
Goals for today’s session• Develop understanding of why it’s important to
have a business plan and how it’s used in managing a business.
• Discuss in detail each element of a business plan.
• Understand the tools and resources necessary for completing business plan.
• Ask questions.
• Talk about next steps after this class.
© ASBTDC 2009 All Rights Reserved
Reasons to have a business plan
• It is an organized, inclusive way to think about each functional aspect of your business.
• Writing clarifies and disciplines your thinking.
• It provides benchmarks against which to evaluate the progress of your business.
• It is a management tool; you can consult it to make important business decisions.
• It helps you “market” your business to others: lenders, landlords, suppliers, key employees.
© ASBTDC 2009 All Rights Reserved
What is a business plan• Cover Page
• Table of Contents
• Executive Summary
• Financing Proposal
• Company Description
• Industry Analysis
• Products & Services
• Market Analysis
• Management & Organization
• Operational Plan
• Financial Plan & Projections
• Appendix
© ASBTDC 2009 All Rights Reserved
Cover page• Owner’s name & business
name
• Company logo
• Phone numbers
• Mailing address & physical address
• Email & website address
• Confidentiality statement
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Table of Contents
• Include a table of contents as a quick reference to each topic discussed in your plan.
• You can have multiple topics referenced on a single page.
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Executive Summary• Most important section of the
business plan
• Likely only part ever read by some users
• Clear, concise summary of the plan
• Write LAST!
• Limit length to 1 or 2 pages
• Company Description
• Products & Services
• Target Customer
• Marketing Strategy
• Competitive Position
• Management Team
• Financial Summary
• Financing Proposal
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Financing Proposal• Loan amount requested
• Terms of Loan
• Utilization of Loan Proceeds
• Collateral for Loan
• Owner’s Equity Contribution
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Commercial Lending Decision
• Banks make lending decisions based on:
– Management ability
– Repayment ability
– Owner’s equity
– Collateral
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Company Description
• Name recognized by
• Mission statement
• Product or service offered
• Legal status and ownership
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Industry Analysis• Demonstrate your knowledge!
• Competitive “landscape”• What drives demand?• Fragmented or concentrated?• Labor or capital intensive?• Major players?
• Products, Operations, Technology• What mix of products/services are sold?• What percent of revenue comes from each?• How are they sold, what is the role of technology?• Sales per employee? Per square foot floor space?
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Industry Analysis (cont’)• Sales & Marketing – how do firms typically market
themselves? Location, advertising, website?
• Finance & Regulation – is cyclical cash flow management an issue? Is regulation pending?
• Business Challenges – what keeps managers “up at night?”
• Industry Opportunities – where is the industry trending? Where are the niches?
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SWOT Analysis• Strengths• Weaknesses
• Opportunities• Threats
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Products & Services• Describe the products and/or services
you intend to sell.
• How will you “position” your offerings?*
• Customer distribution channels – how will you sell to
the end user?
• How do you intend to price your offerings (generally),
and why?
*Positioning is the process of distinguishing yourself from competitors in specific ways in order to be the preferred provider for certain market segments.
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Market Analysis• Target Market
• Competitor Analysis
• Location Decision
• Marketing and Sales Strategy
• Supporting Market Research
Let’s talk about each of these in briefly!
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Target Market• Demographic description of target customer?
• Gender, age, race?• Children, family size• Income, net worth, homeowner?
• Geographic location of customer – trade area?
• Market segmentation system• Rich description – combines demographics
with buying behavior, lifestyle choices• Geodemographics – plot Tapestry
segments on your trade area• Example descriptions, map
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Example of Market Segmentation System
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Competitor Analysis• Always competition. No competition means no market for
product!
• Describe your major competitors
• Where are they located – Locator report
• What is their share of sales – Dun & Bradstreet
• Research them if possible - Company profiles
• Look for niche opportunities – entrepreneurs most successful
– example hardware store
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Mapping Existing Businesses
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Location Decision• Do you need a physical facility?
• How does this facility contribute to the competitive
advantage of the business?
• Consider a smaller advertising budget and a better
location.
• Enlist an experienced broker or agent to assist you.
• Use ASBTDC’s “Leasing Checklist.”
ASBTDC OfficesLead Center
University of Arkansas at Little RockDonald W. Reynolds Business Center
Suite 2602801 S. University Ave.Little Rock, AR 72204
501-683-7700asbtdc.ualr.edu
Arkansas State University, JonesboroCollege of Business
P.O. Box 2650Jonesboro, AR 72467
870-972-3517
Henderson State University, ArkadelphiaSchool of Business
P.O. Box 7624Arkadephia, AR 71999
870-230-5184
Southern Arkansas University, MagnoliaCollege of Business
P.O. Box 9192Magnolia, AR 71754
870-235-5033
University of Arkansas, FayettevilleSam M. Walton College of Business
D. W. Reynolds Center for Enterprise Development, Suite 140
Fayetteville, AR 72701479-575-5148
University of Arkansas - Fort SmithCollege of Business
P.O. Box 3649Fort Smith, AR 72913
479-788-7758
University of Arkansas at MonticelloCollege of Technology- McGehee
P.O. Box 747McGehee, AR 71654
870-222-4900
© ASBTDC 2009 All Rights Reserved
© ASBTDC 2009 All Rights Reserved
Marketing and Sales Strategy
• The Marketing Mix
– Product
– Price
– Place (distribution)
– PromotionBalance 4 P’s to create perceived value and generate
a positive response in target customer
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Marketing and Sales Strategy
• Discuss marketing vehicles you intend to use to educate consumers about your business. Be mindful of:
– Fit – must reach target customer
– Mix – use more than one method
– Repetition – many exposures
– Affordability – must fit within your budget
© ASBTDC 2009 All Rights Reserved
Marketing and Sales Strategy
• Examples of Marketing Vehicles include:
– Company website
– Print media
– Broadcast media
– Online advertising
– Direct mail
– Sampling
– Informal marketing/Networking
© ASBTDC 2009 All Rights Reserved
Supporting Market Research• Use market research to bolster sections of the
business plan.
• You can’t just make statements based on what you think. Do your homework!
• Lenders understand the marketplace, particularly regarding loans they specialize in.
• ASBTDC assists with market research -- competitor analysis, site selection, target marketing, industry research, demographics, and more.
© ASBTDC 2009 All Rights Reserved
Management & Organization
• Assess your strengths and weaknesses.
• Assemble an effective team:
– Tax advisor/accountant
– Banker/financial advisor
– Business attorney
– Technology consultant/web developer
– Insurance agent/risk management
– ASBTDC consultant
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Management & Organization
• Key positions in the business
• Qualifications of key personnel
• Organizational chart
• Compensation and incentives
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Operational Plan• This section covers the day-to-day operation of your
business:– Facilities
– Production plan, if applicable.
– Inventory management
– Supply and distribution
– Order fulfillment and Customer service
– Financial controls
– Legal issues
– Contingency planning
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Operational Plan• Don’t need to cover every detail. Address those
issues that:
– Are essential to the nature and success of your company.
– Provide you with a distinct competitive edge.
– Help you overcome a frequent problem in businesses of
your type.• Mundane, but vitally important
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Financial Plan & Projections• Pro forma financial statements
– Startup costs
– Balance sheet
– Income statement
– Cash flow statement• For existing business, include 3 years historical statements, if available.
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Start-up Costs• How much will you need?
• Inventory
• Equipment
• Deposits
• Working Capital•How much will it cost?
• Suppliers/Dealers
• Utilities
• Internet
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Balance Sheet
• Assets - what you own
• Liabilities - debts or obligations
• Equity - investment and undistributed profits
Assets = Liabilities + Equity
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•Revenues (income) less expenses
•Shows profitability over time
•Sales projection tools (RMA, Hillsearch, Industry)
Income Statement
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•Focus on not only amount but timing
•Allows for planning of potential cash shortfalls
•Demonstrates ability to repay debt
Cash Flow Projections
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Financial Plan & Projections• Techniques of financial analysis:
– Break-even analysis – drive net cash flow to zero by altering input such as price or costs.
– Sensitivity analysis – technique for determining the outcome of decision if a key prediction turns out to be wrong.
– Contribution margin – total revenue less total variable cost, helpful in making decisions about pricing, adding or subtracting products, or sales commissions.
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Financial Plan & Projections (cont’)
– Ratio analysis*
• Quick ratio – liquidity measure
• Inventory turnover – measure inventory management
• Return on assets – how effectively assets used to
generate profit
• Collection period – how quickly firm collects accounts
receivables*To be meaningful, most ratios must be compared to historical values of same firm, the firm’s forecasts, or ratios of similar firms.
© ASBTDC 2009 All Rights Reserved
Financial Plan & Projections
• Tools available to help you
– RMA (Risk Management Association)
– Statement Studies of the Small Business
– ProfitCents™ software
– ASBTDC staff
© ASBTDC 2009 All Rights Reserved
Appendix• Information supporting, confirming, and
reinforcing conclusions in body of plan.
• You might include:– Compelling market research findings– Resumes indicating special skills or abilities– Letters of reference– Personal financial statements– Impressive marketing materials
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Next Steps• Work up a draft of your business plan.
– Contact your ASBTDC for help with market research, financial projections, or any other area of concern.
• Provide a copy of your plan to the ASBTDC and
complete Request for Counseling.
• After review, we will meet to discuss our comments and
suggestions.
• Fill out course evaluation.