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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