1	Developing a successful business plan Dr. Jeff Shay
2	Writing a business plan Many successful entrepreneurs do not write a business plan, so why should you? We have three responses for this: It depends on how you measure success. Many businesses can indeed be started without a business plan. Usually, however, these are lifestyle businesses that have little prospect for any significant future growth. It leads one to wonder how much more successful these entrepreneurs would have been if they had written a business plan. In order to acquire the necessary financing for most businesses, investors or lenders will need to see a well-developed business plan.
3	What is the purpose of your business plan? Feasibility analysis Helps you determine whether the business is feasible Operating guide Provides structure to your plans for starting the business Financing tool Provides details about the business and its potential to investors and lenders Valuation Offers the opportunity to assess the value of your business
4	Here are some of the reasons for writing a business plan Make more money Map and compass for future Take advantage of opportunities Impress your banker Set realistic goals Operating and financing plans Communicate more clearly
5	Reasons people give for not writing a business plan I don’t need one I have one in my head I don’t know how to begin I don’t have enough time I’m not a numbers person I make more than enough money and I am immortal We believe that these are not good reasons, so let’s proceed…
6	Who are we writing for? The first step is to determine who you are writing the plan for. This will help determine its content and tone. So, which of the following are you writing your plan for. Yourself Bank Investors Strategic Alliances Establish Image Attract Stars Facilitate M&A’s Motivate & Focus Management Team
7	General sections of a business plan There are three general sections to business plans: The Business Financial data Supporting documents
8	Executive Summary Although appearing first in your plan, the Executive Summary should be written as the final step Checklist for the Executive Summary: Motivate reader to continue Cover all major content areas Dynamic, effective writing style Professional tone Persuasive Length – 2 pages or less Most important How much money do you want, from whom, and how will investors get money out?
9	Section One: The Business Section One includes the following: Description of the business Product/service lines Markets Location Competition Management Personnel Type and use of financing being sought Summary Let’s take a closer look at each…
10	Naming your business Before proceeding with each of the sections, have you considered what you will call your business? Determining the right name for your business is a critical step The name should communicate: What you do or make What customers should value in your product or service Include adjectives to bring your name to make the name more memorable
11	Description of business Objectives What your business is How it will be run Why you think your business will succeed Questions What business are you in? What is the status of the business? What’s the business’s form? Why is your business going to be profitable? When will you open? What are your operating days and hours? Is your business seasonal?
12	Product or Service description For this section, you should answer the following questions: What are you selling? What are the benefits? How does your product/service differ from competitors? If your product/service is new or innovative, what makes it different? If your product/service is not new or innovative, why would people buy from you?
13	The Market For this section, answer the following questions: What business are you in? Who are your target markets? What do your customers buy? What benefits do your customers think they receive from your product/service?
14	The Market: Customers The Customer section includes responses to the following questions: What are your markets? Which ones are buying from you or existing competitors now? What products or services are they buying? Who are the people that will be buying from you? What are their purchasing behaviors?
15	The Market: Product Benefits Respond to the following questions: Why are these people going to buy from your company? Why are these people going to buy from your company and not from the competition? What are these people going to be buying from you? On what cycle will they make their purchases? How can your company find more people like these?
16	The Market: Sales and Distribution Respond to the following questions: What distribution channels will you use? What are the economics of this distribution channel? What is the key to gaining access to this distribution channel?
17	The Market: Competition Respond to the following questions: Who are your competitors? What do your competitors do well? What can you do better than your competitors? How do your competitors please their customers? What are your competitors’ pricing policies? Where do your competitors advertise—and does it work?
18	The Market: Additional sections In the Market section you should also address the following: Positioning, publicity, promotion Pricing Goals and Budgets Strategies
19	Location of business What will your business address be? What physical features will your building require? Will you lease or own the space? What renovations will be needed and at what cost? Does zoning permit your type of business to operate in that location? What other businesses are in the area? Why did you pick this site over others? Why is this the right location for your business? How will the choice of your location affect your operating costs?
20	Choosing a location You may want to consider the following checklist for your location decision: Checklist: Proximity to customers that match your demographic profile Proximity to competition, raw materials, and transportation Labor rate for the area Parking availability Entrance/exit Foot traffic and car traffic Visibility of location Compatibility of commercial neighbors
21	Competition Respond to the following questions: Who are your five nearest competitors? How is their business doing – stable, increasing, or decreasing? How are their operations similar or dissimilar to yours? What have you learned from watching their operation? What works for them? What doesn’t? How will your operation be better than theirs? How will the competitors react to your entrance in the market? How will you respond? Who else can pursue this opportunity?
22	Management Remember, the entrepreneurial team is a key component of your business. As such, you should provide detailed information on the following: Personal history of the principals Related work experience Duties and responsibilities Salaries Resources available to the business
23	Personnel The personnel that you hire will also play a critical role in getting the business going. You should carefully address each of the following questions: What are the starting personnel needs? What skills will your business need? Are people with those skills available? Where? Will employees be salaried or hourly? What fringe benefits will you offer? Will you pay overtime? Will you have to train employees?
24	Type and use of financing Although the actual financial statements appear at the end of the plan, you should present a discussion of them at the end of Section One. This includes: How much money do you need? How is investment/loan to be spent? What equipment will be purchased? Who is the supplier? What is the price? Are there alternative sources for capital?
25	Summary At the end of section one, make a two or three paragraph summary statement that ties the whole section back together.
26	Section Two: Financials The financials section should include the following in spreadsheet form: Sales forecast for five years Income statement for five years Balance sheet for five years Cash flow for five years Sources/uses of funds Breakeven analysis Assumptions page – what are the financials based on? Financial ratios and analysis
27	Business plan resources In addition to the secondary data for conducting market research for your new business, the RockyMountainBusiness.com site has many other resources for writing business plans We highly recommend that you check them out
28	Next Module In the next module we provide insights into developing financial statements for your business These financials are a critical part of your business plan