BUSINESS SMALL MANAGEMENT
Chapter 4 The Business Plan
Aggasiz Brewing Company
1.
Briefly discuss the problems of starting from scratch, as illustrated by the Aggasiz Brewing Company How could Gary DePape have avoided these problems? What would have been the advantages and disadvantages of Gary purchasing a microbrewery instead of starting from scratch? What risks would Gary have faced if he had dropped the price of his product?
1. 1.
1.
Getting Started Establishing the Business
Advantages of Organizing a Business from Scratch
Define nature of business Exact physical _______ Fresh inventory Employee selection
Develop _______ system
Getting Started Establishing the Business
Disadvantages of Organizing a Business from Scratch
Lack of _______ info Time assembling physical facilities Startup bugs & problems Risk of _______ Establishing outside relationships
Caribbean Beer vs Agassiz Beer
Compare and contrast the two small business ventures in similar industry
NonQuantitative Assessment
Quantitative _______ of Business
Personality Characteristics Goals Content of _______ Lifestyle Capabilities Experience
Small Business Plan
_______ purposes _______ purposes
Blueprint to maintain focus
Tool to evaluate performance Recruit lenders & investors Test of ideas viability Form and emphasis will vary depending on
the user
Firm's Management
Insiders
Employees
New Venture Business Plan
Customers
Outsiders
Suppliers
Investors
The Investor's Perspective
Plans that speak the investors' language:
Are brief, not extremely _______ in written length. Have an a _______ overall appearance. Are wellorganized with a table of contents and numbered pages. Are _______ _______ in meeting customer needs; are not productoriented. Show _______ of customer acceptance of the proposed product or service.
Features of Plans that will Repel Investors
Plans that create
Show an infatuation with the product or service and downplay market needs or acceptance. Are based on financial _______ at odds with accepted industry norms. Have unrealistic _______ projections.
_______ reactions:
Business Plans that Attract Investors
Recognize the _______ needs for required rates of return on investments. Demonstrate _______ of focus on a limited number of products or services Have a proprietary market position through patents, copyrights, and _______
Business Planning Needed and Influencing Factors
Factors affecting the extent of a business
plan:
Cost in _______ and money to prepare the plan Management style and ability _______ of the management team Complexity of the business Competitive _______ Level of _______
Preparing a Business Plan
Two issues critical in preparing a
business plan:
The basic format and _______ of the written presentation. The _______ of the plan.
Clear writing that effectively communicates Factual support for the concept in the form of _______ _______ evidence
Resources for Business Plan Preparation
Specialized _______ Plan Software Packages (BizPlan) Professional Assistance Lawyers Marketing specialists Engineering and production experts Accounting firms Incubator organizations Small business development agencies
ComputerAided Planning Wordprocessing Spreadsheets
Research to Support the Plan
Both primary and secondary research must be carried out by the writer of the business plan.
Secondary Research Primary Research
The Small Business Plan
There are ten components in a plan: 1. Prepare a table of contents. 2. Prepare a synopsis of the plan in an executive summary and background statement. 3. Describe the management team. 4. Describe the business objective. 5. Plan the marketing approach.
The Small Business Plan
Components of the Plan (cont.) 6. Describe the selection of the location. 7. Determine the physical facilities. 8. Plan the financing. 9. Plan the personnel. 10. Investigate the legal requirements.
Components of the Plan
1. Prepare a table of contents.
Overview of the plan Quick access to the various parts of the plan
Components of the Plan
2. Prepare synopsis of the plan in an executive summary and background statement.
history of the project to date
completed at the end of the complete plan statement of the intended mission of the
venture
Components of the Plan
3. Describe the management team.
decisions for the organization
and rsum background of those making the
Components of the Plan
4. Establish business objectives.
Business Size Production Levels Performance Levels
Components of the Plan
5. Plan the marketing approach.
and purchasing habits
Have a clear concept of the target market.
Understand the target market's needs, wants
Answer the following questions: where, when, what, how much, why.
Components of the Plan
5. Plan the marketing approach (cont.)
Be aware of any uncontrollable factors that might affect the marketing of the product or service such as existing or pending legislation relevant to the business. state of the _______ in the market. extent and strategies of the competition. cultural _______ of the market. new technologies that might offset the business.
Components of the Plan
5. Plan the marketing program (cont.)
Components of the Plan
6. Describe the selection of the location.
the trading area
attitude of the _______ area towards new
the Economic _______
businesses
Competition Costs
Components of the Plan
6. Describe the selection of the location.
The Site
The BuyorLease Decision
accessibility, site costs, _______, site history, proximity to other businesses, physical characteristics cost of the lease, length of the lease, restrictions, repairs and lease hold improvements, _______ coverage
Running the Business from One's Home
Components of the Plan
7. Determine the physical facilities.
_______ flow in business _______
Building, equipment, fixtures, starting inventory
Production, layout, distribution of product Don't risk more than you can lose Don't risk a lot for a little Buy insurance only when necessary Investigate company and agent
Components of the Plan
7. Determine the physical facilities.
insurance types
loss or _______ to the property business interruption
insurance _______
liability and _______ life insurance what kind to purchase, how much to purchase, from whom to purchase the insurance
Components of the Plan
8. Plan the financing.
establish capital requirements make _______ projections determine the sources of funding
plan the _______, and bookkeeping systems determine the _______ evaluation measures
Components of the Plan
9. Plan the personnel.
Personnel Policies
Administrative structure
Employee _______ and training
Components of the Plan
10. Investigate the legal requirements.
Legal Structure (four styles)
1.Sole _______
2. Partnership
advantages and disadvantages
3. Cooperative
Limited, _______ advantages and disadvantages one memberone vote vs each share a vote
Components of the Plan
10. Investigate the legal requirements. (cont.)
4. Corporation
advantages and disadvantages of a corporation steps in incorporation selection of the business name development of the share structure, directors, restrictions on share transfers, etc. description of the company operations acquiring the necessary supplies
Components of the Plan
10. Investigate the legal requirements (cont.)
5. Joint Ventures
Components of the Plan
10. Investigate the legal requirements. (cont.)
Licenses and Taxes
Intellectual Property Protection
Federal Government Provincial Government Municipal Governments
patent steps
Appendices
Appendix A Checklist for a Small Business Plan Appendix B Sample Business Plans (2) Appendix C Incorporation of Companies and Associations Appendix D Jurisdiction of Licenses and Taxes
The Sock Hop, Quality Cuts
Concept Checks
1. What are the advantages and disadvantages of owning a small business? 2. What steps are involved in preparing a business plan? 3. What criteria must be evaluated before choosing a trading area? 4. When is it advantageous to lease instead of owning?
Concept Checks
5. What information should be investigated before construction starts and purchasing equipment? 6. Why is insurance purchased? What are some small business insurance types? 7. What major financial aspects should be planned in advance of business operation? 8. What are four legal structures that an owner can utilize?
Concept Checks
9. What are the advantages and disadvantages of incorporation? 10. What level of government issues business licences? 11. What taxes are levied by the federal government? 12. What are the steps required to register a patent?