Business Plan Webinar for Veterans

© ASBTDC 2009 All Rights Reserved

How to Write a Business Plan

[email protected] Lawrence ASU SBTDC

mailto:[email protected]


ASBTDC Services

• Training• Consulting• Market Research• Innovation


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.


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.


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


Cover page• Owner’s name & business

name

• Company logo

• Phone numbers

• Mailing address & physical address

• Email & website address

• Confidentiality statement


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.


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


Financing Proposal• Loan amount requested

• Terms of Loan

• Utilization of Loan Proceeds

• Collateral for Loan

• Owner’s Equity Contribution


Commercial Lending Decision

• Banks make lending decisions based on:

– Management ability

– Repayment ability

– Owner’s equity

– Collateral


Company Description

• Name recognized by

• Mission statement

• Product or service offered

• Legal status and ownership


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?


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?


SWOT Analysis• Strengths• Weaknesses

• Opportunities• Threats


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.


Market Analysis• Target Market

• Competitor Analysis

• Location Decision

• Marketing and Sales Strategy

• Supporting Market Research

Let’s talk about each of these in briefly!


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


Example of Market Segmentation System


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


Mapping Existing Businesses


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



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



• 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



• Examples of Marketing Vehicles include:

– Company website

– Print media

– Broadcast media

– Online advertising

– Direct mail

– Sampling

– Informal marketing/Networking


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.


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


Management & Organization

• Key positions in the business

• Qualifications of key personnel

• Organizational chart

• Compensation and incentives


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


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


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.


Start-up Costs• How much will you need?

• Inventory

• Equipment

• Deposits

• Working Capital•How much will it cost?

• Suppliers/Dealers

• Utilities

• Internet


Balance Sheet

• Assets - what you own

• Liabilities - debts or obligations

• Equity - investment and undistributed profits

Assets = Liabilities + Equity


•Revenues (income) less expenses

•Shows profitability over time

•Sales projection tools (RMA, Hillsearch, Industry)

Income Statement


•Focus on not only amount but timing

•Allows for planning of potential cash shortfalls

•Demonstrates ability to repay debt

Cash Flow Projections


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.


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.


Financial Plan & Projections

• Tools available to help you

– RMA (Risk Management Association)

– Statement Studies of the Small Business

– ProfitCents™ software

– ASBTDC staff


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


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.