Chapter Four The Business Plan Chapter Focus Explain the importance of the business plan. Describe...
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Transcript of Chapter Four The Business Plan Chapter Focus Explain the importance of the business plan. Describe...
Chapter FourChapter Four
The Business Plan
Chapter FocusChapter Focus
Explain the importance of the business plan.
Describe the components of a business plan.
Identify what not to do when writing a business plan.
Recognize where to get help in writing a business plan.
Guidelines for Writing a Business PlanGuidelines for Writing a Business PlanGuidelines for Writing a Business PlanGuidelines for Writing a Business Plan
Consider your audience. Show the benefit of your business to your reader.
Keep it brief. Just long enough to cover all major issues facing
the business. Point of view.
Try to write your business plan in the third person. Create a professional image.
The overall appearance should be professional and attractive but not extravagant.
Marketing Research and Evaluation
Marketing Research and Evaluation
Markets identify your target markets and concentrate on
these key areas Market Trends
explain how you will assess your customer’s needs over time
Competition identify price leader, quality leader, and service
leader Market Share
estimate the market share you intend to gain
Marketing PlanMarketing Plan
Pricing the price must be “right” to penetrate the market, to
maintain your market position, and to make profits Promotion
how will you attract the attention of and communicate with your potential customers?
Place describe how you intend to sell and distribute your
products Service Policies
describe your service and warranty policies
Manufacturing and Operations Plan
Manufacturing and Operations Plan
Geographic Location describe the planned location
Facilities what is needed?
Make or Buy Policy what will be produced and what will be purchased
as components? Control Systems
what is the approach to controlling quality, inventory, and production?
Labor Force is there a sufficient quantity of skilled people in the
local labor force?
Financial PlanFinancial Plan
Sources and uses of capital (initial and projected)
Cash flow projections for three years Balance sheets for three years Profit and loss statements for three
years Breakeven analysis
The Sources and Uses of Funds Worksheet
The Sources and Uses of Funds Worksheet
Source of Funds: Debt:
Term loansRefinancing of old debtLines of credit Line 1 Line 2
Mortgage Equity:
Investment
Uses of Funds: Property Inventory Equipment (itemize)
Working capital Cash reserve
$__________$__________
$__________$__________$__________
$__________
$__________$__________$__________$__________$__________$__________
Total Sources: $_______
Total Uses: $__________
Balance Sheet (1 of 2)Balance Sheet (1 of 2)
Current Assets Cash Accounts receivable Inventory Supplies Prepaid expensesFixed Assets Real estate Equipment Fixtures and leasehold improvements VehiclesOther Assets License Goodwill TOTAL ASSETS
YEAR 1
$_______ _______ _______ _______ _______
_______ _______
_______ _______
_______ _______$_______
YEAR 2
$_______ _______ _______ _______ _______
_______ _______
_______ _______
_______ _______$_______
YEAR 3
$_______ _______ _______ _______ _______
_______ _______
_______ _______
_______ _______$_______
Balance Sheet (2 of 2)Balance Sheet (2 of 2)
Current Liabilities Accounts payable Notes payable
(due within 1 year) Accrued expenses Taxes owedLong-term Liabilities Notes payable
(due after 1 year) Bank loans TOTAL LIABILITIES NET WORTH (ASSETS MINUS
LIABILITIES)
YEAR 1
$_______ _______
_______ _______
_______
_______$_______$_______
YEAR 2
$_______ _______
_______ _______
_______
_______$_______$_______
YEAR 3
$_______ _______
_______ _______
_______
_______$_______$_______
Profit and Loss Projection (1 of 2)Profit and Loss Projection (1 of 2)
SALES: Product/service line 1 Product/service line 2 Product/service line 3 Product/service line 4 TOTAL SALES REVENUECost of Goods Sold: Product/service line 1 Product/service line 2 Product/service line 3 Product/service line 4 TOTAL COST OF GOODS SOLD GROSS PROFIT
LOW
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______ _______
MOSTLIKELY
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______ _______
HIGH
_______ _______ _______ _______ _______
_______ _______ _______ _______ _______ _______
Profit and Loss Projection (2 of 2)Profit and Loss Projection (2 of 2)
EXPENSES:Variable: Payroll Sales commission Freight and delivery Travel and entertainmentSemivariable: Advertising/promotion FICA/payroll tax Supplies TelephoneFixed: Rent Utilities Property taxes Dues and subscriptions
TOTAL EXPENSESProfit before depreciationDepreciation
NET PROFIT
LOW _______ _______ _______ _______
_______ _______ _______ _______
_______ _______ _______ _______ _______ _______ _______ _______ _______
MOSTLIKELY_______
_______ _______ _______
_______ _______ _______ _______
_______ _______ _______ _______ _______ _______ _______ _______ _______
HIGH_______
_______ _______ _______
_______ _______ _______ _______
_______ _______ _______ _______ _______ _______ _______ _______ _______
Breakeven AnalysisBreakeven Analysis
1. Total sales2. Fixed costs3. Gross margin4. Gross margin as a percent of sales (line 3 / line 1)5. Breakeven sales (line 2 / line 4)6. Profit goal7. Sales required to achieve profit goal [(line 2 + line 6) / line 4]
$__________$__________$__________ _________%
$__________
$__________$__________