Busioness Plan Detailed Elements Essay
Order ID 53563633773 Type Essay Writer Level Masters Style APA Sources/References 4 Perfect Number of Pages to Order 5-10 Pages
Busioness Plan Detailed Elements Essay
Write this section last.
I suggest that you make it two pages or fewer.
Include everything that you would cover in a five-minute interview.
Explain the fundamentals of the proposed business: What will your products and services be? Who will your customers be? Who are the owners? What do you think the future holds for your business and your industry?
Make it enthusiastic, professional, complete, and concise.
2.0 THE ENTERPRISE
2.1 General Organization Description
What SE will you be in? What will you do?
Include Vision, Mission, Values.
Vision: that goal that you may never accomplish, a bold statement about why you are in business;
Mission Statement: Many companies have a brief mission statement, usually in 30 words or fewer, explaining their guiding principles. If you want to draft a mission statement, this is a good place to put it in the plan;
Business Philosophy / Values: What is important to you in business?
2.2 Business Overview
Industry / Sector
Describe your industry or sector. Is it a growth industry or sector? What changes do you foresee in the industry or sector, short term and long term? How will your organization be poised to take advantage of them?
Products / Services
Describe in depth your products or services (technical specifications, drawings, photos, sales brochures, and other bulky items belong in Appendices).
What factors will give you competitive advantages or disadvantages? Examples include level of quality or unique or proprietary features.
Features and Benefits
List all of your major products or services.
For each product or service:
- Describe the most important features. What is special about it?
- Describe the benefits. That is, what will the product or service do for the customer?
Note the difference between features and benefits, and think about them. For example, a house that gives shelter and lasts a long time is made with certain materials and to a certain design; those are its features. Its benefits include pride of ownership, financial security, providing for the family, and inclusion in a neighborhood. You build features into your product so that you can sell the benefits.
What after-sale services will you give (if applicable)? Some examples are delivery, warranty, service contracts, support, follow-up, and refund policy.
Explain your method or methods of setting prices. Even when you may not be charging the customer, you still need to determine a dollar value for your serices.
For most small businesses, having the lowest price is not a good policy. It robs you of needed profit margin; customers may not care as much about price as you think; and large competitors can under price you anyway. Usually you will do better to have average prices and compete on quality and service.
Does your pricing strategy fit with what was revealed in your competitive analysis?
Compare your prices with those of the competition. Are they higher, lower, the same? Why?
How important is price as a competitive factor? Do your intended customers really make their purchase decisions mostly on price? Do your funders fund you based upon the value of your services?
If you are selling a product or serice, How do you sell your products or services?
Direct (mail order, Web, catalog)
Your own sales force
Bid on contracts
If you are providing a service, how will you deliver it? Will you deliver directly or get other organizations to deliver it?
2.3 Target Clients / Customers
Identify your targeted customers, their characteristics, and their geographic locations, otherwise known as their demographics.
The description will be completely different depending on whether you plan to sell (or deliver the product / service) to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, other social enterprises, and retailers, you must carefully analyze both the end consumer and the middle businesses to which you sell.
You may have more than one customer group. Identify the most important groups. Then, for each customer group, construct what is called a demographic profile:
- Income level
- Social class and occupation
- Other (specific to your industry)
- Other (specific to your industry)
For business customers, the demographic factors might be:
- Industry (or portion of an industry)
- Size of firm
- Quality, technology, and price preferences
- Other (specific to your industry)
- Other (specific to your industry)
What products & services and companies & social enterprises will compete with you?
List your major competitors: (Names and addresses)
Will they compete with you across the board, or just for certain products, certain customers, or in certain locations?
Will you have important indirect competitors? (For example, showers for homeless may compete with housing for homeless, although they are different types of businesses.)
How will your products or services compare with the competition?
Use a Competitive Analysis tool to compare your social enterprise with your two most important competitors. Write a short paragraph stating your competitive advantages and disadvantages.
Now that you have systematically analyzed your industry / sector, your product, your customers, and the competition, you should have a clear picture of where your social enterprise fits into the world. In one short paragraph, define your niche, your unique corner of the market
Facts about your industry:
- What is the total size of your market?
- What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.)
- Current demand in target market.
- Trends in target market—growth trends, trends in consumer preferences, and trends in product development.
- Growth potential and opportunity for a business of your size.
- What barriers to entry do you face in entering this market with your new social enterprise? Some typical barriers are:
- High capital costs
- High production costs
- High marketing costs
- Consumer acceptance and brand recognition
- Training and skills
- Unique technology and patents
- Shipping costs
- Tariff barriers and quotas
- And of course, how will you overcome the barriers?
- How could the following affect your social enterprise?
- Change in technology
- Change in government regulations
- Change in the economy
- Change in your industry
3.1 Marketing Approach
In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important service (or sales) projection.
Outline a marketing strategy that is consistent with your niche.
How will you get the word out to customers?
Advertising: What media, why, and how often? Why this mix and not some other?
Have you identified low-cost methods to get the most out of your promotional budget?
Will you use methods other than paid advertising, such as trade shows, catalogs, dealer incentives, word of mouth (how will you stimulate it?), and network of friends or professionals?
What image do you want to project? How do you want customers to see you?
In addition to advertising, what plans do you have for graphic image support? This includes things like logo design, cards and letterhead, brochures, signage, and interior design (if customers come to your place of business).
Should you have a system to identify repeat customers and then systematically contact them?
How much will you spend on the items listed above?
Before startup? (These numbers will go into your startup budget.)
Ongoing? (These numbers will go into your operating plan budget
3.2 Location and Facilities
What qualities do you need in each location? Describe the type of location you’ll have.
- Amount of space
- Type of building
- Power and other utilities
Is it important that your location be convenient to transportation or to suppliers?
Do you need easy walk-in access?
What are your requirements for parking and proximity to freeway, airports, railroads, and shipping centers?
Probably you do not have a precise location picked out yet. This is the time to think about what you want and need in a location. Many startups run successfully from home for a while.
Here, analyze your location criteria as they will affect your customers.
Is your location important to your customers? If yes, how?
If customers come to your place of business:
Is it convenient? Parking? Interior spaces? Not out of the way?
Is it consistent with your image?
Is it what customers want and expect?
Where is the competition located? Is it better for you to be near them (like car dealers or fast food restaurants) or distant (like convenience food stores)?
3.3 Major Goals and Objectives:
Goals are destinations—where you want your business to be. Objectives are progress markers along the way to goal achievement. For example, a goal might be to have a healthy, successful social enterprise that is a leader in customer service and that has a loyal customer following. Objectives might be annual sales targets and some specific measures of customer satisfaction.
Describe your most important social enterprise strengths and core competencies. What factors will make the social enterprise succeed? What do you think your major competitive strengths will be?
3.4 Implementation Schedule
Explain the daily operation of the business, its location, equipment, people, processes, and surrounding environment.
How and where are your products or services produced?
Explain your methods of:
- Production techniques and costs
- Quality control
- Customer service
- Inventory control
- Product development
When will the major activities happen, like opening, serving first customers, growing to x level, etc (include date).
- ORGANIZATION AND LEADERSHIP
Who will manage the business on a day-to-day basis? What experience does that person bring to the business? What special or distinctive competencies? Is there a plan for continuation of the business if this person is lost or incapacitated?
If you’ll have more than 10 employees, create an organizational chart showing the management hierarchy and who is responsible for key functions.
Include position descriptions for key employees. If you are seeking loans or investors, include resumes of owners and key employees.
- Number of employees
- Type of labor (skilled, unskilled, and professional)
- Where and how will you find the right employees?
- Quality of existing staff
- Pay structure
- Training methods and requirements
- Who does which tasks?
- Do you have schedules and written procedures prepared?
- Have you drafted job descriptions for employees? If not, take time to write some. They really help internal communications with employees.
For certain functions, will you use contract workers in addition to employees?
4.2 Board of Directors:
A board of directors is a group of people who jointly supervise the activities of the organization. Board members meet periodically to discuss and vote on the affairs of the organization. At a minimum, an annual meeting must occur with all board members present. Additional meetings are likely to take place throughout the year so board members can discuss and make other necessary decisions. Board memberships are not set up to be permanent positions; most organizations have terms set up for board members, which typically fall between two and five years.
Indicate how many members will be on your board, and what type of skills and abilities they should have (this will help you recruit them)
4.3 Professional and Advisory Support
Wich of the following you will need? Name them and explain why.
- Management advisory board
- Insurance agent
- Consultant or consultants
- Mentors and key advisors
5.0 INVESTMENT CONSIDERATIONS
5.1 Legal & Regulatory
Describe the following:
- Licensing and bonding requirements
- Health, workplace, or environmental regulations
- Special regulations covering your industry or profession
- Zoning or building code requirements
- Insurance coverage
Trademarks, copyrights, or patents (pending, existing, or purchased)
5.2 Economic Impact:
What is the impact on the economy that you foresee your SE will have? How will you measure it?
5.3 Community Impact:
What is the impact on the community that you foresee your SE will have? How will you measure it?
5.4 Significant Investment to Date
if there have been any investments already made in the business, list them here. They could be in facilities, development of the plan, performing an initial study, etc.
6.0 FUND DEVELOPMENT
6.1 Public and Private Support Revenue Assumptions
Baased upon your research on what are the most likely sources of funding for your SE, in this section you need to outline what the sources are, indicating:
- Source considered, and why
- What % of the budget do you consider that the source will cover. Keep in mind not to have an extremen dependency on a funding source (more than 33%), and think “balanced portfolio.”
6.2 Fund Development Target and Strategies
Once you have identified the sources, in this section you will discuss the strategies to reach out to these funding sources. This may include: social media, direct mail, phone calls, grant applications, personal relationships, fundraising events, etc.
6.3 Grant writing plans
If one of your strategies is to apply for private and / or piublic grants, how do you plant to fund these efforts? You may need an expert grant-writer, would you hire one (or more) full-time, or part-time, woild you contract per grant written?
6.4 Earned Income
If you are considering earned income to generate revenue, in this section you will describe the earned income strategies, indicating what portio of the revenue portfolio they would cover.
7.0 FINANCIAL SUMMARY
7.1 Operating Assumptions
You will have many startup expenses before you even begin operating your business. It’s important to estimate these expenses accurately and then to plan where you will get sufficient capital. This is a research project, and the more thorough your research efforts, the less chance that you will leave out important expenses or underestimate them.
Even with the best of research, however, opening a new business has a way of costing more than you anticipate. There are two ways to make allowances for surprise expenses. The first is to add a little “padding” to each item in the budget. The problem with that approach, however, is that it destroys the accuracy of your carefully wrought plan. The second approach is to add a separate line item, called contingencies, to account for the unforeseeable. This is the approach we recommend.
It is recommended as a rule of thumb that contingencies should equal at least 20 percent of the total of all other start-up expenses.
Explain your research and how you arrived at your forecasts of expenses. Give sources, amounts, and terms of proposed loans. Also explain in detail how much will be contributed by each investor and what percent ownership each will have.
7.2 Three-year budget
In here you will make projections for both revenue and expenses for the first three years of the SE. Use the template provided for this purpose, and present your estimations to the best of your abilities based upon your operating assumptions, and the research that you have made.
7.3 Three-year Profit and Loss Projection (Optional /Bonus Points)
For the purposes of this project, the financial plan consists of a 36-months (3 years) profit and loss projection only. Typical plans also include a three-year cash-flow projection, a projected balance sheet, and a break-even calculation. Together they constitute a reasonable estimate of your social enterprise’s financial future. More important, the process of thinking through the financial plan will improve your insight into the inner financial workings of your social enterprise.
Many business owners think of the three-years profit and loss projection as the centerpiece of their plan. This is where you put it all together in numbers and get an idea of what it will take to make a profit and be successful.
Your sales projections will come from a sales forecast in which you forecast sales, cost of goods sold, expenses, and profit.
Profit projections should be accompanied by a narrative explaining the major assumptions used to estimate social enterprise income and expenses.
Research Notes: Keep careful notes on your research and assumptions, so that you can explain them later if necessary, and also so that you can go back to your sources when it’s time to revise your plan.
7.4 Four-Year Revenue Projection (Optional /Bonus Points)
The 12-month projection is the heart of your financial plan. The Four-Year Profit projection is for those who want to carry their forecasts beyond the first year.
Of course, keep notes of your key assumptions, especially about things that you expect will change dramatically after the first year.
7.5 Projected Cash Flow (Optional /Bonus Points)
If the profit projection is the heart of your business plan, cash flow is the blood. Businesses fail because they cannot pay their bills. Every part of your business plan is important, but none of it means a thing if you run out of cash.
The point of this worksheet is to plan how much you need before startup, for preliminary expenses, operating expenses, and reserves. You should keep updating it and using it afterward. It will enable you to foresee shortages in time to do something about them—perhaps cut expenses, or perhaps negotiate a loan. But foremost, you shouldn’t be taken by surprise.
There is no great trick to preparing it: The cash-flow projection is just a forward look at your checking account.
For each item, determine when you actually expect to receive cash (for sales) or when you will actually have to write a check (for expense items).
You should track essential operating data, which is not necessarily part of cash flow but allows you to track items that have a heavy impact on cash flow, such as sales and inventory purchases.
You should also track cash outlays prior to opening in a pre-startup column. You should have already researched those for your startup expenses plan.
Your cash flow will show you whether your working capital is adequate. Clearly, if your projected cash balance ever goes negative, you will need more start-up capital. This plan will also predict just when and how much you will need to borrow.
Explain your major assumptions, especially those that make the cash flow differ from the Profit and Loss Projection. For example, if you make a sale in month one, when do you actually collect the cash? When you buy inventory or materials, do you pay in advance, upon delivery, or much later? How will this affect cash flow?
Are some expenses payable in advance? When?
Are there irregular expenses, such as quarterly tax payments, maintenance and repairs, or seasonal inventory buildup, that should be budgeted?
Loan payments, equipment purchases, and owner’s draws usually do not show on profit and loss statements but definitely do take cash out. Be sure to include them.
And of course, depreciation does not appear in the cash flow at all because you never write a check for it.
7.6 Opening Day Balance Sheet (Optional /Bonus Points)
A balance sheet is one of the fundamental financial reports that any business needs for reporting and financial management. A balance sheet shows what items of value are held by the social enterprise (assets), and what its debts are (liabilities). When liabilities are subtracted from assets, the remainder is owners’ equity.
Use a startup expenses and capitalization spreadsheet as a guide to preparing a balance sheet as of opening day. Then detail how you calculated the account balances on your opening day balance sheet
Optional: Some people want to add a projected balance sheet showing the estimated financial position of the social enterprise at the end of the first year. This is especially useful when selling your proposal to investors.
7.7 Break-Even Analysis (Optional /Bonus Points)
A break-even analysis predicts the sales volume, at a given price, required to recover total costs. In other words, it’s the sales level that is the dividing line between operating at a loss and operating at a profit.
Expressed as a formula, break-even is:
Break-Even Sales = Fixed Costs 1- Variable Costs
(Where fixed costs are expresssed in dollars, but variable costs are expressed as a percent of total sales.) Include all assumptions upon which your break-even calculation is based.
7.8 Sensitivity Analysis / Risk Assessment (Optional /Bonus Points)
In this section you use financial projections to demonstrate that you have thought about the severals risks that your business could face. Some risks could be: market can’t respond as you proojected and this may affect sales, it may take you longer to start selling your products that planned, you don’t accomplish the target market share as planned. First, you need to choose which factor (s) you consider may impact your business, then you create financial projections under various scenarios.
For example, if you think that your projection if the market share may be affected by other potential competitors’ moves, you may create three financial scenarios: the worst case, the likely, and the best case. The projections that you have created already may be considered the “likely” scenario, a reduction of the market share in half the worst, and a market share 50% above plan the best. Explain why you made your assumptions and create financial scenarios for each.
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