How to Write a Business Plan Ron Nelson Island County EDC (360) 678-6889 [email protected] Why Planning is Important • Suppose you lived in New Hampshire and wanted to drive to Texas, would you use a map or GPS? • K-12 education is a pre-defined plan • Baking / cooking requires a plan - recipes • Planning will help shape your destination and provide the best road to get you there • Plans communicate to investors, suppliers, employees and others interested in your business Snapshot of a Business Plan • Typical Business Plan Components – Table of Contents – Executive Summary – Business Description – Definition of the Market – Description of Products and Services – Organization and Management – Marketing and Sales Strategy – Financial Management – Appendices Table of Contents Components of the Business Plan • Lists key sections of the business plan • Used to quickly locate specific sections • Brings organization and structure to the plan Executive Summary Components of the Business Plan • Purpose – Interest someone to read rest of plan • Most important section of the plan • Write last • Provides an enthusiastic snapshot of your company • Less than one page Business Description Components of the Business Plan • The Company Vision: – Outlines what a company wants to be – Futuristic: memorable and engaging expression of hope and inspiration – Staying status quo is moving backwards Business Description Components of the Business Plan • The Mission Statement: – Brief statement about who the company is and what it stands for – Example: Google’s mission statement is: Organize the world’s information and make it universally accessible and useful. Definition of the Market Components of the Business Plan • Describe your business industry and outlook • Define specific needs you will satisfy • Identify targeted customers • Develop customer profile • Determine market size – Demographics Research • North American Industry Classification System – Find the NAICS – http://naics.com/search.htm • WA St Dept of Revenue – Determine local statistics – http://www.dor.wa.gov • Google searches Research – Sno-Isle • Sno-Isle Libraries Business Resources www.sno-isle.org > Research > Business and Business: Small Business Start-Up • Small Business Resource Center: Sample business plans, how-to tutorials, business publications • A-Z: Market research and trend analysis • Business Plans eBookshelf: Business plan templates • Learning Express (in eLearning): Microsoft Excel tutorials • Legal Forms (in Legal Info): WA State legal form templates • Free wi-fi and meeting rooms at your local library • Information professionals available in person, on the telephone, and online to help with your business research Description of Products Components of the Business Plan • Identify and explain product pricing • Describe your products and services how they are competitive • Reference applicable graphics and brochures Organization and Management Components of the Business Plan • Descriptions of how the company is organized • Legal form of ownership • Explanation of how things get done • Required licenses and permits – Washington State Department of Licensing (Universal Business Identification Number) – Internal Revenue Service (Employer Identification Number) • Biographies of key managers / leaders Marketing and Sales Strategy Components of the Business Plan • Marketing is the process of creating customers • Research is the foundation of marketing – Who are my customers and potential customers? – Where do they live? – Am I offering the kinds of goods or services they want at the best place, at the best time and in the right amounts? – Are my prices consistent with what buyers view as the product’s value? Marketing and Sales Strategy Components of the Business Plan • Creating a marketing strategy – Identify customer groups you can best serve – Understand customers needs – Always consider change Financial Management Components of the Business Plan • Key Financial Statements – Cash Flow Statement – Balance Sheet – Income Statement Financial Management Components of the Business Plan • Cash Flow Statement – Monthly statement of cash on hand, incoming cash and expenses – Used to determine projected working capital availability and shortages Financial Management Components of the Business Plan • For a New Business – Estimate of start-up costs – Projected cash flow statement (12 months forward) Financial Management Components of the Business Plan • For an Existing Business – Balance sheets (last 3 years) – Income statements (last 3 years) – Cash flow statement (12 months) Financial Management Components of the Business Plan • If Applying for a Loan – Current personal financial statement on each principal – Federal tax return for prior year Appendices Components of the Business Plan • Company brochures • Resume of key employees • List of business equipment • Copies of press articles and advertisements (if available) • Pictures of your business location and products • Information and/or data supporting the growth of your industry and/or products • Key business agreements such as lease, contracts, etc. Next Steps • Put what you’ve learning into action – Prepare a draft business plan • Include 12 month cash flow projection – Plenty of Excel templates available – Discuss your draft plan and any questions you have with a business mentor, coach, or other seasoned business advisor – Use the information you’ve received to prepare a more finished product Financing • http://www.kauffman.org/about-thefoundation/kauffman-sketchbook.aspx Free Services • The EDC – Demographics / business data • SCORE (Service Corps Of Retired Executives) – Confidential small business counseling • Bring business plan and 12 month cash flow projection – http://www.scorechapter591.org/ • Small Business Administration – http://imedia.sba.gov/vd/media1/training/YoungEntrepreneurs/player.html How to Write a Business Plan Questions?