Transcript 3.1 PowerPoint Presentation

Entrepreneurship
Unit 3.2:
Creating the Business Plan
Creating the Business Plan
• Students will be able to:
– Construct a mission statement for a company
– Explain rationale for starting a business by utilizing
market research
– Describe a business, it’s products/services, and
customers
– Compare types of ownership for a business, and
select best option
– Determine organizational structure and
management skills needed to operate a business
– Assess locations for a business
Creating the Business Plan
(Organizing the structure of the business)
The Business Plan format used in this unit closely
follows the “DECA Entrepreneurship Participating”
event. It is a 10-page business prospectus, and
can be easily completed by students. This format
contains all the common components of a
business plan, however some parts are combined
to shorten the document.
It’s advised for teachers/students to get a copy of this format on the DECA or
USOE website. (http://www.deca.org/pdf/ENPI-ENPFguide.pdf)
Students, however, are not required to use this format. Other formats are
available from FBLA, DECA, the USOE website, or on the internet.
DECA Business Plan
Format
• Section I: Executive Summary
• Section II: Analysis of Business Situation
– Rationale and marketing research, Description of Business, Selfanalysis, Analysis of the business opportunity, customer and location,
and Proposed organization
• Section III: Marketing and Promotional
Plan
• Section IV: Financing Plan
– Income Statements, Amortization, and Return on Investment
Section I:
Executive Summary
• Summarizes the main points covered in
the business plan
– Even though this is the first page of the
document, it is usually written last…thus
the word “summary”
– May contain the Mission Statement (Goals)
of company
Section I:
Constructing a Mission Statement
• A mission statement expresses
“specific” goals for the company
• Example:
“To maintain 30 lawns on a weekly basis by
the end of the first year”
DECA Business Plan
Format
• Section I: Executive Summary
• Section II: Analysis of Business Situation
– Rationale and marketing research, Description of Business, Selfanalysis, Analysis of the business opportunity, customer and location,
and Proposed organization
• Section III: Marketing and Promotional
Plan
• Section IV: Financing Plan
– Income Statements, Amortization, and Return on Investment
Section II:
Explain Rationale for Starting Business
by Utilizing Market Research
• The Market Analysis section:
– Presents your market research
– Features a customer demographic profile
– Identifies and analyzes competitors and
explains your competitive advantage
– Addresses industry trends and growth
Section II:
Description of Company, Products/Services,
and Customers
• Includes history and background of idea
• Describes the product or service
• Discusses features and benefits of the
products/services offered and how it
benefits the customer
• Discusses target market, market
segments, or market niche served
• Assess locations
Assessing Locations for Business
• Location, Location, Location
– The location of a business—especially retail—is often a critical
factor in its success
– WHERE you will locate and WHY…Regardless of type of
business, this is an important aspect of all business plans and
must be explained in detail, including…
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Zoning & Parking
Square footage
Traffic counts
Accessibility
• Visibility of site
• Costs (Lease, taxes, renovations)
• Nearby businesses, including
target market
Section II:
Select a Form of Ownership
• Sole Proprietorship
• Partnership
• Corporation
– Subchapter S Corporation
– C-Corporation
• Other legal form of Ownership
– Limited Liability Company
*See Unit 3.2A “Legal Forms of Ownership” slide presentation
Sole Proprietorship
• Owned and operated by one person
• Easy to create
• Receives all profits, incurs any losses,
and is liable for the debts of business
• Most entrepreneurs often switch to
another form that provides more
personal financial protection as the
business grows
Partnership
• A business with two or more owners
• Partners do not have to share a
business equally
• How the partnership interests are
divided are spelled out in the
Partnership Agreement.
Corporation
• Registered by the state and operates
apart from its owners
• A corporation lives-on after the owners
die or have sold interest
• Ownership is represented by shares of
stock, public or private
2 Types of Corporations
• C-Corporation
• Subchapter S Corporation
C-Corporation
• The most common corporate form for large
businesses (i.e., Federal Express, Microsoft)
• Can create status that may assist in getting
loans
• Shareholders are owners of the corporation
• Required to have an elected Board of
Directors to make decisions for the company
• Structured to accommodate employee
benefits; i.e., pensions, retirement plans, and
profit sharing
Subchapter S Corporation
• Designed for owners of smaller companies
who want the liability protection of a
corporation, but want to avoid double taxation
– Pass-through Taxation: Profits are taxed once at
shareholder’s personal tax rate
– Shareholders liable to amount invested
• In smaller private corporations, the founders
generally hold all–or a majority–of the stock.
Other Forms of Ownership
• Limited Liability Company
• Nonprofit Corporations
IMPORTANT: Before you start your
company… Check with your state,
accountants, or attorneys to determine
which form of legal ownership most benefits
your needs, company size, financial status,
and issues of liability.
Source:
Allen, Kathleen R., & Meyer, Earl (2006).
“Entrepreneurship and Small Business
Management.” New York: Glencoe, p. 143
Source: Entrepreneurship and Small Business Management, Glencoe, 2006, pg. 143.
Section II:
Organizational Structure and
Management Skills
• Organizational Structure
– A plan which shows how the jobs in your
company relate to one another
• Smaller companies may have everyone report
to the owner. The larger the company, the more
layers of management needed.
Organizational Chart
• A graphic representation of the
organizational structure.
Management Skills
• The management and staffing section
should provide skill sets needed–a job
description–for each position
• Show you and your staff have the
experience, maturity, and common
sense to manage your business well
Good Management Skills
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Human Relations
Communications
Networking
Math
Problem Solving & Decision-making
Technical Skills
Time Management
Conceptual Skills
DECA Business Plan
Format
• Section I: Executive Summary
• Section II: Analysis of Business Situation
– Rationale and marketing research, Description of Business, Selfanalysis, Analysis of the business opportunity, customer and location,
and Proposed organization
• Section III: Marketing and Promotional
Plan
• Section IV: Financing Plan
– Income Statements, Amortization, and Return on Investment
Section III:
The Marketing Mix
• The Marketing Mix (the 4 P’s)
– Product
– Price
– Place
– Promotion
*See Unit 3.2B “The Marketing Mix” slide presentation
Products/Services
Answers: What are you selling?
• Product brands
– Ford, Dell, Kellogs
• Product Mix
– Used cars: Ford, GMC, Chrysler, Toyota,
Kia
– Ford only: Trucks, SUVs, Sedans, Hybrids
• Inventory methods
– Keeping track of available stock of goods
Pricing Strategies
Answers: How much is it?
• You’re in business to make profit. Know
which pricing strategies to utilize.
– Mark-up
– Cost-based
– Competition-based
– Demand-based
– Psychological
Pricing
– Discounting
– Credit
Channels of Distribution
Answers: Where can I get it?
• The path a product takes from producer
to final user (consumer)
– Direct
– Indirect (intermediaries)
• Use if results in lower cost than you would
charge if you were handling all the phases of
distribution yourself or if middle men have a
“ready-made” network for wider distribution.
– Includes transportation, storage & product
handling
Promotional Mix
Answers: Why should I buy it?
• Advertising:
– Paid non-personal
presentation of ideas
directed toward a
mass audience.
• Publicity:
– Free placement of
newsworthy items
about company, etc. in
the media.
• Personal Selling:
– Giving an oral
presentation to one or
more potential buyers.
• Promotions:
– Use of incentives or
interest-building
activities to create
demand. Be creative!!
Planning Organizational
Structure for Business
• Let’s Review:
– Construct a mission statement for a company
– Explain rationale for starting a business by utilizing
market research
– Describe a business, it’s products/services, and
customers
– Compare types of ownership for a business, and
select best option
– Determine organizational structure and
management skills needed to operate a business
– Assess locations for a business