Page 1 of 19. Business Plan OWNERS. Your Business Name Street Address Address 2 City, ST ZIP Code Telephone Fax

Transcription

1 Page 1 f 19 Business Plan OWNERS Yur Business Name Street Address Address 2 City, ST ZIP Cde Telephne Fax

2 Page 2 f 19 I. Table f Cntents I. Table f Cntents... 2 II. Executive Summary... 3 III. General Cmpany Descriptin... 4 IV. Prducts and Services... 5 V. Marketing Plan... 6 VI. VII. Operatinal Plan...11 Management and Organizatin...13 VIII. Persnal Financial Statement...14 IX. Startup Expenses and Capitalizatin...15 X. Financial Plan...16 XI. Appendices...19

3 Page 3 f 19 II. Executive Summary Write this sectin last. It shuld be n mre than tw pages. Explain the fundamentals f yur agency mdel: What lines f businesses will yu sell? Wh will yur custmers be? Wh are the wners and what key capabilities d they bring? Hw d yu see the future f the industry and hw des yu visin fr the agency fit in? Make it enthusiastic, prfessinal, cmplete, and cncise.

4 Page 4 f 19 III. General Agency Descriptin Purpse Statement: A brief statement, usually in 30 wrds r fewer, explaining yur reasn fr being. Visin: Visin is a destinatin what yu want yur agency t lk like if it fulfilled yur ultimate expectatins. Values: What is imprtant t yu in business? Gals and Objectives: Gals are lng-term aspiratins, usually in terms f vlume, prfitability, market share, etc. Objectives are interim markers n the way t gals. T whm will yu market yur prducts: (State it briefly here yu will d a mre thrugh explanatin in the Marketing Plan sectin). Describe the industry as yu see it, changes yu fresee in the industry, shrt term and lng term? Hw will yur agency be pised t take advantage f them? Describe yur mst imprtant business strengths and cre cmpetencies. What factrs will make the agency succeed? What d yu think yur majr cmpetitive strengths will be? What backgrund experience, skills, and strengths d yu persnally bring t this new venture? Legal frm f wnership: Are yu the sle prprietr f yur agency, r is it a partnership, crpratin, limited liability crpratin (LLC)? Why have yu selected this frm?

5 Page 5 f 19 IV. Prducts and Services Describe in depth the lines f insurance prducts r services yu will ffer. What after-sale services will yu give? Sme examples are service standards (returned calls,) annual reviews r stewardship reprts. What factrs will give yu cmpetitive advantages r disadvantages? Examples include level f quality r unique selling psitin. Describe the cmmissin r fee structures f yur prducts r services. Here are sme examples with premium/cmmissin estimates which will vary by risk characteristics, lcatin etc.: Average Standard Family Aut plicy with 2 vehicles and mature drivers: $3,000/$450 Hme, $150,000: $1,000/$150 Small business: Restaurant Business persnal prperty/general liability package: $5,000/$750 Business aut 1 unit: $2,000/$300 Wrkers cmpensatin: $10,000/$500 Excess $1,000,000 Umbrella Liability: $750/$75

6 Page 6 f 19 V. Marketing Plan Situatin Analysis Facts abut yur industry: What is the ttal size f yur market? What percent share f the market will yu have? (This is imprtant nly if yu think yu will be a majr factr in the market.) Current demand in target market. Trends in target market grwth trends, trends in custmer preferences, and trends in prduct (plicy & services) develpment. Grwth ptential and pprtunity fr an agency f yur size. What barriers t entry d yu face in entering this market with yur new agency? Sme typical barriers are: High capital csts High labr csts High marketing csts Brand recgnitin Training and skills Unique technlgy And f curse, hw will yu vercme the barriers? Hw culd the fllwing affect yur agency? Change in technlgy Change in gvernment regulatins Change in the ecnmy Change in yur industry Custmers Identify yur targeted custmers, their characteristics, and their gegraphic lcatins, therwise knwn as their demgraphics. The descriptin will vary depending n whether yu plan t sell t ther businesses r directly t cnsumers. Yu may have mre than ne custmer grup. Identify the mst imprtant grups. Then, fr each custmer grup, cnstruct what is called a demgraphic prfile. Cnsider the fllwing factrs: Age

7 Page 7 f 19 Gender Lcatin Incme level Scial class and ccupatin Educatin Other (specific t yur industry) Fr business custmers, the demgraphic factrs might be: Industry Lcatin Size f firm Quality, cverage, and price sensitivity Other Cmpetitin What agencies and cmpanies will cmpete with yu? Describe yur cmpetitrs: Will they cmpete with yu acrss the bard, r just fr certain prducts, certain custmers, r in certain lcatins? Hw will yur agency cmpare with the cmpetitin? Use the fllwing Cmpetitive Analysis table t cmpare yur agency with yur tw mst imprtant cmpetitrs. In the first clumn are key cmpetitive factrs. Since these vary frm ne industry t anther, yu may want t custmize the list f factrs. In the clumn labeled Me, state hw yu hnestly think yu will stack up in custmers' minds. Then check whether yu think this factr will be a strength r a weakness fr yu. Smetimes it is hard t analyze ur wn weaknesses. Try t be very hnest here. Better yet, get sme disinterested strangers t assess yu. This can be a real eye-pener. And remember that yu cannt be all things t all peple. In fact, ding s can cause many business failures because effrts becme scattered and diluted. Yu want an hnest assessment f yur firm's strng and weak pints. Nw analyze each majr cmpetitr. In a few wrds, state hw yu think they cmpare.

8 Page 8 f 19 In the final clumn, estimate the imprtance f each cmpetitive factr t the custmer. 1 = critical; 5 = nt very imprtant. Table 1: Cmpetitive Analysis FACTOR Me Strength Weakness Cmpetitr A Cmpetitr B Imprtance t Custmer Prducts Price Quality Selectin Service Reliability Stability Expertise Cmpany Reputatin Lcatin Appearance Sales Methd Advertising Nw, write a shrt paragraph stating yur cmpetitive advantages and disadvantages. Unique Selling Psitin Nw that yu have systematically analyzed yur industry, yur agency, yur custmers, and the cmpetitin, yu shuld have a clear picture f where yur agency fits int the wrld. In ne shrt paragraph, define yur unique selling psitin that will allw yu t be effective.

9 Page 9 f 19 Strategy Nw utline a marketing strategy that is cnsistent with yur unique selling psitin. Prmtin Hw will yu get the wrd ut t custmers? Advertising: What media, why, and hw ften? Why this mix and nt sme ther? Have yu identified lw-cst methds t get the mst ut f yur prmtinal budget? Will yu use methds ther than paid advertising, such as trade shws, catalgs, dealer incentives, wrd f muth (hw will yu stimulate it?), and netwrk f friends r prfessinals? What image d yu want t prject? Hw d yu want custmers t see yu? In additin t advertising, what plans d yu have fr graphic image supprt? This includes things like lg design, cards and letterhead, brchures, signage, and interir design (if custmers cme t yur place f business). Shuld yu have a system t identify repeat custmers and then systematically cntact them? Prmtinal Budget Hw much will yu spend n the items listed abve? Befre startup? (These numbers will g int yur startup budget.) Onging? (These numbers will g int yur perating plan budget.) Pricing In the insurance business, pricing is set by insurance carriers and yur access t varius carriers will dictate hw cmpetitive yu will be in any given situatin. Des yur access t carriers fit with what was revealed in yur cmpetitive analysis? Cmpare yur pricing with thse f the cmpetitin. Are they higher, lwer, the same? Why? Hw imprtant is price as a cmpetitive factr? What d yu intend t d t minimize prcess as the primary decisin factr fr yur custmers? Prpsed Lcatin Prbably yu d nt have a precise lcatin picked ut yet. This is the time t think abut what yu want and need in a lcatin. Many startups run successfully frm hme fr a while.

10 Page 10 f 19 Yu will describe ther business needs in the Operatinal Plan sectin. Here, analyze yur lcatin criteria as they will affect yur custmers. Is yur lcatin imprtant t yur custmers? If yes, hw? If custmers cme t yur place f business: Is it cnvenient? Parking? Interir spaces? Nt ut f the way? Is it cnsistent with yur image? Is it what custmers want and expect? Where is the cmpetitin lcated? Is it better fr yu t be near them (like car dealers r fast-fd restaurants) r distant (like cnvenience-fd stres)? Distributin Channels Hw d yu sell yur prducts r services? Stre Frnt Web Outside emplyee prducers Outside Independent cntractr prducers Sales Frecast Nw that yu have described yur prducts, services, custmers, markets, and marketing plans in detail, it s time t attach sme numbers t yur plan. Use a sales frecast spreadsheet t prepare a mnth-by-mnth prjectin. The frecast shuld be based n yur histrical sales, the marketing strategies that yu have just described, yur market research, and industry data, if available. Yu may want t d tw frecasts: 1) a "best guess", which is what yu really expect, and 2) a "wrst case" lw estimate that yu are cnfident yu can reach n matter what happens. Remember t keep ntes n yur research and yur assumptins as yu build this sales frecast and all subsequent spreadsheets in the plan. This is critical if yu are ging t present it t funding surces.

11 Page 11 f 19 VI. Operatinal Plan Explain the daily peratin f the business, its lcatin, equipment, peple, prcesses, and surrunding envirnment. Prcessing Hw and where are yur prducts r services prduced? Explain yur methds f: Open, track and clse new business pprtunities Quality and E&O Cntrl Custmer service Lcatin What qualities d yu need in a lcatin? Describe the type f lcatin yu ll have. Physical requirements: Amunt f space Type f building Zning Pwer and ther utilities Access: Is it imprtant that yur lcatin be cnvenient t transprtatin? D yu need easy walk-in access? What are yur requirements fr parking and prximity t freeways? Cst: Estimate yur ccupatin expenses, including rent, but als including maintenance, utilities, insurance, and initial remdeling csts t make the space suit yur needs. These numbers will becme part f yur financial plan. What are yur business hurs?

12 Page 12 f 19 Legal Envirnment Describe the fllwing: Licensing and bnding requirements Permits Health, wrkplace, r envirnmental regulatins Special regulatins cvering yur industry r prfessin Zning r building cde requirements Insurance cverage Trademarks Persnnel Number f emplyees Experience r expertise: entry level, years f experience, etc. Where and hw will yu find the right emplyees? Quality f existing staff Pay structure Training methds and requirements Wh des which tasks? D yu have schedules and written prcedures prepared? Jb descriptins fr emplyees Fr certain functins, will yu use cntract wrkers in additin t emplyees? Lead-time fr rdering? Carriers Identify key carrier attributes fr each line f business:

13 Page 13 f 19 VII. Management and Organizatin Wh will manage the business n a day-t-day basis? What experience des that persn bring t the business? What special r distinctive cmpetencies? Is there a plan fr cntinuatin f the business if this persn is lst r incapacitated? If yu ll have mre than 10 emplyees, create an rganizatinal chart shwing the management hierarchy and wh is respnsible fr key functins. Include psitin descriptins fr key emplyees. If yu are seeking lans r investrs, include resumes f wners and key emplyees. Prfessinal and Advisry Supprt List the fllwing: Bard f directrs Management advisry bard Attrney Accuntant Insurance agent Banker Cnsultant r cnsultants Mentrs and key advisrs

14 Page 14 f 19 VIII. Persnal Financial Statement Include persnal financial statements fr each wner and majr stckhlder, shwing assets and liabilities held utside the business and persnal net wrth. Owners will ften have t draw n persnal assets t finance the agency, and these statements will shw what is available. Bankers and investrs usually want this infrmatin as well.

15 Page 15 f 19 IX. Startup Expenses and Capitalizatin Yu will have many expenses befre yu even begin perating yur agency. It s imprtant t estimate these expenses accurately and then t plan where yu will get sufficient capital. This is a research prject, and the mre thrugh yur research effrts, the less chance that yu will leave ut imprtant expenses r underestimate them. Even with the best f research, hwever, pening a new agency has a way f csting mre than yu anticipate. There are tw ways t make allwances fr surprise expenses. The first is t add a little padding t each item in the budget. The prblem with that apprach, hwever, is that it destrys the accuracy f yur carefully wrught plan. The secnd apprach is t add a separate line item, called cntingencies, t accunt fr the unfreseeable. This is the apprach we recmmend. We recmmend a rule f thumb that cntingencies shuld equal at least 20 percent f the ttal f all ther start-up expenses. Explain hw yu arrived at yur frecasts f expenses. Give surces, amunts, and terms f prpsed lans. Als explain in detail hw much will be cntributed by each investr and what percent wnership each will have.

16 Page 16 f 19 X. Financial Plan The financial plan cnsists f a 12-mnth prfit and lss prjectin, a fur-year prfit and lss prjectin (ptinal), a cash-flw prjectin, a prjected balance sheet, and a break-even calculatin. Tgether they cnstitute a reasnable estimate f yur cmpany's financial future. Mre imprtant, the prcess f thinking thrugh the financial plan will imprve yur insight int the inner financial wrkings f yur cmpany. 12-Mnth Prfit and Lss Prjectin Many business wners think f the 12-mnth prfit and lss prjectin as the centerpiece f their plan. This is where yu put it all tgether in numbers and get an idea f what it will take t make a prfit and be successful. Yur sales prjectins will cme frm a sales frecast in which yu frecast sales, expenses, and prfit mnth-by-mnth fr ne year. Prfit prjectins shuld be accmpanied by a narrative explaining the majr assumptins used t estimate agency incme and expenses. Research Ntes: Keep careful ntes n yur research and assumptins, s that yu can explain them later if necessary, and als s that yu can g back t yur surces when it s time t revise yur plan. Three-Year Prfit Prjectin (Optinal) The 12-mnth prjectin is the heart f yur financial plan. This sectin is fr thse wh want t carry their frecasts beynd the first year. Of curse, keep ntes f yur key assumptins, especially abut things that yu expect will change dramatically after the first year. Prjected Cash Flw If the prfit prjectin is the heart f yur business plan, cash flw is the bld. Businesses fail because they cannt pay their bills. Every part f yur business plan is imprtant, but nne f it means a thing if yu run ut f cash. The pint f this wrksheet is t plan hw much yu need befre startup, fr preliminary expenses, perating expenses, and reserves. Yu shuld keep updating it and using it afterward. It will enable yu t fresee shrtages in time t d smething abut them perhaps cut expenses, r perhaps negtiate a lan. But fremst, yu shuldn t be taken by surprise.

17 Page 17 f 19 There is n great trick t preparing it: The cash-flw prjectin is just a frward lk at yur checking accunt. Fr each item, determine when yu actually expect t receive cash (fr sales) r when yu will actually have t write a check (fr expense items). Yu shuld track essential perating data, which is nt necessarily part f cash flw but allws yu t track items that have a heavy impact n cash flw, such as sales and inventry purchases. Yu shuld als track cash utlays prir t pening in a pre-startup clumn. Yu shuld have already researched thse fr yur startup expenses plan. Yur cash flw will shw yu whether yur wrking capital is adequate. Clearly, if yur prjected cash balance ever ges negative, yu will need mre start-up capital. This plan will als predict just when and hw much yu will need t brrw. Explain yur majr assumptins, especially thse that make the cash flw differ frm the Prfit and Lss Prjectin. Fr example, if yu make a sale in mnth ne, when d yu actually cllect the cash? When yu buy materials, d yu pay in advance, upn delivery, r much later? Hw will this affect cash flw? Are sme expenses payable in advance? When? Are there irregular expenses, such as quarterly tax payments, maintenance and repairs, r equipment buildup, that shuld be budgeted? Lan payments, equipment purchases, and wner's draws usually d nt shw n prfit and lss statements but definitely d take cash ut. Be sure t include them. And f curse, depreciatin des nt appear in the cash flw at all because yu never write a check fr it. Opening Day Balance Sheet A balance sheet is ne f the fundamental financial reprts that any business needs fr reprting and financial management. A balance sheet shws a cmpany s items f value (assets) and its debts (liabilities). When liabilities are subtracted frm assets, the remainder is the wners equity. Use a startup expenses and capitalizatin spreadsheet as a guide t preparing a balance sheet as f pening day. Then detail hw yu calculated the accunt balances n yur pening day balance sheet. Optinal: Sme peple want t add a prjected balance sheet shwing the estimated financial psitin f the cmpany at the end f the first year. This is especially useful when selling yur prpsal t investrs.

18 Page 18 f 19 Break-Even Analysis A break-even analysis predicts the sales vlume, at a given price, required t recver ttal csts. In ther wrds, it s the sales level that is the dividing line between perating at a lss and perating at a prfit. Expressed as a frmula, break-even is: Breakeven Sales = Fixed Csts 1- Variable Csts (Where fixed csts are expressed in dllars, but variable csts are expressed as a percent f ttal sales.) Include all assumptins upn which yur break-even calculatin is based.

19 Page 19 f 19 XI. Appendices Include details and studies used in yur business plan; fr example: Brchures and advertising materials Industry studies Blueprints and plans Maps and phts f lcatin Magazine r ther articles Detailed lists f equipment wned r t be purchased Cpies f leases and cntracts Letters f supprt frm future custmers Any ther materials needed t supprt the assumptins in this plan Market research studies List f assets available as cllateral fr a lan