Required Business Plan for the Center for Innovation and Entrepreneurship (CIE)

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1 Required Business Plan for the Center for Innovation and Entrepreneurship (CIE) A business plan is required as part of the application process for prospective CIE tenants. For assistance or general information about developing a business plan, contact: Frank Veeman Director Small Business and Technology Development Center (SBTDC) Phone: (660) Fveeman@nwmissouri.edu This guide is designed to help new or existing business owners: - take an objective look at their business - identify areas of strength and weakness - pinpoint needs that otherwise might be overlooked - identify opportunities and threats - begin planning how best to achieve their goals. INTRODUCTION The process of putting together a business plan forces you to take an objective, critical, unemotional look at your business project in its entirety. The business plan is an operating tool that, if properly used, will help you manage the business more effectively in order to achieve success. By taking an objective look at your business, you can identify areas of weakness and strength, pinpoint needs you might otherwise overlook, spot opportunities early, and begin planning how to best achieve your business goals. The business plan also helps you see problems before they grow large and helps you identify their source, thus suggesting ways to solve them. A wellprepared business plan will even help avoid some problems altogether. The business plan also provides information needed by others to evaluate your venture, especially if you will need to seek outside financing. A thorough business plan can quickly become a complete financing proposal that will meet the requirements of most lenders. Since many business plans are submitted to banks or other sources of financing, it is important to realize how a banker analyzes a business plan and what questions will be asked during this

2 analysis. A banker s job is to assess the degree of risk for each proposed loan and to be satisfied that the loan can be repaid by the borrower while still allowing the business to operate profitably. This analysis is based on factors such as: the nature of the business, the purpose of the loan, the amount of the loan, the ability to repay the loan and the character and management skills of the business owner. Bankers, lawyers and certified public accountants are professionals in their fields and should be included in the planning at whatever point their knowledge and expertise can be helpful. Hiring a professional to prepare a business plan won t do you any good if you don t thoroughly understand it. There are numerous software packages on the market that will assist you in preparing your business plan. However, you should not rely on the software and simply fill in the blanks you must understand the document and the meaning of its content. If you are a start-up business seeking financing, you will not have a demonstrated track record that shows the company s ability to run profitably. A well organized, insightful business plan must convince a banker or other funder of your ability to understand your market, demonstrate your understanding of the technical knowledge required in the field, and the company s ability to understand and respond to customer needs. The plan must ultimately show your ability to manage the business so it can be operated in a profitable way. WHY WRITE A BUSINESS PLAN? A business plan is a road map for the development of your company. It includes a written description of your business and corresponding financial data. The goals of a business plan are: 1. To develop and implement your ideas into actual business practices, products or services. 2. To identify the strengths and weaknesses of your company and its competitors, and to provide a strategy to further your company's growth. 3. To develop guidelines for the operation of your company. 4. To assist you in obtaining money from lenders or investors. WHAT IT INCLUDES: The body of the business plan can be divided into four distinct sections: 1) the description of the business, 2) the marketing plan, 3) the operations plan and 4) the financial plan. Additional sections of the business plan should include any supporting documents and financial projections.

3 BUSINESS PLAN OUTLINE A. Business Description 1. Business Overview Explain the following when describing your business: 1. Legal structure is it a sole proprietorship, partnership, limited liability company (LLC) or a corporation? 2. Business type. For example: retail, wholesale, construction, manufacturing, or service. 3. The products or services offered. 4. The business history. 5. Why your business will be profitable both in the near-term and long-term. 6. Hours of operation. 7. Your strategy to be successful in the market you plan to enter. 8. The business goals and objectives. 9. List all owners and board members. Include resumes as supporting materials. 10. Attach an organization chart 2. Product/Service Describe the products and services you sell and the benefits they provide to your customers. Successful business owners know what their customers want or expect from them. Describe your strategies to build customer satisfaction and loyalty. Include what features you offer that set your products or services apart from the competition. 3. Space Requirements 1. Identify the amount of space needed and the type of space needed now, in 2 years, and 5 years. e.g., labs, warehouse space, etc. 2. Describe any features needed such as a loading dock, specialized equipment, etc. B. Marketing Plan The key element of a successful marketing plan is to know your customers -- their likes, dislikes, expectations. By identifying these factors, you can develop a marketing strategy that will create interest and meet their needs. Develop a marketing plan for your business by answering these questions. Your marketing plan should be included in your business plan and contain the following:

4 1. Who are your customers? Define your target market(s). 2. Are your markets growing, steady, or declining? 3. What is your anticipated market share and how will you capture it? 4. How are your markets segmented? 5. Are your markets large enough to support business expansion? 6. How will you attract, hold, increase your market share? How will you promote the business? 7. What is your pricing strategy? A. Competitive Analysis 1. Identify and list your direct competitors. 2. List your indirect competitors. 3. Explain your competitors strategies used to pursue their markets. How will your strategy compete with the competition? 4. What are your competitor s strengths and weaknesses? 5. How does your competitors product or service differ from yours? B. Pricing and Sales Describe your pricing strategy and how it compares to the competitors in your market. C. Advertising and Public Relations Describe your advertising and networking plan as a means to promote your business. List your advertising budget and describe how it will be spent to promote your business. C. Management Plan Answer the following: 1. How does your background/business experience help you in this business? 2. Who will be on the management team? List their relevant experience. i.e., 20 years experience as an auditor, etc. 3. What are their duties? 4. What are your current personnel needs? 5. What are your plans for hiring and training personnel? 6. What salaries and benefits will you offer?

5 D. Financial Plan To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs). Your budget should include the following expenses: Legal/professional fees Licenses/permits Equipment Insurance Supplies Advertising/promotions Salaries/wages/payroll expenses include salaries by position type Income/revenue Utilities Rent Depreciation Loan payments Dues/subscriptions fees Taxes Repairs/maintenance Miscellaneous expenses The financial section of your business plan should include any loan applications you have filed, a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma income projections (profit and loss statement) and pro-forma cash flows. The income statement and cash flow projections should include a three-year summary, detailed by month for the first year, and detailed by quarter for the second and third years. The accounting system and the inventory control system that you will be using are typically addressed in this section of the business plan also. Whether you develop the accounting and inventory systems yourself or have an outside financial advisor develop the systems you will need to acquire a thorough understanding of each segment and how it operates. Your financial advisor can assist you in developing this section of your business plan. Your plan should include an explanation of all projections. Unless you are thoroughly familiar with financial statements, get help in preparing your cash flow and income statements and your balance sheet. Your aim is not to become a financial wizard, but to understand the financial tools well enough to manage your business. Your accountant or financial advisor can help you accomplish this goal. Business plan has been adapted from SBTDC Missouri Small Business and Technology Development Center.