BA chapter three mini sim

a business plan's six sections

-executive summary -company overview -market analysis -products or services -marketing and sales approach -financial projections

company overview

high level explanation of your business that includes a mission statement, the location, and key employees

You have decided to start the business from scratch. What are the advantages of starting a business from scratch versus buying an existing business or purchasing a franchise?

ability to select location, equipment, and inventories and freedom to choose suppliers and hire and train employees

marketing and sales

an explanation of how you will identify potential customers, as well as your marketing approach

financial projections

an explanation of how your business will meet financial obligations and maintain positive cash flow

Although the $200,000 you inherited from your uncle provided you with a solid financial foundation upon which to start your business, you quickly realize that you're going to need a lot more to get the business going. You have decided that, in addition to your start-up costs, you will follow experts' advice and budget for sufficient capital to operate for 6-12 months without earning a profit. You determine that you will need at least another $100,000 to make the business a reality. Unfortunately, you don't have anywhere near that amount in your personal savings, and your family isn't able to help. Where are you going to get those funds? What would be the best option to secure financing for your business?

investigate the small business administration (SBA) loan programs available to small businesses

market analysis

detailed information about your industry, target market, assessment of competitors, and legal requirements impacting your business

The concept of unlimited liability scares you. You do a considerable amount of research, have several conferences with Larry, and consult the Small Business Administration, and you determine that incorporation may be the best way to avoid unlimited liability for the debts of the business. However, you'd also like to avoid double taxation. With those criteria in mind, which corporation would be best suited for your business?

subchapter s corporation

You've done research on the competition in the area, and you worked for a sandwich franchise during college, so you're not entirely unfamiliar with the business. But you also know you've got a lot to learn, and you want to make the right decisions and make your business a success. What should you do first?

write the business plan

The first decision you face is how to get into business. After doing considerable research, you see three options available to you. Which one will you choose? A. purchase an existing sandwich shop that is currently for sale B. start the business from scratch C. purchase a franchise

B. start the business from scratch

executive summary

a brief, compelling introduction of your business and its customers, along with an explanation of how you will make the business successful

products or services

a description of your products or services, how they will meet the needs of your customers, and the benefits of your products and services compared to your competitors

Apparently, good news travels fast! You receive a call from Larry, a former coworker at the sandwich shop where you worked in college. He has heard that you're thinking about opening a sandwich shop and expresses interest in joining you in your entrepreneurial venture. Larry is willing to invest a significant amount of money in the business and wants to work with you on a day-to-day basis in the operations of the business. If you choose to go into business with him, which form of non-corporate business ownership would be best suited for the business?

general partnership

If you choose to enter into a general partnership with Larry, which of the following would be true with respect to responsibility for debts of the partnership?

you and larry will be equally responsible for the debts of the business, regardless of how much money each of you invested in the business or who incurred the debt