6-3 Starting a Small Business (2IBT)

Operations Plan

* Organization of the company * Description of major operations * Analysis of resources needed * Human resource plans

Financial Plans

* Start-up costs * Short- and long-term financial needs * Sources of financing * Budgets and financial statements.

Description of the Business

* The business idea * Major products and services * Ownership structure * Strengths/weaknesses * Long- and short-term goals

Sources of financing

> Owner-supplied funds > Borrowed funds

Types of financing

> Start-up financing > Short-term financing > Long-term financing

Team approach

A business is not easy to run without the help of others. Employees must be chosen carefully. Other people with specialized business knowledge may also be needed.

WHAT IS A BUSINESS PLAN?

A business plan is a written description of the business idea and how it will be carried out, including all major business activities.

Why is it important to use a team approach when starting a new business?

A team approach allows employees to feel valued and motivated to take personal responsibility for the benefit of the business. Owners cannot expect to be able to do everything alone. Building a team will allow the business to increase productivity and, ultimately, profits.

business paln

A written description of the business idea and how it will be carried out, including all major business activities.

In addition to owner-supplied capital, what are several other sources of financing for a small business?

Borrowed money may come from banks, finance companies, or other individuals, such as friends and family. Some suppliers may also be willing to extend credit.

STEPS IN DEVELOPING THE BUSINESS PLAN

Gather and review information, Develop the strategic alternatives, Write the plan, Ask an expert to review the plan.

What are the "strategic alternatives" in a business plan?

Strategic alternatives are alternative plans for production, staffing, financing, and so on.

Start-up financing

The amount of money needed to open the business.

Short-term financing

The money needed to pay for the current operating activities of a business.

An idea plus experience

Business ideas come from many sources. Hobbies, interests, and business experiences often give people ideas for new businesses.

Most business plans are developed for one year and then

updated for the next year.

Description of Competition

* Characteristics of the industry * Condition of the economy * Strengths and weaknesses of major competitors

Customer Analysis

* Description of customers * Location, number, and resources of customers * Sales forecasts

Marketing Plan

* Description of major marketing activities * Description of resources needed * Schedule of marketing activities

Preparation and research

Entrepreneurs should gather information about customers, competitors, important operations, government regulations and many other topics.

Long-term financing

Money needed for the main resources of a business (such as land, buildings, and equipment) that will last for many years.

Right place and time

Most retail businesses need good customer traffic. A wholesaler needs easy access to manufacturers. Manufacturers must be located in an area with access to the raw materials used in manufacturing. Transportation systems must also be easy to reach for distributing finished products. Timing is another key factor in starting a business.

An alternate plan allows a business to

be prepared for the unforeseeable.

By developing a plan the owner is

forced to think about important activities, the amount of time they will take, and their cost.

Even the best business plan cannot

predict every possible circumstance.