Business Plan:Organization Name

Your Name

Your Title

Contact Information

Tuesday, April 18, 2023

The Idea• Talk about the opportunity you have discovered

and the big idea you have for the business.• All good ideas share at least one of three goals:

– They make life for the customer easier. (efficiency)– They make life for the customer better. (effectiveness)– They allow the customer to do new things. (innovation)

• Example: “If you go to five travel sites, you will be presented with five different offers. Traveling to each site is time-consuming and confusing. We are a discount travel website. We have written software that searches all the other travel sites and collates their price quotas into one report.”

The Industry• Name and describe the market or industry that

you will work within—in other words, the chosen “sandbox” where you will play.

• For market or industry descriptions see the North American Industry Classification System (NAICS) at www.census.gov/naics or industries at a glance at http://www.bls.gov/bls/industry.htm

• Talk about any trends and changes in the industry.

• Talk about whether the industry is growing and, if so, by how much.

The Business Model

• Talk about the timeless reason why your business should exist beyond just making money. Complete this sentence, “The purpose of our business is to…”

• Talk about how you make money and how you deliver your idea to the customer.

• Example: Think of eBay—“Our purpose is to provide a global trading platform where practically anyone can trade practically anything. We charge a listing fee plus a commission.” End of story.

The Product• Talk about the product or service that you will

sell.• Talk about what sets the product or service

apart from what is currently being sold to customers.

• Talk about any ways you can protect the product or service from being easily copied by the competition.

• Present any product pictures, drawings, or renderings you might have (on additional slides if necessary).

The Customer

• Talk about the groups of customers that will be attracted to your idea. Ask: Who do we serve? What do we know about them?

• Example: “Our customers are busy executives and sales persons who frequently travel more than 20 weeks a year.”

• Example: “Our customers are high-school students who need additional teaching help outside the traditional classroom.”

• Example: “We reduce the risk of fraud for regional commercial banks in their online transactions.”

The Market• The idea for a market study is to tell the “story of the market”

in numbers starting with the big picture and then narrowing down the data to a more detailed view. Use as many slides as you need and don’t clutter the information.

• Talk specifically about where your customers are located. Are they within a city, county, state, region, nation, or international place? Maps are good to use here if it makes sense.

• Talk about the numbers of customers in the market and possibly even what they spend on your kind of products and services.

• Present any community profiles for these places. The Census Bureau is a great place to find such information at www.census.gov

• If you are targeting business customers look at the Economic Census at http://www.census.gov/econ/census02/ for help.

The Targeted Customers

• Talk about your targeted customers. Remember, you can segment customers by type, buying behavior, location, and so on.

• Describe who they are by discussing some of the following things: (use multiple slides if needed)– Demographics (characteristics they share in common)– Buying Behavior (how and why they buy the product) – Size (numbers of them / dollars they spend)– Projected Sales– Trends (growth / opportunities)

Target Market Strategy• For your targeted customers, talk about how you will

customize your marketing efforts to fit their needs.• Remember, if this group of customers is really unique

then something about your strategy must be different.• Talk about…

– The Message: What slogan or positioning statement will you use for this target market?

– The Pricing: Will the pricing have to be different for this type of customer? If so, what price will you charge?

– Product Customization: Will the product or service have to be customized for this customer?

– Distribution: Will the product get to this customer?

Target Market Sales Approach• Talk about your specific sales and promotional ideas

for this target market which might include:– Contact Sphere: What other businesses or professions might

naturally refer this group of customers to your business?– Advertising: What specific types of media will you use and at

what cost?– Public Relations: What kinds of media relations, press releases,

and events might you use to reach this group of customers?– Personal Selling: Do you require a sales force to reach this

group of customers? If so, how many and at what cost?– Sales Promotions: What kinds of sales tools might you use?

Discounts, coupons, loyalty programs?

Target Market DescriptionsDescription Target Market #1 Target Market #2 Target Market #3

Name Local Market Commuting Workers & Tourists

Commercial Events

Description People and households within 7 miles of the restaurant

People migrating into Bartholomew County for work or tourism

Commercial business in Bartholomew County that need catering event services

Demographics Consumers ages 21 to 54 / $54,000 average household income

Workers and Tourists ages 21 to 54

Businesses from 20 to 300 employees

Buying Behavior Frequent but small purchases (5 times per year at about $9.00 per patron)

Infrequent but larger purchases (1 time but spends upward of $12.00 per patron)

Infrequent but very large purchases (2 events per year spending $600.00 per event)

Size (numbers/dollars) 58,600 residents / 20,000 households / $58 million local market for restaurant sales

9,000 daily commuters / 28,000 annual tourists

400 businesses

Projected Sales $400,000 $150,000 $100,000

Trends slow to moderate growth / spending less on meals away from home on average

Good growth / new arts theatre nearby should improve traffic

Excellent growth in company numbers and employment trends

Target Market StrategiesStrategy Target Market #1 Target Market #2 Target Market #3

Positioning Message The Gourmet Restaurant Where You Eat With Your Hands

Gourmet Burritos…Fast Big Burritos For Big Crowds

Pricing Entrees between $4 and $6 Entrees between $4 and $16 Per head range from $8 to $12

Product Customization Lunch time speed is largest consideration

Banquet style service

Distribution At retail location At retail location On-site catering set-up and service

Contact Sphere Visitors center, community development, tourism bureau, hotel concierges

Chamber of commerce, HR managers, event planners, public relations managers

Advertising Newspaper, yellow pages, specialty publications, website

Hotel brochures, tourism directory, billboards, restaurant guide

Direct mail, business section of newspaper

Public Relations Annual 5K charity run for diabetes assn.

Personal Selling Part-time banquet sales coordinator

Sales Promotions Discount coupons, samples Hotel referral fees 15% off first event promotion

The Competition• Talk about the three to four main competitors trying

to win your customers.• Never dismiss the competition. Everyone wants to

hear why your good, not why the competition is bad.• Talk about the story each competitor tells and then

talk about how your story is either different or more important.

• Example: “McDonalds is selling fast. Burger King is selling choice. We’re telling the story of being fresh and therefore healthy.”

Competitive Value Curve

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Minute Clinic Typical Doctors Office Hospital

HIGHLEVEL

LOWLEVEL

Competitive Analysis

COMPANY WE CAN DO, THEY CAN’T WE CAN’T DO, THEY CAN

Competitor X

Competitor Y

Competitor Z

The Message

• Talk about the message you will deliver to your customers. Messages that are made to stick are simple, unexpected, concrete, credible, emotional, stories.

• Example: “The delivery of a wine’s taste depends on the form of the glass. The secret to Reidel glasses is that there is a perfect shape for every beverage. Through ten generations of glassblowers we have discovered the timeless forms of glass to convey the wine’s message in the best manner to the human senses. Reidel—A Passion for Glass.”

The Sales Approach

• Talk about how you are going to reach your customers and present your message.

• Try to convince the audience that you have an effective go-to-market approach that won’t break the bank.

• Example: “A majority of the customers for our educational software can be reached through our website, the direct mailing of promotional kits, and through two national trade shows and four primary regional shows.”

The Marketing Schedule

Media Annual Cost

Yellow Pages (South Central Edition)

Category: Restaurants, Restaurant Guide $3,600.00

Newspaper (The Republic: Circulation 28,000)

Ad Design Costs $800.00

Media Costs (24 ads @ $328) $7800.00

Direct Mail (Brochures and Special Occasions)

Distribution (5,000 @ $.50 per piece @ $.27 postage) $3,850.00

Radio (QMIX 103 / Adult Contemporary & WTIU/NPR)

Media Costs (600 :30 second ads @ $6.20 per spot) $3,720.00

Total Annual Advertising and Media Costs $19,770.00

The Inner Workings• Talk about the work you do and how you make

things.• Talk about the people, places, things, and time

you need to get the job done.• Example: “Bistro On The Green will be located

at 34th Street and Delmar Avenue and will be open from the hours of 11:00am to 10:00pm Tuesday through Sunday. The location requires the addition of a full commercial kitchen. We require 28 staff members each working about 35 hours on average per week…”

The Location• Talk about where you will be located. If you are a retailer or a

service business where access and visibility is important to the customer, talk about your proposed location. Provide the address and talk about the accessibility, the visibility, and the costs.

• Talk about the numbers and types of customers that are located near your location. These numbers are called “ring studies” because they detail the number of customers in 1,3 and 5 mile rings from your location. See www.easidemographics.com for free ring reports of your location.

• Talk about any commuting and traffic patterns around the location. Check with your state’s department of transportation for these statistics.

The Management Team• Talk about the key players who will manage your

business. Talk about how your team completes the “management trinity”:– Who will oversee the work—production expertise,– Who will oversee sales—marketing expertise, and– Who will take care of the money—financial expertise.

• Talk about any board of directors, advisory boards, consultants, or major investors that you may use in rounding out your management team.

• Talk about any professionals like lawyers, accountants, bankers, or insurance agents that will assist you in running the business.

DELETE THIS SLIDE

Legal Structure ComparisonCharacteristics

Sole Proprietorship

General Partnership

CCorporation

SCorporation

Limited Liability Company

Formation No state filing required Agreement between two or more parties. No state filing

required

State filing required State filing required State filing required

Duration of Existence Dissolved if sole proprietor ceases doing business or

dies

Dissolves upon death or withdrawal of a partner unless safeguards are

specified in a partnership agreement

Perpetual Perpetual Dependent on the requirements imposed by the

state of formation

Liability Sole proprietor has unlimited liability

Partners have unlimited liability

Shareholders are typically not personably liable for the

debts of the corporation

Shareholders are typically not personally liable for the

debts of the corporation

Members are not typically liable for the debts of the

LLC

Operational Requirements

Relatively few legal requirements

Relatively few legal requirements

Board of directors, officers, annual meetings, and annual

reporting required

Board of directors, officers, annual meetings, and annual

reporting required

Some formal requirements but less formal than

corporations

Management Sole proprietor has full control of management and

operations

Typically each partner has an equal voice, unless otherwise arranged

Managed by the directors, who are elected by the

shareholders

Managed by the directors, who are elected by the

shareholders

Members have an operating agreement that outlines

management

Taxation Not a taxable entity. Sole proprietor pays all taxes

Not a taxable entity. Each partner pays tax on his/her share of income and can

deduct losses against other sources of income

Taxed at the entity level. If dividends are distributed to shareholders, dividends are also taxed at the individual

level

No tax at the entity level. Income/loss is passed

through to the shareholders

If properly structured there is no tax at the entity level. Income/loss is passed through to members

Pass Through Income/Loss

Yes Yes No Yes Yes

Double Taxation No No Yes, if income is distributed to shareholders in the form

of dividends

No No

Cost of Creation None None State filing fee required State filing fee required State filing fee required

Raising Capital Often difficult unless individual contributes funds

Contributions can be made from partners, and more partners can be added

Shares of stock are sold to raise capital

Shares of stock are sold to raise capital

Possible to sell interests, though subject to operating

agreement restrictions

Transferability of Interest No No Shares of stock are easily transferred

Yes, but must observe IRS regulations on who can own

stock

Possibly, depending on restrictions outlined in the

operating agreement

The Legal Structure• Talk about the legal structure you have chosen for the

business. See the preceding chart for help.• Talk about why the structure was chosen—in other

words, what advantages does the structure provide?• A sample chart like the one below might be helpful to

show the ownership structure of the business:Owner Shares Percent Owned

Jack Smith 1,000 50%Loretta Johnson 500 25%Equity Investors 500 25%

Risk Management

• Talk about the different kinds of insurance you will need and what the cost of such coverage will be.

• In general there are three basic categories of insurance:– Property: covers building and content losses– Liability: gives you legal protection– People: provides health, worker’s comp, and lost income

protection

The Money Forecast

• Talk about how much money you need to get started. At this stage, list the major categories of start-up costs and estimate their amount.

• Talk about the money you expect to take in during the first year. Show how you came up with that number (units times prices).

• Talk about the money you expect to spend out during the first year. Think about people, product costs, space, equipment, etc.

• How much is left over?

The Core Scores

• Talk about what things you need to measure to be successful.

• These measures might be leading indicators of such things as customers, growth, innovation, internal operations, or financial performance.– Example: “The Chamber of Commerce will measure five

metrics in determining our success: annual member engagement, member retention, net member growth, market penetration, and employee engagement.

– Example: “For our restaurant to be successful, we must closely measure four activities: reservations and table turns, food costs, staff turn-over rates, and total staffing costs.”

Required Start-Up FundsItem Amount

Fixed Assets

-Building $1,000

-Land $1,000

-Initial Inventory $1,000

-Equipment $1,000

-Furniture and Fixtures $1,000

-Vehicles $1,000

Working Capital

-Salaries and Wages $1,000

-Insurance Premiums $1,000

-Leasehold Improvements $1,000

-Rent and Utility Deposits $1,000

-Advertising and Promotions $1,000

-Legal and Accounting Fees $1,000

-Supplies $1,000

-Cash on Hand $1,000

Totals $15,000

Capital Strategy

Total Amount Required $907,900

-4 Investors ($50,000 each will get 25% share of company) $200,000

-Commercial Bank Loan (Real Estate & 80% Building) $684,000

-Owners $23,900

Loan Payment Amounts

-Principal Amount Borrowed $684,000

-Projected Interest Rate 7.25%

-Term In Months 240

Total Monthly Loan Payment $5,406.17

Financial Summary

Year One % Year Two % Year Three %

Income 20,000,000 20,000,000 20,000,000

Cost of Sales 10,000,000 10,000,000 10,000,000

Gross Margin 10,000,000 50 10,000,000 50 10,000,000 50

Salary and Wages 30,000,000 30,000,000 30,000,000

Fixed Expenses 10,000,000 10,000,000 10,000,000

Other Expenses 10,000,000 10,000,000 10,000,000

Net Income 0 0 0 0 0 0

The Next Steps

• Talk about the next five to ten steps that need to be completed in the next 90 days to consider yourself a success. Attach dates to each step.

• Talk about the two or three big things that you want to accomplish in the next 2-3 years to consider yourself a success.

Sample PlanRequired Start-Up Funds

Required Start-Up Funds Amount Totals Depreciation Notes

Fixed Assets

Real Estate -$

Buildings - 20.00 years

Leasehold Improvements - 7.00 years

Equipment - 7.00 years

Furniture and Fixtures - 5.00 years

Vehicles - 5.00 yearsOther Fixed Assets - 5.00 years

Total Fixed Assets -

Operating Capital

Pre-Opening Salaries and Wages -

Prepaid Insurance Premiums -

Beginning Inventory -

Legal and Accounting Fees -

Rent Deposits -

Utility Deposits -

Supplies -

Advertising and Promotions -

Licenses -

Other Initial Start-Up Costs - Working Capital (Cash On Hand) -

Total Operating Capital -

Total Required Funds -$

Sources of Funding Amount Totals Loan Rate Term in Months Monthly Payments

Owner's Cash Injection 0.00% -

Outside Investors 0.00% -

Additional Loans or Debt

Commercial Loan 0.00% - 9.00% 84.00 $0.00Commercial Mortgage 0.00% - 9.00% 240.00 $0.00

Total Sources of Funding 0.00% -$ $0.00

A line of credit is also required in the amount of 6,528$

Sample PlanSalaries and Wages

Salaries and Related Expenses # Assumptions Wage Base Monthly Year One Year Two Year Three

Percent Change 3.00% 3.00%

Salaries and Wages

Owner's Compensation 3 -$ - - -

Salaries 0 - - - -

Wages

Full-Time Employees 0 - - - -

Estimated Hours Per Week 40.00

Estimated Rate Per Hour 9.00$

Part-Time Employees 2 390 4,680 4,820 4,965

Estimated Hours Per Week 5.00

Estimated Rate Per Hour 9.00$ Independent Contractors - - - -

Total Salaries and Wages 5 390 4,680 4,820 4,965

Payroll Taxes and Benefits

Social Security 6.20% 102,000$ 24 290 299 308

Medicare 1.45% 6 68 70 72

Federal Unemployment Tax (FUTA) 0.80% 7,000$ 23 280 280 280

State Unemployment Tax (SUTA) 2.70% 7,000$ 79 945 945 945

Employee Pension Programs 0.00% - - - -

Worker's Compensation 0.00% - - - -

Employee Health Insurance 0.00% - - - - Other Employee Benefit Programs 0.00% - - - -

Total Payroll Taxes and Benefits 132 1,583 1,594 1,605

Total Salaries and Related Expenses 522 6,263 6,414 6,570

Sample PlanFixed Operating Expenses

Fixed Operating Expenses Monthly Year One Year Two Year Three Notes

Percent Change 3.00% 3.00%

Expenses

Advertising -$ - - -

Car and Truck Expenses - - - -

Commissions and Fees - - - -

Contract Labor - - - -

Credit Card and Bank Charges - - - -

Customer Discounts and Refunds - - - -

Dues and Subscriptions - - - -

Entertainment - - - -

Insurance (Liability and Property) - - - -

Internet - - - -

Legal and Professional Fees - - - -

Office Expenses - - - -

Postage and Delivery - - - -

Rent (on business property) - - - -

Rent of Vehicles and Equipment - - - -

Repairs and Maintenance - - - -

Supplies - - - -

Telephone and Communications - - - -

Travel - - - - Utilities - - - -

Total Expenses - - - -

Other Expenses

Depreciation - - - -

Interest

Commercial Loan - - - -

Commercial Mortgage - - - - Line of Credit 22 265 - -

Total Other Expenses 22 265 - -

Total Fixed Operating Expenses 22 265 - -