Lesson 17: Business Lesson 17: Business Plan AnalysisPlan Analysis

Lesson 17: Business Lesson 17: Business Plan AnalysisPlan Analysis

Objectives• Explain the importance of preparing a business

plan• Describe the main components of an effective

business plan and the information contained in each section

• Explain the purpose of financial reports within a business plan

• Identify characteristics of a professional business plan and resources that may assist you in preparing one

• Compute personal net worth and business equity in terms of assets and liabilities

• Forecast revenue, calculate net sales, and determine net profit using industry averages

• Review a business plan, identify potential problems, and make necessary changes

1. What is a Business Plan?

• A document that details a plan for the creation of a business

• Covers all aspects of the proposed business

2. Why Prepare a Business Plan?

• Requires research, time, and THOUGHT– Often referred to as a business blueprint– Not something that can be Google’d

• Benefits to writing a business plan– Helps set and clarify your goals– Helps determine the steps to accomplish goals– Details how much money is needed for start-

up– Helps you secure finances

3. Developing a Business Plan

• Keep it realistic!• Be honest about expectations and

goals• Use the SBA website• Give yourself a reasonable timeline

to develop the business plan and goals

4. Elements of a Business Plan

1. Executive Summary – 1 paged summary of the proposal for the business that introduces your proposed business venture and helps familiarize the reader with your concept

2. Description of Business, Product, or Service – explains the products or services your business will provide

3. Management Team – explains personnel needs (staffing), qualifications for management, and an organizational chart (of who reports to who)

• Customer Profile – analysis of and information about the target market (who you want as your customers)

• Competitive Analysis – information about direct and indirect competitors, their product and service offerings, and their pricing policies

• Marketing Plan – information about how the business will be marketed and promoted, pricing policies, and proposed promotional policies

• Operations Plan – how the business will operate, the type of ownership, and the

location of the business

• Financial Projections – the amount of money necessary to start and operate the proposed business– Personal financial report – your personal

financial status and personal assets and liabilities

– Pro Forma income statements – monthly income states that provide information about sales, expenses, profit, or loss

– Pro Forma cash flow statements – monthly statements about when cash is coming in and leaving throughout the month

– Pro Forma balance sheet – assets, liabilities, and owner’s equity

– Proposed sources of funding – personal and outside sources of funding, short- and long-term notes

• Short-term – paid off within one year• Long-term – paid off within one to five years

5. Creating a Professional Business Plan

• Use proper grammar and spelling• Incorrect grammar and misspelled

words show a lack of attention to details

• Use standard fonts (Arial, TNR)• Use business terms• Keep it clean and simple in

formatting

6. Key Math ConceptsNet Worth = Assets – Liabilities

Forecasted Revenue = % increase or decrease X Industry Ave. of

Rev.

Revenue = Unit Sales X Price per Unit

Net Sales = Total Sales – (Returns and Discounts)

Net Profit = Total Revenue – Total Expenses

Equity = Assets - Liabilities