Introduction

One purpose of this annotated model for a business plan-of-action is to ensure that entrepreneurs have recognized a researched (with help if needed) relevant subject areas pertaining to their particular business concept. For success, it is vital that the pertinent questions be asked and answered by the entrepreneur.

It is important to note that the relevant subject areas to be explored (for a complete business plan-of-action) are very much the same whether the entrepreneur is initiating, buying, or enlarging a business. Moreover, the ingredients for success, and the questions designed to uncover these ingredients, are similar in most cases.

The model should serve as a guideline - particularly the Roman numeral topic areas. Obviously, information outlined or identified in sub-sections of the business plan-of-action table of contents may require expansion or change according to the needs of the entrepreneur. The outline may serve as a checklist.

Properly used, this model guideline can provide the entrepreneur with an effective "road map" to aim him toward success.

Business Plan of Action

I. The Concept

In this section, the entrepreneur provides a brief description of the business idea and the basic assumptions or premises for initiating/buying, enlarging the business.

II. Objectives of the Entrepreneur (A Target Plan)

The entrepreneur clearly identifies the goals or objectives in two or three brief statements - - followed by equally brief statements as to how each goal or objective will be accomplished. In addition, an estimated time plan should be formulated. (This forces the entrepreneur to think and plan.)

III. The Product/Service Mix (Product, Price, Promotion, Place)

In this section, the entrepreneur identifies:

• The products or services offered.
• The pricing Strategy (penetration, meeting competition, "cream skimming")
• Basic promotional strategy/activities.
• Physical facilities - - the place/location.

IV. Management and Personnel Audit

The entrepreneur identifies the following:

• The owner(s) of the business - - including a brief statement about their relevant experience.
• The form of the business(sole proprietorship, partnership, corporation).
• The number of full-time employees needed - and their jobs/activities
• The number of part-time employees needed - and their jobs/activities
• A brief evaluation of the manager/owner - for this type of business.
• Sources of additional employees or managerial people - if needed.
• Who has been retained as an attorney - preferably on an "as needed" basis.
• Who the business insurance broker will be - for business insurance needs of the business.
• Who will fill the role of accountant for the business.

V. Analysis of the Market Potential (Justifying the Business)

The entrepreneur must research, identify, and express his/her findings in the following:

• Demographics:

  1. The population in the proposed area (number, age)
  2. The income of the population.

• The firm's Target market:

  1. Investigate and evaluate realistically the needs and wants of the community.
  2. Determine who are or will be the firm's customers.

• The competition (or possible competition) in the proposed marketing area.
• Trends or analysis if the industry - the firm's product or services.
• The location and/or equipment needs of the business and why the owner selected it.

  1. Location - buy or lease and why - including costs.
  2. Equipment - buy or lease and why - including costs.

• A brief expression of the realistic potential of the business - based on findings.

Vl. Strategy for Development of the Business (Growth)

The entrepreneur should be able to identify and briefly state his/her thoughts on the following:

• The basic operating policy of the firm. ("Policy" is nothing more than the attitude of owner/ manager - expressed in writing.)
• Expansion and growth plans (sites, facilities equipment needs, people needs, and an expression of the firm's track record thus far).
• Innovations that may be introduced to increase customer traffic (or contracts) and profit.
• Friends of the entrepreneur (or people in the community) who are real potential centers of influence.
• The owner's personal plans for the next five years.
• Realistic sales projections and forecasts based on true investigation and research.
• Potential sources of money - list.

VII. Financial Analysis (Needs and Costs for Initiating/Buying/Enlarging the Business)

The entrepreneur must research and be able to list the following information with dollar amounts shown:

• Estimated cash required for the business.

1. Land_lease or buy - how much?
2. Building_lease or buy - how much?
3. Parking area improvement - who pays? How much?
4. Equipment needed - itemized with costs.
5. Merchandise inventory - itemized with costs.
6. Advertising costs - grand opening costs and subsequent budget.
7. Licenses, bonds, other costs - how much?
8. Operating capital needs - for 3 to 6 months.
9. Contingency funds - how much?

• Source of funds and application. (Where the Money is Coming From And Where It Will be applied)

1. List the major areas of financial application (such as equipment, merchandise inventory, advertising, and operating capital).
2. Show the amount provided by personal savings, friends and relatives for each area
3. Show the amount anticipated to be provided by bank loans (S.B.A. guarantee/other).
4. The total must agree with the total shown in your financial analysis section.

• Risk (A Function of the Firm's Ability to Make A Desirable Profit)

1. How much will be lost if the firm does not achieve its expectations?
2. Disaster plan - what will the entrepreneur do if his/her business gets in trouble or fails?

(NOTE: Remember that over 90 percent of business failures are due to poor management!)

VIII. Financial Projections (Estimates of Monthly Income And Expenses)

The entrepreneur (with help, if needed) must provide the following information:

• A pro-forma profit and loss statement (income and expenses) for each month for the first year.
• A break-even analysis chart.
• Loan pay-back information - preferably amortized, identifying:

  1. Amount of loan.
  2. Rate of interest.
  3. Terms of the loan (in years).
  4. The entrepreneur's monthly payment.
  5. The total number of payments
  6. The amount t of principal paid.
  7. The amount of interest paid.
  8. The total pay-back amount.

Appendix Exhibits

The entrepreneur (with help, if needed) should furnish the following information:

• Floor plan/plot plan
• Personal data sheet (resume)
• Pro-forma profit and loss statement
• Break-even analysis chart
• Loan pay-back information
• Personal financial statement
• Letters of intent or contracts negotiated

Some Prerequisites for Success in Business

Most important to any person in business - particularly people who are planning to be entrepreneurs - is the development of the following abilities and activities.

• Know where you are going by establishing your goals - write them down_in advance.
• Develop the ability to plan. The planning function is the foundation of management.
• Develop the ability to communicate. You must be able to express yourself - orally and in writing - in a relevant, clear, interesting and believable manner.
• Maintain a positive attitude toward yourself, and others.
• Be persistent and determined.
• Follow through in a timely manner.
• Study the functions of management: planning, organizing, leading, controlling - and coordinating.
• Prepare yourself for the future -- NOW

SAS #27