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small business management unit 3

Terms in this set (86)

business plan aka
venture plan
business plan
written description of a new idea that projects marketing operational and financial aspects of a proposed business
business plans are
written to give direction
tell a story
must be constantly reviewed
business plans serve as
guide and focus of the business
business plans are not always necessary if
forming a small home based business needing little cash; have large amts of collateral or have an existing business w/ a track record and are seeking an expansion loan
business plan is a
tool
good business plans
communicate clearly and effectively and must be believable
business plans persuades
potential investors to supply funding
provide a clearly articulated statement of goals and strategies
business plans are not
a legal document
business plans are not sufficient
to solicit investment
to solicit investment would
require a prospectus or offering memorandum
business plan should project
marketing
operational and financial aspects of a business for the first three to seven years
not to exceed 40 pages
primary function of business plan
to serve as a selling document selling your ideas and even yourself to others
entrepreneur must be
primary planner
entrepreneur can not avoid
direct involvement in developing the business plan by relying on attorneys accounting firms incubator services
content of any plan must include
entrepreneurial team
people involved
must show opportunity that exists
resources available
indicate money it will take to see the plan through
changes and challenges that may occur
four components of a business plan
people
opportunity
content
risk/reward
people factor
who will implement plan
opportunity factor
what possibility exists to implement plan
content factor
what it is that will be implemented and how the plan will be implemented
risk/reward factor
what will be gained by the plan
sections of a business plan
title page
table of contents
executive summary
vision and mission statement
company overview
products and/or services plan
marketing plan
operating plan
financial plan
appendix of supporting documents
executive summary
highlights various sections of the business plan
comes at the very beginning and is written last
vision and mission statement
is the intended strategy and business philosophy for making entrepreneurs vision a reality
company overview
presents a firms history and its form of organzation
products and or services plan
identifies which products and or services will be provided
marketing plan
identifies user benefits and show evidence of consumer interest
management plan
proposed ventures organizational structure
operating plan
describes the facilities and location of the proposed ventrue
financial plan
includes pro forma financial statements which reflect firms future financial situation
balance sheets
income statements
cash flow statements on an annual basis for five years
cash budgets on a monthly basis
marketing plan should include
market research
location
customer group that is to be targeted
competition
positioning in the market
product or service that will be sold
pricing structure
advertising that will be used
promotion will take place
following the completion of the market and competitor analysis
entrepreneur is ready to write the formal marketing plan
if entrepreneur anticipates several target markets
each individual segment must have its own corresponding customer profile
target market analysis refers to
identifying and describing the types of customers to whom you will sell and this is important part of a new venture marketing plan
entrepreneurs ignore the
reality of competition of their new ventures
consumer oriented philosophy
marketing philosophy begins with customer needs
marketing
way of communicating with the consumer
marketing is a way
of telling a story of a business
its products and services
gain feedback to increase sales and income
marketing must
identify the market
assess the markets potential
distributing the product or service
marketing is the process of
planning and executing the development
pricing
promotion
distribution of organizations goods and services
many small business owners have
strong production skills and are weak in marketing ability
market
group of potential customers possessing purchasing power and unsatisfied needs
market survey
study that is used by a business to determine where the potential customers are located
market survey will take into consideration
selection of a community or location and research published market
marketing research
gathering processing reporting and interpreting of marketing information
small businesses do
conduct less marketing research than larger firms due to expenses and lack of understanding
factors in community being surveyed will take into consideration
demographics
economic base
population trends
disposable income trends of the community
competition
social and business climate
demographics
statistical study of human populations w/ respect to their size density distribution composition and income
economic base
wealth produced in or near a community that provides employment and income to the local population
population trends
growth and movement of the population
disposable income trends of the community
disposable income is the income available for spending after taxes
disposable income is used
to pay expenses for the necessities of life
competition
others out there doing what we want to do
social and business climat
variety of business and lifestyles in a community
site location
location for a business
public market data
can be obtained from government sources and through the internet
census of business
source of market data that explains where certain businesses are located
census of business is an
example of data source
census of housing
source of market data that keeps track of new home sales by region and/or the construction of new houses by region and specific area
census of housing is an
example of a data source
census of manufacturing
source of market data that explains where certain manufactures are located
census of manufacturing is an
example of a data source
census of population
source of market data that compiles population statistics with regard to distribution of population by things such as region and area
census of population is an
example of data source
chamber of commerce
an association of business people who attempt to protect and promote the commercial interest in a community
chamber of commerce is an
example of data source
forms of organizing
selecting a type of legal organization to use for a small business management control is a major consideration
under law
different forms of organization receive different tax treatment
sole proprietorship
aka proprietorship
sole proprietorship is a
business owned by one person who is subject to claims of creditors
since sole proprietorship are owners
they cannot enjoy advantage of tax free fring benefits avail to employees
death of a sole proprietor
terminates the business entitiy
residual assets of a sole proprietorship belong to
co owners of a lawful enterprise for their joint profit
partnership
voluntary association of two or more people who have combined their resources to carry on as co owners of a lawful enterprise for their joint profit
creating a partnership allows a business
to pool the managerial talents and capital of those individuals joining together as partners
partners are not
required to contribute capital or assets to form a partnership
individuals may become partners w/out
contributing capital or assets to form a partnership and without contributing capital or having a claim to assets at the time of dissolution
partners usually share
profits and losses equally
each partner has what is called
agency power
agency power
ability of any partner to legally bind in good faith other partners in contract or agreement
any person capable of contracting may
legally become a business partner
partnership reports the income
it earns to the irs but the partnership itself does not pay any taxes
each individual partner are responsible for
their share of taxes
limited partnerships
involve at least one general partner and one or more limited partners
income from a limited partnership
is taxed at the same rate as ordinary income
general partner remains
bound by all debts of the business
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