Business planning basics for hm educators pwp

Cindy Dvergsten, Holistic Management Certified Educator
Whole New Concepts LLC
www.wholenewconcepts.com
cindydv@wholenewconcepts.com
Presented December 9 th , 2011 for Certif ied Educator Conference Call

Overview

Introductions : What brings you to this call today?

Do you have a business plan?

What is the purpose of having a business plan?

What is a business plan?

Key components of a business plan.
Feasibility studies support the business plan
Financial Statements

Financing and Profitability considerations

Group Discussion

Business Planning Basics Copyright © 2011 Whole New Concepts LLC

Why Plan a Business?
“By failing to plan you are planning to fail”
Proverb
“It pays to plan ahead. It wasn't raining when Noah built the ark.”
Proverb
“Expect the best, plan for the worst, and prepare to be surprised.”
Denis Waitley
“Good fortune is what happens when opportunity meets with planning.”
Thomas Edison

In reality, business plans can take a long time to write, require that you have a
tremendous amount of data at your fingertips, depend in part on projections, and
often are responsible for creating a long list of research you still need to conduct
and other work you need to complete.

But despite all of that, business plans can be one of the most effective tools for the
small business owner who is starting, growing and even managing a business.


Top Ten Reasons to Have a Business Plan
1. Forces you to look at the whole business
2. Focuses attention on important issues
3. Guides adaptation and innovation by testing feasibility
4. Helps to clarify and communicate your goals and objectives
5. Provides a means of assigning priorities
6. Provides a framework for daily decision‐making and better management
7. Helps maintain a proactive business attitude
8. Serves as a benchmark to track performance
9. Stimulates development of new and emerging business opportunities
10. Helps you to access capital, acquire business partners,
and attract employees

Additional reasons?


The Business Planning Cycle

 The owner assumes the lead in the process

 The planning process involves everyone in the family and
business
 The plan reflects reality (feasibility has been determined)

 There is a contingency plan for the worst-case scenario

 The goals and objectives are achievable and clear

 The plan is flexible

 The plan is used to run the business, reviewed often, and
revised when necessary


Basic Outline for a Business Plan
Section I   Executive Summary
The executive summary is the first section of your small business plan that is
typically written last. It provides an overview of all of the other sections in the
business plan.
Section II   Company Description
General Description of Business
Vision and Mission Statements
Business Goals and Objectives
Section III   Background Information
Industry
Business Fit in the Industry
Experience & Past Performance
Section IV   Organizational Matters
Business Structure
Management & Personnel
Operating Controls & Risk Mgt.

Basic Outline for a Business Plan
Section V Marketing Plan Appendix
Products/Services (benefits & features) The appendix of your business
plan includes information that
Market Analysis (identify customer, niche, supports your statements,
geographic area, competition, demand, etc.) assumptions and reasoning used
Pricing & Delivery in the other sections of your
Marketing Strategies (how to attract & business plan. This may include
graphs, charts, statistics, photos,
promote business, serve customers etc.
marketing materials, research
Section VI Financial Plan and other relevant data.
Costs of goods sold,
Operating Expenses
Start up Expenses
Sales Projections
Cash Flow Projections
Financial Statements
Income Statement (P&L)
Balance Sheet (Owners Equity/Net worth)

Basic Feasibility Considerations
SCOPE
 What is the business opportunity?
 What is the purpose? What are your goals?
 What are the features and benefits?

SWOT ANALYSIS (strengths, weaknesses, opportunities, threats)
 Your business
 Your industry
 Your target market
 Your competition

FINANCIAL FEASIBILITY
 What are your capital requirements?
 Do you need outside funding?
 Why will your idea be profitable?
 When will you reach your break-even point?
 What rate of return do you expect?

FEASIBILITY OF SALES VOLUME
 How, when, and where will you generate revenue?
 How much will it generate?
 Why are these projections realistic?


Additional Feasibility Considerations
MARKETING FEASIBILITY
How will you communicate with customers?
Why, when, how, where, and how much will they buy?
What price will they pay?
What price, promotion, and placement strategies will you use?

FEASIBILITY OF PERSONNEL
Do you have the right mix of personnel, with the right training?
Have they bought into the business idea?
What functions will be outsourced?

LOGISTICAL FEASIBILITY
What are your product and performance specifications? How will you
ensure that they are met?
Can you get enough of the supplies and materials you need? What’s the
turnaround time? Is your supply chain adequate?
Do you have the equipment you need?


Additional Feasibility Considerations
LEGAL FEASIBILITY
Does the idea meet local, state, and federal regulations?
Do you need to protect intellectual property?
What contracts, permits, licenses and leases are required?
ENVIRONMENTAL FEASIBILITY
Will implementing the concept reduce, reverse, or offset environmental
damage?
What is the environmental impact of resource extraction, manufacturing,
storage, shipping, consumer use, and disposal?
Can you reduce external costs and increase external benefits?
SOCIAL FEASIBILITY
How does each aspect of your product and your business affect workers,
neighbors, and communities at home and abroad?
Can you reduce external costs and increase external benefits?


Financial Statements Used in Business Planning

Income Statement



Balance Sheet
Profit & Loss Statement



Performance
Reports



Cost of Goods
Sold



Owners Equity
Statement



Annual Cash Flow
Statement


Reasons Businesses Seek Financing

 Research and development
 Growth or start-up expenses
 Purchase a business
 Seasonal working capital
 Permanent working capital
 Equipment acquisition
 Real estate acquisition
 Other: ______________________


Three Ways to Increase Profitability

1. Increase your sales volume (without increasing your
costs)

2. Reduce your fixed costs (without causing a decrease in
your sales volume)

3. Increase your contribution margin by:
• Increasing the sales price
(without decreasing volume)
• Decreasing variable costs (reduce inputs)
• Changing product or service mix to those with
contribution margins (without decreasing volume)

Contribution Margin (C) is Unit Revenue (Price, P) minus Unit
Variable Cost (V): C = P − V


Discussion

Do you have personal experiences about business planning to share?

How do you feel about business planning?

What are the barriers you or other you know of have faced in
completing business plans?

What does the practice of Holistic Management
contribute to the business planning process?

Other thoughts or comments?

What “gem” are you going to take away from today’s
presentation and discussion?


Business planning basics for hm educators pwp

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