SMALL BUSINESS MANAGEMENT

parakeetconspiracyManagement

Nov 20, 2013 (3 years and 10 months ago)

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SMALL BUSINESS
MANAGEMENT

Chapter 4

The Business Plan

Aggasiz Brewing Company

1.
Briefly discuss the problems of starting from
scratch, as illustrated by the Aggasiz Brewing
Company


2.
How could Gary DePape have avoided these
problems?


3.
What would have been the advantages and
disadvantages of Gary purchasing a
microbrewery instead of starting from scratch?


4.
What risks would Gary have faced if he had
dropped the price of his product?


Getting Started

Establishing the Business


Advantages of Organizing a
Business from Scratch


Define nature of business


Exact physical _______


Fresh inventory


Employee selection


Develop _______ system


Getting Started

Establishing the Business


Disadvantages of Organizing a
Business from Scratch


Lack of _______ info


Time assembling physical facilities


Start
-
up bugs & problems


Establishing outside relationships


Risk of _______


Caribbean Beer vs
Agassiz

Beer


Compare and contrast the two small
business ventures in similar industry


Non
-
Quantitative Assessment


Personality Characteristics


Goals


Content of _______


Lifestyle


Capabilities


Experience


Quantitative
_______

of Business

Small Business Plan


_______ purposes


Blueprint to maintain focus


Tool to evaluate performance


_______ purposes


Recruit lenders & investors


Test of ideas viability


Form and emphasis will vary depending
on the user


Customers

Suppliers

Investors

Employees

Firm’s

Management

Insiders

Outsiders

New Venture

Business Plan

The Investor’s Perspective


Plans that speak the investors’ language:


Are brief, not extremely
_______

in written
length.


Have an a
_______

overall appearance.


Are well
-
organized with a table of

contents and numbered pages.


Are
_______ _______

in meeting

customer needs; are not

product
-
oriented.


Show
_______

of customer

acceptance of the proposed

product or service.

Features of Plans

that will Repel Investors


Plans that create
_______

reactions:


Show an infatuation with the product or service
and downplay market needs or acceptance.



Are based on financial
_______

at odds with
accepted industry norms.



Have unrealistic
_______

projections.


Business Plans that Attract Investors


Recognize the _______ needs for required
rates of return on investments.


Demonstrate _______ of focus on a limited
number of products or services


Have a proprietary market position

through patents, copyrights,

and _______

Business Planning Needed and
Influencing Factors


Factors affecting the extent of a
business plan:


Cost in
_______

and money to prepare
the plan


Management style and ability


_______

of the management team


Complexity of the business


Competitive
_______


Level of
_______

Preparing a Business Plan


Two issues critical in preparing a
business plan:


The basic format and
_______

of the
written presentation.


Clear writing that effectively communicates


The
_______

of the plan.


Factual support for the concept

in the form of _______ _______

evidence

Resources for Business

Plan Preparation


Computer
-
Aided Planning


Word
-
processing


Spreadsheets


Specialized
_______

Plan Software Packages (BizPlan)


Professional Assistance


Lawyers


Marketing specialists


Engineering and production experts


Accounting firms


Incubator organizations


Small business development agencies

Research to Support the Plan


Both primary and secondary research must
be carried out by the writer of the business
plan.



Secondary Research



Primary Research


The Small Business Plan


There are ten components in a
plan:

1. Prepare a table of contents.

2. Prepare a synopsis of the plan in an
executive summary and background
statement.

3. Describe the management team.

4. Describe the business objective.

5. Plan the marketing approach.


The Small Business Plan


Components of the Plan (cont.)

6. Describe the selection of the location.

7. Determine the physical facilities.

8. Plan the financing.

9. Plan the personnel.

10. Investigate the legal requirements.


Components of the Plan


1. Prepare a table of contents.


Overview of the plan


Quick access to the various parts of the
plan


Components of the Plan


2. Prepare synopsis of the plan in
an executive summary and
background statement.


completed at the end of the complete
plan


history of the project to date


statement of the intended mission of
the venture


Components of the Plan


3. Describe the management team.


résumé and background of those
making the decisions for the
organization



Components of the Plan


4. Establish business objectives.


Business Size


Production Levels


Performance Levels


Components of the Plan


5. Plan the marketing approach.


Have a clear concept of the target
market.


Understand the target market’s needs,
wants and purchasing habits


Answer the following questions: where,
when, what, how much, why.


Components of the Plan


5. Plan the marketing approach (cont.)


Be aware of any uncontrollable factors that
might affect the marketing of the product or
service such as


existing or pending legislation relevant to the
business.


state of the _______ in the market.


extent and strategies of the competition.


cultural _______ of the market.


new technologies that might offset the
business.



Components of the Plan


5. Plan the marketing program
(cont.)



Components of the Plan


6. Describe the selection of the
location.


the trading area


the Economic _______


attitude of the _______ area towards
new businesses


Competition


Costs



Components of the Plan


6. Describe the selection of the
location.


The Site


accessibility, site costs, _______, site
history, proximity to other businesses,
physical characteristics


The Buy
-
or
-
Lease Decision


cost of the lease, length of the lease,
restrictions, repairs and lease hold
improvements, _______ coverage


Running the Business from One’s Home


Components of the Plan


7. Determine the physical facilities.


Building, equipment, fixtures, starting
inventory


_______

flow in business


Production, layout, distribution of
product


_______


Don’t risk more than you can lose


Don’t risk a lot for a little


Buy insurance only when necessary


Investigate company and agent



Components of the Plan


7. Determine the physical facilities.


insurance types


loss or
_______

to the property


business interruption


liability and
_______

life insurance


insurance _______


what kind to purchase, how much to
purchase, from whom to purchase the
insurance



Components of the Plan


8. Plan the financing.


establish capital requirements


make _______ projections


determine the sources of funding


plan the _______, and bookkeeping
systems


determine the _______ evaluation
measures


Components of the Plan


9. Plan the personnel.


Administrative structure


Employee _______ and training


Personnel Policies


Components of the Plan


10. Investigate the legal
requirements.


Legal Structure (four styles)


1.Sole _______


advantages and disadvantages


2. Partnership


Limited, _______


advantages and disadvantages


3. Cooperative


one member
-
one vote vs each share a vote



Components of the Plan


10. Investigate the legal
requirements. (cont.)


4. Corporation


advantages and disadvantages of a
corporation


steps in incorporation


selection of the business name


development of the share structure,
directors, restrictions on share transfers,
etc.


description of the company operations


acquiring the necessary supplies




Components of the Plan


10. Investigate the legal requirements
(cont.)


5. Joint Ventures


Components of the Plan


10. Investigate the legal requirements.
(cont.)


Licenses and Taxes


Federal Government


Provincial Government


Municipal Governments


Intellectual Property Protection


patent steps

Appendices


Appendix A

-

Checklist for a Small
Business Plan


Appendix B

-

Sample Business Plans
(2)


The Sock Hop, Quality Cuts


Appendix C

-

Incorporation of
Companies and Associations


Appendix D

-

Jurisdiction of
Licenses and Taxes

Concept Checks


1. What are the advantages and
disadvantages of owning a small
business?


2. What steps are involved in
preparing a business plan?


3. What criteria must be evaluated
before choosing a trading area?


4. When is it advantageous to lease
instead of owning?

Concept Checks


5. What information should be investigated
before construction starts and purchasing
equipment?


6. Why is insurance purchased? What are
some small business insurance types?


7. What major financial aspects should be
planned in advance of business operation?


8. What are four legal structures that an
owner can utilize?

Concept Checks


9. What are the advantages and
disadvantages of incorporation?


10. What level of government issues
business licences?


11. What taxes are levied by the federal
government?


12. What are the steps required to register
a patent?