Business Plan Components PDF

Promotion Strategy How the company’s product or services will be promoted is an important component of the marketing. The promotion strategy must include the following: 1.Advertising aspects a)Advertising budget b)Positioning message c)First year’s...

Promotion Strategy How the company’s product or services will be promoted is an important component of the marketing. The promotion strategy must include the following: 1.Advertising aspects a)Advertising budget b)Positioning message c)First year’s media schedule 2. Packaging which describes how the company’s products will be package 3. Public relations-this will be detailed presentation of the publicity strategy of the firm. 4. Sales promotion- these are means used to support the sales message like special sales, coupons, contests, premium awards, trade in, among others. 5. Personal sales- these present the sales strategy including a) Pricing procedures b) Rules on returns and adjustments c) Methods of sales presentation d) Generation of leads e) Policies on customers services f) Compensations of salesmen g) Responsibilities of the salesmen  ANALYSIS OF THE COMPETITION The small business operator will find it difficult to compete if his competitors are unknown to him. This makes necessary to make an analysis of the competitors. In competitive analysis, the following must be determined: 1.The strengths and weaknesses of the firm’s competitors 2.Strategies that will give the firm a competitive advantage 3.Barriers that can be developed to prevent competitors or would be competitors from exploiting the firm's market; 4.Any opportunity that can be exploited  OPERATIONS AND How the firm will be operated on a MANAGEMENT continuing basis is an important component of the business plan. As such, the plan must contain the following: a)Organization structure b)Operating expenses c)Capital requirements d)Cost of goods sold  ORGANIZATIONAL A STRUCTURE well defined and realistic organizational structure is an important element of the business plan. Generally, they will be concerned hoe the firm is organized along the following concerns: 1.Marketing (including sales, customers, relations and service) 2.Productions (including quality assurance) 3.Research and development 4.Management 5.Human resource OPERATING EXPENSES Projections of operating expenses are important aspects in the preparation of a business plan. This is prerequisite in projecting financial statements. Lenders and investors are especially interested in scrutinizing such statements. These expenses included the following: 1.Material 2.Labor 3.Overhead  CAPITAL REQUIREMENTS Capital equipments are necessary items in operating businesses. The business plan will not be complete unless a listing of capital equipment needed to be purchased is drawn up.  COST OF GOODS Businesses which carry inventories like those engaged in manufacturing and trading provide a list showing cost of goods. The cost of goods of trading firms consist of products purchased for resale, while the cost of goods of manufacturing firms refer to total expenses incurred un manufacturing the products that are intended to sold.  FINANCIAL DATA Financiers are most interested in the financial aspects of the business plan. To satisfy this requirement, the following statements must be presented in the business plan: 1. the income 2.The balance sheet 3.The cash flow statement THE INCOME STATEMENT It shows the income, expenses and profits of a firm over a period of time. It is also alternatively called “statement of earnings”. It my cover a certain year, quarter or month. It provides basic data to help the prospective financier analyze the reasons for the projected profits.  THE BALANCE SHEET The balance sheet is that type of financial statement that shows the financial condition of the business as of a given date. The information provided by this statement is useful not only the entrepreneur but also to the prospective creditors. a summary of the financial balances of a sole proprietorship, a business partnership, a corporation or other business organization, such as an LLC or an LLP. Assets, liabilities and ownership equity are listed as of a specific date, such as the end of its financial year. A summary of financial information about the business is contained in the balance sheet and are broken down into three areas, namely; 1.Assets 2.Liabilities 3.Owner’s equity  THE ASSETS The assets portion of the balance sheet lists the assets of the firm in order of liquidity from the most liquid to the least liquid. As such this portion is subdivided into the following: 1.Current assets a)Cash- which includes cash in checking, savings and short terms investments account; b)Account receivables-these refer to income derived from credit accounts; c)Inventory- this refers to the inventory of material used to manufacture a product not yet sold. 2. Fixed assets- these are durable assets and will last more than one year. These consist of the following; a)Capital and plant- this refers to the book value of all capital equipment and others such as land and building, if owned by the firm, less depreciation. b)Investment- these are investments account owned by the company that cannot be converted to cash in less than a year  THE LIABILITIES The liabilities portion of the balance sheet is classified as current or long term. Current liabilities are due in one year or less and they include the following; 1.Accounts payable- these refer to all expenses incurred by the business that are purchased on an open account from suppliers and are due for payment 2.Accrued liabilities- these refer to operational expenses that are not yet paid. Examples are overhead and salaries 3.Taxes that are due and payable. Long term liabilities are due in more than one year. 1.Bonds payable- these are bonds due and payable over one year. 2.Mortgage payable-this refers to loans used for the purchase of real estate and is repaid for a period of over one year 3.Notes payable- these are loans represented by a written document which is payable for a period of over one year  The owner’s equity This section refers to how much the owner has in the business. It provides a useful means in evaluating the company.  The cash flow statement a cash flow statement, also known as statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing, and financing activities.  The following items are listed in cash flow statements 1.Cash- which is the cash on hand in the firms 2.Cash sales- which are income from sales paid for by cash 3.Receivables- which are income collected from credit sales. 4.Other income- which are income derived from investments, interest on money loaned to borrowers and on cash derived from sale of assets 5) Total income- is the sum of each cash, cash sales, receivables and other income 6) Material or merchandise refers to a. Raw material used in the manufacture of the product or b. The cash outlay for merchandise inventory of trading firms or c. The supplies used in the performance of a service 7) Direct labor refers to all required to manufacture a product or perform a service 8) Overhead- this refers to all fixed and variable expenses required in a day-to-day operations of the business 9) Marketing expenses- these refers to all salaries, commissions, and other direct cost associated with the marketing and sales departments. 10)R and D expenses- are labor expenses required to support the research and development efforts of the firm 11)G and A expenses-refer to those required to support the general and administrative functions of the firm. 12)Taxes- refer top all taxes, except payroll with holding taxes, paid to the government, national and local.  13) capital- represents the funds requirements to obtain any equipment needed to generate income 14)Loan payments- refers to total payments made to reduce or eliminate any long-term debts. 15)Tal expenses- refer to the sum of materials, direct labor, overhead, marketing expenses, R and D, G and A, taxes capital and loan payments 16)Cash flow-refers to the different between total income and total expenses 17)Cumulative cash flow- refers to the different between current cash flow and  Supporting documents The business plan would be more meaningful if supporting documents are included. 1.The owner’s resume 2.Contracts with suppliers 3.Contracts with customers 4.Letters of reference 5.Letters of intent 6.A copy of the firm's lease 7.A copy of copyright or patent acquired, if applicable 8.Tax returns for the last past 3 years THANK YOOOOOOOU. :>