Primary Task Response: Your first task is to post your own Key Assignment Outline include any notes you feel are appropriate. The purpose of this assignment is to help improve the quality of the Key Assignment Draft you will complete next week.
Best Practice for Business Plan Click here to watch a video of insights and recommendations from an interview with Dr. Steven Gedeon, venture capitalist and entrepreneur. Reference StartmeUpVideo. (2011). Business plan: Examples and best practices of business plan writing [Video]. Retrieved from http://www.youtube.com/watch?v=RoytcBiOpDI&feature=player_embedded Business Structure Understanding the role and importance of small business in the United States is fundamental to the study of our overall business and economic system. Business creates jobs; provides goods and services across the country; provides for competition, that is, freedom of consumer choice; and maintains a high individual standard of living and society’s quality of life. Not only does small business in the United States accomplish these goals, but small business also expands opportunity to many individuals looking to establish business operations. Two main types of individuals participate in small-business ownership: the entrepreneur and the small-business owner. Entrepreneurs are individuals who possess a high degree of tolerance for risk and are typically motivated by the possibility of introducing a new good or service and the high potential for financial gain. Small-business owners tend to be motivated by the business success of their main business objective. Small-business owners typically do not wish to expand as rapidly as possible and seek to establish long-lasting operations as an indicator of success. Both types of business owners are important to our general economy and are encouraged by a variety of social and government organizations. The general environment of small business has changed over time. Technology has become an increasingly prevalent element within small businesses as customers have become accustom to using technology to contact companies and even order goods and services. Small-business owners have needed to accept the role of technology as a result of customers’ service and delivery expectations. Another change within small business has been the encouragement of minorities and women to own small businesses. Both the federal government and many private organizations offer women and minorities business owners assistance. This assistance has increased the level of opportunity for many Americans. Several methods exist for starting a small business. Among the most common methods are buying out an existing small business, starting a small business from scratch, and purchasing a franchise. Although most small-business owners simply begin their businesses from an idea or skill that they want to offer the public, many individuals become attracted to the established reputation and business organization of existing small businesses and franchises. Regardless of the method individuals take to begin their small business, many businesses will have several organizational elements in common with other businesses. These organizational elements include a strong and well-written business plan with well-established sources of funding. Most well-written business plans lay out the framework of the business and include three main elements: goals and objectives statements, revenue forecasting, and financial planning statements. The most common sources of funding for both small businesses and entrepreneurs are institutional sources, private investors, angel investors, and personal funds. Business owners must also decide on the type of business that will match their goals and objectives. Three main types of business are used by small-business owners: the sole proprietorship, partnership, and corporation. All three of these types of business possess advantages and disadvantages. Business owners must evaluate the best type of business to maximize their potential for long-term success or for entrepreneurs, the opportunity for rapid expansion. Over time, researchers and business professionals have been able to list several failure and success traits for small businesses. Among the failure mechanisms, or traits, are managerial inexperience and business neglect. Some of the success mechanisms are hard work and dedication and a strong evaluation of the market potential for the good or service to be offered. All business owners plan to succeed, otherwise competition and the pure burden of ownership and business management may become too overwhelming. Good planning is imperative for any business owner. Business Plan Advice Click here to watch an interview with Dr. Steven Gedeon, an experienced start-up professional. Learn his views on writing a business plan. Reference Start Me Up. (2011, February 17). Business plan: Examples and best practices of business plan writing [Video]. Retrieved from the YouTube Web site: http://www.youtube.com/watch?v=RoytcBiOpDI What Investors are looking for? Click here to learn some insider points on creating an effective presentation of your business plan that investors will read. Reference BankToTheFuture.com. (2012, December 15). How to write a business plan that investors read [Video]. Retrieved from the YouTube Web site: http://www.youtube.com/watch?v=KizOAweVhVw Template for your Business Plan Click here to access a template that you can use for writing a business plan for Internet businesses. There are several other templates available if you scroll down the page. Reference Entrepreneur. (n.d.). Business plan template for Internet business [Video]. Retrieved from http://www.entrepreneur.com/formnet/form/460# Customizing your Business Plan Click here to watch a video that will help you gain valuable business plan advice. Reference Palo Alto Software. (2009, March 24). Ask Tim Berry – What sort of business plan do you need? [Video]. Retrieved from the YouTube Web site: http://www.youtube.com/watch?v=SdS0qInvC4k Starting a Business Many people believe that starting your own business simply requires a good idea and hard work, but the planning and establishment of a business are actually very complex. First is the concept of franchising. Franchising is a form of licensing by which the owner (franchisor) of a product, service, or method obtains distribution through affiliated dealers (franchisees). The holder of the right is often given exclusive access to a defined geographical area. Franchising has also been described as a convenient and economical means for the fulfilling of a drive or desire (for independence), with a minimum of risk and investment and maximum opportunities for success through the utilization of a proven product or service and marketing method. Opportunities to acquire franchises are numerous and span every imaginable business type. Fast-food restaurants come to mind when one thinks of a franchise, but there are franchises that cater to nearly every business interest. Site selection is another important component in starting a business. An entrepreneur’s location goal is to locate the company at a site that will maximize the likelihood of success. The more that entrepreneurs invest in researching potential locations, the higher the probability is of finding the spot that is best suited for their companies. The site selection research and decision can be very complex. The entrepreneur needs to look at retail compatibility, competition, proximity to transportation, and government regulations. More than 80 percent of all companies in the United States are family-owned. Family-owned businesses come with their own set of advantages and disadvantages. For people who are involved in family-owned businesses, management succession and the exit strategy options are topics that are too rarely considered. Planning for management succession protects not only the founders’, successors’, and companies’ financial resources, but it also preserves what matters the most in a successful business: its heritage and tradition. Innovation and Business Climates In an interconnected, highly competitive world, innovation is recognized as the essential element to stay ahead of the competition and create growth for the firm. Investors demand a return; the highest returns are generated when a new product or innovation disrupts the marketplace and creates a new culture or way that did not once exist. When a famous entrepreneur dropped out of school to start what became a major U.S. software and hardware company, many around him doubted the good sense of the idea. But he flew in the face of convention, and he took to the vision that he was beginning to see of a world in which each household had a computer of its own. This was quite extraordinary, considering the capability of a computer around 1980, which took up much space and was capable of many fewer processes than today. This entrepreneur’s innovative way of thinking helped propel the computer into the place it holds in society today. Overcoming Obstacles Today as well, innovators have to overcome obstacles to successful innovation. For example, a famous motor company set out to make a sports car that is both green and does not sacrifice performance. This motor company has encountered scores of challenges, many centered on the technologies that allow it to build a completely electric car that will go from 0–60 miles per hour in 3.9 seconds. After its prototype was developed, it had engineering difficulties. It had presold over 500 cars and was pushing off the date that the cars would be available. In May 2008, in a conversation with a multimillionaire, who owned over half the motor company, he said that to date, he had put millions into the company. He stated that in 2007 alone, there had been more than six separate things that happened to almost take the company out of business; but in February 2008, the company was able to begin shipping cars and had overcome those issues. Innovation Comes in All Sizes Every day, innovations small and large change the landscape of our world. Take a simple coat hanger, for instance. There have been many small iterations of innovation to the coat hanger, each designed to provide a function better suited to the hanging of clothes. There are wire hangers, clip-on hangers, stacked clip-on hangers, plastic hangers, plastic hangers with hooks, and hangers with cardboard so pants do not get creased. Although these innovations are not as earth-shattering as the personal computer, design evolution like this is evidence of the spirit of innovation. Entrepreneurial Business Environments Of all the countries in the world, the United States has set up its economic system of free markets with entrepreneurship in mind. The ability to freely trade goods and services, to start and run an enterprise with minimal government interference, and the freedom to engage in venture activity makes the United States one of the best places to do business in the world. Many people migrate to the United States to start personal shops, gas stations, or local groceries, and in doing so, realize the dream of owning and not being owned. Within the United States, there are also climates that are made for the business owner. For instance, many businesses are headquartered in Delaware because of the favorable business laws for corporations and the established set of case law. Each state also has a different tax code that may be friendlier to a business than another state. Some areas are known for entrepreneurship, especially for start-up companies, such as in the Silicon Valley near San Francisco. Sandhill Road is famous for housing many venture capital firms and banks that cater specifically to firms in start-up mode. There are entrepreneurship groups that meet on a regular basis to encourage one another, network, and gain information. Incubators also provide low-cost rent for start-ups and a sense of camaraderie as the business goes through the challenges that are unique to a new company. All of these provide certain climates that are positive to start-up ventures and business growth. Of course, the reverse is also true. There are many countries, states, and areas not particularly friendly or well-versed for business ventures. The entrepreneur needs to consider these factors and choose wisely, because once a business is established and starts to grow, it is very difficult and cost-prohibitive to change climates and locations. The entrepreneur is wise to consider the climate of the area the business will be located before making a final decision because it plays a big role in the eventual success of an organization. Reference Innovation. (n.d.). Dictionary.com Unabridged (v 1.1). Retrieved March 31, 2009, from Dictionary.com Web site: http://dictionary.reference.com/browse/innovation Sections of a Business Plan Question 1: How should a business plan be organized? Answer 1: The plan should have an introduction, a summary, body (content in chapters), and appendices. Question 2: How should the introduction and the summary of the business plan be structured? Answer 2: The introduction should describe the company and the purpose of or reason for the plan. If the purpose is two-fold, then the company should consider developing two versions of the plan, tailored to the audiences (such as organizational use and presentation for potential investors). Identify the authors of the plan and the date the plan was written. Indicate if outside help was used to develop the plan. Briefly describe the structure of the document. State the confidentiality of the document, and include an explanation that forecasts in the document do not constitute a prospectus. Most importantly, include contact details for the primary person presenting the plan. The summary should be written at the end of the plan’s drafting. Include only highlights of the plan and key issues of strategic importance. Focus on the perspective of the plan’s audience. Describe briefly what is of most importance to the reader that will be answered in the plan. Summarize in very brief fashion what will be covered in the main sections of the document. Question 3: What should be included in the body of the business plan? Answer 3: The body of the plan provides a realistic view of nearly every aspect of the company. It should include the following: • The vision and mission statements, the strengths, weaknesses, opportunities, and threats (SWOT) analysis, and strategy plan • A description of the present condition and position of the company • A description of the products and services that the company offers • A profile of the target market(s) • Marketing strategies • Technology (if appropriate) and a listing of resources • Manufacturing and operational plans (if appropriate) • A description of upper management and their roles • High-level financial projections, including income statements, cash flow projections, projected balance sheets, and other documents pertinent to finance • Funding proposals (if plans are developed to attract investment capital) • Implementation plans, including future decision points, timeliness, milestones, required actions, and contingency plans Question 4: What should appear in the appendices of the plan? Answer 4: The appendices should include the following: • Details of items mentioned in the body of the plan • Chronological development of the company • Historical financial documents • Market research • Description of competition • Financial projection tables and data Question 5: How should a business plan be used? Answer 5: The business plan serves three purposes: planning, management, and communication. The document as a planner will provide guidance as a business evolves. It will help to identify problems and create solutions. The document as a management tool aids in monitoring and evaluating progress. The document as an instrument for communications helps present and possible employees understand the direction of the business. It shows whether a company has the potential to succeed and grow financially for investors or possible strategic business partners.