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Chapter 5Chapter 5

Develop a Business Plan

5.15.1 Why Do You Need a Business Plan?

5.25.2 What Goes into a Business Plan?

5.35.3 Create an Effective Business Plan

LESSONSLESSONS

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Lesson 5.1Why Do You Need a Business Plan?

Explain the purpose of writing a good business plan.

Describe the importance of a business plan.

GOALSGOALS

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What is a Business Plan?A business plan is a written document

that describes all the steps necessary to open and operate a successful business.

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What are the Three Main Purposes of a Business Plan? Explains the idea behind your business and

spells out how your product or service will be produced and sold.

Sets specific objectives and describes how your business expects to achieve them.

Describes the background and experience of the people who will be running the business.

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What Are Some Reasons Why a Business Plan Is Important?Makes you think about all aspects of

your business.May help you secure financing for your

business.Helps you communicate your ideas to

others.Can serve as a tool for managing your

business.

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Lesson 5.2What Goes into a Business Plan?

Study the seven basic elements of a business plan.

Recognize what additional elements may be needed.

GOALSGOALS

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Seven Basic Elements of a Business PlanHistory and backgroundGoals and objectivesProducts or servicesForm of ownershipManagement and staffing MarketingCurrent and projected financial

statements

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History and BackgroundDescribing how you came up with your

idea can help lenders, investors, and others understand how your business will operate.

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Goals and ObjectivesYour business plan should outline your

goals—short-term, medium-term, and long-term.

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Products or Services

Explain how your products or services differ from those already on the market.

Describe the industry you will operate in.Describe the location of your business.

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Form of OwnershipIdentify your form of ownershipProvide information relevant to your

form of ownership

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Management and StaffingDemonstrate that you and the people

working for you have the experience, maturity, and common sense to manage your business.

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MarketingIdentify and describe your prospective

customers.Describe the size of the market for your

product or service.Explain how you plan to enter the

market.Explain how you plan to deal with

competition.

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Current and Projected Financial StatementsThe financial section has three elements:Identification of risksFinancial statementsFunding request and return on

investment

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Additional Elements of the Business PlanSome businesses need to provide additional information in their business plans related to:

LicensingLegal restrictionsRegulations

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Lesson 5.3Create an Effective Business Plan

Research your business plan.Organize your business plan.GOALSGOALS

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Research the Business PlanPrint resourcesOnline resourcesPeople resourcesAdditional resources

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Put Your Business Plan TogetherIntroductory elements

Cover letterCover sheetsTable of contentsStatement of purposeExecutive summary

Main body of your planAppendix

ENTREPRENEURSHIP: Ideas in Action © SOUTH-WESTERN PUBLISHING

Chapter 5Chapter 5

Develop a Business Plan

5.15.1 Why Do You Need a Business Plan?

5.25.2 What Goes into a Business Plan?

5.35.3 Create an Effective Business Plan

LESSONSLESSONS