A more detailed explanation of the marketing plan and how to develop an effective marketing program is provided in the Workshop on Marketing. See Training Module 3 - Marketing Your Business for Success.
THE BUSINESS PLAN - THE MANAGEMENT PLAN
Managing a business requires more than just the desire to be your own boss. It demands dedication, persistence, the ability to make decisions and the ability to manage both employees and finances. Your management plan, along with your marketing and financial management plans, sets the foundation for and facilitates the success of your business.
Like plants and equipment, people are resources-they are the most valuable asset a business has. You will soon discover that employees and staff will play an important role in the total operation of your business. Consequently, it's imperative that you know what skills you possess and those you lack since you will have to hire personnel to supply the skills that you lack. Additionally, it is imperative that you know how to manage and treat your employees. Make them a part of the team. Keep them informed of, and get their feedback regarding, changes. Employees oftentimes have excellent ideas that can lead to new market areas, innovations to existing products or services or new product lines or services which can improve your overall competitiveness.
Your management plan should answer questions such as:
oHow does your background/business experience help you in this business?
oWhat are your weaknesses and how can you compensate for them?
oWho will be on the management team?
oWhat are their strengths/weaknesses?
oWhat are their duties?
oAre these duties clearly defined?
oIf a franchise, what type of assistance can you expect from the franchisor?
oWill this assistance be ongoing?
oWhat are your current personnel needs?
oWhat are your plans for hiring and training personnel?
oWhat salaries, benefits, vacations, holidays will you offer? If a franchise, are these issues covered in the management package the franchisor will provide?
oWhat benefits, if any, can you afford at this point?
If a franchise, the operating procedures, manuals and materials devised by the franchisor should be included in this section of the business plan. Study these documents carefully when writing your business plan, and be sure to incorporate this material. The franchisor should assist you with managing your franchise. Take advantage of their expertise and develop a management plan that will ensure the success for your franchise and satisfy the needs and expectations of employees, as well as the franchisor.
THE BUSINESS PLAN - THE FINANCIAL MANAGEMENT PLAN
Sound financial management is one of the best ways for your business to remain profitable and solvent. How well you manage the finances of your business is the cornerstone of every successful business venture. Each year thousands of potentially successful businesses fail because of poor financial management. As a business owner, you will need to identify and implement policies that will lead to and ensure that you will meet your financial obligations.
To effectively manage your finances, plan a sound, realistic budget by determining the actual amount of money needed to open your business (start-up costs) and the amount needed to keep it open (operating costs). The first step to building a sound financial plan is to devise a start-up budget. Your start-up budget will usually include such one-time-only costs as major equipment, utility deposits, down payments, etc.
The start-up budget should allow for these expenses.
Start-up Budget
opersonnel (costs prior to opening)
olegal/professional fees
ooccupancy
olicenses/permits
oequipment
oinsurance
osupplies
oadvertising/promotions
osalaries/wages
oaccounting
oincome
outilities
opayroll expenses
An operating budget is prepared when you are actually ready to open for business. The operating budget will reflect your priorities in terms of how your spend your money, the expenses you will incur and how you will meet those expenses (income). Your operating budget also should include money to cover the first three to six months of operation. It should allow for the following expenses.
Operating Budget
opersonnel
oinsurance
orent
odepreciation
oloan payments
oadvertising/promotions
olegal/accounting
omiscellaneous expenses
osupplies
opayroll expenses
osalaries/wages
outilities
odues/subscriptions/fees
otaxes
orepairs/maintenance
The financial section of your business plan should include any loan applications you've filed, a capital equipment and supply list, balance sheet, breakeven analysis, pro-forma income projections (profit and loss statement) and pro-forma cash flow. The income statement and cash flow projections should include a three-year summary, detail by month for the first year, and detail by quarter for the second and third years.
The accounting system and the inventory control system that you will be using is generally addressed in this section of the business plan also. If a franchise, the franchisor may stipulate in the franchise contract the type of accounting and inventory systems you may use. If this is the case, he or she should have a system already intact and you will be required to adopt this system. Whether you develop the accounting and inventory systems yourself, have an outside financial advisor develop the systems or the franchisor provides these systems, you will need to acquire a thorough understanding of each segment and how it operates. Your financial advisor can assist you in developing this section of your business plan.
The following questions should help you determine the amount of start-up capital you will need to purchase and open a franchise.
oHow much money do you have?
oHow much money will you need to purchase the franchise?
oHow much money will you need for start-up?
oHow much money will you need to stay in business?
Other questions that you will need to consider are:
oWhat type of accounting system will your use? Is it a single entry or dual entry system?
oWhat will your sales goals and profit goals for the coming year be? If a franchise, will the franchisor set your sales and profit goals? Or, will he or she expect you to reach and retain a certain sales level and profit margin?
oWhat financial projections will you need to include in your business plan?
oWhat kind of inventory control system will you use?
Your plan should include an explanation of all projections. Unless you are thoroughly familiar with financial statements, get help in preparing your cash flow and income statements and your balance sheet. Your aim is not to become a financial wizard, but to understand the financial tools well enough to gain their benefits. Your accountant or financial advisor can help you accomplish this goal.
Sample balance sheets, income projections (profit and loss statements) and cash flow statements are included in Appendix 2, Financial Management. For a detailed explanation of these and other more complex financial concepts, contact your local SBA Office. Look under the U.S. Government section of the local telephone directory.
THE BUSINESS PLAN - SELF-PACED ACTIVITY
During this activity you will:
oBriefly describe what goes into a business plan.
oIdentify advantages of developing the marketing, management and financial management plans.
oList financial projections included in the financial management plan.
oSketch an outline for a business plan.
THE BUSINESS PLAN - APPENDIX 1
MARKETING
o1. THE MARKETING PLAN
o2. PRICE/QUALITY MATRIX
o3. MARKETING TIPS, TRICKS & TRAPS
_________________________________________________________________
THE ENTREPRENEUR'S
MARKETING PLAN
This is the marketing plan of____________________________
I. MARKET ANALYSIS
A. Target Market - Who are the customers?
o1. We will be selling primarily to (check all that apply):
oTotal Percent
oof Business
a. Private sector _______ ______
b. Wholesalers _______ ______
c. Retailers _______ ______
d. Government _______ ______
e. Other _______ ______
o2. We will be targeting customers by:
oa. Product line/services.
We will target specific lines ________________
b. Geographic area? Which areas? ________________
c. Sales? We will target sales of ________________
d. Industry? Our target industry is ________________
e. Other? ________________
o3. How much will our selected market spend on our type of product or service this coming year?
$________________
B. Competition
o1. Who are our competitors?
NAME ________________________________________
ADDRESS _________________________________________
_________________________________________
Years in Business ___________________
Market Share ___________________
Price/Strategy ___________________
Product/Service
Features ___________________
NAME _________________________________________
ADDRESS _________________________________________
_________________________________________
Years in Business ____________________
Market Share ____________________
Price/Strategy ____________________
Product/Service
Features ____________________
o2. How competitive is the market?
High ____________________
Medium ____________________
Low ____________________
o3. List below your strengths and weaknesses compared to your competition (consider such areas as location, size of resources, reputation, services, personnel, etc.):
Strengths Weaknesses
1._______________________ 1._____________________
2._______________________ 2._____________________
3._______________________ 3._____________________
4._______________________ 4._____________________
C. Environment
o1. The following are some important economic factors that will affect our product or service (such as trade area growth, industry health, economic trends, taxes, rising energy prices, etc.):
________________________________________________
________________________________________________
________________________________________________
o2. The following are some important legal factors that will affect our market:
________________________________________________
________________________________________________
________________________________________________
o3. The following are some important government factors:
________________________________________________
________________________________________________
________________________________________________
o4. The following are other environmental factors that will affect our market, but over which we have no control:
________________________________________________
________________________________________________
________________________________________________
II. PRODUCT OR SERVICE ANALYSIS
A. Description
o1. Describe here what the product/service is and what it does:
________________________________________________
________________________________________________
________________________________________________
B. Comparison
o1. What advantages does our product/service have over those of the competition (consider such things as unique features, patents, expertise, special training, etc.)?
__________________________________________________
__________________________________________________
__________________________________________________
o2. What disadvantages does it have?
__________________________________________________
__________________________________________________
__________________________________________________
C. Some Considerations
o1. Where will you get your materials and supplies?
__________________________________________________
o2. List other considerations:
__________________________________________________
__________________________________________________
III. MARKETING STRATEGIES - MARKET MIX
oA. Image
o1. First, what kind of image do we want to have (such as cheap but good, or exclusiveness, or customer-oriented or highest quality, or convenience, or speed, or ...)?
__________________________________________________
oB. Features
1. List the features we will emphasize:
a. __________________________________________
b. __________________________________________
c. __________________________________________
oC. Pricing
1. We will be using the following pricing strategy:
a. Markup on cost ____ What % markup? _____
b. Suggested price ____
c. Competitive ____
d. Below competition ____
e. Premium price ____
f. Other ____
o2. Are our prices in line with our image?
oYES___ NO___
o3. Do our prices cover costs and leave a margin of
profit?
YES___ NO___
oD. Customer Services
1. List the customer services we provide:
a. ____________________________________________
b. ____________________________________________
c. ____________________________________________
2. These are our sales/credit terms:
a. ____________________________________________
b. ____________________________________________ c._____________________________________________
3. The competition offers the following services:
oa. ____________________________________________
ob. ____________________________________________
oc. ____________________________________________
oE. Advertising/Promotion
1. These are the things we wish to say about the business:
____________________________________________________
____________________________________________________
____________________________________________________
o2. We will use the following advertising/promotion sources:
1. Television ________
2. Radio ________
3. Direct mail ________
4. Personal contacts ________
5. Trade associations ________
6. Newspaper ________
7. Magazines ________
8. Yellow Pages ________
9. Billboard ________
10. Other___________ ________
o3. The following are the reasons why we consider the media we have chosen to be the most effective:
__________________________________________________
__________________________________________________
__________________________________________________
_________________________________________________________________
MARKETING TIPS, TRICKS & TRAPS
1. Marketing Steps
oClassifying Your Customers' Needs
oTargeting Your Customer(s)
oExamining Your "Niche"
oIdentifying Your Competitors
oAssessing and Managing Your Available Resources
Financial
Human
Material
Production
_________________________________________________________________
NOTES AND STRATEGIES FOR YOUR BUSINESS
_________________________________________________________________
MARKETING TIPS, TRICKS & TRAPS
2. Marketing Positioning
oFollower versus Leader
oQuality versus Price
oInnovator versus Adaptor
oCustomer versus Product
oInternational versus Domestic
oPrivate Sector versus Government
_________________________________________________________________
NOTES AND STRATEGIES FOR YOUR BUSINESS
_________________________________________________________________
MARKETING TIPS, TRICKS & TRAPS
3. Sales Strategy
oUse Customer-Oriented Selling Approach - By Constructing
oAgreement
Phase One: Establish Rapport with Customer - by agreeing to discuss what the customer wants to achieve.
Phase Two: Determine Customer Objective and Situational Factors - by agreeing on what the customer wants to achieve and those factors in the environment that will influence these results.
Phase Three: Recommend a Customer Action Plan - by agreeing that using your product/ service will indeed achieve what customer wants.
Phase Four: Obtaining Customer Commitment - By agreeing that the customer will acquire your product/service.
oEmphasize Customer Advantage
oMust be Read: When a competitive advantage can not
be demonstrated, it will not
translate into a benefit.
Must be Important
to the Customer: When the perception of competitive
advantage varies between supplier and customer, the customer wins.
Must be Specific: When a competitive advantage lacks
specificity, it translates into mere puffery and is ignored.
Must be Promotable: When a competitive advantage is
proven, it is essential that your customer know it, lest it not exist at all.
________________________________________________________________
NOTES AND STRATEGIES FOR YOUR BUSINESS
_________________________________________________________________
MARKETING TIPS, TRICKS & TRAPS
4. Benefits vs. Features
oThe six "O's" of organizing Customer Buying Behavior
ORIGINS of purchase: Who buys it?
OBJECTIVES of purchase: What do they need/buy?
OCCASIONS of purchase: When do they buy it?
OUTLETS of purchase: Where do they buy it?
OBJECTIVES of purchase: Why do they buy it?
OPERATIONS of purchase: How do they buy it?
oConvert features to benefits using the "...Which Means..."
oTransition
oSales Maxim: "Unless the proposition appeals to their INTEREST, unless it satisfies their DESIRES, and unless it shows them a GAIN-then they will not buy!"
oQuality Customer Leads:
Level of need Ability to pay
Authority to pay Accessibility
Sympathetic attitude Business history
One-source buyer Reputation (price or
quality buyer)
_________________________________________________________________
NOTES AND STRATEGIES FOR YOUR BUSINESS
_________________________________________________________________
CONVERT FEATURES INTO BENEFITS-
THE "...WHICH MEANS..." TRANSITION
FEATURES "WHICH MEANS" BENEFITS
Performance Time Saved
Reputation Reduced Cost
Components Prestige
Colors Bigger Savings
Sizes Greater Profits
Exclusive Greater
Convenience
Uses Uniform Production
Applications Uniform Accuracy
Ruggedness Continuous Output
Delivery Leadership
Service Increased Sales
Price Economy of Use
Design Ease of Use
Availability Reduced Inventory
Installation Low Operating Cost
Promotion Simplicity
Lab Tests Reduced Upkeep
Terms Reduced Waste
Workmanship Long Life
BUYING MOTIVES
RATIONAL EMOTIONAL
Economy of Purchase Pride of
Appearance
Economy of Use Pride of Ownership
Efficient Profits Desire of Prestige
Increased Profits Desire for
Recognition
Durability Desire to Imitate
Accurate Performance Desire for Variety
Labor-Saving Safety
Time-Saving Fear
Simple Construction Desire to Create
Simple Operation Desire for
Security
Ease of Repair Convenience
Ease of Installation Desire to Be
Unique
oSpace-Saving Curiosity
oIncreased Production
oAvailability
oComplete Servicing
oGood Workmanship
oLow Maintenance
oThorough Research
oDesire to be Unique
oCuriosity
_________________________________________________________________
PRICE / QUALITY MATRIX
SALES APPEALS
PRICE/QUALITY HIGH MEDIUM LOW
HIGH "Rolls Royce" "We Try Harder" "Best Buy"
Strategy Strategy Strategy
MEDIUM "Out Performs" "Piece of the Rock" "Smart Shopper"
Strategy Strategy Strategy
LOW "Feature Packed" "Keeps on Ticking" "Bargain
Strategy Strategy Hunter"
Strategy
THE BUSINESS PLAN - APPENDIX 2
FINANCIAL MANAGEMENT
1. Income Projection Statement
oInstructions for Income Projection Statement
2. Balance Sheet
oInstructions for Balance Sheet
3. Monthly Cash Flow Projection
oInstructions for Monthly Cash Flow Projection
4. Information Resources
_________________________________________________________________
INCOME PROJECTION STATEMENT
Industry J F M A M J J A S O N D Annual Annual
% total %
oTotal net sales (revenues)
oCosts of sales
oGross profit
oGross profit margin
oControllable expenses
oSalaries/wages
oPayroll expenses
oLegal/accounting
oAdvertising
oAutomobile
oOffice supplies
oDues/Subscriptions
oUtilities
oMiscellaneous
oTotal controllable
oexpenses
oFixed expenses
oRent
oDepreciation
oUtilities
oInsurance
oLicense/permits
oLoan payments
oMiscellaneous
oTotal fixed expenses
Total expenses
oNet profit (loss)
obefore taxes
Taxes
Net profit (loss) after
taxes
_________________________________________________________________
INSTRUCTIONS FOR INCOME PROJECTIONS STATEMENT
The income projections (profit and loss) statement is valuable as both a planning tool and a key management tool to help control business operations. It enables the owner/manager to develop a preview of the amount of income generated each month and for the business year, based on reasonable predictions of monthly levels of sales, costs and expenses.
As monthly projections are developed and entered into the income projections statement, they can serve as definite goals for controlling the business operation. As actual operating results become known each month, they should be recorded for comparison with the monthly projections. A completed income statement allows the owner/manager to compare actual figures with monthly projections and to take steps to correct any problems.
Industry Percentage
In the industry percentage column, enter the percentages of total
sales (revenues) that are standard for your industry, which are
derived by dividing
Costs/expenses items x 100%
___________________________
total net sales
These percentages can be obtained from various sources, such as trade associations, accountants or banks. The reference librarian in your nearest public library can refer you to documents that contain the percentage figures, for example, Robert Morris Associates' Annual Statement Studies (One Liberty Place, Philadelphia, PA 19103).
Industry figures serve as a useful bench mark against which to compare cost and expense estimates that you develop for your firm. Compare the figures in the industry percentage column to those in the annual percentage column.
Total Net Sales (Revenues)
Determine the total number of units of products or services you realistically expect to sell each month in each department at the prices you expect to get. Use this step to create the projections to review your pricing practices.
oWhat returns, allowances and markdowns can be expected?
oExclude any revenue that is not strictly related to the business.
Cost of Sales
The key to calculating your cost of sales is that you do not overlook any costs that you have incurred. Calculate cost of sales of all products and services used to determine total net sales. Where inventory is involved, do not overlook transportation costs. Also include any direct labor.
Gross Profit
Subtract the total cost of sales from the total net sales to obtain gross profit.
Gross Profit Margin
The gross profit is expressed as a percentage of total sales
(revenues). It is calculated by dividing
gross profits
______________
total net sales
Controllable (also known as Variable) Expenses
oSalary expenses-Base pay plus overtime.
oPayroll expenses-Include paid vacations, sick leave, health insurance, unemployment insurance and social security taxes.
oOutside services-Include costs of subcontracts, overflow work and special or one-time services.
oSupplies-Services and items purchased for use in the business.
oRepair and maintenance-Regular maintenance and repair, including periodic large expenditures such as painting.
oAdvertising-Include desired sales volume and classified directory advertising expenses.
oCar delivery and travel-Include charges if personal car is used in business, including parking, tools, buying trips, etc.
oAccounting and legal-Outside professional services.
Fixed Expenses
oRent-List only real estate used in business.
oDepreciation-Amortization of capital assets.
oUtilities-Water, heat, light, etc.
oInsurance-Fire or liability on property or products.
oInclude workers' compensation.
oLoan repayments-Interest on outstanding loans.
oMiscellaneous-Unspecified; small expenditures without separate accounts.
Net Profit (loss)
(before taxes) - Subtract total expenses from gross profit.
Taxes - Include inventory and sales tax, excise
tax, real estate tax, etc.
Net Profit (loss)
(after taxes) - Subtract taxes from net profit (before
taxes)
Annual Total - For each of the sales and expense items in
your income projection statement, add all
the monthly figures across the table and
put the result in the annual total column.
Annual Percentage - Calculate the annual percentage by dividing
Annual total x 100%
___________________
total net sales
oCompare this figure to the industry percentage in the first column.
_________________________________________________________________
BALANCE SHEET
COMPANY NAME
As of ____________________________, 19____
Assets
oCurrent assets
Cash $_______
Petty cash $_______
Accounts receivable $_______
Inventory $_______
Short-term investment $_______
Prepaid expenses $_______
Long-term investment $_______
oFixed assets
Land $_______
Buildings $_______
Improvements $_______
Equipment $_______
Furniture $_______
Automobile/vehicles $_______
Other assets
o1. $_______
o2. $_______
o3. $_______
o4. $_______
oTotal assets $______
Liabilities
Current Liabilities
Accounts payable $______
Notes payable $______
Interest payable $______
Taxes payable
Federal income tax $______
State income tax $______
Self-employment tax $______
Sales tax (SBE) $______
Property tax $______
Payroll accrual $______
Long-term liabilities
Notes payable $______
Total liabilities $______
Net worth (owner equity) $______
Proprietorship
or
Partnership
(name's) equity $_____
(name's) equity $_____
or
oCorporation
Capital stock $_____
Surplus paid in $_____
Retained earnings $_____
Total net worth $_____
oTotal liabilities and
ototal net worth $_____
(Total assets will always equal total liabilities and total net worth)
________________________________________________________________
INSTRUCTIONS FOR BALANCE SHEET
Figures used to compile the balance sheet are taken from the previous and current balance sheet as well as the current income statement. The income statement is usually attached to the balance sheet. The following text covers the essential elements of the balance sheet.
At the top of the page fill in the legal name of the business, the type of statement and the day, month and year.
Assets
List anything of value that is owned or legally due the business. Total assets include all net values. These are the amounts derived when you subtract depreciation and amortization from the original costs of acquiring the assets.
Current Assets
oCash-List cash and resources that can be converted into cash within 12 months of the date of the balance sheet (or during one established cycle of operation). Include money on hand and demand deposits in the bank, e.g., checking accounts and regular savings accounts.
oPetty cash-If your business has a fund for small miscellaneous expenditures, include the total here.
oAccounts receivable-The amounts due from customers in payment for merchandise or services.
oInventory-Includes raw materials on hand, work in progress and all finished goods, either manufactured or purchased for resale.
oShort-term investments-Also called temporary investments or marketable securities, these include interest- or dividend-yielding holdings expected to be converted into cash within a year. List stocks and bonds, certificates of deposit and time-deposit savings accounts at either their cost or market value, whichever is less.
oPrepaid expenses-Goods, benefits or services a business buys or rents in advance. Examples are office supplies, insurance protection and floor space.
Long-term Investments
Also called long-term assets, these are holdings the business intends to keep for at least a year and that typically yield interest or dividends. Included are stocks, bonds and savings accounts earmarked for special purposes.
Fixed Assets
Also called plant and equipment. Includes all resources a business owns or acquires for use in operations and not intended for resale. Fixed assets may be leased. Depending on the leasing arrangements, both the value and the liability of the leased property may need to be listed on the balance sheet.
oLand-List original purchase price without allowances for market value.
oBuildings
oImprovements
oEquipment
oFurniture
oAutomobile/vehicles
Liabilities
Current Liabilities
List all debts, monetary obligations and claims payable within 12 months or within one cycle of operation. Typically they include the following:
oAccounts payable-Amounts owed to suppliers for goods and services purchased in connection with business operations.
oNotes payable-The balance of principal due to pay off short-term debt for borrowed funds. Also includes the current amount due of total balance on notes whose terms exceed 12 months.
oInterest payable-Any accrued fees due for use of both short- and long-term borrowed capital and credit extended to the business.
oTaxes payable-Amounts estimated by an accountant to have been incurred during the accounting period.
oPayroll accrual-Salaries and wages currently owed.
Long-term Liabilities
Notes payable-List notes, contract payments or mortgage payments due over a period exceeding 12 months or one cycle of operation. They are listed by outstanding balance less the current position due.
Net worth
Also called owner's equity, net worth is the claim of the owner(s) on the assets of the business. In a proprietorship or partnership, equity is each owner's original investment plus any earnings after withdrawals.
Total Liabilities and Net Worth
The sum of these two amounts must always match that for total assets.
______________________________________________________________
MONTHLY CASH FLOW PROJECTION
Name of Business Owner Type of Business Prepared by Date
Pre-start- 1 2 3 4 5 6 Total
up position Columns 1-6
Year Month
Est.* Act.* Est.Act. Est.Act. Est.Act. Est.Act. Est.Act. Est.Act. Est.Act.
1. Cash on hand (beginning
month)
2. Cash receipts
o(a) Cash sales
o(b) Collections from credit
oaccounts
o(c) Loan or other cash
oinjections (specify)
3. Total cash receipts
(2a+2b+2c=3)
4. Total cash available
(before cash out) (1+3)
5. Cash paid out
o(a) purchases (merchandise)
o(b) Gross wages (excludes withdrawals)
o(c) Payroll expenses (taxes, etc.)
o(d) Outside services
o(e) Supplies (office and
ooperating)
o(f) Repairs and maintenance
o(g) Advertising
o(h) Car, delivery and travel
o(i) Accounting and legal
o(j) Rent
o(k) Telephone
o(l) Utilities
o(m) Insurance
o(n) Taxes (real estate, etc.)
o(o) Interest
o(p) Other expenses (specify
oeach)
o(q) Miscellaneous
o(unspecified)
o(r) Subtotal
o(s) Loan principal payment
o(t) Capital purchases
o(specify)
o(u) Other start-up costs
o(v) Reserve and/or escrow
o(specify)
o(w) Owner's withdrawal
6. Total cash paid out (5a
through 5w)
7. Cash position (end of
month) (4 minus 6)
oEssential operating data
o(non-cash flow information)
A. Sales volume (dollars)
B. Accounts receivable
(end on month)
C. Bad debt (end of
month)
D. Inventory on hand (end
of month)
E. Accounts payable (end
of month)
_________________________________________________________________
INSTRUCTIONS FOR MONTHLY CASH FLOW PROJECTION
o1. Cash on hand (beginning of month) -- Cash on hand same as (7),
oCash position, pervious month
o2. Cash receipts-
(a) Cash sales-All cash sales. Omit credit sales unless cash is actually received
(b) Gross wages (including withdrawals)-- Amount to be expected from all accounts.
(c) Loan or other cash injection-Indicate here all cash injections not shown in 2(a) or 2(b) above.
o3. Total cash receipts (2a+2b+2c=3)
o4. Total cash available (before cash out)(1+3)
o5. Cash paid out -
(a) Purchases (merchandise)--Merchandise for resale or for use in product (paid for in current month).
(b) Gross wages (including withdrawals)--Base pay plus overtime (if any)
(c) Payroll expenses (taxes, etc.)-- Include paid vacations, paid sick leave, health insurance, unemployment insurance, (this might be 10 to 45% of 5(b))
(d) Outside services-This could include outside labor and/or material for specialized or overflow work, including subcontracting
(e) Supplies (office and operating)--Items purchased for use in the business (not for resale)
(f) Repairs and maintenance-Include periodic large expenditures such as painting or decorating
(g) Advertising-This amount should be adequate to maintain sales volume
(h) Car, delivery and travel-If personal car is used, charge in this column, include parking
(i) Accounting and legal-Outside services, including, for example, bookkeeping
(j) Rent-Real estate only (See 5(p) for other rentals)
(k) Telephone
(l) Utilities-Water, heat, light and/or power
(m) Insurance-Coverage on business property and products (fire, liability); also worker's compensation, fidelity, etc. Exclude executive life (include in 5(w))
(n) Taxes (real estate, etc.)-- Plus inventory tax, sales tax, excise tax, if applicable
(o) Interest-Remember to add interest on loan as it is injected (See 2?above)
(p) Other expenses (specify each)
_______________________________________________
_______________________________________________
Unexpected expenditures may be included here as a safety
factor________________________________________
Equipment expenses during the month should be included
here (non-capital equipment)__________________________
When equipment is rented or leased, record payments here
o(q) Miscellaneous (unspecified)--Small expenditures for which separate accounts would be practical
o(r) Subtotal-This subtotal indicates cash out for operating costs
o(s) Loan principal payment-Include payment on all loans, including vehicle and equipment purchases on time payment
o(t) Capital purchases (specify)--Nonexpensed (depreciable) expenditures such as equipment, building purchases on time payment
o(u) Other start-up costs-Expenses incurred prior to first month projection and paid for after start-up
o(v) Reserve and/or escrow (specify)-- Example: insurance, tax or equipment escrow to reduce impact of large periodic payments
o(w) Owner's withdrawals-Should include payment for such things as owner's income tax, social security, health insurance, executive life insurance premiums, etc.
o6. Total cash paid out (5a through 5w)
o7. Cash position (end on month) (4 minus 6)-- Enter this amount in (1) Cash on hand following month-
Essential operating data (non-cash flow information)--This is basic information necessary for proper planning and for proper cash flow projection. Also with this data, the cash flow can be evolved and shown in the above form.
oA. Sales volume (dollars)--This is a very important figure and should be estimated carefully, taking into account size of facility and employee output as well as realistic anticipated sales (actual sales, not orders received).
oB. Accounts receivable (end of month)-- Previous unpaid credit sales plus current month's credit sales, less amounts received current month (deduct "C" below)
oC. Bad debt (end on month)-- Bad debts should be subtracted from (B) in the month anticipated
oD. Inventory on hand (end on month)-- Last month's inventory plus merchandise received and/or manufactured current month minus amount sold current month
oE. Accounts payable (end of month) Previous month's payable plus current month's payable minus amount paid during month.
oF. Depreciation-Established by your accountant, or value of all your equipment divided by useful life (in months) as allowed by Internal Revenue Service
THE BUSINESS PLAN - APPENDIX 3: INFORMATION RESOURCES
U.S. Small Business Administration (SBA)
The SBA offers an extensive selection of information on most business management topics, from how to start a business to exporting your products.
This information is listed in "Resource Directory for Small Business Management." For a free copy contact your nearest SBA office.
SBA has offices throughout the country. Consult the U.S.
Government section in your telephone directory for the office
nearest you. SBA offers a number of programs and services,
including training and educational programs, counseling services,
financial programs and contract assistance. Ask about
oService Corps of Retired Executives (SCORE), a national organization sponsored by SBA of over 13,000 volunteer business executives who provide free counseling, workshops and seminars to prospective and existing small business people.
oSmall Business Development Centers (SBDCs), sponsored by the SBA in partnership with state and local governments, the educational community and the private sector. They provide assistance, counseling and training to prospective and existing business people.
oBusiness Information Centers (BICs), offering state-of-the-art technology, informational resources and on-site counseling for start-up and expanding businesses to create business, marketing and other plans, do research, and receive expert training and assistance.
For more information about SBA business development programs and services, call the SBA Small Business Answer Desk at 1-800-U-ASK-SBA (827-5722).
Other U.S. Government Resources
Many publications on business management and other related topics are available from the Government Printing Office (GPO). GPO bookstores are located in 24 major cities and listed in the Yellow Pages under the "bookstore" heading. You can request a "Subject Bibliography" by writing to Government Printing Office, Superintendent of Documents, Washington, DC 20402-9328.
Many federal agencies offer publications of interest to small businesses. There is a nominal fee for some, but most are free. Below is a selected list of government agencies that provide publications and other services targeted to small businesses. To get their publications, contract the regional offices listed in the telephone directory or write to the addresses below:
oConsumer Information Center (CIC)
oP.O. Box 100
oPueblo, CO 81002
The CIC offers a consumer information catalog of federal publications.
oConsumer Product Safety Commission (CPSC)
oPublications Request
oWashington, DC 20207
oThe CPSC offers guidelines for product safety requirements.
oU.S. Department of Agriculture (USDA)
o12th Street and Independence Avenue, SW
oWashington, DC 20250
The USDA offers publications on selling to the USDA. Publications and programs on entrepreneurship are also available through county extension offices nationwide.
oU.S. Department of Commerce (DOC)
oOffice of Business Liaison
o14th Street and Constitution Avenue, NW
oRoom 5898C
oWashington, DC 20230
DOC's Business Assistance Center provides listings of business opportunities available in the federal government. This service also will refer businesses to different programs and services in the DOC and other federal agencies.
oU.S. Department of Health and Human Services (HHS) - Public
oHealth Service
oAlcohol, Drug Abuse and Mental Health
oAdministration
o5600 Fishers Lane
oRockville, MD 20857
Drug Free Workplace Helpline: 1-800-843-4971. Provides information on Employee Assistance Programs.
National Institute for Drug Abuse Hotline:
1-800-662-4357. Provides information on preventing substance abuse in the workplace.
The National Clearinghouse for Alcohol and Drug Information:
1-800-729-6686 toll-free. Provides pamphlets and resource materials on substance abuse.
oU.S. Department of Labor (DOL)
oEmployment Standards Administration
o200 Constitution Avenue, NW
oWashington, DC 20210
oThe DOL offers publications on compliance with labor laws.
oU.S. Department of Treasury
oInternal Revenue Service (IRS)
oP.O. Box 25866
oRichmond, VA 23260
o1-800-424-3676
oThe IRS offers information on tax requirements for small businesses.
oEnvironmental Protection Agency Office of Small Business Ombudsman
oU.S. Environmental Protection Agency (EPA)
oSmall Business Ombudsman (Mail Code 2131)
oRoom 3423
o401 M Street, S.W.
oWashington, D.C. 20460
o1-800-368-5888 except in DC and VA
o202-260-1211 in DC and VA
The EPA offers more than 100 publications designed to help small businesses understand how they can comply with EPA regulations.
U.S. Food and Drug Administration (FDA)
FDA Center for Food Safety and Applied Nutrition
o200 C Street, SW
oWashington, DC 20204
The FDA offers information on packaging and labeling requirements for food and food-related products.
For More Information
A librarian can help you locate the specific information you need
in reference books. Most libraries have a variety of directories,
indexes and encyclopedias that cover many business topics. They
also have other resources, such as
oTrade association information
oAsk the librarian to show you a directory of trade associations. Associations provide a valuable network of resources to their members through publications and services such as newsletters, conferences and seminars.
Books
oMany guidebooks, textbooks and manuals on small business are published annually. To find the names of books not in your local library check Books In Prints, a directory of books currently available from publishers.
Magazine and newspaper articles
oBusiness and professional magazines provide information that is more current than that found in books and textbooks. There are a number of indexes to help you find specific articles in periodicals.
In addition to books and magazines, many libraries offer free workshops, lend skill-building tapes and have catalogues and brochures describing continuing education opportunities.
