Wright County Missouri - Small Business Startup Kit

In this section, provide a detailed description of your business. An excellent question to ask yourself is: “What business am I in?” In answering this question include your products, market and services as well as a thorough description of what makes your business unique. Remember, however, that as you develop your business plan, you may have to modify or revise your initial questions.

The business description section is divided into three primary sections. Section 1 actually describes your business, Section 2 the product or service you will be offering and Section 3 the location of your business, and why this location is desirable (if you have a franchise, some franchisors assist in site selection).

1. Business Description

a. Legalities - business form: proprietorship, partnership, corporation. The licenses or permits you will need. Business type: merchandizing, manufacturing or service.

d. Why your business will be profitable. What are the growth opportunities? Will franchising impact on growth opportunities?

f. What you have learned about your kind of business from outside sources (trade suppliers, bankers, other franchise owners, franchisor, publications)?

A cover sheet goes before the description. It includes the name, address and telephone number of the business and the names of all principals. Describe the unique aspects and how or why they will appeal to consumers. Emphasize any special features that you feel will appeal to customers and explain how and why these features are appealing. The description of your business should clearly identify goals and objectives and it should clarify why you are, or why you want to be, in business.

2. Product/Service

Try to describe the benefits of your goods and services from your customers' perspective. This type of perspective can be helpful in building customer satisfaction and loyalty. And, is also a good strategy for beating the competition and remaining competitiveness.

c. Which products/services are in demand; if there will be a steady flow of cash.

3. The Location

The location of your business can play a decisive role in its success or failure. Your location should be built around your customers, it should be accessible and it should provide a sense of security. Consider these questions when addressing this section of your business plan:

d. Is it easily accessible? Is public transportation available? Is street lighting adequate?

Marketing plays a vital role in successful business ventures. The key element of a successful marketing plan is to know your customers -- their likes, dislikes, expectations. By identifying these factors, you can develop a marketing strategy that will allow you to arouse and fulfill their needs. Identify your customers by their age, sex, income/educational level and residence. At first, target only those customers who are more likely to purchase your product or service. Your marketing plan should be included in your business plan and contain answers to these questions:

f. How will you attract, hold, increase your market share? If a franchise, will the franchisor provide assistance in this area? Based on the franchisor's strategy? How will you promote your sales?

1. Competition

Competition is a way of life. Advances in technology can send the profit margins of a successful business into a tailspin causing them to plummet overnight or within a few hours. When considering these and other factors, we can conclude that business is a highly competitive, volatile arena. Because of this volatility and competitiveness, it is important to know your competitors. Questions like these can help you:

Start a file on each of your competitors. Keep manila envelopes of their advertising and promotional materials and their pricing strategy techniques. Review these files periodically, determining when and how often they advertise, sponsor promotions and offer sales. Doing this can help you to understand your competitors better and how they operate their businesses.

2. Pricing and Sales

Your pricing strategy is another marketing technique you can use to improve your overall competitiveness. Get a feel for the pricing strategy your competitors are using. That way you can determine if your prices are in line with competitors in your market area and if they are in line with industry averages. Some of the pricing strategies are:

• retail cost and pricing

• competitive position

• pricing below competition

• pricing above competition

• price lining

• multiple pricing

• service costs and pricing (for service

• businesses only)

• service components

• material costs

• labor costs

• overhead costs

3. Advertising and Public Relations

How you advertise and promote your goods and services may make or break your business. Devise a plan that uses advertising and networking as a means to promote your business. Develop short, descriptive copy (text material) that clearly identifies your goods or services, its location and price. Use catchy phrases to arouse the interest of your readers, listeners or viewers. In the case of a franchise, the franchisor will provide advertising and promotional materials as part of the franchise package; you may need approval to use any materials that you and your staff develop.

C. 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. Your management plan should answer questions such as:

a. How does your background/business experience help you in this business?

b. What are your weaknesses and how can you compensate for them?

c. Who will be on the management team?

d. What are their strengths/weaknesses?

e. What are their duties?

f. Are these duties clearly defined?

g. If a franchise, what type of assistance can you expect from the franchisor?

h. Will this assistance be ongoing?

i. What are your current personnel needs?

j. What are your plans for hiring and training personnel?

k. What salaries, benefits, vacations, holidays will you offer? If a franchise, are these issues covered in the management package the franchisor will provide?

l. What benefits, if any, can you afford at this point?

D. THE FINANCIAL MANAGEMENT PLAN

Sound financial management is one of the best ways for your business to remain profitable and solvent. 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). Your start-up budget will usually include such one-time-only costs as major equipment, utility deposits, down payments, etc. It should allow for these expenses:

• personnel (costs prior to opening)

• legal/professional fees

• occupancy

• licenses/permits

• equipment

• insurance

• supplies

• advertising/promotions

• salaries/wages

• accounting

• income

• utilities

• payroll expenses

• personnel

• insurance

• rent

• depreciation

• loan payments

• advertising/promotions

• legal/accounting

• miscellaneous expenses

• supplies

• payroll expenses

• salaries/wages

• utilities

• dues/subscriptions/fees

• taxes

• repairs/maintenance

The financial section 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. This is also where you address which accounting system and the inventory control system that you will be using. 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. The following questions should help you determine your financial management plan:

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.

This publication is intended to serve as a reference document and in no way attempts to provide all of the information necessary to start a business. It is published with the understanding that the publisher is not engaged in rendering legal, accounting or other professional services. The advice of an attorney and/ or accountant should be sought before entering into any business activity or contract.

• State the general and specific nature of the business, (i.e., restaurant). State the type of business (manufacturing, service, construction, wholesale, retail, other).

• Describe your product and/or services. Briefly state who buys the product/service and who the final users are.

• Describe how the product/service is sold to customers (walk-in stores, sales, representatives, mail order catalogs, telephone orders, etc.).

• Describe how and where buyers get the product/service (walk-in stores, mail delivery, etc.).

• If new, say so. If existing, discuss age of business, prior owners, how acquired and length of time operated by you, image or reputation; number of employees, last year’s sales volume and profit and any significant events that have affected the company’s development.

• State whether rented, leased or owned. If rented or leased, state from whom and under what conditions. List size (square footage) of all buildings.

• Is the location a good one that is convenient to customers? State business hours.

• For the present and future, state number of employees, type of labor (skilled and unskilled, etc.), sources of labor (especially minorities, handicapped veterans or other socially or economically disadvantaged grouped), timing of hiring.

• List your suppliers: name, address, type and percent of supplies furnished and length of time you have been buying from each, reliability and frequency of purchase.

• How easy or difficult is it to get necessary supplies? If it is difficult, how will you deal with potential or actual shortages?

• Are the prices of your supplies steady or fluctuating? If fluctuating, how do you deal with changing costs?

• List the equipment used by the business and comment on its condition. If the equipment has been appraised, include values and state who did the appraisal.

• State form of business (sole proprietorship, partnership, LLC, corporation) and status (already formed or in process of formation).

• State licensing requirements (type and licensing sources) and status (not yet applied, applied and pending, obtained).

• Trademarks, patents, licenses and copyrights should be checked for legality.

• What are your plans for the future (maintain, expand, diversify, sell, etc.)?

• Who are your customers (wholesalers, retailers, consumers, government, etc.).

• How long will this market need your product/service? If your product/service a fad or continuing need; being phased out or created by new technology?

• List the characteristics of your average customers: age, location (market area), average income/sales, sex, life style (i.e. family or single, working)

• Estimate how much the total market will spend on this or similar products/services in the next year.

• Discuss any environmental factors (economic, legal, social or technological) which affect your market or product/service. Environmental factors are those which have significant effects on your operation, but over which you have no control (i.e., county growth, rising energy costs, prices, etc.).

• Discuss the number of competitors (director or indirect), type of company they are (i.e., product or service), location, age, reputation, size (sales or customers), market share.

• List major competitors (names and addresses). Discuss their product/service, its quality, features, age of business, price, location/distribution, reputation/image, market share, size, and marketing strategy.

• Discuss how your product/service meets market needs and how you can compare with the competition in terms of product/service features, location, distribution, price, other.

• Compare your estimates of the market’s demand and the competition’s supply.

• The relationship of supply and demand will affect your marketing and sales strategy. High demand with low supply usually means less competition and less advertising. Low demand and high supply indicates a very competitive situation and a need for extensive marketing.

• Give your projections in terms of either the number of customers, items sold, or contracts obtained, etc.

• Present your marketing strategy, or how you will get the edge on your competition and get customers. This is your action plan to get business.

• Your product/service will sell because one or more of the following is attractive: advertising, pricing (high, medium, low), distribution system (limited, widespread, etc.) and promotion.

• Describe how you plan to promote your product/service: advertising, direct mail, personal contacts, sponsoring events or other word of mouth, trade associations, etc.).

• If you plan to advertise what media you will use: radio, television, newspaper, magazines, telephone book yellow pages, Internet, and/or other (billboard, etc.). State why you consider the media you have chosen to be the most effective.

• State the content of your promotion or advertising: what your product/service is, why it is attractive, business location, business hours, business phone number, web site, and other.

• For key management personnel (e.g., the owners), include the following: resumes, personal financial statements and tax returns for the last three years.

• Describe prior experience that qualifies management to run this type of business. State why you can run this business. State how much time management will devote to running this business. Discuss local contacts who may assist you in your business.

• State where the money to pay for the project will come from (sources) and show in detail how it will be used (uses).

• If business is an existing one, include business tax returns and financial statements for the last three years. Financial statements should include:

• For both existing and new businesses, project the following financial statements for the next three years (monthly for the 1st year, quarterly for 2nd and 3rd years).

First 30 Days

· Obtain report to determine liability status (unemployment tax) with the state

· Have each employee complete an I-9 form (Employment Eligibility Verification)

1. Business Description

2. Product/Service

3. The Location

1. Competition

2. Pricing and Sales

3. Advertising and Public Relations

First 30 Days

First 60 Days

By End Of The Year