Welcome to Business Plans 101!

1. Welcome to Business Plans 101! Virginia Gay Young University of New Orleans Program Coordinator- ExcEl Jennifer Arceneaux University of New Orleans Program Coordinator- ExcEl WHO DAT!

2. Details, Details, Details

3. Title Page Business Name Business Plan Owner’s Name Address Address Phone (---) --- - --- Cell (---) --- - --- E-Mail xyz@xyz.net Date Month DD, YYYY

4. Table of Contents Executive Summary Mission Statement N The Business Environment N The Status of the Local and National Economy N The Status of the Industry N Marketing Plan N Product or Service N Customers N Competitors N Direct N Indirect N Competitive Advantage N Pricing N Promotion N Personal Selling N Advertising N Sales Promotion N Publicity N Word-of-mouth N Networking N Operations N Legal Issues N Location N Logistics N Suppliers N Insurance N Management N Owner Qualifications N Employee Qualifications N Professional Advisors (Attorney, CPA, Banker) N Appendices A. Summary of Acquisitions N B. Financial Statements Cash Flow Profit and Loss Balance Sheet

5. Executive Summary • The executive summary is a brief summary of the business plan in its entirety. • It should be no more than 2 pages and single spaced. • It should follow the outline of the business plan and written only after the rest of the business plan has been written.

6. Mission Statement • The mission statement is a very simple and brief description of what you have created your firm to do. • Imagine someone on the street asked you to describe what it is your business does and you have only one or two well-worded sentences to answer them

7. The Business Environment • In this section, you must describe the overall health of the industry in the geographic region of your business. • This description should include information about the state of the economy and the customer group you plan to service. • Specific information regarding local and economic measures and industry status are included in the business environment.

8. Local and National Economic Measures • Population (current, increasing or decreasing in the past and future) • Household income (current, increasing, or decreasing) • Per capita income (current, increasing, or decreasing) • Employment • Number of businesses • Business start-ups (or start-up rate) • Housing growth

9. Industry Status • Number of firms • Number employed in the industry • Average number of employees per firm • Total sales for industry • Average sales per firm • Geographic dispersion of firms in industry • Anticipated demand trend (e.g., growth in number of firms, sales employment)

10. Marketing Plan • The marketing plan consists of several different parts focused around the product, the customers, and how you plan to attract customers to your product. • The parts included in the marketing plan are the following: product or service, customers, competitors, competitive advantage, pricing, and promotion.

11. Marketing Plan Continued- Product or Service • Provide a brief, but complete description of your product or service. • The description should be clear and detailed enough for any reader to envision. • Unless you are dealing with a truly unusual product or service, a paragraph should be sufficient.

12. Marketing Plan Continued- Customers • Describe fully the people to whom you plan to sell your product or service. Use accurate demographics such as age, income, education, and geographic location. • Other ways to describe your customers might be: “people who are moving,” “people who are getting married,” “people who must use a wheelchair.” • Accuracy is critical because this description will help you to estimate how many customers you have, how much money you can charge, how you are going to get the product or service to them, and how you are going to tell them about your product or service.

13. Marketing Plan Continued- Competitors • In this section, you must develop a list of either specific competitors (contact names, phone numbers and locations of businesses) or groups of firms which will be competing for your customers. • Competitors should be separated into Direct and Indirect. • Direct competitors are those selling essentially the same product or service that you intend to provide. For example, if your service is swamp tours, you would list all others who are providing swamp tours. • Indirect competitors are those who are trying to attract customers away from your type of business (swamp tours) to a different type of business (fishing trips, water parks).

14. Marketing Plan Continued- Competitive Advantage • Describe in one or two sentences why people are going to use your product or service instead of that of your competitors.

15. Marketing Plan Continued- Pricing • In this section you must describe the different versions of your product or service and the prices you will charge for each. • You also may be planning to sell to different groups of customers for which you might charge different prices. For example, if you were providing landscaping services you might sell to homeowners and corporations, you might have two different pricing schedules. • Accuracy in pricing is critical because it is the foundation of your revenue estimates, and ultimately your profitability calculations.

16. Marketing Plan Continued- Promotion • Promotion consists of all the ways you inform, persuade, and remind current and potential customers about your company, product or service. • Methods of promotion include the following: personal selling, advertising, sales promotion, publicity, word-of mouth, and networking.

17. Promotion Continued Personal Selling • Includes calling customers at their place of business, serving them at the counter and on the telephone. Networking and word-of-mouth programs are included in this category. • 1. Develop a list of potential customers. • 2. Call and make contact. • 3. Send letter or brochure. • 4. Make telephone call and schedule personal visit. • 5. Make visit and bring samples. • 6. Follow-up with thank you phone call.

18. Promotion Continued Advertising • Is a non-personal form of communication. • Advertising media include, but are not limited to, print (newspapers, fliers, Yellow Pages), broadcast (radio, television), direct mail, signage, and Internet websites.

19. Promotion Continued Sales promotion • Consists of tours, contests, cooperative advertising, point-of-purchase advertising, specialties (e.g., calendars, T-shirts, mugs), and sales incentives.

20. Promotion Continued Publicity • Consists of free coverage in the news media, work in trade association activities, community involvement and charitable sponsorships. • For example, you might get a local newspaper or TV station to feature your business. You might volunteer your product or service for some special event such as the Chamber of Commerce or Special Olympics.

21. Promotion Continued Word of Mouth • Promotionoccurs when you get a new customer and that customer has heard about your product or service from someone else. A successful word-of-mouth program consists of several elements: • offering an outstanding product or service; • handling complaints promptly; • developing champions who will tell others about your business; and • a system for rewarding champions.

22. Promotion Continued Networking • Is the process of developing business relationships with other individuals or organizations for mutual benefit. • Develop a list of beneficial organizations (such as the local Chamber of Commerce or an industry-based association), join them and become an active participant in them.

23. Promotion Continued Promotional Cost Summary • Type Cost • Personal Selling $NN.NN • Advertising $NN.NN • Sales Promotion $NN.NN • Networking $NN.NN • Word-of-Mouth $NN.NN • Total $NN.NN

24. Operations • The Operations section describes some of the details of how you will actually conduct your business on a daily basis. • The critical aspects are legal issues, location, logistics, suppliers, and insurance.

25. Operations Continued Legal Issues • There are a number of legal issues which need to be considered when planning a new venture. • Select the appropriate form of organization and complete documents. • Review leases and contracts for buildings, vehicles, etc. • Review franchise agreements • Advise on intellectual rights and contracts • To advise on or register patents and trademarks • To advise on the use of a company name • To advise on or prepare an employment contract • To advise on or review any/all contracts

26. Operations Continued Location • The actual location of your business should be provided here. • This section should also explain why this location is a particularly good one. • Is it close to your customers? Is it close to transportation like highways or the airport? Is it close to suppliers?

27. Operations Continued Logistics • Logistics refers to how you plan to move materials and products in and out of your business. • How will you get the product to your customers? Explain your choice of distribution of your product or service. • Will you have your own delivery service? If you are in the pet grooming business, will you provide house service? Or will the customers have to come to you?

28. Operations Continued Suppliers • Whether you are providing a product or service, you will probably need materials to operate successfully. • Who are your suppliers? Where are they located relative to your business?

29. Operations Continued Insurance • Another important legal issue is insurance. There are a variety of possible insurance needs: product liability, property insurance and workmen’s compensation. Again, the need for these and other types of insurance should be determined after discussing your business with a qualified specialist.

30. Management • Your qualifications are the most important part of this section. • You should include any experience or skills you have that demonstrate that you will be successful operating your business. • Any special training or education you have received would be important. • Positions you have held in other companies that are relevant to your business should also be included.

31. Management Continued-Employees • If you anticipate hiring any employees whose skills or qualifications are critical to the success of your business, you should include a list of those employees and a description of their qualifications. • If you hire others to work for you, an organizational chart should be included to show the relationship between you and those individuals.

32. BAIL • Acronym for the members of your professional team: • Banker • Accountant • Insurance • Lawyer • You should list the names and locations of these individuals.

33. Appendices Appendices may include many things such as: • Detailed list of pricing • Competitors • Financial Statements • Acquisitions for the Businesses • Income Statement

34. Summary of Acquisitions • Lists the particular items that will be purchased for the operation of your business. Information specific to each acquisition may be the following: • Item description • Category (i.e. equipment, inventory) • Vendor Name • Manufacturer’s Number • Number of Items • Price of each item

35. Financial Statements Perhaps the most critical part of the business plan is the demonstration of the financial success of your business. To demonstrate your financial success, you should include three different financial statements: cash flow statement, profit and loss, and balance sheet

36. Financial Statements Continued Cash Flow Statement • This is essentially a list of all the sources of actual money coming into the business and the outflows of cash on a monthly and annual basis. • Sources would be cash from sales, cash from the sale of assets like , funds from loans, and money from your personal bank accounts. • Outflows would include paying for supplies, services (utilities), loans or the purchase of assets. • Note: This statement should be prepared using Microsoft Excel.

37. Financial Statements Continued Profit and Loss: • This statement essentially provides a financial description of all the activity which occurs during a year and should include an exhaustive list of all revenues collected and all expenses incurred. • The P&L statement is usually prepared on a monthly basis for the first year of operation, and annually for the second and third years of operation. • Sources of revenues should be rather obvious, but you will need accurate estimates of the volume of sales and accurate pricing information (Revenue=price X volume). • Expenses can be identified by referring to examples in the textbook or by carefully thinking through the regular operation of your business. • Note: This statement should be prepared using Microsoft Excel.

38. Financial Statements Continued Balance Sheet: • While the P&L statement is a description of action, the balance sheet is more like a photograph showing what your company looks like at the beginning and end of the year. • It contains a listing of three major categories of financial information: assets, liabilities and equity. • These three types of information are related in the following manner: Assets = Liabilities and Equity. • Assets include such things as cash, inventory, equipment, land and buildings. • Liabilities include various kinds of IOU’s: loans to banks and accounts payable to suppliers. • Equity is your personal interest in the business. • Note: This statement can be prepared using Word.

39. Financial Statements Continued Revenue Statement • Detailed list of estimated revenue from capital acquisitions through loans, sales, and gifts

40. Terms to Familiarize Yourself With: • Demographics • MSA (Metropolitan Statistical Area)/CBSA (Core Based Statistical Area) • PCPI (Per Capita Personal Income) • Median Household Income • NAICS (North American Industry Classification System)

41. Business Environment Resources • American Fact Finder (factfinder.census.gov)- source for population, housing, economic, and geographic data from census information. • U.S. Bureau of Labor Statistics (bls.gov) • Chambers of Commerce • SCORE (Service Core of Retired Executives) (scoredelaware.org) • Local Economic Development Offices • Small Business Development Centers • U.S. Bureau of Economic Analysis (Bea.gov)- Source of US economic statistics including national income and product accounts (NIPAs), gross domestic product (GDP) • BEA’s Regional Fact Sheets (BEARFACTS)- Fact sheet about an area's personal income and gross domestic product.

42. BEARFACTS example Nashville-Davidson-Murfreesboro-Franklin • In 2009 Nashville-Davidson-Murfreesboro-Franklin had a per capita personal income (PCPI) of $38,656. • This PCPI ranked 98th in the United States and was 98 percent of the national average, $39,635. • The 2009 PCPI reflected a decrease of 4.0 percent from 2008. • The 2008-2009 national change was -2.6 percent. • In 1999 the PCPI of Nashville-Davidson-Murfreesboro-Franklin was $29,667 and ranked 57th in the United States. • The 1999-2009 average annual growth rate of PCPI was 2.7 percent. The average annual growth rate for the nation was 3.4 percent.

43. New Orleans Economic Measures • • Infrastructure Projects: • o New six-lane twin span over Lake Ponchartrain: $806 million. • o Widening of the Huey P. Long Bridge: $660 million. • o Army Corps of Engineers levee improvements: $4 billion over four years. • o Inner Harbor Navigational Canal surge-reduction project: $695 million. • o Local road repair projects: $360 million over 5 years. • o State & federal road projects: $545.9 million • Veterans Highway: $81 million • Airport Road to I10/I12/I59: $35 million • Caminada Bay Bridge: $35 million • I12 at Causeway: $31.5 million • Caminada headland barrier: $30 million • Lake Ponchartrain hurricane protection: $50 million • West Bank hurricane protection: $50 million. • o Recovery School District: $685 million capital program to rebuild/repair 28 schools • (presently funded portion part of $1.7 billion program). • o St. Tammany capital improvements program: $167 million. • New commercial: • o Trump Tower – 450-room hotel plus condos: $200 million. • o One River Place - 250-room apartment tower: $65 million. • o Remake of World Trade Center: $160 million (developer backed out in August). • o Dominion Group’s Crescent Club and Reserve: $100 million. • o CP3 Associates – hotel/condos at Canal Place: $210 million (Go-Zone period has expired) • o World War II Museum expansion: $300 million • o $25 million renovation of Antoine’s Restaurant

44. New Orleans Economic Measures Continued The New Orleans economy has been stable in the last year, with losses of manufacturing and employment agency jobs balanced by gains in private health and education and government. The latest data on wages show the average weekly wage growing 5% over the year. With stable employment and earnings, the money flowing through the metro retail establishments has declined about 4% this year. Job gains over the last year were 1,100. Due to national recessionary pressures, a loss in local employment growth of 2,200 is expected in the first year of the forecast. As the nation starts to pull out of the recession in 2010, the job trend is expected to reverse with an addition of 5,500 jobs in the second year of the forecast. 1,100 jobs were added to the New Orleans metropolitan area and new population figures by the U. S. Census put the total New Orleans metropolitan population at 1.13 million as of July.

45. East Baton Rouge Economic Measures East Baton Rouge Parish has the largest percentage of residents (33.3%), who hold at least a bachelor’s degree in the entire state of Louisiana. Also, 82.2% of pupils achieved a high school diploma, another state high. The median income per household in EBR parish was $37,224 and the median income for a family was $47,480. Some 17.9% of the population and 13.2% of families were below the poverty line. Total employment in EBR in 2010 was 254,777, and experienced only a 6.5% unemployment rate compared to the U.S. average of 9.6%. Employment statistics show that health care, and social assistance ranked first with 38,245 employees. Retail trade (27,519) followed at second, then construction (26,727) and educational services (24,820). Numerous large companies which employ over 1,000 people are located in East Baton Rouge Parish. These include Dow Chemical Company, Entergy/Gulf States Utilities, Exxon Chemical Company, Turner Industries, Georgia Gulf Corporation, BASF Wyandotte Corporation, Baton Rouge General Medical Center, Exxon Chemical Americas, Harmony Corporation, and many others. Tourism is an important part of the East Baton Rouge economy. It is the home of the state capital along with a concentration of museums, public attractions, and cultural sites. Louisiana State University and Southern University attract large crowds due to their sporting events and other activities. Historical sites date back to the pre-colonial time Indians, including Indian mounds, colonial homes, plantation homes, and civil war sites. The urban traveler can enjoy riverfront casinos, golf courses, the Baton Rouge Zoo, and swamp tours.

46. EASI Demographics • Demographic Estimates & Forecasts • Demographic Software and Mapping • Custom Data Development • Location Analysis • Trend Analysis • Market Analysis • Sales Potential Analysis

47. Nashville-Davidson-Murfreesboro-FranklinExpenditure Report on Entertainment

48. Nashville-Davidson-Murfreesboro-FranklinExpenditure report on Food Away from Home

49. Industry Status Example: Game Console Repair The computer and video game companies in the U.S. directly and indirectly employ more than 80,000 people. The direct employment for the industry has grown at an annual rate of 4.4 percent per year. The average salary for direct employees is $92,300, resulting in total national compensation of $2.2 billion. From 2005 to 2009, the industry's real annual growth rate was more than seven times the real annual growth rate for the entire economy. In 2007, the computer and video game industry sold 267 million units, leading to $9.5 billion in revenue. This number increased in 2009 when the industry sold 273 million units in 2009 leading to 10.5 billion dollars in annual revenue. California, Texas, Washington, New York and Massachusetts currently have the highest number of video game jobs. Collectively, these areas directly employ 22,279 workers and post nearly 71 percent of the industry's total direct employment. It is anticipated that 190 million households will use a video game console in 2012. One of the main gaming consoles, Xbox360 (33% of all types of game consoles sold), has had a reported failure rate of 23.7% by SquareTrade; and estimates have reached as high as 54.2% by a Game Informer survey. Two additional popular gaming consoles, the PS3 and the Wii, have had failures of 10% and 2.7% respectively. The combination of an increase in units sold and the amount of unit failures will increase the necessity of game console repair. The average age of the most frequent game purchaser is 40 years old. Forty percent of consumers are women. In fact, women over the age of 18 represent a significantly greater portion of the game playing population than men aged 17 or younger (33% versus 18 percent). 75% of connected-console households, more than 110 million, will use console-based video services at least a couple times each week.

50. Industry Status Example: Restaurant Business In 2000, the U.S. restaurant industry included about 480,000 full service restaurants with combined annual revenue of about $375 billion dollars. The predictions for restaurant industry sales in 2011 are unfolding to be true, reaching a record high of 960,000 full service locations and annual revenue of $604.2 billion dollars. The national restaurant industry ranks number 18 over 190 other industries in revenue. The southwest central section of the U.S., consisting of Louisiana, Texas, Arkansas, and Oklahoma, ranked 2nd in restaurant profitability, out of the 9 total areas. It employs over 13 million people and is the second largest private sector employer in the United States. One out of every ten people in the U.S. work in the restaurant industry. The restaurant industry is a driving force in Louisiana’s economy. The sales create remarkable tax revenues and provide jobs and careers for over 182,000 residents. In 2010, the Louisiana restaurant industry had annual revenue of $4.6 billion dollars.