McGraw-Hill/Irwin 5-1 © 2006 The McGraw-Hill Companies, Inc All rights rese Chapter Planning, Organizing, and Managing a Small Business Importance Of Planning Strategic, Operational, & Financial Planning Need & Purpose Of A Business Plan 5-2 Planning The Process Of Setting Objectives And Determining Actions To Achieve Those Objectives McGraw-Hill/Irwin 5-3 © 2006 The McGraw-Hill Companies, Inc All rights rese Criteria For Planning Be Prepared Be Patient Know When To Get Help Form Support System Know Power Of Vertical Integration Never Rest On Laurels Keith Brofsky/Getty Images McGraw-Hill/Irwin 5-4 © 2006 The McGraw-Hill Companies, Inc All rights rese Planning & Other Managerial Functions McGraw-Hill/Irwin 5-5 © 2006 The McGraw-Hill Companies, Inc All rights rese Planning Provides Internally: 1) Course Of Action 2) Bases For Change 3) Means To Delegate McGraw-Hill/Irwin Javier Pierini/Getty Images 5-6 © 2006 The McGraw-Hill Companies, Inc All rights rese Planning Provides Externally: 1) Interest From Investors/Lenders 2) Guide Owner/Managers In Operations 3) Give Direction/Motivation To Employees 4) Attracts Customers & Prospective Employees Ryan McVay/Getty Images McGraw-Hill/Irwin 5-7 © 2006 The McGraw-Hill Companies, Inc All rights rese Reasons To Neglect Planning Day-To-Day Activities Get In Way Fear Of What It Might Reveal Lack Of Planning Knowledge Feeling Future Cannot Be Planned For Requires: Original Thinking Time To Difficult McGraw-Hill/Irwin Jason Reed/Getty Images 5-8 © 2006 The McGraw-Hill Companies, Inc All rights rese Types Of Planning Strategic- Before Starting Business Business Plan to Attract: Investors Financiers Prospective Employees Jim Arbogast/Getty Images Operational- Continuous Before & After Business Starts McGraw-Hill/Irwin 5-9 © 2006 The McGraw-Hill Companies, Inc All rights rese Strategic Planning Comprehensive LongTerm Direction To Help Business Accomplish Its Mission McGraw-Hill/Irwin 5-10 © 2006 The McGraw-Hill Companies, Inc All rights rese Mission/Strategy John Smith, General Agent McGraw-Hill/Irwin 5-18 © 2006 The McGraw-Hill Companies, Inc All rights rese Operational Planning Sets Policies, Procedures, And Standards For Achieving Objectives McGraw-Hill/Irwin 5-19 © 2006 The McGraw-Hill Companies, Inc All rights rese Parts Of Operational Plan Polices: Guides For Consistent Action Methods & Procedures: Manner Of Operating Budgets & Standards: Measures Of Control For Activities McGraw-Hill/Irwin Jules Frazier/Getty Images 5-20 © 2006 The McGraw-Hill Companies, Inc All rights rese Areas Of Operational Planning • Choosing Location • Planning Facilities • Developing Sources Of Supply • Planning HR Needs McGraw-Hill/Irwin • Setting Up Legal Structure • Determining Approach To Market • Establishing Record System • Setting Up Schedule 5-21 © 2006 The McGraw-Hill Companies, Inc All rights rese Financial Planning $Estimating Income/Expense $Estimating Initial Investment $Locating Sources Of Funds McGraw-Hill/Irwin Royalty-Free/CORBIS 5-22 © 2006 The McGraw-Hill Companies, Inc All rights rese Income And Expenses Net Profit Expenses Variable Fixed McGraw-Hill/Irwin 5-23 © 2006 The McGraw-Hill Companies, Inc All rights rese Estimating Annual Income/Expense/Net Profit McGraw-Hill/Irwin 5-24 © 2006 The McGraw-Hill Companies, Inc All rights rese Sources Of Funds Your Own Funds FEDERAL RE SERVE N OTE TH E UUN N ITED ATE S OF THE ITEDST STATES O F AMER AMERICA IC A TH IS N O TE IS L E G A L TE N D E R FO R A L L D E B TS , P UB L IC AN D P RIV A TE L70 744 629F 12 W A SHI NGT ON, D C 12 A H 93 L 7074 4629 F 12 SE R IES 12 198 ON O NEE D DOL OLLLAR AR Funds From Others FEDERAL RE SERVE N OTE TH E UUN N ITED ATE S OF THE ITEDST STATES O F AMER AMERICA IC A TH IS N O TE IS L E G A L TE N D E R FO R A L L D E B TS , P UB L IC AN D P RIV A TE 12 L70 744 629F W A SHI NGT ON, D C 12 A H 93 L 7074 4629 F 12 SE R IES 12 198 ON O NEE D DOL OLLLAR AR FED ERA L RE SE RV E NO TE THE ED STATE S OF THE UNIT UNITED STAT ES OF AMERICA AMERICA TH IS N O TE IS L EG AL TE ND E R FO R AL L D EBT S, PU BL IC AN D P RIV ATE L70744629F 12 W A SH IN GT ON , D C 12 A H 293 L70744629F 12 SE RIE S 12 19 85 ON E DOLLAR ONE D OLLA R FED ERA L RE SE RV E NO TE THE ED STATE S OF THE UNIT UNITED STAT ES OF AMERICA AMERICA TH IS N O TE IS L EG AL TE ND E R FO R AL L D EBT S, PU BL IC AN D P RIV ATE L70744629F 12 W A SH IN GT ON , D C 12 A H 293 L70744629F 12 SE RIE S 19 85 ON E DOLLAR ONE D OLLA R McGraw-Hill/Irwin 12 Equity Investors Lenders 5-25 © 2006 The McGraw-Hill Companies, Inc All rights rese Purposes Of Business Plan Keeps On Target Keeps Creativity Focused Concentrates Power Patagonik Works/Getty Images On Goal McGraw-Hill/Irwin 5-26 © 2006 The McGraw-Hill Companies, Inc All rights rese Plan Should Include A Proposed Product B Expected Market C Industry Strengths & Weaknesses D Marketing Policies E Operations/Production Methods F Financial Aspects CS qua red Stu dios /G McGraw-Hill/Irwin ett y Ima ges 5-27 © 2006 The McGraw-Hill Companies, Inc All rights rese Preparing Business Plan Business Current Status Where Would Business Like To Be- Objective What Will It Take To Get Business To Objective- Strategy Owner Should Prepare Monica Lau/Getty Images Create Action Steps McGraw-Hill/Irwin 5-28 © 2006 The McGraw-Hill Companies, Inc All rights rese Components Of Business Plan I Cover Sheet II Executive III IV V VI McGraw-Hill/Irwin Summary Table Of Contents History Description Of Business Definition Of Market VII Description Of Products & Services VIII Management Structure IX Objectives & Goals X Financial Data XI Appendixes 5-29 © 2006 The McGraw-Hill Companies, Inc All rights rese Outline Of Executive Summary McGraw-Hill/Irwin 5-30 © 2006 The McGraw-Hill Companies, Inc All rights rese Writing The Plan Be Honest Use The Third Person Use Transitional Words Avoid Redundancies Use Short, Simple Words Use Visuals McGraw-Hill/Irwin 5-31 © 2006 The McGraw-Hill Companies, Inc All rights rese Preparation For Presentation Adequacy Of Research & Development Validity Of Research Understanding Of Business Financial Projections Priority Of Objectives Ability To “Make It Happen” McGraw-Hill/Irwin 5-32 © 2006 The McGraw-Hill Companies, Inc All rights rese ... Companies, Inc All rights rese Preparing Business Plan Business Current Status Where Would Business Like To Be- Objective What Will It Take To Get Business To Objective- Strategy Owner Should... Strategic- Before Starting Business Business Plan to Attract: Investors Financiers Prospective Employees Jim Arbogast/Getty Images Operational- Continuous Before & After Business Starts McGraw-Hill/Irwin...Chapter Planning, Organizing, and Managing a Small Business Importance Of Planning Strategic, Operational, & Financial Planning Need & Purpose Of A Business Plan 5-2 Planning The Process Of Setting