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Section 1: The Business Profile
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Description of my Business
I plan to market a complete line of bathroom accessories including
squeegees, soap dishes, toothbrush holders, coat hooks, and towel
bars. The product line will be designed in my home office
and manufactured and packaged in China.
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Targeted Market and Customers
My customers will be discount department store chains with good
credit ratings and reputations for prompt-payment. These will
include Albertson¡¯s, Costco, Fleming, Wal-Mart, K-Mart, Target,
and selected others.
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Growth Trends in this Business
This information will need to be targeted to your own intended
product. Can you document from trade sources the anticipated
rate of growth of your industry? If industry sources
are not available, you will need to give a logical explanation as
to the trend and potential of your intended market. This segment
will provide you and your backers with information as to whether
the market for your product is growing or shrinking.
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Pricing Power
I will not initially enjoy pricing power in marketing Widget accessories.
Discount chains will be primarily interested in price. In
order to achieve lower costs than my larger competitors I plan to
do the following: _______________________.
My ultimate goal is to build a line so unique and promote it so
effectively that consumers will be willing to pay a premium.
My long term objective is to build a market that is not entirely
based on price. My unique features will include: ________.
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Section 2: The Vision and the People
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I have had a long-term plan to be in business for myself and to
utilize the specialized business knowledge I have gained.
The business relationships I have developed include vendors, discount
chain buyers and manufacturing resources. They are:
______,
_______,_______. (List and explain in detail how they will
help you).
The reasons that I feel my plans are realistic are: __________.
I am the right person to pursue this opportunity because: __________.
There are special market conditions that are favorable
to my getting started at this time.
They are: ___________.
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The People
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Work Experience Related to my
intended Business
My work experience has been as follows:
1995 ¨C 1998: Position__________ at ________Co.
Describe your work
responsibilities in detail: ______________________________________
1998 ¨C 2000 Product Manager at
ABC Imports Co. Describe your work
responsibilities in detail: ______________________________________
I have included a list of work references and
character references as Exhibit A
I have personal contacts in Hong Kong and Singapore who are ready
to assist in the design, production, packaging of the WIDGET line.
Two large discount chains have encouraged me to make presentations
to them.
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Personal Background and Education
Credentials
EDUCATION CREDENTIALS:
My education includes: _________Grade school, graduation from
__________high school (class of ____).
My higher education includes a _____degree earned in ______ at__________
university, _______ year.
In ________school I participated in the following activities
(student council, student body officer, sorority/fraternity, clubs,
etc.) I have also taken the following courses and seminars:
My Own Business Internet Course, ________________, _______________.
My hobbies are: _________________________________________________
My ongoing education includes subscriptions to the following professional
journals: Wall Street Journal, Plastics World, etc.
I belong to the following professional and service organizations:
National Association of Importers, Rotary Club, etc.
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Section 3: Communications
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Computer and Communications
Tools
I plan to take advantage of all the computer and communications
tools presently available to establish myself on the same
level playing field as my large competitors. Following are
the tentative specifications and budget for this equipment.
Resource Requirements:
Communications
Enter a description of all communications equipment.
Enter a budget for all communications equipment.
Telephones
Enter a description of all telephone equipment.
Enter a budget for all telephone equipment.
Pagers
Enter a description of pagers.
Enter a budget for all pagers.
Facsimile
Enter a description of all fax equipment.
Enter a budget for all fax equipment.
Computers
Enter a description of all computer equipment.
Enter a budget for all computer equipment.
Internet
Enter a description of necessary Internet providers.
Enter a budget for Internet access.
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Section 4: Organization and Insurance
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Business Organization
I plan to form a corporation for my business. It is my intention
to grow Widget into a large firm with international relationships.
The initial and ongoing costs of operating as a corporation will
be a necessary business expense. Also, since a properly run
corporation will afford me some limits of liability, I feel this
is the right form of business for me. I intend to depend on
my attorney to handle all aspects of setting up the corporation
and maintaining proper corporate records.
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Professional Consultants
I feel it is important that my team of professional
advisors be in place before I start in business. Here is a list
of these professionals:
Attorney: Suzie Catchum
Accountant: Norman Numbers
Insurance Agent: Paul Premium
Banker: Douglas Deeppockets
E-Commerce Consultant: Mary Smith
Other: _________________
Other: _________________
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Licenses
My Widget Corporation will require the following licenses.
I will need to research the requirements for my own location and
circumstances:
1. City Hall: This could include the business license
department, planning department, building department, health department,
etc.
2. Norman Numbers, my accountant will give me advice on federal,
state and local reporting and licensing requirements.
3. My lawyer, Suzie Catchum, will provide me with a checklist.
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Insurance
I plan to use the services of Paul Premium, my insurance agent.
My insurance policies and limits of coverage are as follows:
Mr. Premium will provide me with a tabulation
of all insurance policies and limits of liability.
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Section 5: Premises
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Location Criteria
During my start-up phase of approximately 6-12 months, I plan to
operate out of my home office. Once my business is established,
my initial office requirement will be approximately 1,000 square
feet with two private offices and a secretarial area. My office
criteria will include:
1. Convenience to my home.
2. A short-term lease of 1 - 2 years with two 1 year options.
3. A lease provision that the landlord provide me expansion
space as required with a
kickout
clause if expansion space is not available.
4. Office layout including tenant improvements provided by
the landlord. See Exhibit
"C".
5. Lawyer review of the lease.
6. Use of the Lease Check-off list which is attached as an
exhibit.
The use of this location criteria will gain me experience in handling
much larger leases for space in the relatively near future.
Future growth plans include warehousing of merchandise. I
will be incurring large lease obligations which will be carefully
reviewed. Location studies will include:
- space requirements
- future requirements
- site analysis study if needed (attach)
- demographic study if needed (attach)
- lease check-off list (attach)
- estimated occupancy cost as a % of sales
- zoning and use approvals
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Section 6: Accounting and Cash Flow
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Accounting
My knowledge of accounting is: ______. (If you are deficient
in basic accounting knowledge, then state how you intend to gain
this needed know-how.)
My accountant: I plan to work with Norman Numbers.
Accounting and payroll software programs: I will
be using the following systems: _____________________.
Method of accounting: I will use the accrual method
of accounting since this is generally required by the internal revenue
service for business dealing with manufacturing and inventory.
Business records: I will keep Widget accounts and records separate
from my personal records.
Tax issues: My accountant, Mr. Numbers, will help me set up records
for payments of social security tax, estimated income tax payments,
payroll taxes and state withholding and sales taxes. My federal
employer identification number (FEIN) is: ______________.
My state identification number is: ____________.
Internal controls: Mr. Numbers will also help me set appropriate
controls for handling funds in my business including inventory policy
and controls. Purchasing, capital acquisitions and signing
of checks will not be delegated.
Quarterly returns: Taxes will be paid in the appropriate time frames.
Mr. Numbers will help me set up resale permit records for reporting
to my state franchise tax board.
Bank account reconciliation: Bank accounts will
be reconciled on a monthly basis.
Balance sheet: Attached is a separate exhibit of my starting balance
sheet. Included is a schedule of equipment and fixtures needed
that will appear on my balance sheet.
Income statements: Attached is my projected income
statements for the first six months and one year.
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Cash Flow Planning
Attached is an exhibit of my one-year cash flow analysis including
estimated sales, all costs and capital requirements. I have
included a checklist of all expense items for input into my cash
flow projections.
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Analysis of Costs
Attached is an itemized cost-breakdown of each individual Widget
product that will be in my initial line. My initial target
mark-up will be _____%.
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Internal Controls
My accountant, Norman Numbers, is experienced in my type of business
which includes international trade. He will help me set up
a system of internal controls to make sure that Widget Corporation
will receive all of its income without any of it being siphoned
off by waste, fraud, dishonest employees or carelessness.
This will include an inventory policy including who can sign for
goods and services and who controls the release of goods and services
out the door. Included in the internal control policy
will be the requirement that the only person authorized to sign
purchase orders, make capital acquisitions and sign checks will
be myself personally.
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Section 7: Financing
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Financing Strategy
My requirements for start-up capital are as follows:
Attached is a list of expenses for which I will require either
start-up capital or financing. These items include buying
supplies, getting a computer, equipment and fixtures, tooling, travel
expenses and start-up overhead expenses. These expenses are
included in my monthly cash flow projection to indicate the ongoing
requirements for cash.
My sources of cash for starting my business are as follows.
I have provided a spreadsheet showing all of the sources of
start-up equity capital.
My sources of financing for starting my business is indicated in
the following spreadsheet. While I will not be depending
on banks for financing, there will be other resources available
to me such as leasing of equipment and fixtures, credit from suppliers,
mortgage financing, etc. My referrals include the following
helpful contacts to lending institutions: my accountant, the
Small Business Administration, friends, relatives, etc.
I am prepared to make presentations to potential lenders.
My presentation kit includes this business plan, my personal financial
statement and personal tax returns. I will be prepared to
be specific in my needs for financing, the payback program and my
sources of repayment. I will furnish potential lenders a cash
flow projection showing sources of repayments and I will be conservative
in my forecasts.
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Section 8: E-Commerce
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E-Commerce Plans
A website focusing on business-to-business E-commerce will be an
important tool in my overall marketing program. I plan to
build and install the www.widgetcorp.com website, which I have already
registered. This will permit my discount department store
customers to have access to my product line and to order (and reorder)
merchandise via this website. I plan to hire Mary Smith of
Smith E-Commerce Consulting Company to design, install and maintain
this site.
The features of the www.widgetcorp.com site will
include:
ÿ It will be easy to use with good navigational
features and prompt loading.
ÿ The site will provide useful content including
detailed information about all items in
my product line.
ÿ Purchasing procedures on a B to B basis
will be designed and implemented.
ÿ I intend to use the site to generate client
feedback to help improve every aspect
of my product line, operation and business procedures.
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E-Commerce Budgeting
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E-Commerce Competition
The use of business-to-business e-commerce has become standard
in my industry and is an important marketing tool. It is my
intention to maintain a website that will project the image of a
fresh and dynamic resource to my customers. I plan to keep
abreast of the website developments of my competitors and to constantly
improve my site.
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Section 9: Acquisitions
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Due Diligence Procedures for
Acquisitions
I may have opportunities to acquire businesses in the future.
In order to position myself to investigate acquisitions intelligently,
the following ¡°due diligence¡± process will be adhered to.
I will use a team of experts to give specific
advice on the various components of the acquisition:
ÿ Attorney
ÿ Accountant
ÿ Banker
ÿ Broker
ÿ Equipment supplier
ÿ Other business owners
The following information will be required:
1. Sellers records and verification of revenues
2. Current financial statements
3. Cash deposit records
4. Supplier bills
5. Financial comparisons of similar businesses
6. Other ______________
Valuation analysis will include:
Basis for valuation: appraisals, etc.
Method of purchase: stock, assets, etc.
If a franchise, interview with randomly selected
franchisees
Evaluation of predictable future earnings
Status of seller¡¯s motivation to sell
Sources of acquisition financing
Inspection of seller¡¯s personal and business tax
returns
Evaluation of leases and contracts
Quality of improvements
Quality and size of inventory. Obsolete merchandise?
Condition of receivables
Status of payables
Status of verified order backlog
Evaluation of customer relationships and goodwill
Evaluate government approvals and licenses
Status of pending litigation
Other ____________
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Section 10: Marketing
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Marketing Plan
I plan to focus all initial marketing efforts on establishing a
beachhead at one large discount department store chain. I
will personally be responsible for the contacts with the appropriate
buyers. My complete line will be presented as a package including
display accessories that tie into the merchandising policies of
each chain. Initially my price structure will be based on
a maximum markup of _____% in order to provide a strong price incentive.
I will be depending on the combination of fresh styling, quality
and price to break into this market.
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Advertising and Promotion Plans
Short Range Plan (6 to 12 months): Initially my advertising and
promotion will be done on an entirely personal basis without any
budget for paid advertising. My customers require personal
visitation by the CEO¡¯s of their vendors. It will be my plan
to limit my advertising budget to personal travel expenses in making
these presentations and follow-up presentations.
Mid Range Plan (12 ¨C 36 months): To establish brand recognition
at the retail level, I plan to budget ____% of my sales to joint
advertising with my discount department store customers. I
will solicit presentations from local advertising agencies.
Long Range Plan: I plan to aggressively build brand recognition
and loyalty by budgeting ____% of sales which will be allocated
between space advertising in trade journals, appropriate consumer
magazines and joint advertising with my customers.
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Purchasing and Inventory Control
For replenishment of stocks I plan to participate in just-in-time
tracking with my customers, utilizing their on-line business-to-business
computer systems in place. As much as possible, warehousing
will be kept to a minimum by use of direct and rapid delivery systems.
The following procedures will be implemented.
We will ask for 30 day payment terms and offer
2% discount for 10 days.
An inventory control system will be maintained.
All merchandise received will be counted and inspected.
We will pay our contractors on time and be loyal
to them.
We will ask for and take term discounts.
Purchase Orders will include:
Price and terms
Price protection
Always in writing
Complete specifications
Delivery deadlines
All promises will be verified
in writing
Appropriate contingencies
will be included in purchase orders
Any changes or extras must
have prior approval in writing
Internal controls will be
in place for shipping and receiving
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Training Policies
Initially I will personally handle sales to my discount department
store customers. As my business expands, I intend to begin
marketing to smaller retailers. I will hire sales associates
who can gain the confidence of smaller buyers who want to deal with
vendors that are knowledgeable and helpful. To achieve these
qualities I will look for the following characteristics in marketing
employees. People who:
¡¤ Like what they do
¡¤ Are quick learners
¡¤ Project a pleasant and positive image
¡¤ Like people and relate well to them
¡¤ Are helpful to customers and follow associates
¡¤ Are ambitious and seek to grow in responsibilities
I will follow a checklist in hiring marketing
associates:
¡¤ Have a hiring policy in place including written salary
structure, commission
compensation
and perks.
¡¤ Create job descriptions for everyone.
¡¤ Conduct ongoing marketing meetings.
¡¤ Have written policies and procedures on handling customer
complaints.
¡¤ Maintain clear guidelines for pricing policies and handling
customer¡¯s inquiries.
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The Competition
My principal competitor is Colossal Plastics Company. I have
included a list of all major competitors in this business and a
brief sketch including to whom they sell. (Provide a
tabulation of these competitors).
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How I Plan to Take Advantage
of Competitors Weak Points
My biggest competitor is Colossal Plastics Company which has a
20 year history of success and has gained good brand-recognition.
But they have developed a large overhead structure, which I will
not have. They are also slow to make changes and upgrades to their
line of products. I plan to overcome their leadership with
fresh new designs, artwork and attractive packaging and to be priced
very competitively. I intend to continually introduce additions
and refinements to the line.
Also, my end-user profile is for younger families who are not impressed
by old-line brand names. Operating with a very low overhead,
I believe I can gain a foothold in this market. A similar
profile of my other principal competitors is enclosed indicating
their weak spots and how I plan to capitalize on these deficiencies.
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Section 11: Growth Program
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Expansion
Once my business has been established I plan to implement the following
growth strategy. I anticipate it will take approximately _____(months
or years) to gain sufficient experience and level of profits before
any expansion plans are implemented.
My growth strategy will be guided by the following:
I will not set an inflexible timetable for expansion but will wait
until a sound basis of experience, earnings and cash flow is achieved.
(If you intend to expand as a chain of stores or units, here¡¯s where
you should take a stand to say that your initial pilot operation
will be on a sound earnings basis before you begin to add more units.)
Accounting and cash flow controls will be in place
with profit and loss statements prepared for individual expansion
units on a ____(monthly, etc) basis.
Internal controls for both accounting, money handling
and inventory will be in place.
My attorney will review all documentation regarding expansion.
This will include leases, employment and incentive agreements, licensing
and franchise agreements, important commitments with vendors and
customers, etc.
It is my intention that expansion plans will not
change my policy of taking adequate time for my family.
Hiring and training policies will be in place. Fringe benefit
plans will be in place.
My intention is to delegate authority and responsibility
to expansion management personnel with the following conditions
in place:
1. Managers will be motivated by a profit incentive plan which
will be tied to manager¡¯s individual success. My plan will
be in writing, simply stated and call for frequent periods of accountability.
A sample of my manager¡¯s incentive compensation plan is attached.
2. Capital allocations and signing checks will
not be delegated.
I intend to maintain an ongoing study of my competitors.
Their successes and failures will help me form guidelines on what
to do and not to do.
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Handling Major Problems
My policy in handling problems will be to identify and acknowledge
problems promptly and honestly. I plan to put the following
policies into effect promptly if and when the following adverse
scenarios emerge during my growth program:
The risk of running out of cash: I plan to maintain very frequent
(_______monthly?) cash flow projections. Forecasts for income,
expenses and unanticipated contingencies will be stated conservatively.
Any periods of cash deficits will be remedied promptly by cutting
costs to maintain a positive cash flow and profitability.
A drop in sales or insufficient sales:
1. I will be prepared to take prompt remedial
steps by cutting costs.
2. I will improve every aspect of product value,
performance and image
3. I will seek out new ways to expand sales by
_________________.
4. I plan to stick with this specialized business
that I know best unless fatally defective.
Dishonesty, theft, shrinkage: I intend to implement the same policies
that have been proven by ___________ company, one of my biggest
competitors.
Business recessions: I am prepared to promptly cut costs to maintain
liquidity. I will also be on the lookout for good business
opportunities during periods of adversity.
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