Business Planning Tutorial

based upon
The Good Idea and Good Resources
Business Plan Workbook

BusinessPlanningFree.com
Richard E Hall
 Conceptual Overview
• The BusinessPlanningFREE.com ToolKit is
based upon a sound set of business
planning concepts, principles and planning
tools. Here’s how it hangs together
• It starts with the formula for every
successful business “A Good Idea and
Good Resources” – the title of the book
• The message under the Balance Scale on
the book cover states that “A Good Idea
cannot compensate for Poor Resources
and Good Resources cannot compensate
for a Poor Idea. Both are required for
success.”
• A Good Idea “must demonstrate the
capability to be competitive in the
marketplace”
• Good Resources “are all of the assets
needed to implement and sustain the Idea”
2
 Conceptual Overview (con’t)
• This formula is the basis for creating a
Business Model Schematic (graphic)
• The Business Model Schematic creates a
three-level graphical view of the business
• The Business Model Schematic specifies
the six elements of the Idea and the six
elements of the Resources
• A computer-assisted worksheet is
completed for each of the twelve elements
• Each worksheet is assessed for risk as
compared to the competition or to the
resource requirements
• The worksheet data can be converted into
a formal computer-assisted business plan
• This tutorial will cover all of these concepts,
principles and tools in detail
3
 Design of this Tutorial
• This tutorial is designed to help you
complete the twelve worksheets, create
your business model and your business
plan
• The worksheets are identified as Steps 1 –
12, one for each of the twelve elements of
every business
• The tutorial starts with background
information and then proceeds to review
the purpose and content of each of the
twelve worksheets
• Slides precede each worksheet that
emphasize the most important aspects of
the worksheet
• Writing the Business Plan is covered in the
last section

4
 Suggestions for using this Tutorial
• Review the CD Word file “suggestions“
• Print the 12 worksheets to see what your
output will look like
• Review the tutorial in an overview fashion
first to get an idea of the process using the
printed worksheets as a reference
• Review the tutorial again to get a more
complete understanding of the process
• Toggle between this tutorial and the
worksheet as you start to enter the data on
the worksheets
• Save your worksheets so that you can
modify them as you proceed through the
step-by-step process

5
 The Tutorial will help you by…
• Supplementing the book as a business
planning reference
• Introducing examples of how the
worksheets simplify the data gathering in
creating your business model and business
plan
• Demonstrating the value of assessing the
quality of the twelve business elements of
the business model
• Identifying the risk factors that could impact
the success of the business concept
• Explaining how to format and write the
formal business plan, if needed

6
 A Four Part Tutorial

Part 1 – Overview

Part 2 – Documenting the

Business Idea

Part 3 – Documenting the

Business Resources

Part 4 – Writing the Business Plan

7
 Part 1
Overview

A look at things to come!

 Business Planning is…
• Business planning is a process with six
activity components:
– Gather data
– Develop ideas
– Make assumptions
– Consider alternatives
– Make decisions
– Prioritize
• The 12 business planning worksheets
reflect facts, goals, assumptions,
alternatives, and decisions about all
aspects of your business concept
• It’s always a good practice to have an
experienced business person like a
SCORE counselor provide a second
opinion about your business plan
9
 A Successful Business…
• The following business planning concept is
worth repeating because it defines the goal
for your business planning effort – a
successful business
• The formula for a successful business is
“A Good Idea and Good Resources”
• A Good Idea “must demonstrate the
capability to be competitive in the
marketplace”
• Good Resources “are all of the assets
needed to implement and sustain the Idea”
• This formula is the basis for everything that
follows. It’s the basis for the Business
Model, the worksheets, the assessment
process, and the Business Plan.

10
 A Business Model is…
• A business model is a description of the
characteristics of your business concept
graphically and in text
• It has two parts, the Idea and the
Resources
• It describes your “Idea” – what you want
to do, and
• Your “Resources” – what is required to
do it
• The six Idea elements are assessed for
their quality as compared to the
competition in the marketplace
• The six Resource elements are assessed
for their quality in providing the resources
to implement and manage the business
• The Business Model Schematic (next
slide) is a great visual tool to help you
understand and assess your concept
11
 Business Model Schematic

The Business Model Concept!

A Good Idea cannot compensate for Poor Resources
and Good Resources cannot compensate for a Poor Idea!
Both are required for Success!

Six Elements Six Elements

BUSINESS
MODEL

BUSINESS BUSINESS
IDEA RESOURCES

PRODUCTS & CUSTOMER FINANCIAL

OWNERSHIP
SERVICES PROFILES MODEL

COMPETITION DIFFERENTIATION STAFFING FUNDING

BALANCE
ADVERTISING SALES FACILITIES
SHEET
 Design of the Worksheets…
• There is a one page worksheet for each of
the twelve elements on the Business
Model Schematic
• The worksheets are designed specifically
for the small business owner
• The worksheets can be completed on
your computer using Microsoft Excel
• They ask direct, unambiguous questions
and require direct, unambiguous answers
• Answers are limited to key words and
phrases that convey precise data
• The worksheet data is used to assess the
quality of the Business Model
• The worksheets also provide the source
data to write the business plan
• You can customize the worksheets if
you have unique requirements
13
 The Process…
• The process to create a business model
and business plan is logical and orderly
• Complete a worksheet for each of the
twelve business model elements
• Assess the quality of those twelve elements
as Good, Fair or Poor
• A “Good” assessment of the total business
model is a hopeful sign
• Transfer the data from the worksheets to
the appropriate sections of the computer-
assisted Business Plan Outline provided on
the CD
• Convert the abbreviated data into more
complete sentences to improve readability
and comprehension

14
 Fictitious Startup Business
• We are going to create a fictitious new
startup business to demonstrate the
process
• We will review a completed worksheet for
each of the twelve steps for the fictitious
business
• We will assess the quality of each
worksheet element just as you would do –
using a set of questions for each element
that meet the prudent business person
criteria
• We will post the assessment on a mini
Business Model Schematic as shown
below

15
 Overview of the Fictitious Business
• SafeClean Tile and Carpet, LLC is the
name of the fictitious startup business
• It is a floor tile and carpet cleaning
business owned by William Dailey
• He is assisted by his wife and a part time
contract employee
• He is buying a van with steam cleaning
equipment that cleans both tile and carpet
• He has experience in the industry and is
financing the business himself

16
 Part 2
Documenting the
Business Idea
 We’re Ready to Start!
• We are ready to start documenting your
business concept
• It’s easy – we do it one Step at a time. We
will complete the twelve worksheets (Steps
1 – 12)
• We will review several informational slides
preceding each Step including a worksheet
for the fictitious business owner
• An assessment slide follows the worksheet.
The answers to the questions are used to
support the assessment as Good, Fair or
Poor
• The mini Business Model Schematic will be
posted with the assessment value

18
 We’re Ready to Start! (con’t)
• After completing the tutorial review, you can
switch to the Excel worksheet for Step 1
and begin to enter data
• Most of the fields on the worksheets are
self-explanatory – you will see how easy
they are to complete and how much
information they accumulate
• You can toggle back to this tutorial to review
the information again as often as needed to
complete your worksheet
• Be sure to save your worksheet so that you
can return and modify it as needed
• Note: Different computers and different
Excel versions may require you to adjust
page breaks, margins and print areas for
best worksheet printer output

19
 Business Idea Elements
• We will review the content of each of the
six Business Idea worksheets
• The Idea worksheets are completed first to
provide the source data to estimate the
Business Resource requirements

Six Elements Six Elements

BUSINESS
MODEL

BUSINESS BUSINESS
IDEA RESOURCES

PRODUCTS & CUSTOMER FINANCIAL

OWNERSHIP
SERVICES PROFILES MODEL

COMPETITION DIFFERENTIATION STAFFING FUNDING

BALANCE
ADVERTISING SALES FACILITIES
SHEET

20
 The Concept of Pairs
• There is another unique characteristic of
the six elements that make up the IDEA
• That is that they form three closely
integrated pairs and they should never be
viewed as individual units
• The informational slides will explain about
the pairs in more detail, but for now we will
just mention the pairs so that you will
recognize them
• Products and Services and Customer
Profiles form the Critical Pair (Steps 1 - 2)
• Competition and Differentiation form the
Competitive Pair (Steps 3 - 4)
• Advertising and Sales form the Marketing
Pair (Steps 5 – 6)

21
 The Critical Pair…
• The first two worksheets (Steps 1 and 2)
are for Products and Services and
Customer Profiles
• They define what you are going to sell and
who you will sell to
• They are called the Critical Pair because
everything else depends upon these two
decisions
• These two elements are attached at the
hip – never treat them as individual
elements
• Any miscalculation in these two elements
will likely cause the business to falter

22
 Products and Services…
• Products are tangible items that can be
identified, owned and transferred
• Services are defined as “work performed”
• Sometimes the sale of a product requires
the performance of a service, i.e., carpet
sale requires installation of the new carpet
• Sometimes the sale of a service requires
the use of a product, i.e., painting your
house requires paint
• Both products and services should have a
profit margin built into the sales price
• The data from these worksheets will be
used as input to create the Financial Model
in Step 10

23
Product/Service Worksheet Essentials
• Identify no more than seven products or
product groups
• Establish the cost of each product or
product group
• Establish the sales price for each product
or product group
• Identify the source (supplier) of the
products
• Identify no more than seven services or
service groups
• Establish the sales price for each service or
service group
• Notice how brief comments add to the
overall understanding of the information
• Assess the worksheet for competitive
content as Good, Fair or Poor
24
 Products & Services Worksheet
A. Instructions for Products: Products are tangible items you can own and transfer. List no more than
seven products. If you have a large number of products, group them into typical packages that you can
visualize a customer buying. Enter your name for the product, your cost, your selling price, and your source,
such as a wholesaler.
Product Name Cost Price Source
Tile cleaner (spray can) 2 5
Carpet cleaner (spray can) 2 5

Comments: These items are provided as a customer service when we complete a job. They are not
considered a revenue generating line.

B. Instructions for Services: Services are defined as "work performed for a customer". List no more
than seven services. If you have a large number of services, group them into typical packages that you can
visualize a customer buying. Enter your name for the service and your selling price.

Service Name Price Comments

S1 - tile clean 120 sq. ft. 120
S1 - tile clean 240 sq. ft. 216
S1 - tile clean 360 sq. ft. 306
S1 - tile clean 480 sq. ft. 384
P1 - carpet clean 120 sq. ft. 90
P1 - carpet clean 240 sq. ft. 168
P1 - carpet clean 360 sq. ft. 234
P1 - carpet clean 480 sq. ft. 288
Comments: Prices are based on the square feet of tile or carpet cleaned. The price per square foot is
reduced as the size increases because the travel time and expense are spread over a larger overall price.

Assessment of Products and Services GOOD FAIR POOR

25
 Product/Service Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate Lower
Risk
Higher
Risk

Product Questions
1. Long term demand? n/a
2. Multiple product suppliers? n/a
3. Price is competitive? n/a
4. Sufficient margin for profit? n/a
Service Questions
1. Long term demand? X
2. Price is competitive? X
3. Sufficient margin for profit? X
Assessment: X Good Fair Poor

26
 Step 1 – Your Turn
• You have read about Products and
Services. Now its time for you to start
entering data on the Step 1 worksheet
• Open Excel and then open the Step 1
worksheet
• You should not list more than seven
products or services because this
information is used on the Step 10
Financial Model to project numbers of sales
and Income generated
• You may have to group products and
services into typical packages in order to
improve your chances of making a
reasonable sales and income projection
• You may not have all of the data to
complete this worksheet on the first try
• Assess the element as Good, Fair or Poor
after completing the data entry 27
 Step 2 – Customer Profiles
• Customer Profiles is the second half of the
Critical Pair
• Identifying the products and services and
customer profile characteristics are the
most important decisions you will make
• Business success is all about making
profitable sales and that means reaching
the customers that need, can and want to
buy your products and services
• You must be very specific about the
characteristics of your ideal customers
(those most likely to buy from you)
• These characteristics define the people you
have to reach with your advertising
• More on the next slide

28
 Four Criteria for Customers…
There are four general criteria for customers
that must be met for the business to
succeed:
• Clearly Definable – can you identify who
and where the customers are?
• Decision Makers – can you reach the
decision makers that decide what and
where to buy?
• Sufficient to Maintain – is the pool of
customers large enough to meet your
sales objectives?
• Reachable Economically – can you
reach these customers using an
advertising approach you can afford?

29
Customer Profiles Worksheet Essentials
• Decide if you will sell to business
customers, consumers (non-business
customers) or both
• Select profile characteristics for those
customers “most likely” to buy from you
• Focusing on these “most likely” buyers will
make your advertising selections more
realistic and effective
• These customers should meet the four
criteria itemized on the preceding slide
• Add meaningful comments on the
worksheet that clarify your intent
• Notice how easy it is to just checkmark
many of your decisions
• Assess the worksheet for competitive
content as Good, Fair or Poor

30
 Customer Profiles Worksheet
A. Instructions for business customers: In general, only select characteristics of the customers
"most likely" to buy from you. T his will make selecting your advertising and sales approachess in Step
5 and 6 more accurate. Multiple selections are suggested when appropriate to identify all of the
characteristics that apply. Click on your choice to insert check mark.

Geographic Characteristics 10 25 50
(distance from vendor in miles) 100 Other:
Customer's type of business manufacture wholesale retail
Other:
Customer's annual revenues 100,000 250,000 500,000
1,000,000 Other:
Customer's number of employees 5 10 20
50 100 500
Can identify decision maker name title address
tel no email
Comments: I will be very selective in pursuing business customers.

B. Instructions for consumer (non-business) customers: In general, only select characteristics

of the customers "most likely" to buy from you. T his will make selecting your advertising and sales
approaches in Step 5 and 6 more accurate. Multiple selections are suggested when appropriate to
identify all of the characteristics that apply. Click on your choice to insert check mark.
Geographic Characteristics 10 25 50
(distance from vendor in miles) 100 Other:
Demographic Characteristics male female married
children rent own
Asian Black Hispanic
White college
Income 25,000 50,000
100,000 250,000
Special Interest Characteristics health crafts sports
food outdoors
Comments: I will focus on middle class customers in specific ZIP code areas with right
demographics. Senior citizen areas may be very productive.

Assessment of Customer Profiles GOOD FAIR POOR

31
 Customer Profiles Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate Lower
Risk
Higher
Risk

Business Customer Questions

1.Customers need these products and n/a
services?
2. Sufficient number of potential customers? n/a
3. Can identify and reach the decision maker? n/a
Consumer Customer Questions
1. Customers need these products and X
services?
2. Sufficient number of potential customers? X
3. Advertising can reach the decision maker? X
Assessment: X Good Fair Poor

32
 Step 2 – Your Turn
• You know the drill by now
• Open the Step 2 worksheet and begin
entering data
• Remember, brief comments that support
your data or the checkmarks will be very
important later if you write a formal
business plan. You can expand upon these
brief comments to explain the reasons for
your decisions
• You probably found that you didn’t have all
of the data to complete Step 1 on the first
try. That’s to be expected. Just save the
worksheet and return to it when you have
the answers
• It’s not uncommon to spend a month or
more to develop a business plan. You may
finish in a week or two with this system
33
 The Competitive Pair…
• The next two worksheets (Steps 3 and 4)
are Competition and Differentiation. They
are called the Competitive Pair
• Your competition is the greatest barrier to
successful entry into the marketplace
• Your competitors are those vendors that
provide the same or similar products and
services to your targeted customers
• You must now research and define the
strengths and weaknesses of your
competition
• Then you will be able to identify your
differentiation – “why customers will buy
from you rather than from your
competition” in Step 4

34
 Step 3 - Competition…
• There is an old saying “Keep your friends
close and your enemies closer”. It applies
to competition too
• Although your competition may not be an
enemy in the normal sense, to survive,
they must try to diminish their competitor’s
advantages and enhance their own
advantages
• Your success will require applying the
same principles
• The point of the old saying is that you
must always be aware of what your
competition is doing and develop
strategies to maintain a position of
strength
• The worksheet format is very simple but
the analysis requires thorough research
35
 Competition Worksheet Essentials
• Knowing your competition and deciding
how to compete against them is usually the
first key to business success
• Do you have one competitor or many? It’s
not unusual to have a number of
competitors, so measuring their strengths
and weaknesses is not an easy task
• If you have many, you will have to estimate
the average quality of the group
• Think seriously about each of the twelve
characteristics and be as honest as
possible in measuring their quality
• You never know when a weakness in any
one of these items may provide you with a
needed competitive advantage

36
 Competition Worksheet

Instructions for evaluating your Competition: It is important to understand the strengths and
weaknesses of your competition so that you can determine your relative strengths and weaknesses
in comparison. This worksheet is used to evaluate your competition. In Step 4 you will estimate how
you compare, using the same standard of comparison for the same items. You defined the
characteristics of your competition when you defined your products and services and customer
profiles. Your competition sells the same or similar items to the same customer segment. If you have
more than one competitor, you should average their strengths and weaknesses unless you have one
important competitor that you must contend with (perhaps in the same area). Any of the items listed
might be considered a strength or a weakness. Click on a value for each item. If you don’t know the
answer, leave the item blank and return to it later after doing more research.

Items for Comparison GOOD FAIR POOR

Products
Services
Pricing
Established clientele
Location
Equipment
Advertising
Sales skills
Management skills
Employee skills
Financial strength
Reputation

Comments: Most of the competition has been in business for severalyears or longer. They must be
doing a reasonable job to have stayed in business so long.

Assessment of Competition GOOD FAIR POOR

37
 Competition Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate Lower
Risk
Higher
Risk

1. Have identified the competition? X

2. Familiar with their characteristics? X
3. Have evaluated them completely and fairly? X
Assessment: X Good Fair Poor

38
 Step 3 – Your Turn
• Open the Step 3 worksheet . It doesn’t
require a lot of data entry but that doesn’t
mean it isn’t important
• In fact, as Step 4 will indicate, the absence
of a distinct differentiation is a severe
handicap
• Your first challenge is to have an open mind
and rate your competition fairly
• It may be difficult to acknowledge that your
competition should be rated as GOOD, but
if they have been in business for a number
of years they probably aren’t POOR
• Carefully weigh all of the factors on the
worksheet. Feel free to add characteristics
that may be important to your business
model

39
 Step 4 - Differentiation
• Differentiation is – “why customers will
buy from you rather than from your
competition
• Most differentiation between competitors
revolves around three factors – quality,
service and price
• It is contrary to business logic that you can
be the best in all three categories – two out
of three is quite positive
• You usually have to make a conscious
business decision about which factors will
provide a competitive edge and then
pursue that as an operational strategy
• Your differentiation will be your advertising
focus because you always incorporate your
strength in your advertising

40
 Differentiation Worksheet Essentials
• If you are already in business and surviving,
you are probably equal to or better than
your competition in some areas
• If you are a new startup, you may have to
decide what you can do differently to
establish a meaningful advantage
• This worksheet provides the clearest
evidence of your intentions
• Include brief comments to explain your
strategy for creating a measurable
separation from your competition
• Whatever you decide here will probably be
reflected in your financial model in Step 10
because differentiation often costs money
• You will notice we have highlighted the
weaknesses of our fictitious business

41
 Differentiation Worksheet

Instructions for evaluating your Differentiation: Differentiation is defined as the reasons why a
customer chooses to buy from you rather than a competitor. A positive differentiation is an important
asset in maintaining a competitive position. Using the same standards for your business that you
used for evaluating the competition, click on one value for each of the twelve items.

Items for Comparison Better Equal Worse Comments

Products
Services
Pricing
Established clientele Weakness
Location
Equipment
Advertising
Sales skills
Management skills
Employee skills
Weakness
Financial strength
Reputation Weakness
Greatest strengths: My experience, desire to succeed and dedication to satisfying customers. I
hope the website video demonstration of our process will be an effective advertising tool.

Greatest weaknesses: As a new busines in the marketplace, I may have to offer special lower
pricing to get customers and begin to build a reputation. I don't have any strengths that would be
obvious to a potential new customer.

Assessment of Differentiation GOOD FAIR POOR

42
 Differentiation Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate Lower
Risk
Higher
Risk

1. Have identified important competitive X

characteristics for your business model?
2. Confirmed you DO have some important X
competitive advantages?
3. Confirmed you DON”T have any X
competitive weaknesses?
4. Used the same standards for assessing my X
business characteristics?
Assessment: Good X Fair Poor

43
 Step 4 – Your Turn
• Having a competitive advantage is an
important factor in determining business
success
• As shown in the preceding fictitious
business worksheet, the lack of a
recognizable positive differentiation is a
potentially serious weakness. The
FAIR/Yellow color in the mini-schematic
reflects that concern
• This is a critical point in defining your
business model so give it the thought it
deserves
• Reminder - after completing this worksheet,
post all of your completed assessments on
the PowerPoint Business Model Schematic.
Just click on the boxes and fill them with
the correct color
44
 The Marketing Pair…
• The next two worksheets (Steps 5 and 6)
are Advertising and Sales. They form the
Marketing Pair
• The venues available for advertising are
many – but budget and other constraints
narrow the list for most small businesses
• The rule for advertising is “test and
validate results before committing serious
assets to specific venues”
• The sales approach is usually dictated by
what you sell and how you advertise

45
 Step 5 - Advertising
• Advertising causes more heartburn than
most other operational issues for a small
business owner
• The reason is that getting customers is the
ultimate measure of success, and
advertising is the source of prospects and
sales
• The cost of the most desirable advertising
always seems to be more than the owner
can afford
• The result is there is always a compromise
between what you would like to do and
what you can afford to do. Finding the most
cost effective venues is never easy and
may change over time

46
 Analyzing your advertising needs…
• Advertising may be personal or
impersonal. Personal advertising is more
commonly used for business customers
• Decide if your primary customers are
businesses or consumers. Serving both
complicates your advertising approach
• Are you a service or a product business, or
both? Do you need to reach a specific
individual with your advertising? These two
factors may point you to either personal or
impersonal advertising approaches
• Are your customers located in a local area
or a large geographical area?
• Larger areas typically require more
expensive advertising venues
• Validate your selection by reviewing how
your competitors advertise. Post your
competitors approach on the worksheet

47
 Advertising Worksheet

Instructions for selecting your Advertising Approach: T he advertising alternatives listed below
are divided into three groups; Personal, Impersonal - Inexpensive and Impersonal - Expensive. Each
group is itemized in the "least expensive to most expensive" order. You may select one or more items
from all three groups by clicking on Your Approach and then on a value for Competitor's approach to
indicate how your competitor's advertize.

Your Competitor's
Advertising Alternatives Comments
Approach Approach
Personal
1. Personal visit for selective business customers
2. T elephone call
3. Personal letter
4. Personal email

Impersonal - Inexpensive
1. Business cards
2. Brochures provide to potential customers
3. Flyers
4. Email
5. Internet video demo on website is good
6. Local print media will include reduced price coupons
7. ZIP code mailers may experiment at some point
8. Limited direct mail

Impersonal - Expensive
1. Yellow pages
2. Billboards
3. Urban newspapers
4. Radio
5. T V
6. Magazines
7. Catalogs

Comments: I will test the local media opportunities to determine the most effective venues. I will include
coupons to validate results.

Assessment of Advertising GOOD FAIR POOR

48
 Advertising Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Identified most cost effective advertising X

alternatives?
2. These alternatives will reach sufficient X
number of prospects?
3. Advertising takes advantage of competitive X
strengths?
4. Do your competitors use the same X
advertising venues?
Assessment: X Good Fair Poor

49
 Step 5 – Your Turn
• The task here is to decide what approach
to advertising makes the most sense for
your business model
• Usually this is not a difficult decision
because you have described the
characteristics of your customers in Step 2
• Assuming that you decide to use
impersonal print media in some form, you
don’t have to design the format and content
at this time. You may decide to get some
professional help to complete that task
• Having a website as one form of
advertising is becoming the norm in
addition to using other impersonal media
• The advertising approaches used by your
competition may help confirm your
selection
50
 Step 6 - Sales
• Closing sales is usually handled by a person
in most businesses, but not always
• The graphic below may be useful in
measuring the importance of employee
(personal) sales skills in your business
• It also emphasizes the importance of the
quality of the advertising media with a
passive sales staff

Where are you on the

sales approach scale?
Up Close Remote and
and Personal Impersonal

Sales Approach Characteristics

Very active sales staff Very passive sales staff

More sales skills required Better media advertising required

51
 Sales Worksheet Essentials
• This is a simple worksheet for most small
businesses. Most close sales at the
business location or the customer location
by the owner or an employee
• If this is your approach, just click on those
options
• If you use other approaches, click on those
that fit your intent
• Add comments to explain any unusual
sales approaches
• If your approach is substantially different
from you competitors, you might want to
explain why you are using a different
approach

52
 Sales Worksheet

Instructions for Sales Approach: T his is a relatively simple worksheet because the sales
alternatives for most small businesses reflect the decisions made in Steps 1 - 5. Most sales are made
by a sales person from the business interacting on a one-on-basis with the customer. But, since this is
not always true, variations for other business models is included. For example, restaurants commonly
advertise coupons for a reduced price meal. Although this is advertising, the sale is made when the
recipient decides to use the coupon. No human contact is necessary to make the sale, only to deliver
the product. Click on your selections under Your Approach and on the alternatives used by your
competitor's under Competitor's Approach.
Your Competitor's
Sales Alternatives Comments
Approach Approach
1. Personal Contact - Products
a. At business location
b. At customer location
2. Personal Contact - Services
a. At business location
b. At customer location
3. Personal Cold Calling
a. Products
b. Services
4. Impersonal - Direct Mail
a. Products
b. Services
5. Impersonal - Coupons
a. Products
b. Services
6. Impersonal - Catalogs
a. Products
b. Services
7. Impersonal - Internet
a. Products
b. Services
Comments: I expect to personally handle job estimates and closing of sales until such time as the
volume requires assistance. I won't have a business location for customer visits until such time as I get
a storefront location. I do not see that happening in the next two or three years.

Assessment of Sales GOOD FAIR POOR

53
 Sales Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Sales approach meets customer X

expectations?
2. Good balance between advertising X
program and sales approach?
3. Sales approach maximizes opportunity to X
reach sales goals?
Assessment: X Good Fair Poor

54
 Step 6 – Your Turn
• This is the easiest worksheet to complete
• If you are going to complete sales in person
you may want to include some comments
about the skills or training required for the
job
• You might mention whether it is a
commission or salary based plan for
employees. These decisions will be
reflected on the Step 8 - Staffing worksheet

55
 Assessing the Business Idea…
• Let’s look at the fictitious Business Model
Schematic after completing an
assessment of the six individual elements
and then the total Business Idea
• Five of the six elements were assessed
“Good” and one was assessed “Fair”
• The element assessed as Fair was for
Differentiation
• The total Business Idea was assessed as
only “Fair” because not having a positive
differentiation is a serious deficiency in a
new startup
• Would you have assessed the Business
Idea as Fair? Did it meet the “must be
competitive in the marketplace” criteria?

56
 Businesss Model Schematic

Assessing the Business Idea!

The Business Idea defines what you expect your
business to look like in the competitive environment.
A Good Idea “must demonstrate the capability to be
competitive in the marketplace”

Assess the Business

Idea elements

BUSINESS
MODEL

BUSINESS BUSINESS
IDEA RESOURCES

PRODUCTS & CUSTOMER FINANCIAL

OWNERSHIP
SERVICES PROFILES MODEL

COMPETITION DIFFERENTIATION STAFFING FUNDING

BALANCE
ADVERTISING SALES FACILITIES
SHEET

Color code: Blue – Good, Yellow – Fair, Red – Poor

57
 The Business Idea – Your Turn
• Now you see how revealing the Business
Model Schematic can be after assessing
the six Idea elements
• It provides a clear and understandable view
of the Idea that is not generally available in
other business planning processes
• It gives you a chance to consider the
quality of your Idea in the marketplace after
fairly assessing it in comparison to the
existing competition
• Not all Ideas for a business are GOOD. In
fact, more are POOR than GOOD. If yours
is rated GOOD, that’s a positive sign. If it is
rated FAIR, that is a cautionary signal
• Keep going with the Business Resources
worksheets

58
 Part 3
Documenting the
Business Resources
 Business Resource Elements
• Let’s review the worksheets for the six
Business Resources elements
• We will assess each worksheet as we
proceed

Six Elements Six Elements

BUSINESS
MODEL

BUSINESS BUSINESS
IDEA RESOURCES

PRODUCTS & CUSTOMER FINANCIAL

OWNERSHIP
SERVICES PROFILES MODEL

COMPETITION DIFFERENTIATION STAFFING FUNDING

BALANCE
ADVERTISING SALES FACILITIES
SHEET

60
 Four Types of Resources
• There are four types of resources required
by most businesses
• Human – the personal characteristics and
needs of the people that own, manage and
operate the business
• Physical – the facilities (space and
equipment) to operate the business
• Information – the information required to
manage the business in an ever-changing
competitive environment
• Financial – access to the financial
resources required to operate and grow the
business

61
Ownership, Staffing and Facilities…
• The next three worksheets describe the
non-financial Business Resource
elements of the business concept
• Ownership (Step 7) includes data on
owner background, experience, goals, and
legal structure
• Staffing (Step 8) includes data on staffing
requirements, position descriptions, and
wage/salary expenses
• Facilities (Step 9) includes data on
space, vehicles, office and other
equipment

62
 Step 7 - Ownership
• Ownership is the key resource
• Ownership must have the vision, skills,
experience, and energy to manage the
business
• The owner sets the goals used to measure
the success of the business
• Business success is usually a long-term
adventure, otherwise it tends to be a short
term misadventure
• Banker’s know the importance of the
owner’s experience, resources, credit
history and ethical standards in measuring
the risk of loan requests

63
 Critical Ownership Skills
• There are three critical skills used by
successful owner/managers
• Vision - the ability to visualize the future
business environment for the enterprise
• Insight – The ability to develop a practical
implementation plan to get from this point
to the future vision
• Oversight – the ability to manage the
successful implementation of the plan
• Consider these skill requirements as you
complete the Ownership worksheet
• Sometimes the owner doesn’t have all of
the requisite skills and must bring in
someone with the missing skills

64
 Ownership Worksheet Essentials
• This worksheet is easy. It’s all about you
• Just fill it in like the example on the next
page
• If you don’t know your credit score, you can
go online and get it quickly for a small fee
or for free
• If you are looking for a business loan from
a bank, your credit score is a key criteria
• Your bottom line on the Financial Model in
Step 10 will reflect your potential income
• You will have a chance to see if your
income estimates will match your financial
goals
• Add comments to record any pertinent
personal assets or attributes that give you a
better chance at success

65
 Step 7 - Ownership
SafeClean Tile and Carpet, LLC
Business Name

1234 Jefferson Drive, Anytown, Fl 37623

Business Address

William Dailey Owner/President

Owner's Names and Titles

Business structure sole proprietor partnership corporation

S corporation Limited Liability Company
Website name safecleantile.com
Owner credit rating good 720
Business credit rating not yet established
10 years working for a franchise cleaning business in this
Owner's experience in this area.
industry

Associate degree in business. Supervised three employees in

Owner's education and franchis business.
management experience

First year $ 30,000 - 35,000

Owner's financial goals
Second year $ 35,000 - 40,000
Create a family business for our children.

Other business goals

Comments:

Assessment of Ownership GOOD FAIR POOR

66
 Ownership Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Ownership is clearly identified? X

2. Legal structure is appropriate? X
3. Owner has industry experience? X
4. Owner has management experience? X
5. Financial goals are reasonable for this type X
of startup business model?
6. Credit history would meet lender X
requirements?
Assessment: X Good Fair Poor

67
 Step 7 – Your Turn
• This worksheet contains many important
pieces of information about the business
• It describes the owners and their skills and
experience
• It establishes the financial results that are
required to satisfy the owner’s commitment
and investment
• It contains the seeds of a mission
statement based upon the goals set for the
organization
• It outlines the strengths that would provide
confidence about the opportunity for
success to investors, suppliers and
customers

68
 Step 8 - Staffing
• Ask small business owner’s what is most
important in their success and they
invariably say “reputation”
• Many startup businesses don’t have
employees other than the owners
• For those that do, your employees
represent you and are an important factor
in establishing your reputation
• Finding the right kind of employees starts
with establishing position standards and
clear performance expectations
• Managing employee expense is often the
most important financial control
• This is your staffing plan and the Financial
Model will include these expenses

69
 Staffing Worksheet

A. Instructions: Enter the position titles, monthly salary and number of staff for each position for each
quarter of the year.

Position Titles Monthly Salary 1Q 2Q 3Q 4Q

Owner/President Est 3000 1 1 1 1
Cleaning Helper Varies P.T. 1 1 1

B. Instructions: Re-enter the position titles in the same order as above. List preferred management
or industry experience requirements and the preferred education of training requirements for each
position.
Position Titles Experience Requirements Education Requirements
Owner/President See Ownership qualifications See Ownership qualifications

Cleaning Helper Experience with customer High school or more

service, strong and healthy

Comments: I will do most of the work until the volume becomes more than one person can handle.
My wife will answer calls and may do some of the bookkeeping.

Assessment of Staffing GOOD FAIR POOR

70
 Staffing Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Are education and experience X

requirements established?
2. Has a salary plan been established? X
3. Are employees with these qualifications X
available?
4. Will these employees enhance your X
reputation?
Assessment: X Good Fair Poor

71
 Step 8 – Your Turn
• Many entrepreneurs start a business
without ever having any intention of having
employees
• Employees come with advantages and
disadvantages
• The greatest advantage is that employees
are the key to growing revenues. Its difficult
to grow into a large enterprise without
employees
• The disadvantages are that managing
people is sometimes a challenging
responsibility that some entrepreneurs want
to avoid
• This worksheet will offer some insights into
your perspective on the growth potential of
your business model

72
 Step 9 - Facilities
• Facility requirements are the greatest
variables for most small businesses
• For home-based businesses, space is just
part of your domicile
• For others, space needs vary from storage
to relatively expensive office and storefront
locations
• Most businesses require at least one
vehicle
• Most businesses require some office
equipment
• Some businesses require tools and other
equipment

73
 Facilities Worksheet Essentials
• Specify your space requirements by
location and size
• Confirm that the space meets customer
expectations and operational needs
• Confirm that zoning and other regulations
have been satisfied
• Enter the monthly rent if applicable
• Specify vehicle requirements and costs
• Specify office equipment requirements and
costs
• Specify other equipment requirements and
costs
• Add comments to explain any unusual
requirements

74
 Facilities Worksheet
A. Instructions for Location: T his table is used to specify where your business is located, the
amount of space required (square feet) and the type of space. Enter the number of square feet in the
cell adjacent to the desired location.Click on the cell to indicate the type of space.
Type of space required
Location Sq. Ft. Office Retail Warehouse Manufacture Other
Home-Based
City
Suburbs
Rural
Storage 200
Instructions: Click on the yes or no answers. Enter monthly payment under question 4, if needed.
1. Are zoning, covenants, licenses and permits satisfied? Yes No
2. Does location meet customer expectations? Yes No
3. Does location meet operational needs? Yes No
4. Own or buying property? Yes No Mo. payment $ 150
B. Instructions for Equipment: Enter the vehicles and major items of equipment required to operate
the business. Enter the cost if you will buy the item or enter the lease amount if you rent. Enter the
quantity in the quarter you expect to acquire the item.
Equipment Own Rent Enter quantity in quarter needed
Description $ Cost $/MO 1Q 2Q 3Q 4Q
Vehicles
Van 500 1 1 1 1

Office Equipment

Other Equipment
Cleaning Eq for Van 600 1 1 1 1

Comments: Van and cleaning equipment will be leased with option to buy.

Assessment of Facilities GOOD FAIR POOR

75
 Facilities Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Have space requirements been X

established?
2. Is space available at a fair price? X
3. Have vehicle requirements been X
identified?
4. Have equipment requirements been X
identified?
5. Are these equipment items readily X
available?
Assessment: X Good Fair Poor

76
 Step 9 – Your Turn
• This worksheet asks that you identify where
your business will be located and your
vehicle, office equipment and other
equipment requirements
• Many businesses are started with facilities
already owned by the entrepreneur
• The worksheet permits you to schedule the
items during the quarter they are needed
• The cost of these items is entered on the
worksheet. These costs will be reflected on
the various financial worksheets
• Make sure you continue to assess the
worksheets and post the results on the
Business Model Schematic

77
Financial Model/Funding/Balance Sheet
• The next three worksheets (Steps 10, 11
and 12) provide data critical to managing
the business and adjusting to changing
conditions. This data is one of your
important informational assets
• The Financial Model worksheet (Step 10)
projects sales, income, expenses and profit
or loss
• The Funding worksheet (Step 11)
estimates startup expenses, operating and
reserve requirements and identifies funding
availability
• The Balance Sheet (Step 12) itemizes
Assets, Liabilities and Net Worth

78
 Step 10 - Financial Model
• The Financial Model is the primary
financial analytical tool
• It includes your projection of sales
volumes by product or service, income
generated, cost of goods, other expenses,
and profit or loss (The Bottom Line)
• It is used to determine the future viability
of the business (does it meet owner
financial goals and can it survive)
• It requires the conversion of earlier
assumptions into financial estimates and
is fraught with the opportunity for error
• Even though it is the most important
financial document in a business plan, the
inability to project sales and income often
stymies the business planning effort
• The ability to perform this task well is the
measure of a critical management skill

79
Financial Model Worksheet Essentials
• The first hurdle is to not be put off by the
first impression of the Financial Model. It
looks very busy but it is quite simple to
create using the Excel worksheet
• All you have to do is deal with it one line at
a time. It’s all very straightforward and
logical as you will see if you analyze the
example
• Expect to make adjustments to your first
pass. Changes result from thoughtful
consideration of all of the estimates and
relationships
• Plan to make two versions of the Financial
Model. One that reflects your most likely
scenario and a second that reflects a “worst
case” scenario that still permits survival

80
 Estimating Sales and Income
• Follow these instructions to complete the
top sections of the Financial Model
• Estimate the number of sales per quarter
for each product and service, increasing or
decreasing sales based upon your forecast
• Adjust sales for seasonal impacts
• Calculate quarterly Income by multiplying
the number of sales times the sales price
for each product and service
• Total all Income for each quarter
• Calculate Cost of Goods in a similar
manner for product related sales
• Calculate Gross Margin by subtracting Cost
of Goods from Total Income
• Note: the worksheets are already
programmed to calculate all of the totals
81
 Estimating Expenses and Profit
• Follow these instructions to complete the
expense and profit sections of the Financial
Model
• The Financial Model includes a list of
typical expenses for a small business and
are generally accepted by the IRS
• Enter quarterly expenses for those that
apply to your business. Add or delete
expense categories as required
• Total all expenses by quarter
• Subtracting Total Expenses from Gross
Margin reveals your Profit or Loss
• This is the “Bottom Line”. Does it meet the
Owner’s financial Goals?
• Note: the worksheets are already
programmed to calculate all of the totals

82
 Applying for a business loan?
• If you are using this business plan to
support a request for a business bank loan,
you should include your projection of the
loan costs on the Financial Model under
Loan (P&I) and on your Funding worksheet
• The banker will review your Financial
Model and will want to see the loan
payments as a monthly or quarterly
expense
• Then they will check your bottom line to
determine if your financial projections are
reasonable and achievable with the loan
payments included as a cost of doing
business
• The banker will want to know specifically
what the loan will be used for

83
 Step 10 – Financial Model
This worksheet provides a one year projection of the number of sales by product or service, cost of goods, gross margin,
expenses and profit or loss. Duplicate this page to create a second year projection or to make a version of the previous
year's performance. The formulas have been inserted to compute totals. If you change the rows or columns
you may need to modify the formulas.

Products & Services Price Cost of Enter number of sales for each quarter Year
Goods 1Q 2Q 3Q 4Q
P1 - Tile Clean/spray can 5 2 5 5 5 5 20
P2 - Carpet Clean/spray can 5 2 5 5 5 5 20
0
S1 - tile clean 120 sf 120 12 14 16 18 60
S2 - tile clean 240 sf 216 10 11 12 13 46
S3 - tile clean 360 sf 306 8 9 10 11 38
S4 - tile clean 480 sf 384 5 7 9 11 32
0
S5 - carpet clean 120 sf 90 12 14 16 18 60
S6 - carpet clean 240 sf 168 10 11 12 13 46
S7 - carpet clean 360 sf 234 8 9 10 11 38
S8 - carpet clean 480 sf 288 5 7 9 11 32

Total Income 14090 15057 19466 22154 70767

Less Cost of Goods 20 20 20 20 80
Gross Margin 14070 15037 19446 22134 70687

Expenses
Accounting/Legal 0
Advertising 1000 1000 1000 1000 4000
Entertainment/Meals 0
Insurance 500 500 500 500 2000
Internet/Website 200 200 200 200 800
Leased Equipment (cleaning) 600 600 600 600 2400
Loan (P & I) 0
Office Supplies 150 150 150 150 600
Rent (storage bin) 150 150 150 150 600
Salaries/Contract Labor 500 1000 2000 3000 6500
Salary Burden 0
Supplies (10% of sales price) 1409 1506 1947 2215 7077
Telecommunications 400 400 400 400 1600
Vehicle Mileage 1500 1500 1500 1500 6000
Van lease 0
1500 1500 1500 1500 6000
Total Expenses 7909 8506 9947 11215 37577

Profit before Taxes 6161 6531 9499 10919 33110

Assessment of Financial Model GOOD FAIR POOR

84
 Financial Model Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Are sales and income estimates X

reasonable for market conditions?
2. Are expense projections reasonable for X
this business model?
3. Does the profit margin meet owner goals? X
4. Would a prudent business person proceed X
based upon this financial model?
Assessment: X Good Fair Poor

85
 Step 10 – Your Turn
• Take a deep breath and take your time.
Don’t farm this task out to anyone else –
you need to know the details to manage the
business (although you may need advice)
• Don’t expect the first pass to be the last.
Rather, expect to make changes based
upon new data and familiarity with sales ,
income and expense projections
• And, please don’t change the numbers just
to make the profit look good. This report
won’t change the real environment
• If the results aren’t good enough, analyze
your business model to see how you can
improve the results without being overly
optimistic
• The Financial Model is really your budget,
so it should be updated over time
86
 Step 11 – Funding
• You must know two things about funding –
how much money is required and what is
the source for the funds
• For a new business, startup expenses
begin before the business opens so
funding is needed before income is
generated
• Once in business, you need sufficient
capital (cash) to meet daily operational
expenses, and
• A cash reserve to handle contingencies
and emergencies
• Business failures for lack of adequate
funding are common, so be careful about
starting without a reasonable reserve

87
 Applying for a business loan?
• This is a follow-up to the slide in the
Financial Model
• As noted there, the banker will want to
know what you are going to do with the
money
• Bankers prefer to have loans used to buy
items that have salvage value (vehicles and
other items that would have some value if
the business failed and the assets were
sold)
• They don’t like using the money to pay
yourself a salary or to buy advertising
because there is no collateral value in
those items
• They also want to see how much of your
money you are putting into the venture

88
 Funding Worksheet Essentials
• If you are a new startup, make sure your
don’t overlook any significant startup
expense
• Review your Financial Model and see if
your expenses exceed income for any of
the four quarters. If they do, determine
whether you will need a reserve fund to
continue operations
• Note: Not replacing inventory is not a good
solution unless your inventory levels can
withstand the deferral for a short period
• Assume that things may not go as planned.
Would you need contingency funds to
continue operations?
• Would your “worst case” scenario require
additional contingency funding?

89
 Step 11 - Funding
Background: T he information and decisions reflected on the Ownership, Staffing and Financial Model
worksheets provides the source data to complete the Funding worksheet. T his worksheet is divided into two
tables. T he top table is for entrepreneurs not yet in business and identifies all of the major startup expenses
required before the business opens. T he bottom table identifies the funds required to open, operate and sustain
the business. It also asks that you identify the source of the funds for the various funding categories.

A. Instructions for estimating startup expenses: If you are not yet in business, enter the amount required for
each applicable item. Change item names and add or delete items as appropriate. If the item has already been
paid for, enter the amount in the Paid For column. Otherwise, enter the amount in the Not Paid For column. If
you alter the rows or columns you may need to modify the formulas for totals.

Startup Expense Item Paid For Not Paid For Comments

Advertising 300 cards, brochures, sign

Fees and Permits 100
Inventory 1000 cleaning supplies
Legal/Professional 200 setting up LLC and county permits
Office Equipment 300 printer/copier and file cabinets
Other Equipment
Renovations
Vehicles 3000 van to be leased for $3000 down and $500/mo
Website 300 development and domain name

Total Startup Expenses 5200 0

B. Instructions for estimating funding requirements and sources: Enter the amount of funds required for
each item and the source of funds, if known. If not known, enter unknown in Explanation. T he source of funds
includes cash on hand, credit cards, loans, investors or grants.

Items Requiring Funding Amount Source Explanation

Startup Expenses 5200 savings
Operating Capital 4000 savings
Contingencies 2000 credit card

Total Funds Required 11200

Assessment of Funding GOOD FAIR POOR

90
 Funding Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Are startup expenses reasonable? X

2. Are startup expenses funded? X
3. Are operating fund estimates reasonable X
and funded?
4. Are contingency fund estimates X
reasonable and funded?
Assessment: X Good Fair Poor

91
 Step 11 – Your Turn
• Once again, this is an easy worksheet to
complete because you know what funds
are needed and what is available
• If you can fund the business without
requiring external assistance, that’s good
• The issue then becomes whether you are
committed to spending your own money on
the venture
• If you have the money but want a bank to
fund your business, they might reasonably
ask why they should take the risk if the risk
is too great for you
• If you need money, you might consider
bringing in a partner to share ownership

92
 Step 12 - Balance Sheet
• A Balance Sheet is the financial report used
to measure the current financial strength of
the business
• It is accurate only at the time it is prepared
as income and expenses change the values
• It starts with an itemization of everything the
business owns (Assets)
• It then itemizes everything the business
owes (Liabilities)
• It then reflects the Net Worth of the business
by subtracting the liabilities from the assets
• A substantial positive Net Worth is the best
indicator of financial health
• This report can be used to confirm the
availability of funds projected on the Funding
Worksheet

93
 Balance Sheet Essentials
• It is common for new startups to prepare
two Balance Sheets. One for the business
and one for personal assets
• This is particularly important if you expect
to apply for a business loan
• Your credit rating (score) is easy to verify
so get your score on online. If it isn’t good,
you should do everything you can to
improve your score over time
• Your Balance Sheet should confirm your
funding source projections (if you said you
would fund out of savings, the funds should
be visible on your Balance Sheet)

94
 Step 12 – Balance Sheet

Instructions for Balance Sheet: T he Balance Sheet is a reflection of the current financial strength of an
individual or organization. Very simply it indicates Assets (what you own), Liabilities (what you owe) and Net
Worth (difference between the two). If you own (in real current value) more than you owe, you have a positive
net worth. A good balance sheet and a good payment history is the basis for a good credit score. If you could
make some assets available as collateral for a loan, check the box. Some assets may not be accepted as
collateral.

Balance Sheet
Personal Business
OK for
Assets Value Explanation
Collateral
1. Cash, checking, savings 7000 Funds will be transferred to
2. Stocks 1500 business checking account
3. Bonds as we get ready to open
4. 401 K Plans
5. Real Estate (market value) 160000
6. Vehicles 8000
7. Inventory 1000
8. Equipment 300

Total Assets 177800

Liabilities
1. Current Bills 500
2. Credit card balance 1500
3. Real Estate Mortgage 132000
4. Vehicle loans 5000
5. Other Loans

Total Liabilities 139000

Net Worth 38800

(assets minus liabilities)

Assessment of Balance Sheet GOOD FAIR POOR

95
 Balance Sheet Assessment
Insert X in Yes or No column Yes No
Enter n/a if not appropriate (Lower
Risk)
(Higher
Risk)

1. Are the assets valued fairly? X

2. Are the assets available for collateral X
identified?
3. Are the liabilities identified? X
4. Is the net worth positive? X
5. Does the balance sheet support the X
funding projections?
Assessment: X Good Fair Poor

96
 Step 12 – Your Turn
• Preparing a personal Balance Sheet is a
good idea for everyone whether they are in
business or not
• Not all of your assets are worth their stated
value on the Balance Sheet. For example,
jewelry is often not worth the assessed
value. Homes are worth only what
someone will pay at the time of sale
• This is why your estimated Net Worth may
not have that amount of cash value
• These same principles apply to business
Net worth
• This is your last worksheet –
Congratulations. You probably need to
review and perhaps modify some of the
worksheets in some minor way

97
 Assessing the Business Resources
• It’s time to assess the quality of the
business resources
• This is a continuation of the earlier
business idea assessment
• In the fictitious business example, all of the
business resources elements were
assessed as Good
• The overall assessment for the total
business resources was Good
• Is this how would you have assessed the
total business resources?
• Did it adequately meet the “assets needed”
criteria

98
Assessing the Business Resources

Assessing the Business Resources!

The Business Resources define the human, physical,

financial and information assets required to implement
and operate the business Idea concept! Good
Resources are “all of the assets needed
to implement and sustain the Idea”

Assess the Business

Resources elements
BUSINESS
MODEL

BUSINESS BUSINESS
IDEA RESOURCES

PRODUCTS & CUSTOMER FINANCIAL

OWNERSHIP
SERVICES PROFILES MODEL

COMPETITION DIFFERENTIATION STAFFING FUNDING

BALANCE
ADVERTISING SALES FACILITIES
SHEET

Color code: Blue – Good, Yellow – Fair, Red – Poor

99
 The Business Resources – Your Turn
• Did you notice how meaningful the Business
Model Schematic is in portraying all of the
elements of the fictitious business concept?
• Update your Business Model Schematic with
the results of your assessments
• You might decide to revise these
assessments as you review all of the
worksheet data

100
The Total Business Model Assessment…
• Now we make the final assessment of the
total business model
• It is the combination of the assessments
of the business idea and the business
resources into one overall evaluation
• The rule is “both a good idea and good
resources are required for success”
• Four out of five businesses fail in five
years because of shortcomings in one or
more of these twelve elements
• How would you assess the total business
model? You will use the same process for
your own business model!

101
 Assessing the Total Business Model

Assessing the Total Business Model as Good, Fair

or Poor is the final task. This assessment may be
difficult but the robust process used to reach this
point provides the data to reach an educated decision.

How would you assess

this total Business
Model?
BUSINESS
MODEL

BUSINESS BUSINESS
IDEA RESOURCES

PRODUCTS & CUSTOMER FINANCIAL

OWNERSHIP
SERVICES PROFILES MODEL

COMPETITION DIFFERENTIATION STAFFING FUNDING

BALANCE
ADVERTISING SALES FACILITIES
SHEET

Color code: Blue – Good, Yellow – Fair, Red – Poor

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 Total Business Model – Your Turn
• This is a very serious activity even though
you may still feel its “only a picture”
• It is the most concise portrayal of your
business concept that you will ever have
• It portrays all of the elements of your
business and evaluates the quality of those
elements based upon your own
documentation
• If your assessment judgment has been
complete and fair, you have a valuable tool
for estimating the viability of the venture
• Your business plan will be used to explain
this business model more completely. The
content of various sections will relate to and
support the assessment value for each of
the twelve elements on the Business Model
Schematic
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 What next?
• You have all of the basic data to decide
about your future course of action
• If you are already in business, you have the
data to determine if you should proceed as
planned, or if a course correction is in order
• Likewise, if you aren’t yet in business, you
have the data to determine how to proceed
• If everything looks OK, you are ready to
decide if a formal business plan is required
• If you need a business loan, you have the
data to talk it over with your banker and
take his advice about how to proceed
• If your business model is not positive, you
know what the weaknesses are. Yellow or
red elements have highlighted the
weaknesses. Can you fix the problems?

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 Part 4
The Business Plan
 The Business Plan Outline
• Your ToolKit CD contains a WORD copy of
the Business Plan Outline
• It is the template you should use if you
decide to write a formal business plan
• It contains instructions about what to
include in each section of the plan and the
worksheet(s) that provide the source data
• The information on the following slides has
been extracted from the Business Plan
Outline for reference
• When you are ready to start writing the
business plan, print out all of your
worksheets and then open the Business
Plan Outline file and start entering data
• You will be pleasantly surprised by how
easy it is to transfer the data

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 Writing the Business Plan…
• Open the Word Business Plan Outline. It is
structured and ready for you to insert data
from your worksheets
• The following slide provides a Table of
Contents for writing the formal business
plan. You simply enter data from the
corresponding worksheets into the
appropriate sections
• Convert the abbreviated data on the
worksheets into understandable sentence
structures
• Write the Executive Summary after
completing all of the other sections
• Put resumes, product lists and other
detailed information in the Appendices.
You might also want to include copies of
the worksheets
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 Business Plan Outline

1. Executive Summary
2. Ownership and History
3. Products/Services & Customer
Profiles
4. Competition and Differentiation
5. Advertising and Sales
6. Management and Staff
7. Facilities
8. Financial Model
9. Funding
10. Balance Sheet
11. Appendices

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 1 - Executive Summary
The Executive Summary is not written until the other sections of
the business plan are completed. Then extract brief, critical
elements from the other sections to provide an overview of the
important ideas and projections so that the reader gets a good
snapshot of the business concept without reading the whole
plan. No more than 2 pages at the most. You might include in
abbreviated fashion some of the following data from these
sections.
– Ownership – Owners names and titles, financial goals,
previous business history and experience
– Products and Services – Primary product and service
offerings
– Customer Profiles - Business or consumer trends that
support this industry segment
– Differentiation – Strengths and weaknesses as compared
to the competition
– Advertising and Sales – How the synergy of these
functions will generate the required income
– Financial Model – How adequately the Bottom Line meets
financial goals
– Funding and Balance Sheet – How these projections
demonstrate the financial strength of the enterprise

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 2 - Ownership and History
A business plan should be structured to introduce the reader to
the owners and the business concept in a manner to maximize
understanding. That’s not too different from introducing yourself
to a new client. You first introduce yourself, your business and
your history to establish a foundation so that the reader
understands who you are and where you are coming from.
That’s the idea behind placing ownership and business history
at the beginning of the business plan. You might include in
abbreviated fashion some of the following data from these
worksheets.
– Owners qualifications and experience as managers in this
industry segment
– The basic nature of the business concept
– Unique ownership strengths that will contribute to the
success of this venture
– Financial and other goals that will be used to measure
success
– Perhaps a few comments about the business model and
how it was used to validate the business concept

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3 - Products/Services & Customer Profiles
You will recall that the first two business model elements were
Products and Services and Customer Profiles. We call them the
Critical Pair because they are the foundation of every business
and must be perfectly matched to create a good business
model. It makes sense to discuss them as a pair rather than
attempting to treat them as individual units that don’t have a
close relationship. Failing to do so might result in misleading or
invalid conclusions. The goal here is to prove the tight
relationship between these two elements and how the profiled
buyers need and use these products and services as evidenced
by past marketplace results and projections for a strong demand
in the future. You might include some of the following data from
these worksheets.
– Explain that these two elements are combined in a common
section to demonstrate how they create the synergy for
success
– Summarize the major product and service offerings
– Identify any special attractions for these offerings
– Summarize the geographic, demographic and special
interest characteristics that reflect the potential of the
marketplace now and in the future

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 4 - Competition and Differentiation
An accurate analysis of the strengths and weaknesses of the
competition is the prerequisite to determining your own
strengths and weaknesses in your chosen marketplace.
Providing a reasonable assessment and understanding of your
advantages over the competition is required to support sales
and revenue projections. You could start this section by outlining
the results of your analysis of the competition and then present
how your business model provides enough advantages
(competitive edge) to produce the required sales revenues. You
might include some of the following data from these worksheets.
– Number and type of competitors in your geographical area
– Summary of your most challenging competitors
– Summary of your strengths and weaknesses and the factors
that differentiate you from your competitors
– If you don’t have significant advantages, explain how you
expect to overcome this weakness

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 5 - Advertising and Sales
The thrust of this section is to demonstrate how the advertising
and sales functions are tied together as two mutually supportive
business activities and that they, in tandem, can generate the
income to meet your financial goals and perhaps grow the future
business. You should explain how your approaches to
advertising and sales reach the potential customers and
generate the number of prospects needed to meet sales
objectives. You might include some of the following data from
these worksheets.
– A description of the advertising venues to be used and why
they are the most cost effective for this type of business.
– Explain how this approach will capitalize on your
differentiation factors
– Indicate how your advertising approach either mirrors or
differs from those used by the competition
– Explain how your sales approach maximizes the impact of
your advertising program

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 6 - Management and Staff
Note: If you don’t plan to have a staff you may delete this
section. In that case, you may want to add more information in
section 2- Ownership and History.

If you plan to have non-owner employees, this section should

provide more information about the organization than that found
in section 2 – Ownership and History. It should demonstrate
that management and staff are capable of managing and
operating the business in a professional and economical
manner. You might include some of the following data from the
Ownership and Staff worksheets.
– Names, titles and experience and training of the owners and
managers, or
– A summary of the Staffing Worksheet
– Comments regarding salary and benefit programs

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 7 - Facilities
The significance of the business location and equipment
varies greatly by type of business. The relative importance of
these items should be discussed for this specific business.
Any potential issues that could arise from zoning, licenses
and permits should be addressed and satisfied. Any potential
problems with acquiring vehicles or equipment should be
clarified. You might include some of the following data from
the worksheet.
– The location of the business
– The type of facility required
– Whether the location is owned or rented
– Any issues regarding zoning, covenants, licenses or
permits
– Explain that the financial impacts of these items are
reflected in the financial reports sections of the plan.

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 8 - Financial Model
The Financial Model is the most detailed document in the
business plan. It requires the conversion of all of the business
plan decisions into numerical values so that the financial
opportunity can be evaluated. The complete Financial Model
should be included in the Appendices but only the significant
totals should be included in the text of this section. These totals
will convey the viability of the business future to a
knowledgeable business person. You might include the following
worksheet data and explain their significance.
– Sales volumes and growth trends
– Income
– Cost of Goods
– Expenses
– Profit or Loss
Address any issues that are revealed in these projections.
– Assumptions about growth or reduction of sales
– Assumptions about changing products or services
– Assumptions about changes in expenses
– Does the profit meet owner’s financial goals.

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 9 - Funding
The Funding table is a very brief and meaningful reflection of the
funding required and the adequacy of the financial resources
immediately available to the business. Obviously, if the funding
resources are inadequate, the business is in severe jeopardy.
The complete Funding Worksheet should be available in the
Appendices. You might include the following worksheet data
and explain their significance.
– A brief summary of the data from the worksheet
– Reassurance that the funding needs have been identified
and satisfied, or
– Explain how any funding shortfalls will be satisfied
– If loans, partners or mergers are being considered to meet
funding needs, identify the stage of these negotiations and
the likelihood of success
– This may be the place to offer information about your
personal and business credit rating and qualifications for a
business loan.

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 10 - Balance Sheet
The Balance Sheet is the financial document that reveals the
current financial strength of the business and confirms the
ability to accommodate the funding requirements. If the
Balance Sheet is relatively simple, it could be included here
in its entirety. If not, include the Balance Sheet in the
Appendices and include the totals for the Assets, Liabilities
and Net Worth here. You might address the following items, if
appropriate.
– Explain any unusual entries on the Balance Sheet
– Clarify whether the Balance Sheet supports the funding
requirements
– New startup businesses may want to include the owner’s
personal balance sheet data.

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 11 - Appendices
The Appendices contain data that is important but the size,
detail or complexity would detract from the readability of the
main document. Consider including the following items in the
Appendices.
– The Business Model Schematic
– The Financial Model
– The Funding Worksheet
– The Balance Sheet
– The Implementation Plan, if available
– Resumes
– Historical performance records

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 Help is Available

Ask your SCORE counselor, your

banker or an experienced business
person to review your plan!

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