KEYWORDS: assistance, business plan, and management

Selecting a Value-Added Opportunity

The results of the initial investigation process will determine if the value-added concept has the potential to be successful. To be successful the venture must:

1) be a viable business idea (feasible to produce),
2) show market competitiveness and growth potential, and
3) generate positive cashflow and be financially profitable.

The project must also fit with the personal and business goals and objectives of all the individuals involved, as well as the local community. It is important to inform and involve the community in the selection process and mobilize local citizens in support of selected value-added projects.

Planning for Value-Added Action

A detailed business plan should be developed for all selected value-added opportunities meeting the standards for potential success. The business plan is a written document that demonstrates that enough products or services can be sold at a profit to become a successful business venture. Planning is an essential ingredient for any successful business.

The three primary reasons for writing business plans are:

1) to aid you in determining the feasibility of your business idea;
2) to attract capital for starting up; and
3) to provide direction for your business after it is in operation.

A good plan gives the reader the what, when, where, why, and how the business will accomplish its objectives and tells who will be involved in running it.

A plan's contents will vary from business to business; however, its structure is fairly standardized. Your plan should contain as many of the following sections as appropriate for your type of venture.

1) Cover Page
2) Table of Contents
3) Executive Summary
4) Company and Industry Background Information
5) Description of Products or Services
6) Marketing Plan
7) Operations Plan
8) Management Team
9) Timeline
10) Critical Risks and Assumptions
11) Community Impacts
12) Financial Plan

Cover Page—Include names associated with business, addresses, phone numbers, and date issued.

Table of Contents—An orderly table of contents will allow the reader to turn directly to the section desired.

Executive Summary—Give a one- to two-page overview of your entire plan. Most likely the most important section of a business plan.

Company and Industry Background Information—Describe your company's background, legal forms, personal skills, previous experience, financial resources, environment and industry trends.

Products and Services—Go into detail describing your product or service. Describe your competitive advantage and what sets your product or service apart as better than the competition.

Marketing Plan—The marketing plan shows how you expect to reach your sales forecast. Include overall marketing strategy, market objectives, pricing policy, promotion policy, place, and service policies.

Operations Plan—The operations plan will stress elements related to your business production. Include facilities, location, capital equipment, labor force, inventory, and purchasing.

Management Team—Describe legal form of ownership and the people with their qualifications that will make the business run smoothly and successfully.

Timeline—Outline the interrelationship and timing of the major events planned for your venture.

Risks and Assumptions—All business plans contain implicit assumptions; this section gives you a place to establish alternate plans in case the unexpected happens (unreliable sales forecasts, erratic supply of products or raw materials, etc.).

Community Impacts—Describe potential benefits, networks, and alliances with the community.

Financial Plan—Your financial plan is where you demonstrate that all the information from previous sections can come together to form a viable, profitable business. Projections should be your best estimates of future operations. Your financial plan should include the following statements:

1) sources and uses of capital,
2) cashflow projections for 3 years,
3) balance sheets for 3 years,
4) income statements for 3 years, and
5) financial analysis (liquidity, solvency, financial efficiency, profitability, repayment capacity, and break-even analysis).

Where to Get Help

The business plan should be tailored to fit the value-added project. Write the plan yourself, even if you seek assistance from professionals and other community members. Professional assistance (attorneys, accountants, financial consultants, etc.) should be used as needed.

You can get assistance in writing your business plan from:

* One of the many guides written on business plans.
* Small Business Administration pamphlets.
* Your area Small Business Development Center.
* Your local Chamber of Commerce.
* A college or university near you.

What NOT to do when writing a business plan. When writing your business plan do not:

1) submit a rough copy,
2) depend on outdated data,
3) make unsubstantiated assumptions,
4) be unrealistic,
5) misunderstand your own financial information,
6) forget factors outside your business, or
7) hold your own money back.

References

Hatten, Timothy S., Small Business Entrepreneurship and Beyond, Prentice Hall Business Publishing, 1996.

Wold, Sargent, and Sargent, NxLevel Guide for Business Start-Ups, US West Foundation, 1996.

Colorado Small Business Development Center, The Small Business Planning Guide, SB-2M-00156-01.

Internet Resources