• lt'tMl ,md ~t.

,tllt{,t\ l\'qlllt~ 1 11wnt 1 ,

• ~lll'Pt. 'I urn, ~l'I VI Ct'C..

S. OPERATIONAL. / PROOlJCU,O__N PJ.AN

• P1,,durt1on tnr lll\ lt", i1mi r"dlhH lty utlll:i1tlon
• PtNiud lo" 1HHI opl'tiitlon•, ,,t111\t 1<1Y
• l'1,,th1d h.,11 pr t'l t'~~
• Rl'<1\ll,,t1c,ns t\1tt'r tltH1 opt'I titlorn: ,
· 1ll 1t
• Opt't ,1tlo1h,l lltndl, l >.It' / 11 roe l lll ·tlon •'•·d1u<

t, , FINANCIAL ebAN

• Pr\'· opN..-it Ions cost

• \Vorldng c~1pltnl
• Cush flow projcrtlons
• Pro- formu Income statumcnts
• Pro-formu brilanco sheets
• Profitablllty ratios
• Proposed cc:ipltollzatlon
• Potentlul risks

7. BUSINESS PLAN WRITING

DEFINITION

A business plan is a written document describing the nature of the buslne

sales and marketing strategYt and the financial background, and containing a
projected profit and loss statement

A business plan is also a road map that provides directions so a business c

its future and helps it avoid bumps In the road. The time you spend making
business plan thorough and accurate, and keeping It up-to-.date is an Invest~
that pays big dividends In the long term. '

At business plan is a document setting out a business's future ob1'ectlves an(

s rategles for achieving them.

It is a roadmap for your business th t .

achieve those goals. a outlines goals and details how you plar

Atndits heart, a business plan Is just a

I
a how you're going to make It Pan for how your business is going tow
Plan up to date. succeed, Good businesses always keep their

.e_URPOSE OF A BUSIN - • n ..
Ess PLAN
 btY,ln';',',.
for how you will opnn..tte yrJur fr)r f(;U r
lnvPstor5 or got<..! l<Jan
usines s pla
~~ile you need
n ser
to
ves
hav e
as yo
a
bu
ur
sin
blu
ess
ep rln t
pla n to ~~eit
.
pr~vidc:~ tJ 5V.!p-by-<,t,~p gtod<;
and It direct', r!'l '!r /
,..,,.,

any the plan is actua lly for yo ur bcne . co mp

*
an y'
w yo ur cu rre nt
comp rt ' a ne w business or gro
you sta rd.
decision you make going forwa

l. GET ORGANIZED th gh tc an da org cJnize th~

. . ~ nu mb er of
- n he lps you cla rify yo ur ou
ur bu sin ess pla
Writing down yo ~;e ble A bU$ines~
nee d to tak e to be suc ces sful In yo ur buslnes~. T~ere 1 . · ur 1=-fforts
steps you pro a
eth er to make yo ur busines.,)
pieces tha t all have to come tog any im po rta nt steps tha t could ~e rai l yo_ .., _blt=-
plan ensures tha t you wo n't ski
p ~-
c ( eve n if the plan is for yo ur ey es on ly) , Use mea:u_ra
down the line. Be specifi an d tra ck ~b le p~rfo~mance ex pe
cta tio :.., , .
nta ble res po nsi bili tie s see th - big
milestones, accou y spe lled ou t in wr itin g, ,t he lps yo u
pla n is cle arl
for starters. When yo ur nd ers .
problems before you . ma ke blu
picture and identify po ten tia l

2. STAY ON TRACK
ve lop ed , ref err ing to it pe rio dic all y he lps yo u ma int ain
After your business plan is de to fol low
as you ma ke da ily de cis ion s. The plan ma ke s it ea sie r
a long-range view po rta nt ele me nts
ss de ve lop me nt ste p in ord er so you do n't mi ss an y im es a
each busine
ritt en pla n pro vid es yo u wit h a sta rtin g po int an d ou tlin
along the way. A we ll-w ping yo u gro un de d, foc us ed
on yo ur tar ge t
t dri ves yo ur ac tiv itie s, kee yo u
timetable tha in bu sin ess tac tic s an d on tra ck as
ne d wit h yo ur ma
market, strategically alig
progress.

3. CLARIFY GOALS
ne ed ed
an eff ec tive me an s of de fin ing yo ur go als an d the ste ps
A business plan is tio n. It als o
m. It spe lls ou t yo ur pu rpo se , vis ion an d me an s of op era
to reach the to inv es tor s,
as yo ur co mp an y's res um e, ex pla ini ng yo ur ob jec tiv es am ou nt
serves bu sin es s pla n cle arl y sta tes the
,an d ve nd ors . A go od
partn~rs, employees wo rk an d wh ere the inv es tm
en t is co mi ng
d to ma ke the co mp an y
of capital yo_u nee mo ne y, yo ur sa les
nfi e: the me an s by wh ich yo u wil l pa y ba ck bo rro we d
from. It cla es t pro fits .
h flo w an d ho w yo u wil l inv
forecast, spending bu dg et, cas
4 • PREPARE FOR TH E FU TU RE
.
yo u wil l rea ch th
By outlining yo ur goals and ho w res ea rch in the bu ~m , you,r bu sin es s pla n he
lps yo u
Ma rke t e
pre~are for the fut ure . s me ss P an sh ou ld inc lud
proJections based to ful fill t~o se ne ed s. A we
ll-
~~ o~ ~~ !n~ ;~{ t~i r ab ilit y
dev~lo~ed bu sin es ~~ ~o nn !~s ns the co mp an y wil l fol low in
ca se the
be too o tim · f
proJect,ons tur n ou t to lop ed to ide nti fy
sta cle s, inc lud ing pis sib ~: ~b as ;t~ ~o ~h sh ou ld be de ve
~~l~e~tial ob t the co mp an y
red to ma ke op era tio na l de cis ion s th t e ma ~k ~t, ~o etha wi th the ov era ll
busin e prepa a rem ain in lin
ess str ate gy ,
 SE Of A BUSINess
Ttff pURPO
~
T· tfAT IS
ss pl.AN? W
sus1NE AL'7
WHAT IS A T IS A GO -
pLAN? WHA

sruovuNKS
- ur com
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www.Score.org

_ www. bplans.com N

FEATU

OBJECTIVES hould be able to:

. t he teamer s
d f this topic
By the en ° of a
-ness plan
bus,
3. Outline the features

FEATURES OF A BUSINESS PLAN .

. Ian has the following components.

Generally, a business P . Whether it's to provide
·tten business plan. i
Every business nee?s to have ab:~iness.
plan is vita) for the success or your
direction or attract investors,?
organization. A business plan include .

1. 1. TITLE PAGE AND CONTENTS

•
2. A business plan should be presented in a binder . a cover risti ngmber
with e·
the nam1
of the business, the name(s) of the principal(s)' ad~ress' pbor:ie n ~ !ot'of
mail and website addresses, and the date. You don t have to sper:1 a
money on a fancy binder or cover. Your readers want a plan that 1ooks
professional, is easy to read and is welJ-put-together.

Indude the same information on the title page. If you have a logo, you can use\
too. At.able of contents follows the executive summary or statement of purpose,
5
that reader.; can quickly find the information or financial data they need.

1. ~- EXECUllVE SUMMARY. It tells the reader what you want and why,
nght up front. Are you IOOking for a loan to remocJel and refurbish your ,
factory? A loan to expand your Product fine or buy new equipmerit? How "to
you repay vour loan, and over what tenn? Would you like to find a partner
 iness? What's in it for him or her? The
whom you'd sell 25 percent of the bus and
n shou ld be addressed here clearly
questions tha t pertain to your situatio
succinctly.
LF A PAGE
SUM MA RY OR STA TEM ENT SHO ULD BE NO MO RE THA N HA
THE ELE ME NTS :
LEN GTH AN D SH OU LD TOU CH ON THE FO LLO WIN G KEY
IN
es
iness, its product, the ma rke t it serv
• Business concept describes the bus
age.
and the business' competitive advant
l high lights, such as sales and profits.
• Financial features include financia or
much capital is needed for sta rtup
• Financial requirements state how
wha t collateral is available.
expansion, how it will be used and pany,
s relevant info rma tion abo ut the com
• Current business position furnishe and
was founded, the principal owners
its legal form of operation, when it
key personnel. s,
anything not ewo rthy , such as patent
• Major achievements points out , or results
arding pro duc t dev elo pm ent
pro toty pes , imp orta nt contracts reg
n conducted.
from tes t ma rke ting tha t have bee
ESS
1. 3. DE SC RIP TIO N OF THE BU SIN
2. ins with a sho rt exp lan atio n of the
3. The business des crip tion usually beg as well
ust ry, discuss wha t's going on now
ind ust ry. When describing the ind can pro vide
necessary research so you
as the out loo k for the futu re. Do the
ts with in the ind ust ry, incl udi ng
info rma tion on all the var iou s ma rke der you r
elo pm ent s tha t could ben efit or hin
references to new pro duc ts or dev foo tno te
on reliable dat a and be sure to
business. Base you r obs erv atio ns
when necessary. Rem em ber tha t
and cite you r sources of info rma tion on
w hard fac ts-- the y wo n't risk mo ney
ban ker s and inve sto rs wan t to kno
ass um ptio ns or con ject ure .
, reta i\, foo d
des crib ing you r bus ine ss, say whi ch sec tor it falls into (wh ole sale
When ss is new or
and so on) , and whether. the bus ine
service, ma nuf act urin g, hos pita lity tne rsh ip, C
d. The n say wh eth er the bus iness is a sole pro prie tors hip , par
establ ishe sta te wh at the y
t, list the business' prin cipa ls and
or Sub cha pte r S cor por atio n. Nex cus tom ers
to the bus ine ss. Con tinu e with info rma tion on who the bus ine ss'
bring d and
the pro duc t or ser vice is dis trib ute
are, how big the ma rke t is, and how
ma rke ted .
SERVICE
1. 4. DESCRIPTION OF THE PRODUCT OR
2. len gth ,
few par agr aph s to a few page~ in
3. The business des crip tion can be a d,
n. If you r pla n isn 't too com plic ate
ing on the com ple xity of you r pla
dep end on~
sho rt, des crib ing the ind ust ry in
kee ps you r bus ine ss des crip tion ces s J~etQrs
r, and the bus ine ss and its suc
par agr aph , the pro duc t in ano the
in two or thre e mo re par agr aph s.
 e . ma k Su re y o u r re a d
u describe your Produc t or service, use your p d t
e r h a s a c:le
~i°!~It°vou're p 1
E p\ain hOW e.oP e ro uc or serv iceari
talking ab~~~- p:O d 'f fe th \
ta\\<. about w ctuct or se rvi~i~e~ re n t fr o m o e rs availa
· q~\
ble i
hat ~a\<.e: ~
t what sets y s a part from those
market. Be sp
ecific a o o u r bu of You r 1
competitors.

t· it iv e e d g e
ga1·n a c o. m p e
Then exp\ai_n b ·ness will and why y
how your -~ o u r busi~
wi\\ _be p ro f1 ta
~~s~~~~sJit~:~e
!\
b \\ ~!s~;'ed as
he factors yo th
a financing p
u
·11
1
1m
ink e x p la in
~op~sa G iv e
a k e it s u c c e f I If
w
s s
h y th e a d d
u . Yo ur
it io n a l eq~
1

equipment w
yo ur busin ess mor:a~oit;~i,'o
h a rd fa c ts , s u c h as "ne w
i\\ create an in
co oo per year" an
how. m e s tr d briefly d escribe
Other inform . d
ation to ~ddre . ti o n o f th e
key peop\e _in ss here ,s a e x p e ri e n c e
the business. e ;c n ~ u r busines o f th e oth er
what supphe W~oever ;: ~ s p la n w il l
t~ ~ b o u t y o u w a n t to kno w
to your idea.rs or experts you ve sp r b u s in e s s
They may eve o a n d th e ir resp
for se\\ing this n ask you to \ ·fy y o u r choice o ns~
particu\ar pro can o f lo c a ti o n
duct. o r reason s
1. 5 . MARKET AN
2. ALYSIS
A thorough m
arket ana\ysi
help you esta s will he\p yo
blish pricing, u define y o u
allow your co distribution, r p ro s p e c ts
mpany to be and p ro m o ti as w e ll as
short and lon successful vis o n a l s tr a te g ie
g term. -a-vis y o u r c s th a t will
o m p e ti ti o n ,
b o th in the
Begin your m
a
structure, gro rket analysis by defining
w th
your product th prospects, trends, an e market in te rm s o f s
or service will d sales pote ize d e m o
the potential
you either ha
annual purch
ve or can att
be purchased
ase. Then fig
ain. Keep in
by
ure out wha
ntial. N e x t
your ta rg e t m
t percent e
a rk
d t'
e ermm_e
. ira hies
p ft '
o w O en
share, and th mind th a t no t. T h e ~ fi g u
a t a somethin one g e t age re o
Your market
share will be
g as small as
25 percent is o f th is a n n u u t
of your mark a con -~ lO O P a l sum
et-planning p benchmark th a t tells you e rc e n t m a rk
rojections. hows, ~~ed et
a d o m in a n t
You'll also ha we You're share.
ve to describ d o in g in lig
product or se e your positio ht
rvice from th ning strategy.
niche to fill is a t of your com H o w

business plan
ca
tity within the
pe
service's iden lled "positioning." Positio titors and then Otu d i~ e
nin J .

eyes of the p g helps establis~ errrun n ti a te y o u r

re
doesn't have urchaser. A p e Which m
who your targ to be long or os ke
et market is, elaborate, b u it io n to u r P ro d u c t o r a r t
you, who you ho t it doe~g s ta
r competitors w you'll reach them, wh te rn e n t f
are, and wha at they"renee
t your USP (u d to P o in tr
How you pric nique sellirnea a
e your produ 1ty b u y in g o fu
decision. It 's ct or service g Pro t
also one -Of t'. is perhaps yo ro
because there he ,most diffic u r most im p o P o sition) .m
available to yo a re no in st a n
ult to make fo
u, but these t formulas. Many method most small
are among th
e most comm
r
s of establish
rt
b: ~ l'l1arketi
ing in~ss o w
15
•

on. ~g
Prices are ers
,
 all costs,
by ma nuf act ure rs to assure tha t
• cos t-pl us pricing is used ma inly e is
d and the desired pro fit percentag
both fixed and variable, are covere
attained .
• ies tha t sell the ir products thro ugh
a
• Demand pricing is used by compan
es based on demand .
var iety of sources at diff erin g pric
• panies tha t are entering a ma rke
t where
• Competitive pricing is used by com one
e and it's diff icu lt to diff ere ntia te
there's already an established pric
pro duc t from ano the r .
• retailers and is calculated by add
ing you r
•Markup pricing is used mainly by
duct.
desired pro fit to the cost of the pro
cess of
tion, which includes the entire pro
ou'II also have to determine distribu analyze you r
ory to the en d user. Make sure to
moving the product from the fact the same typ e of
befo re decid ing whether to use
competitors' distribution chann els antage.
nne l or an alte rna tive tha t ma y provide you wit h a stra tegic adv
cha
municate with
should include all the way s you com
Finally, you r promotion stra teg y be successful,
r ma rke ts to ma ke the m awa re of your products or services. To
you relations,
ress advertising, packag ing, public
you r promotion strategy shou ld add
s.
sales promotion s and persona l sale

lysis is to determine:
The purpose of the competitive ana
t.
the competitors with in you r marke
the strength s and weaknesses of
• age.
a distinct advant
strateg ies tha t will provide you with
• r
pre vent competition from entering you
bar rier s that can be developed to
•
ma rket. cycle.
loit ed in the product development
• any wea knesses tha t can be exp
indirect
lysis is to identify both direct and
The fi rst step in a com pet itor ana grouped
now and in the future. Once you 've
competi tion for your business, both ntifying the ir
r com pet itor s, sta rt analyzing the ir marketing strategies and ide you
you
ble area s by exa min ing the ir stre ngths and weaknesses. This will help
vuln era
advantage.
determine your distinct competitive
targ et ma rke t
should be very clear on who your
Whoever reads your business plan com pet itors,
t you r ma rke t niche is, exa ctly how you'll stand a~?irt from your
is, wha '\. t
so.
and why you'll be successful doing
NT
1. 7. OPERATIONS AND MANAGEME
2.
ponent of your plan is designed to
The o_perations and management com ons
s on a continuing basis. The operati
describe how the business function
 . th th . a ti o n s u c h
plan highllghts e logistics of e o rg.a n iz ' a s th e respon
. . sibilit•
the managemen t team the tasks ass1g~ ed to e a c h d1v1s1. on w ,th ·in
company, and . I ~nd expen e m e n ts re la te the ies
capita se requ1 r d to th e o p e ra tion
the business.
s~
!: 8. FINANCIAL CO
MPONENT
S OF YOUR B
U S IN E S S P L
s. AN .
After defining th
e product, _mar t and o p e ra ti o n s , th e n e
k~I s ta te m e n ts xt
attention to are
your business the thre~ financ, t te m th a t fo rm th e a re a to tu rn Yo~
plan: the in c o e n t cash fl o w b a c k b o n e of
sheet. mes a s ta te m e n t, a n d balan
' c~
The income sta
tement is a sim
generating abili ple and s tr a ig
ty. It is a scorec h tf o rw a rd re p
th a t reflects whe ard on the fina o rt o n th e b u
n sales are mad ncial p e rf o r~ s ines~ ' cash-
information fro e and when exp ance of your
m the various enses a re in c busine ss
expenses, capita financial mode u rr e d • It d ra w s
l (in the form o ls d e ve lo p e d
these elements f depreciation), e a rl ie r s u c h
, the income st and c o s t o f g a s revenue ,
makes o r loses atement ill u st ra oods. By com
during the yea te s ju s t h o w b ining
revenue to arr r by subtractin much your c
ive a t a net re g co st o f g o o d s a o m p a ny
income statem sult, which is e n d e x p e n s e
ents,_ i~clude a it h e r a p ro fi t o s from
very short, ~m note ~nalyzing r lo s s . In a d d
th e re su lt s. T h e it io n to the
you craft this. phas1zing the key poin a n a ly s is s h o
ts o f th e in co m u ld be
e s ta te m e n t.
Y o u r CPA can
The cash flow help
business, since st a te m e n t is one o f the most
it shows how m cr
require it and uch cash you'llitical in f •
where it will co ne d o rm a ti
each month an me from. The o n ~ool~ fo r
d year. The ca result~ t~ me your ,
to th e n e xt m o sh flow st a te m e n e t_ ob
n th to also show t is t e p ro fi ll g a t, o n s , w h e n you II
cash flow st a te the cumulativ t o r lo s s a t th
m e n t is a m a jo ca rr ie s b o th p e end of
m e e t expense r red flag th a t i ro fi ts a n d lo s
s-something th ed~mount. R u s e s over
a t demands im n n in g a lo s s
m :~ ~ = :: s n o t o n your
The cash flow ~ a v in g e n o u g
s ta te m e n t sho a tt e n ti o n a n d h c a s h to
year, on a q u a uld be prepare acr
rt e rl y basis fo d
following 1 7 it r the second io n ·
e m s are listed ea
statement. As in th e order ih on a m o n th ly b a s is d .
w it h th e incom r, and a n n u a ll .
st a te m e n t in a e st y fo r thu n n ~
sh o rt su m m a ry a te m e n t ey ~eed to a p p e a th e fi rs t
doesn't have to in th e bus{n You II r e th ir d y e a r.
be long and sh need to a n a l The
ould cover h~ 5 on Your cash
~ plan. On
ce a g :z e th e fl o w
The last financi 9 11 c a s h fl o w
al s ta te m e n t yo 9 h ts o n ly . A s
financial st a te u 'll ne ed is k in , th e a n a ly
m e n ts th e ba
.
an d is~ lance sheet is b Y o u r CPA fo r
s is
more o r less,' a alance s h e h e lp .
down into thre a s u m m a ry o f Qenerat d et U .
e areas: asse a ll th e Pree _e a n n · n lt k th
ts, liabilities a uau e e p re v io u
nd e e~ing fi n s
Balance sheets q u ,t y. a n c iI I ~ or th e b u s in e s s
are used to ca 1n forn-,. . pla n
measuring ass lculate th e n e ·r ~ 1
ets a g a in st lia tw , • • ,at1on
b ro k e n
th e _balance sh bilities. If y o u
e r
business plan et fr o m y o u r la st re p o rt in g b u ~ ~ h o f a bus.m-e
is fo r a ne ~ . ess
· ·
 you may
will be over !he cours~ of the business plan to determ ine what equity
ng for a new busines s, you'll need to
~ccum ulate in the business. To obtain financi
include a personal financi al statem ent or balance sheet.

sheet just as
In the business plan, you'll need to create an analysis for the balance
s of the
you need to do for the income and cash flow statem ents. The analysi
balance sheet should be kept short and cover key points.

1. 9. . SUPP ORTIN G DOCUMENTS

2.
your
In this section , include any other documents that are of interes t to
ts with supplie rs, custom ers, or clients,
reader , such as your resume ; contrac
of your lease and any other legal
letters of referen ce, letters of intent, copy
and anythin g else
docum ents, tax returns for the previous three years,
releva nt to your business plan.
to borrow
Some people think you don't need a business plan unless you're trying
need a good plan if you intend to approach
money . Of course, it's true that you do
ist or any numbe r of other source s-
a lender --whet her a banker , a ventur e capital
pitch for financi ng; it's a
for startup capital . But a busine ss plan is more than a
guide to help you define and meet your business goals.
maplf you
Just as you wouldn t start off on a cross-c ountry drive withou t a road
1

ss w·i thout a busines s plan to guide you. A

should not embar k on your new busine
a succes s, but rt wilJ help you avoid
busine ss pJan won't autom atically make you
as under-c apita1i zatton or lack of an
some commo n causes of business failure, such
adequ ate marke t.
1
in your .
As you research and prepar e your business plan,, yol.!1 1~ find weak spo~
repair. You'll also discov er areas with potential
business idea that you'll be able to
to profit from th~m. ~nJy by
you may not have though t about before --an~ ways
r your great idea 1s really
putting togeth er a busine ss p1an can you deade whethe
worth your time and investm ent.

REVIE W QUES TIONS

1. What is a business plan?

2. Exp.lain the reasonrs why a business plan is ~repared
3. Identif y the disting uishing feature s of a business pJan

STUD YUNK S

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I.

www.s core.or g

wwwJJ plans.c om
 IJ!SS PL
V t.,O Xf"G
9u~p_gUH1!$ F.,.
.
otUE!=TlV)B
~ . toping an effo ct lvo bu sln or.r. Plat,
Describe the guldo otho
II es for deVe I ns
buslnesfil p a .
~'. Identify ttio users of
<'o here ;,ire ,,ornc ,,1,
. ~ dlfflCUlt to do. , '
13•. lor wr,1 •I
Howt~vcr , 9cttlnQ •lt"i111cd trlrlY h<.
\u ,~'" d h,t$ t h- •.? p1rn, .
cH
1. RESEARCH, IU:SEAR w --RESEARCHJL
. . d your ob jed .iv ,: <;.1p,:rt
!',t:,"
:~,~=:r~,:911:~: ~~w-rctlred se;:~; :;~~~~ ~,i:r,c
d . I 1.c your product, yo ur market an

ha s wn n-c n "Consider spendi

. d rnanagPment e>a:<.u t,1V
res ea r;,h lng ,
e,
r!v<1lu at1nr1 and
thinking as you spend actua ng t ltl g the business plan.
lly wr n
"To wri te the perfect plan, you ou r company, yo ur pro du
mu st kn~w Y ct, yo ur
competition and the ma rke t
int im ate ly,
In oth er words, it's yo ur res
ponsibility to kn ow ev ery thi
business and the industry tha ng yo u ca n ab ou t _your
t you 1re en ter ing . Read ev ery
industry and tal k oo yo ur aud thi ng yo u ca n abou t yrJ.Jr
leAce.
2. DE TE RM INE TH E PURP
OSE OF YO UR PL AN .

A business plan, as define

d by En tre pre ne ur, ls a "w ritt
nature of the business, the sal en do cu me nt desc~ibing
es and marketing str ate gy , an the
background, and containing d the fin an cia l
a pronected pro fit and los s sta
business plan can serve severa
l dif fer en t purposes. tem en t." !H ow ev er., your

As En tre pre ne ur notes, it's

"al
can plan its fut ure and helps so a road ma p tha t rov id • . •
'lt avold ' bu mp s. th P
in mind if you're self-funding es dir ec tio ns so a .business
or bootstrappinm e roa d : " Th t' ·
att rac t investors, yo ur plan wil a s im po rta nt to 1.r,.CN
... ~p
l have a dif fer ;ni ou r bu s me
plan tha t tar ge ts them so It ss. Bu t, if yo u wal'ilt to
will have to be as pu rpo se
you define yo ur plan, make an d yo u'l l ha ve to write a
sure you have de f c Iea r an d
co nc ise as possible When
ine d the se
3. CREATE A COMPANY PR
OFILE. go ats personaUy as· well.

Your_ company profile includes

the history of
services you offer, yo ur tar ge
t ma rke t and Yo_ur org an iza
going to solve a problem and tio
what mak' audience Yo ur
company profile, I pu t thi s on n, Wh at pro du cts or
ou r Abou ~ -Your bu si~ es s u
r~s ou rce s, ho w yo u 're
- ~ - niq ue . Wh en I cra fte d rnY
Company profiles are 0ften fou
nd on th ' ' • jl '"-.t
att rac t possible customers and
tal en t He company's off i .
· owev c,a 1 Web ·
er, Your Pro file srte an d are used to
ca n be us ed to
 l co mponent
sin es s pl an . It 's not on ly an esse ntia
pa ny in yo ur bu parts of the pl an.
describe yo ur co m it's al so on e of th e first wr itten
n ;
of yo ur busines s pla
to compose .
m ak es th is st ep a whol e lo t easier
in pl ac e
Ha vin g yo ur pr of ile
UR BU SI NE SS .
L AS PE CT S OF YO
4. DOCUMENT AL
money .
ur bu sin es s Is go ing to m ake th em
m ak e su re th at yo ng abou t yo ur
In ve st or s wa nt to st or s wa nt to know ever yt hi , cash
Because of th is ex
pe ct at io n, in ve
m en t ev er yt hi ng from yo ur expenses
do cu deta ils lik e your
wi th th is pr ocess, et seemingly m in or
business. To help . Al so , do n' t fo rg
pr oj ections
flo w an d in du st ry and licensing agreements.
lo ca tio n st ra te gy
PLAN IN PLACE.
HA VE A ST RA TE GIC MARKETING
5.
keting plan.
lud e a st ra te gi c and aggressive mar
an wi ll always inc objectives such as:
A gr ea t business pl ac hi ev in g m ar ke tin g
ca lly inc lud es
This ty pi
w products
• In tro du ci ng ne products
in g or re ga in in g m ar ke t fo r existing
• Ex te nd mpany
te rri to rie s fo r the co Where will this
• En te rin g ne w
cu la r pr od uc t, m ar ke t or price range.
in a pa rti
• Boosting sales
busines s co m e fro m ? Be specific. an ot he r
g ( or bu nd lin g) one pr od uc t wi th
• Cross-se llin le clients
in to lo ng -te rm co ntracts with desirab
• En te rin g sales figures
wi th ou t cu tti ng in to
• Raising prices
uc t
• Refining a pr od gy
nt en t m ar ke tin g st ra te
• Ha vin g a co od uc t de liv er y
En ha nc in g m an uf ac tu rin g/ pr
•
of objectives) and
sh ou ld ha ve se veral goals (subsets
je ct ive
"Each m ar ke tin g ob e go als,," states Entrepr
eneur.
hi ev in g th os
ta ct ics fo r ac
n, you focus on th
e '~ ha t' a~d the
g pla
se ct io n of yo ur m ar ke tin tion section, yo_u
"In th e ob je ct ive s ah ea d. In th e implementa
tin g ta sk s fo r th e ye ar en and how. Th is
'why' of th e m ar ke -c al lu se s ar ea s of who, where, wh
al , sw ea t-a nd
focus on th e pr ac tic
tin g tre nc he s. "
is lif e in th e m ar ke ficial fo r
s wi ll ha ve co s~ . "I t would be bene
ive
g m ar ke tin g ob je ct hours (s ta ff tim e)
and external costs
O f course, ac hi ev in dg et s fo r in te rn al
ra te bu
you to cr ea te se pa
nses).
( ou t-o f-p oc ke t expe
AUDIENCE.
E IT AD AP TA BL E BA SE D O N YOUR
6. MAK bankers
n ar e a ~? 1.rjed bu nch, ranging from
ers of a business pla ach ty pe of reader
"The potentiaJ read em pl oy ee s, " st at es Entrepreneur. "e
lis ts to
and ve nt ur e ca pi ta
 th e se i n te re s ts
If you kn o w u p -f ro n t, You
have certain typi Ia n fo r th a t p a
cal in te ~ :: ~ n rt ic u la r aud ·tar
does k them in to acco p re p a ri n g a p
sure to ta e u ie ~
. b la n ce sh e
re in te re st e d tn e ts a n d cash-f\o
For example, bank . a a t th e b a si ~
statements , while
and your manag
ers wil~ ~ ~ ;~ li s ts
ve n tu r T he m
will be
anager o
1~0;~~; c b u si n e ss con
te a m , will b e u
sing the Pl~
ement te ~ ~ ti ve s
"r e m ind themselv ."
es o f obJe
d. g o n th e a u
can be m d d e p e n tn d ie n c e reading
plan . However , ke ~~n e al te ra tio ns lim it e d
make sure th a t yo od ifi e . "
ur o n e p la n to a n o th
th a t when sharin ep e~ fr o ~ ke e p th
e r. This m,~.•
.
g financial proJe ctions, yo u shoU a t d a ta th e sa
m e a~
th e board . -~
7 . E X P L A IN W
H Y YOU CARE.

Whethe r you 're

sharing your, plan . ·n ve st o r
pl an needs to sh wi~h a~ 1an d d e c u s to m e r o r te a m m e m b e r,
ow th a t you re pa d ic a te d , a n d y
o u a ct u a lly care
y~
ab ou t yo ur busine ss,ona e Id d. cu
learned , lis t th e ss and th e plan . 'f ou co~ ss th e m is ta k e s
problems th a t yo is t h a t yo u 'v e
establish w ha t m u re hoping to so I d e sc ri b e y o u r
akes yo u stand ve~ . va lu e s an d
o u t fr o m th e co ,
m p e t1 ti o n .
W h en I s ta rt e d
m y p a y m e n ts c
w a n te d to c h a ompany, I set
n g e th e w a y p a o u t to c o n q u
anyone, anywh y m e n ts w e re m a e r th e wo~ld. l
e re in th e w o rl de and make
e x p la in e d w h y d to p a y a n y o n it e a sie r for
I e w it h fe w to
e v e ry th in g I d w a n te d to b u il d th is . M y p a s n o fe e s. I
o. s io n s h o w s th
ro u g h
B y expl~ining. w
hy
connection w1th yo u care a b o u t y~ u r business
others so th a t th yo u cr e a te a n
e y II su p p o rt y o e m o ti o n a l
u r o rg a n·i z a ti
WHO NEEDS A o n 90 1•n g fo rw a _.
B U S IN E S S PLA , u.
N
1. STARTUP B
U S IN E S S E S
T h e m o st classi
c business planni
helps th e founde ng scenario is
rs br ea k un ce rt ai
p ro je ct io n , expe nt y do w n in to14o r
nse bu dg et , m ile a ~ r tu p , fo r w
st on es , an d ta s
~ ~ n in g tu 1 P ie
h ic h th e plan
T h e need becom ce s, li k e th e sales
es obvious as so
m u ch m o n e y yo on as you reco
u .
co st s, expenses, need, and when you need it 9~ 12
and ti m in g o f pa e th a t Y o u d
th e y need to co ym en ts A n d : 1 ,
nvince in ve st or s, ~ o u t la yi n g
o n
4

m o n e y and fu nd ba t k !' o w h o w
th e new ve nt ur e nks, o r fr ie n ~ a t s fo r au s ta O
~ t .Q ro 1e ct ed sa
. le~
U p s, w h e th e r or , t
s a n d farnuy t
' IS
ln th is case, th e 0 no
business plan is P a rt With t h e ir
go in g to do, ho focused on ex
w it is go in g to . .
th e fo un de rs ar
e th e ri g h t peop
accomplish it s
le to do th e jo9b
:ftntng W h at ~·
~s, a n d -n io s ~ ~ n e
w c o m pa n y is
• st a rt u p buS
in •r n p o rt
a n tl y- wh
ess P la n a lso d e tay ,
..
 , •➔ r
IOllld l gr-ow e, 1 p, ta:::rc.:, 1., ,u c ..,, .. .,....,.,._

2. EXIS TING BUS INES SES

g the next big
Not all busi ness plan s are for start ups that are laun chin
egic ally man age and stee r
thing . Exis ting bus ines ses use business plan s to strat
ets and to take adva ntag e of
the busi ness , not just to addr ess chan ges in their mark
egy, esta blish metr ics, man age
new oppo rtun ities . They use a plan to reinf orce strat
and plan reso urce s
resp onsi biliti es and goal s, trac k resu lts, and man age
plan to set the sche dule for
indu ding critic al cash flow. And of course they use a
regu lar revie w and revis ion.
exis ting businesses.
Busi ness plan s can be a critic al drive r of grow th for
process can be a com petit ive
For exis ting busi ness es, a robu st business plan ning
vatio n. Inste ad of a stati c
adva ntag e that drive s faste r grow th and grea ter inno
me dyna mic tools that are
docu men t, busi ness plan s in exis ting businesses beco
re they dera il the business
used to trac k grow th and spot pote ntial prob lems befo

REV ISIO N UES TION S

L i. Wha t is a bus ines s plan ?

2. ii. Disc uss the purp ose of a bus ines s plan
3. iii. Out line the feat ures of a bus ines s plan

DYU NKS

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OPIC TWO: BUS INE SS DESCRIPTION

OBJ ECT IVES

1. i. Det erm ine how to prov ide a bus ines s nam e

2.. ii. Elq>lain fact ors to con side r whe n cho osin g
a bus ines s loca tio~'J.

L BUS INE SS NM tE d \' 1

 're go in g to be co nc er
companY, yo u ned
. a name for yo_ur n~ :r d m ak in g su re yo u pic . Wit~
When choosing business, an k an ~
h t best suits y lne
· the name t a t
finding ct
you can lega II Y use and pro e · · 1
. ss na me s ar e th e le ga l re qu irements
. busine ,a
The two main conce rns for startu P
the commercial use.
. W e ar e no t at to rn ey
ire me nts s. We do
Now in terms of legal req , full dis _c los ur ~tt or ne y ea
u rly on as you bu ild
' e
not giv legal advic. e, so be sure to check wi th an
you r business .
. h" se cti on no t yo
. ·ness ur
lk
We are ta mg a bo ut the na me of yo ur us1 T det is
b in '
t rademarks, service marks or slogans. ra m ar k la w pr ot ec ts product
, logos,
names, logos , trade name sloga ns as tra de m ar ks or se rv ice ma r k
Copy ri ght law protects wo s, even so~etion mo vie s, ar s.
rks or art, IC t, sc ul pt ur e, an d ot he
, r
creative works.

Business law, however, do f II ua

business name es not ul y _g_t ran tee you th e ex clu siv e
us e of
. To get close to exc usIvI Y, you have to be fir st , yo u ha ve yo ur
to be
nationa l, and you have to
be alert.
Ow ni ng an d es ta bl ish
in g a business na m e

The most common misund

erstanding about busines
reg isteri ng, protecting, an s na me s is in te rm s of
d reserving your busines
s na me s.
You ca_n't reserv
exclusive use. e a business name co mp let ely -th at is to sa y,
yo u ca n' t ha ve

DI FF ER EN T W AY S OF
ES TA BL IS HI NG YOUR
BU SI NE SS NA M E:
1. Us ing yo ur ow n na
me

The fir st and simplest bu

siness name is yo ur own
John Smith using Smith na .
Cons~lting or hosting Sm
business name nor_mally ith 'rn ~ Which m ig ht be en
requires no additional Pa ou gh for
owners end up registering pe ~o ~ stau ra nt . Th is kin
a name anyhow to estabi· h d of
k, _although m t b • ess
2. Re gi st er in g a OBA 1s th eir os
I us
ega1 cla i m t ·t m
o1•
The second normal comm
on level of business narne
Business As") or fict~tiou .
s ,bu sines~ nar:ne, which
operate under a busmes giv !~ s ca!led DBA " .
9 riame with signs, bank
ace an Ind ivi du (fo r
Do ing
These are generally regist ou nts , Ch eck at th e
There mi gh t be a McDona
ered and legalized by co
un t s, an d rig ht to
ld's Hardware Store as a so on .
given state, and across ma DB~ ~0 ve rn n,e
ny dif fer en t states.
in nia ny c~~s ":' ith in st at
es.
nt ies W ith in a
3 .. Ro gl st ar ln g yo
ur cor·p or "t c st ru ct ur e
lo•,:: of ft<. v,ulou-. u,rpor
~f.n cntftiw~.
("n1 po i ,,t 1cm, n !qr1rd r;r at ion
·~ho th ird lo vl' I Is tlm C co rp o, ,1t·lnnt;, I I.Ct,, or Whdtevc r, ;, r..o rp
rp or . ,t Ion:-:, ndm<: in each
W he t he, t ht.'Y iW C s co tln d no tw o cd n ht~Vc th o ox dc t "~cimC
u lc vd
ls re gi st er ed at th u st ;,t
st at e.
regl-:;tered as
te e th«Jt. th er e wo n' t be m an y bu sinesses
gu ar an rp or at io n
Ho we ve r, th er e Is no se ve ra l co un tie s In a st at e, and a co
or a In en s.
Mcf?onald 's Ha rd wa re 1
St
re Co rp or at io n. Th is kin d of du pl ica tio n ha pp
d s Ha rd wa
re gi st er ed as M cD on al
~ ro m pa ny
yo u ca n us e na tio na l services such as rh"
·r;o es ta bl ish a co rp or at
io n,
Th e oo rp or at e fo rm s wi ll go to th e st at e, and
to rn ey .
Co rp or at io n or a local at ich st at e yo u' re in .
wh
de ta ils wi ll de pe nd on
na m e?
pi es yo ur a.wsiness
W ha t if so m eo ne co
on -y ou
s na m es ar e ve ry po ss ib le -a nd qu ite co m m
Ev en th ou gh du pl ic at
e bu sin es once yo u'v e
ot ec t an d de fem d yo u ow n business na m e,
to pr
do st ill ha ve th e rig ht
nd it.
bu ilt th e bu sin es s ar ou
hn
nf us in g iciJe ntity. As we said ab ov e, on e Jo
us io n an d co So to o,
Th e ke y to th is is co nf ith fo r pu rp os el y co nf us in g th ei r id en tit ie s.
r Jo hn Sm w re st au ra nt
Sm ith ca n su e an ot he d sh ou ld su e an yb od y wh o st ar ts a ne
s ca n an
M cD on al d's Ha m bu rg er
rv in g fa st fo od s.
na m ed M cD on al d' s se
co nf us ed wi th an ot he r, be in g fir st m at te rs .
e bu sin es s is wo ul d
On th is po in t, wh en on a se oo nd . M cD on al d's Ha rd wa re wh er e it
to es ta bl ish has a le ga l rig ht to pr ev
en t
When so m eb od y tri es th e fir st M cD on al d's
e fir st , th en
confuse pe op le wi th th
it.
e fir st st or e sh ou ld ta ke qu ick legal ac tio n
ts up ~ ,sign, th en tM case of th ~
If th e se co nd st or e pu or e ig no re s th e se co nd , th e be tte r th e
th e fir st st on e to use th e na m e 1s
to st op it. Th e lo ng er es to co ur t, th e fir st
e wh ol e ·m es s go r on e bu ilt th e na m e., th
elil
second store4 W he n th qu ie tly wh ile th e ot he
fir st on e sa t
likeJy to wi n, bu t if th e
th er e is m or e do ub t.
 w--
au eauy----..:a"-,;;,n - , ...
problems later, because I c
·t onfuses you WI·tn ocn~,
_ _ _ _ __ __,,,..,-,,,Tlll"l::::YY.-----.-....-------
~ ~ ~ - --:-=-:-~
.
uu ~u , ...... - - - -
•
. , d taken may seem obv•o~.s, bu t_ how ~
Okay, so choosing a name that ,sn t alrea y 't be a conflict? There ,s no single
you r,esearch a name to make sure there won '
01
way, but here are some suggestions:

1. Run several different online searches

Do a few searches, and see wl':lether anything tur:ns up on the company name
vou're considering. You can also go to the Office website, as well as
using KnowX.oom or similar searcher sites.

2. Check out the domain names that are available

1

There are sever:al searchers that offer access ito the"' .,

sites; the most tr:aditional site for this is the one at V w~~se database of internet
_ensign, Inc.
Ohedking the domain names associated with your . -

but also because you'll !likely want to pick a name

business website.
t:
is import.ant; not only because you'll want to avoJJ>otent,at business
COnfiusing and d na~e
at You can u uphcate name,
se ffor vour
As suoh, if your chosen business rname already ha
1e xample, you might want to go ln a different dine~i! blog attaCh
n.. eq to it, 1~, or
3. "talk with an a lawyer

Since you p~obably want to talk to arn attonraey abol!Jt

and otber start-up matt!ers, you may also ask vour aihe <:or.~
business r:-aames. 0 nney, ~ bllls;lil
l!lt lCfla ess entities
CHOICE OF BUSINESS LOCATION ecking on
~ )' . ..
.... ,
 •I whon d1oor;l11cJ II loctillon for
your bur,lnw,,,
There arc ma ny thln qs to corrnld( or lo()vln<) tfJ
ture , wh eth er set t Ing up c1n offi ce or r1 shop f 01 I.ho fir<;,! Um<:,
ven
expand Into new areas.

1. Ac ces sib ilit y

nt to c.on~ldcr foe.al
s you r bus ine ss rely on freq uen t dellvcrlcs? 1f so, It's imp orta
Doe tal and
roads and mo torw ays. Property ren
tra nsp ort link s, par ticu larl y ma in me rcia lized areas, so
r In hig her density, mo re com
purchase prices are ofte n steepe ation, providing
cer tain ly cos t ben efit s to see king a mo re out of tow n loc
the re are Equally,
bus l~e ss ope rati ons wo n't be hamper ed by poor tran spo rt links.
you r dai ly Is accessible by
tfall, then ensuring you r location
rf you rely on hrgh cus tom er foo et your
bus and eve n trai n will all be imp ort ant considerations. Do n't forg
car , righ t
s too , as a goo d loc atio n is ofte n a critica l fac tor in rec ruiting the
em plo y~e era l job s and
larl y if the y have been offe red sev
people rnto you r business, par ticu
s of eac h.
need to eva lua te the pro s and con

2. Se cu rity
crime,
not , you r loc atio n can incr eas e you r odds of bei ng affected by
Believe it or the additional
r insurance premiums, as well as
wh ich in tur n can infl uen ce you . It's fair to
y me asu res you ma de nee d to take to keep you r premises safe
sec urit intuition and
decisions based on information,
say tha t in business, we all ma ke of crim e in the areas
luck. But knowing the chances
pro bab ility mix ed in wit h a littl e cess.
ant par t of the decision making pro
you are considering is an imp ort

3. Co mp eti tio n
r success.
pro xim ity to oth er com pet ing businesses could be crucial to you
You r ? Establishing
you r business or cause a hindrance
Could the y pro vid e a ben efit to rantee you
pet itor s are in you r are a and the ir offe ring could help gua
wh ich com n then it
rig ht loc atio n for you r bus ine ss. If the re is too much competitio
choose the There are
y be a wa rnin g sig n to exp and you r horizons to a new location.
ma h oth er as
lerships who wa nt to be nea r eac
exc ept ion s to this such as car dea e pro xim ity. .
ers com par e and cho ose the best car d_ea l, hen~e th~ ir clos
cus tom some krnd
if you hav e an ele me nt of you r offe ring tha t rs unrqu_e or offers
Likewise, ma rke t could be
an area tha t already has a npe
of new inn ova tion the n choosing ce in a new
wa y to pic k up cus tom ers ver y qui ckl y and establish a presen
the ideal
e.
area in a rela tive ly sho rt tim e fram

4. Bu sin ess Ra tes

 ·nes the viabfe ability for ~ bli r .
. , 1 it determ1 · '"' h ·•ltµ,,,
Cash is king! Cash flow is cnt1ca as . . im ortant to researc,1 , t ,'~,.,v,·rtlge Bu, .
survive and pay its bills. The~efore, ,t ,s in the area to ensure yrm r ,m tiff0ri'
Rates including rent, utility bills and taxdes osits and whether you ne,!d t,; r;uy t
premises . Simple hidden costs such as eitting to a location. Estimatm<J th!! 11 ,/:
park need to be snuffed out before com~ment outside your means. •
cost of the location will prevent a comm,

s. Skill base in the area

Find out the skill base in the area - can it fulfill your nee~s! Take tto
ar.r..r;u~,t
employment rates as well. If you rely on skilled workers tt '~ best, 0 ~o to Where
there is a healthy bank of talent. Employees are often a business s b1ggf:~t :r.~1
thus choosing a location that's lacking in required talent may be the start of /ou,
business's downfall. Some recruitment agencies will happily send you CVr,, on t~
to gauge the market, only charging if you subsequently decide to interview and;
someone. ~lternatively, posting a free job via an online jobstte will q uickly .;how
you the caliber of employees in a particular area.

6. Potential for growth

Will the premises be able to accommodate bu ·

Moving premises is a big upheaval and can bestess growth or a spike in demand?
decision needs to be made as to whether th' ime_ consuming and costly. A
t erm 1oca t .10n or ·f . e premise yo
, you would like to stay the i u are choosing is a short~
lo~ti~n's flexibility could be a very importan~ef. or th e long haul. Consequenttv a
surtab1fity for your business needs :actor regarding th . "" 1 '
· .,, e prem1ses'
Whilst a perfect business location is different i
crucial areas will certainly give you the best or every busines
your business on track for future success chance of beatin s, covering these I

· 9 'the Odds and k.eeP~

REVIEW QUESTIONS

1. Outline different ways of coming up with a .

2. Explain the measures you would take in viable busi
business name any case SornOess narne
3. Discuss the factors majorly considered wh eone COp;es 1

name en COmin your

g Up \Vi+-L
.._., a bu .
STUDY LINKS Slness

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 .ww..w ,bplnDS &m J

ION
TOPIC TWO: BU SIN ESS DE SCR IPT

LESSON FIVE

OBJECTIVES
ine ss ow ner shi p
1. Exp lain var iou s for ms of bus
ION
FORMS OF BU SIN ESS OR GA NIZ AT
er is how the
of the firs t dec isio ns tha t you will hav e to ma ke as a business own
One con figu rati on
businesses mu st ado pt som e legal
bus ines s sho uld be stru ctu red . All s's own ers hip,
s of par ticip ant s in the busines
tha t def ine s the righ ts and liab ilitie n will hav e
trol , per son al liab ility , life spa n, and fina ncia l stru ctu re. This decisio
con t and
y wan t to con sult with an acc oun tan
lon g-te rm imp lica tion s, so you ma In ma king a
of own ers hip tha t is righ t for you .
atto rne y to hel p you sele ct the form
acc oun t the follo win g:
cho ice, you will wan t to tak e into
nat ure of you r business.
•Yo ur visi on reg ard ing the size and
e.
•Th e leve l of con trol you wis h to hav
ing to dea l with .
•Th e leve l of "str uct ure " you are will
suit s.
•Th e bus ines s's vuln era bilit y to law
aniz atio nal stru ctur es.
•Ta x imp lica tion s of the diff ere nt org
ines s.
•Ex pec ted pro fit (or loss ) of the bus
re-i nve st ear ning s into the business.
•W het her or not you nee d to
of the bus ines s for you rse lf.
•Yo ur nee d for access to cash out tors hip;
l form s of org aniz atio n: Sole Pro prie
An ove rvie w of the fou r bas ic lega
ited Liab ility Com pan y follo ws.
Par tne rsh ips; Cor por atio ns and Lim

1. Sol e Pro pri eto rsh ip

se firm s
t ma jori ty of sma ll bus ines ses sta rt out as sole pro prie tors hips . The
The vas res pon sibi lity
the indi vidu al who has day -to- day
are own ed by one per son , usu ally . bus ines s
run nin g the bus ines s. Sol e pro prie tors hip s own all the ass ets of ~h~
for llty for any
y also ass ume com plet e respons1b1
and the pro fits gen era ted by it. The one in the
s of the law and the pub lic, you are
of its liab ilitie s or deb ts. In the eye
sam e with the bus ines s.
rsh ip
Ad van tag es of a Sol e Pro pri eto
of own ers hip to org aniz e.
·>LI" • Easiest and lea st exp ens ive form of the law ,
con trol , and with in the par am ete rs
• Sole pro prie tors are in com ple te
ma y ma ke dec isio ns as the y see fit.
 . tly to the owner's personal t
· ess flow direc
-thr oug h
ax re\
Profits from t~e businto dissolve, if desire d.
·
The business ,s easy .
f Sole Pro rietorsh•
isadvanta es o a . nd are legally responsi~le for all deb
..
·etors have unlimite~ hab1hty a ersonal assets are
at nsk. ij
• S~le f~~~r~usiness. Their bus1~~ss ~nd and are
~g~~~s be at a disadvantage in r~:~n~a~~-
Js o~en limited to using funds
from personal savings or consu_ hi h-ca libe
r emp loye es, or tho se tha t are
• May have a hard time att_ractmg wnga art
of the bus ines s.
motivated by the opportunity to O ~r's med ical insu ran ce pre m ium s are not
• some employee benefits s_uch a~ own e (onl
directly deductible from bu smess incom y par tiall y as an adju stm ent to
income) .

2. Par tner ship s

In a Partnership, two or more people share own

ersh ip of a sin_gle bus in~ss. Like
proprietorships, the law does not distinguish
between the bus ines s and its owners,
The Partners should have a legal agreement
that sets fort h how dec isio ns will be
made, profits will be shared, disputes will be
resolved, how futu re par tners will be
admitted to the partnership, how partners can
be bou ght out, or wha t steps will be
taken to dissolve the partnership when needed;
Yes, its hard to thin k abo ut a
" bre~~-u~" when the business i~ just getting
started, but man y par tner sh ips split u:
at crisis times and unless ther~ 1s a defined proc
prob lems . They also must decide up front how ess, ther e will be eve n greater
contribute, etc. much ti d • h
me an cap ita 1eac WI·11
Adv anta ges of a Part ners hip

• Partnerships are relatively easy to establi h.

developing the partnership agreement. 5
' however time sho uld be inve
• With more than one owner, the ability to . sted in
• The profits from the business flow directl ra,hse
funds may be ,·n d
return. Y t rough t crea se .
• Prospective employees may be attracted t o the par t , I tax
become a partner. 0 th
ners pers ona
. e business if .
• The business usually will benefit from P . .
give n the incentive to
artners Who h
Disa dva ntag es of a Partnershil! ave con, PI
eme ntar y sktl· 1s.
• Partners are jointly and individually liable f
• Profits must be shared with others. or the actio
• Since decisions are sh~red, disagreements c
• Some employee benefits are not deductibl ns of the othe r part ners,
• The partnership may have a limited life· ite an occur
fro111 bus:
' rrtay e 1
fa partner. 11ess in
nd Upon th corne on tax returns•
e With draw al or dea th
 ed :
rt ne rs hi ps th at sh ou ld be co ns id er
Tv pe s of Pa

i. G en er al Pa rt ne
rs hi p · ·· es of
vi de re sp on si bi lit y fo r m an a emen t a nd lia bi lit y, as well as th e shar
Partners di in g to th ei .
g
Equal shares are as
sumed
pr of it or lo ss ac co rd te r in te rn al ag re em en t. re .
unless th er e is a w
rit at es di ffe nt ly
n ag re em en t th at st

an d Pa rt ne rs hi p w,·th 1·1m1·t e d 1·,a b"1l"t

v 1
ii. Litm ite d Pa rt ne th
rs hi p _
ve lim ite d lia bi lit y (to th e ex te nt of
"L.1 1 d" st pa rtn er s ha wh ich
at m o of th e an ag em en t de cis io n,
th ':1 .e ~e an s ~e ll as lim ite d in pu t re ga rd in g m ta l
ei r in ve s m en t) as te rm pr oj ec ts , or fo r in ve st in g in ca pi
t
s investo~s ~or sh or fo r op er at in g re ta il
or se rv ice
ge ne ra lly e_ncourage p 1s n
' ot of te n us ed than th at of
f ow~e~sh1 co m pl ex and fo rm al
ass~ts. Th is fo rm _o rtn er sh ip is m or e
bu sin es se s. Foer rmin_g a l1m1ted pa
ip .
a ge ne ra l pa rtn sh
sin gl e
3. Jo in t Ve nt ur e ar ly fo r a lim ite d pe rio d of tim e or a
cle
partn~rsh~p~ bu t is at th e ac tiv ity , th ey
wi ll be
Act~ lik e a ge ne ra l Jo in t ve nt ur e re pe di st rib ut e
er_s in a to file as such, and
proJec~. If th e partn sh ip an d wi ll ha ve
go in g pa rtn er n of th e en tit y.
re co gn iz ed as an on ip as se ts up on di ss ol ut io
ed pa rtn er sh
ac cu m ul at

3. C or po ra tio ns
considered by
wh ich it is he ad qu ar te re d, is
te re d by th e st at e in Corporation
A Co rp or at io n, ch ar an d ap ar t fro m th os e who own it. A ners
en tit y, se pa ra te ag re em en ts . The ow
la w to be a un iq ue te r in to co nt ra ct ua l
of di re ct or s to
n be su ed ; it can en ol de rs el ec t a board
can be ta xe d; it ca de rs . Th e sh ar eh own and
e its sh ar eh ol at io n has a life of its
of a co rp or at io n ar io ns . Th e co rp or
policres an d de cis
ov er se e th e m aj or ges.
no t di ss ol ve wh en ow ne rs hi p chan
do es
C or oo ra tio n
!A dv an ta qe s of a
bt s or ju dg m en ts
ite d lia bi lit y f.or th e co rp or at io n' s de
ve lim
• Sh ar eh ol de rs ha t in sto~k
at io n. fo r th ei r inves~men
ag ai ns t th e co rp or ol de rs can on ly be held ac co un ta bl e fo r th ei r
• G en er al ly , sh ar eh of fic er s ca n be he ld pe rs on al ly lia bl e
ot e ho we ve r, th at m en t ta xe s.
of th e co m pa ny . (N to wi th ho ld an d pa y em pl oy
e fa ilu re c_k .
ac tio ns su ch as th na l fu nd s th ro ug ~ th e s~le of sto
ra is e ad di tio fic er s and
• C or p; ra tio ns ca n th e co st of be ne fit s 1t pr ov id es to of
de du ct
• A Co rp or at io n m ay .
. is election
. m ~n ts ar e m et . Th
em pl oy ee s. Co rp or at io n st at us 1f ce rta in re qw re
• ca n el ec t s si m ila r to a pa rt? ~r
sh1p.
pa ny to be ta xe d
en ab le s co m

a C or po ra tio n
D is ad va nt ag es of he r fo rm s of
qu ire s m or e tim e an d m on ey th an ot
co rp or at io n re
• The pr oc es s of in
or ga ni za tio n.
 . federal, state and som~ local agencies, an
• corporations are monitored by mply with regulations. d as 1
result may have more pape_rwo_rk t~ ~~erall taxes. Dividends paid to share
01
• Incorporating may result 1~ hig~e . thus this income can be taxed tw~1 de
are not deductible from business income, ce.

Subchapter S Corporation
• bl the shareholder to treat the earni
A tax election only; this election ena es d. ti t O th • ngs an
profits as distributions, and have them pass through ,_rec Y e,r personal ta~
th
return. The catch here is that the shareholder, if ~orkmg for e compa ny, and i
there is a profit, must pay his/herself wages, and it mu~t meet _standards of
"reasonable compensation". This can vary by geographical region as well as
occupation, but the basic rule is to pay yourself what you would have to pay
someone to do your job, as long as there is enough profit. If you do not do this
the IRS can reclassify all of the earnings and profit as wages, and you will be liabl
for all of the payroll taxes on the total amount.

4. Limited Liability Company (LLC)

!he LLC is a relati~ely n~w type of hybrid business structure that is now permi 51'b
m most states. ~t 1s _designed to provide limited liability features of a corporati~
and the tax effic1enc1es and operational flexibility of a partnership F f •n
more complex and formal than that of a general partnership. . orma ton is

The owners are members, and the duration of the LL ·15

the organization papers are filed. The time limit ~ usu~lly determined when
vote of the members at the time of ~xpiration. L~~~ e continued if desired by a
st
of the ~our c_ha~acteri~tics that define corporations: Lim~ n?t ~~ve more than tw1
assets, continuity of life; centralization of manag mited llab1ltty to the extent c
ownership interests. ement; and free transferability of

WHAT'S INCLUDED IN THE PRODUCT AND SER

BUSINESS PLAN ,r ~ICES SECTION OF A
"
The product and services section of your business 1
product or service, why they're needed by your mt an format dis
other businesses selling the same or similar produc~ket, and how t~usses you r .
and services section should include: sand service ey compete wit
s. Your product
• A description of the product: or services you are .
• How your products and services will be priced Offering or
• A comparison of the products or services your co Plan to offer
yours rnpetitors
• sales literature you plan to use, including informar1 · · Offer in relation to
collateral materials and the role your website will Pl~n ~bout
• A paragraph or so on how orders from your custorne Y 1n YolJ~our marketing
fulfilled rs Will be Safes efforts
Processed or
 cre ate or d . ur products, such as up-to
-date
• An y ne ed s yo u ha ve to eli ve r yo
co mp ute r eq uipme nt
. ss.
ty (i. e issues you need to addre
• An y int ell ec tua l pr op er
rvi ce ., pa ltent) or leg al
Fu tur e pr od uc ts or se
• you P an to off er

es s la h . fund yo ur
his se cti on of yo ur bu sin T: th ;/e o~ld ex cit e those y~u're hoping will
u. and
r usiness or wo rk wi th yo r~a d:~ :re are a few tips to create a product
pe als to the
erv ice s se cti on th at ap
. u're
• In di ca te wh y yo ur pr od uc t
n t or_ se rv1 ~e s ar e ne ed ed . Especially if yo
ve ntu rin g int o a ne w co p or in~ent1on, or a place
where there is no
ma rk et ou ce pro du ct or service.
cu rre nt ex pl~,n the need for yo ur
ou ~ ~e ne ed to ess is the ab ilit y
• Hi gh li ht A cru cia l pa rt of success in busin or sim ila r
1ttu re s.
ab le togse t y esses tha t sell the same
yo ur se _ ap ar t fro m busin level of service
ro du
~tc es ._ W ha t fea tur es , such as price po int or '
p cts;n d se e to yo u?
d o yo u 011er th at 1s un iqu is how
iqu e fea tur es are im po rta nt bu t even more so
• Fo cu s on be ne fit s. Un consumers. Translate yo
ur features (i.e.,
es pr o~ ide va lue to The goal is
tho se fea tur t it now or save money).
fa st~ r o: ch ea pe r) mt o
pr
be
od
ne
uc
fits
t or
(i.e
se
.,
rvi
ge
ce wi ll fix a problem or impro
ve a client
to h1ghltght ho w yo ur
or cu sto me rs life.
in too
Do n't let yo ur bu sin es s plan ge t bogged down
.
• Be de ar an d co nc ise tio n. You can even use bullets
or numbered
tio n an d inf or ma
mu ch de sc rip
want
lists. "\ J.)
se , ex pe rie nc e, an d accolades. You no t only
• Sh ow ot ry ou r ex pe rti se rvi ces bu t also share wh y
yo u'r e the best to
ur pr od uc ts an d tha t makes
to de sc rib e yo in yo ur education or experience
lud e an yth ing
pr ov ide th em . Inc s. If you ha ve testimonials, awards or
s bu sin es
yo u th e ex pe rt in thi pa ten t, co py rig ht
y, if you ve applied for a
1

, sh ar e tho se ~ Fin aJJ

en do rse me nts
th at as well.
or tra de ma rk , inc lud e
yo ur
bu t ta lk in la ym an te rm s. You should kn ow ders
• Be th e ex pe rt ll, bu t do n
1
t ex pe ct yo ur po ten tia l fun
us try we
pr od uc t/s er vic e an d ind lev el of knowledge. AssLJme
the reader
to ha ve the sa me ng . Avoid
an d pa rtn er s wh en yo u explain wh at yo u'r e off eri
ch as yo u
do es n 1 t kn ow as mu d servi';es. _
an d jar go n wh en ou tli_ning yo ur pro du cts an II pr ov id e
ac ro ny ms ial ab ou t wh at or ho w yo u
ng ex tra sp ec
• In di ca te an yt hi special gu ara nte e or
pr od uc t or se rv ice s. WHI you be off eri ng a of delivering yo ur
yo ur qu ick er or mo re un iqu e way
Do yo u ha ve a
re fun d po lic y?
pr od uc t or se rvi ce ?
wa nt t~
ta lk in g to yo ur cu st om er . While you do n't
W rit e as if yo u• re nte d when you write
•
ad ve rto ria l, yo u do r-iant to be cu sto me r-o rie
wr ite an
s se cti on .
yo ur pr od uc t an d se rvi ce

UE ST IO NS
 ani zation s
f th . . four ma;.ior business org t·on fro m a pa rtn ership
1. tde nt I Y '· lim
corpora 1
2, Dlf fe1cntlat c ~th , , ...ited lfabllitY
~tu res of a sol e pr
op rie tor sh ip
3. 1
=.lab ora lt? on e ' '"

sr uo y bl~~
- www.ent rep reneur.co m

www.score.o,rg_

www.fHllans.com

TO PIC TW O: BUSINESS DE SC
RIP TIO N
OBJECTIVES

1. Explain var iou s business go

als an d ob jec tiv es
IDE NT IFI CA '.T ION OF BUSIN
ESS OP PO RT UN ITY
THE ENTREPRENEURS SELECT
ED TH EIR PR OD UC TS OR PR
ON: OJ EC TS BASED

a. Their own or partners' past exp

erience in tha t business lin e;
b. The Government's promotion
specific business enterprise al schemes and facilities off ere
s; d to run so me

c. The high profitability of produc

ts;

d. Which indicate increasing dem

and for them in the ma rke t?
e. T:he availability of inputs like
raw materials labo
' r, etc . at ch ea pe r rat es ;
f. Th e expansion or diversificatio
n plans of the ir
kraown to the m;
own or an y oth er on go jng bus
iness
g. Th e pro du cts reserved for sm
all-scale units •
O
on e of the ways employed by r cer tain loc ati on s.
most of the intend·
sui tab le pro du ct/ pro jec t is to fi~s
tly generate id ing en tre pre ne
Ac cor din gly , wh at follows ne xt urs t
1s a discussion .deas ab ou t a few O seJect
1 p a_
ID EA GENERATION: ea Qe ner at· '70 du cts ; pro
. ion abo t Jects,
u pro du cts .
SO UR CE S OF IDEAS:
 r .
In a sense, opp ort uni ty ide ntif ica n and selection are akin to, what is termed .1
ma rke ting ter min olo gy, 'ne w prodio elo pm ent .' Thus, ·produc• t or opportu
n ·itny
ide ntif ica tion and sel ect ion proce uct dev
ort uni
. . or pro dss sta
ties t
rts wit h th e generation of ideas, or say ' ideas
about som e opp uc s are generated in the firs t instan
ce.
d
The ideas abo ut opp ort uni ties or b~cts th at t he e~t rep ren eur can con
sider for
ing the mo st pro mis ing on ep ;; be
sel ect
cov ere d fro m va . pur sue d by him /he r as an enterprise ' can
gen era ted or dis ernal.
nou s so urces- both internal and ext

TH ES E MA Y INC LU DE :

er needs
(i) Kn ow led ge of pot ent ial cus tom
'
dem and s for certain products,
(ii) Wa tch ing em erg ing tre nds in
pro duc t,
(iii) Sco pe for pro duc ing sub stit ute
interests like
th rou gh cer tain pro fes sio nal magazines catering to specific
(i v) tGoi~g
e 1ec ron ics , com put ers , etc .,

rep ren eur s or frie nds or relatives

(v) Su cce ss sto ries of kno wn ent '
ducts and
._ Ma kin g vis its to tra de fair s and exh ibit ion s displaying new pro
(vi)
ser vic es,

(vi i) Me etin g wit h the Go ver nm

ent agencies,

abl e persons,
(vii i) Ide as giv en by the kno wle dge
ives, list of
Kn ow led ge ab ou t the Go ver nm ent pol icy , concessions and incent
(ix )
nuf act ure in sm all- sca le sector,
item s res erv ed for exc lus ive ma
com pet itor , and
(x) A new pro du ct intr odu ced by the
h obs erv atio n.
(xi) On e's ma rke t ins igh ts thr oug
ing his / her
ren eur can ~et ideas for est abl ish
In nut she ll, a pro spe ctiv e ent rep duc ts
m var iou s sou rce s. The se ma y inc lud e con sum ers , exi stin g pro
ent erp rise fro ls, and
pre sen tly on off er, dis trib utio n cha nne ls, the gov ern me nt offi cia
and ser vic es
res ear ch and dev elo pm ent .

a. CO NS UM ER S:
and
erp rise can be tho ugh t of wit hou t con sum ers . Co nsu me rs dem
No bus ine ss ent in terms of
ts and ser vic es to sat isfy the ir wants.. Als o, con sum ers ' wa nts
for pro duc eur needs to
enc es, tas tes and liki ng kee p on cha ngi ng. He nce , an ent rep ren
pre fer he/ she can off er the pro duc t or
ons um ers act ual ly wa nt so tha t
 th ro ug h th ei r feedb
service accordingly.
Consumers , wan t 5 can be known ack. aba
sing and would wan t to use in f t
the products and se
rvices they have been
u u ure ,lJt
b. EXISTING PRODUCTS
AND SERVICE~
One _w ay to have an ·t r the existing prod
en terprise idea may
be to ~o ni ~ompetitiv ucts and
se rvices already av e analysis of th em t
ailable in the marke
ide nt ify th ei r shortco t and m~ eda ·de wh
ming s and then, base at and ho w a bette 1
produ~t and service d on it, eci M y en r
can be offered to the terprises are
es t ab lished m ainly consume~ . anver th
to of fer better produc e ex ist ing ones .
ts and se rvi ces 0

Di str ib ut io n ch anne
ls called market inter
so urce fo r new ideas mediaries, also serve
fo r entrepreneurs. Th s as a ve ry effective
th e ult im ate co nsum e reason is th at the y
ers and hence bette ultim at el y deal With
I r know the consumer
I
s' wants.
As su ch, t he channe
l members such as
fo r new prod uc t de wholesalers and reta
velopment and modif ilers can pr ovide ide
an en trepr eneu r ca ication in the existing as
me to know from a product. Fo r example
reason his hosiery salesman in a departm ,
was no t selling was ental sto re th at the
cu sto m er s wa nt ho its dark shade while
siery with light shad most of th e yo un g
fe ed ba ck and accord e. The entrepreneur
ingly changed the sh paid heed to th is
En tre pr eneu r found ade of his hosiery to
his hosiery enjoying light shade.
increasing demand ju
st within a m on th .
d. GOVERNMENT:

At t im es , t he Gove
rnment can also be
wa ys . For example a source of new prod
, go ve rn me nt from uct ideas in various
pr od uc tion and cons time to time issues re
umption. Many a tim gulations on pr od uc
so ur ce s fo r new ide es, these regulations t
as fo r enterprise for become excellent
mation.
Fo r ex am pl e, go ve
rn m en t's regulation
ide a to m an uf ac tu re . s on ban on polythe
Jute bags f or mar ket· ne bags have given
A pr os pe cti~e en tre intg co~ve~d1.encef of t h
pr ~n eu r can also ge e sellers and bune
yew rs .
pa te nt s av ail ab le fo t en erpnse I ea rom
r license or sale. the pu blications of
Besides, th er e are
some governmental
ob ta in in g specific pr agen~ies th at _assist
od uc t information. entrepreneurs in
Such information ca
en te rp ris e fo rm at io n also become basis
n. fo r

e. RESEARCH AN D DE
VELOPMENT:
bu t no means th e lea
T he la st . . st source of new ide
as
(R ~~ ) ac t1 vg 1t :~
b rried ou t in-house or is research and ~evelopment
t~ ~~ :;n ; ~i w a new outside the organizati
ac t1v1ty sug or modified product on. R&o
th e cu st om er s' re can be produced to me
qu ire me nt s. et
 Available evidences indicate that man
enterprise establishments hav b Y new product development, or say, new
research scientist in a Fortu \ ~en th e outcome of R&D activity. For example, one
became the basis of a new ne 0 compan_ y developed a new plastic resin that
the product diversificaf ~oduct, a plastic molded modular cup pallet. Most of
ions ave stemmed from the organization's R&D activity.
METHODS OF GENERATING IDEAS:

As seen. above ' there

. ·
could b e variety ·
of sources available to generate ·ideas for
. formation
enterprise . . · ·ideas to convert these ·mto
· But , even aft er generating
e~terpnse is still a problem for the prospective entrepreneur. The reason is not
difficult to seek.

This_ involves a process including first generating the ideas and then scrutinizing of
the ideas generated to come up with an idea to serve as the basis for a new
~nterprise formation. The entrepreneur can use several methods to g.enerate new
ideas. However, the most commonly used methods of generating ideas are: focus
groups, brainstorming, and problem inventory analysis.

These are discussed as follows:

ii. FOCUS GROUPS:

A group called 'focus group' consisting of 6-12 members belonging to various socio-
economic backgrounds are formed to focus on some particular matter like new
product idea. The focus group is facilitated by a moderator to have an open in-
depth discussion. The mode of the discussion of the group can be in either a
directive or a non-directive manner.

The comment from other members is supplied with an objective to stimulate group
discussion and conceptualize and develop new product idea to meet the market
requirement. While focusing on particular matter, the focus group not only
generates new ideas, but screens the ideas also to come up with the most excellent
idea to be pursued as a venture.

iii.!..._ _ ______!B~RA~=-=IN~S=-T-=-O~R;.:;...M;;.=I...;_N_G_:

Brainstorming technique was originally adopted by Alex Osborn in 1938 in an

American company for encouraging creative thinking in groups of six to eight
people. According to Osborn, brainstorming means using the brain to storm the
issue/problem. Brainstorming ultimately boils down to generate a number of ideas
to be considered for the dealing with the issue/problem.

However, brainstorming exercise to be effective needs to follow a modus operandi

involving four basic guidelif)iffe; ...~: ~ · 4 'YW...t f ,

1. Generate as many ideas as possible.

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In tr.,1 rn~ or r "Pit,,!, r ,,p,,hllfty, ,ind ,,thcr rw,r,utr.,:',, lf1,nu,, hr,/~he n<:P.ds to finally
:,elect. one lcJ,,,, Whlc,1, hr,f,,h,: think•, the rno•,t ',Uit ;,blr: tr, b,, purtued as an
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;,If w natlv,.,, ,,v,,11.,1,1c? Ihi•, I•, don,, th rr,uqh d ',clectir,n process discussed
SU/J!,(;!qU<..:ntly,

J favlnggon,, through ldr:;1 'ii~i'~"'"tfon, also i,xpresscd as 'opportunity scanning' and

oppo1 tun It Y ldcnllflr.,,tlon, w., '·"" dl~tlngulsh between an idea and opportunity. We
are giving below the two sltuat1 c •
of difference between an 'Ide· , ~hd_, th d~, WIii hc.:tr1 /0U unrforr,t;,rid i:lfld ,:Jr- 1 th"- r ~
a an dn opportunlt/. -::i 1 - in_

BUSINESS GOALS AND OBlECTIVES

Successful businesses arc ba d

se on both goal(' d b . . . .
purpose of t he business and hel . Id • ., an o ject1 t":.s, a: tn~; cl:zv1ft/ t1e
statements of desired achieve P t entlfy necessary action~ Goals ar~ g4::r~ra1
actions you take to reach men ' while objectives are the $p~cific stPp".'" o"
and measurable. your goal. 80th goals and objecti ,es zl'iould ;e ;pecifc

Goals can involve areas such f ..

range of objectives that bas pro itab1l1ty, growth and customer ser1ice, 11it,.., a
can e used to meet those goals .

•
1. BUSINESS PROFITABILITY OBJECTIVES

~ comn:1on business goal is to run a profitable operation, which typically means

mcre_asmg. revenu_e while limiting expenses. To reach this goal, objectives couki
consist of increasing annual sales by 10 percent or landing three new accounts eacr
month. Expense objectives could involve finding a new operating facility that
decreases your rent by $200 a month or cutting monthly utility bills by 15 percent •

•
1. CUSTOMER SERVICE OBJECTIVES

Customer service goals could include reducing complaints by 50 percent over one
year or to improve resolution times to customer complaints to a minimum of one
business day. To meet customer service goals, objectives could include increasing
your customer service staff from one to three workers by the end of the year or
implementing a policy where customers are guaranteed to receive a return phone
call before the end of the business day .

•
1. RETENTION OF EMPLOYEES

If you've experienced a problem with employee turnover, your overall goal could be
to improve retention. To make this goal specific, you could measure the current
turnover rate, like one employee in five leaves after three months, and decide to
double this figure to six months. Objectives to meet this goal could include
implementing a training program that details new-hire activities for the first 90
days on the job. You also could implement one-on-one bi-weekly meetings with
your employees in an effort to build rapport and find out what1s on their mind .

•
 Nt;Y 01 111•fiJfl\ I l UNt,
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filooy LIN~~

.ENTf!Y ,!1)1D GROWJ1;1 stRe.JlcG!( Of A au,s1~

t:OPIC TW01 BUSINESS DESCRIPUON
QBlECTIVES

1. Explain v1ulou11 entry •nd urowth •lt:•teule■ <,t • bi.

2. Pedor;in the swo:r •nalysl■ of a bu11lne■■ .,.,.._

EN'fiRY AND GROVl(.liH St:ffAll;Gl( Of.! BUS.IN~

'lihe business can use ,1ny of the follow1ng way~ to grow Its Pl>ritf011o
 ST R EGY
1. MARK ET PENETRATION AT
sin es .
One gro wt h str ate gy in bu hs is market penetration . A
small company uses a
tio n str ate gy
ma rke t pe ne tra g produ cts wit hin t he
same m~ rke t it has bee n usi n~ ~~ it decides to market exi stin
produ cts and
se ma rke t ·h e on ly way to grow using exi sting
ma rke ts 1s to inc rea ert s. Marke t
nt of un it ; dar e, acc ording to sm all business exp
sha re is the pe rce ds wit hin a cer tai n
t vs. all oth er com pe t~~ rs. olla r sales a company hol
ma rke

ma rke t sh . . in markets
One wa y to increasedif fer e f /re rs by lowering prices . For example,
where t he re is litt le lower pric e may help a
mp an y inc rea se ,
·ts sh n ,fa ron among prod ucts, a
co are o t he ma rket.

OR DEVELOPMENT
1. MARKET EXPANSION
dev elo pment 1 entails
n gro wth str ate gy, often called marke t
A ; ark et exp an sio why a company
cts in a ne_w ma rket. There several reason s
se rng cu~ren t pro du y be such tha t
rke t exp an sio n str ate gy. First, the competitio n ma
ma y c? nsrder a ma s not find
_fo r gro wth wit hin the cur rent market. If a business doe
the re rs no room or profits.
cts, it cannot increase sales
ne w ma rket s for rts produ
finds new uses for
ma y als o use a ma rke t expansion strategy if it
~ sm all com pa ny stores may
r exa mp le, a sm all soa p dis trib uto r tha t sells to retail
tt~ produ ct. Fo
rs also use its product.
discover t ha t fac tor y worke

1. PRODUCT EXPANSIO
N STRATEGY
to increase
y als o exp an d its pro du ct line or add new features
A sm all co mp an y ma strategy,
. Wh en sm all com panies employ a product expansion
its sales and pro fits within the existing
du ct de vel opment, they continue selling
also kn ow n as pro well when tec hno logy
an sio n gro wth strategy often works
ma rke t. A pro du ct exp new products as old er
ng e. A sm all com pa ny may also be forced to add
sta rts to cha
ones become ou tm od ed .
VERSIFICATION
1. GROWTH THROUGH DI
a small compa ny
in bus ine ss also inc lude diversification, where
Gr ow th str ate gie s very risky. A
du cts to new ma rke ts. This type of strategy can be
will sell new pro diversification growth
nee d to plan carefully when using a
sm all co mp an y wil l pany will need to determ ine
gy . Ma rke tin g res ear ch is essential because a com
str ate products.
ers in the new ma rke t will potentially like the new
if consum
R COMPANIES
1. ACQUISITION OF OTHE
In acquisition, p_
bus ine ss can also includes an acquisition.
., Growth str ate gie s in s. A small compan y
• an oth er com pany to expand its operation
ter new markets. An
r
company pur cha ses
s typ e of str ate gy to exp and its product line and en
ma y use thi
 . . kY as a d iversific
blJt no t as ns
. . · gr ow th st can be ns kY, at io n
acqws1tion rategy
strategy.
1readY bt· he d . A co m
One reason is . t th e produ cts and market are a . g esta rs . . . ~
th a ·t an ts to achi.ev w he n usrn an a~qurs rnon strate ~ ny
m us t know exac e gy
tly ·red t it
st m en t requ.r , ·ro im pl e m en
m ai nl y because w ha : rn ;c an t in ve ,
of th e s19 .

S W O T A N A LY S
IS
SWOT st an ds fo . ·e s an d T h re
th weaknesses, O pp or tu at s . an d so a
SWOT Analysis r St re ng . s, as ni
sessing these fo ti ' pe ct s of yo
is a te ch ni qu e fo ur as u r business .
r
You can use SW st
m ak e th e m o re of w ha t yo u' ve g o t. to y o u
OT A na ly si s to
or ga ni za tio n's d ce th e ch an ce r
un de rs ta nd in g
be st ad va nt ag e. And yo s o f fa ilu re , bv
w ha t yo u' re 1ack u ~ n .
ca tc h yo u un aw ing, an d ehm m a ~ng haza rd s th a t w ou ld ot
ar es . he rw ise
HOW 'fO DO A
SW O T ANALYSI
S
Fi rs t, dr aw up a
SWOT Analysis
o f th e fo ur aspe m at ri x. This is a
cts of SWOT• 2x 2 gr id , w it h
o n e sq ua re fo r
ea cti
•
1. S TR E N G TH
S
Strengths ar e th
in gs th at yo ur or
di st in gu is he s you ganization does
fr om yo ur ro m pe pa rt ic ul ar ly w el
organization ha tit or s. T hi nk ab l, o r in a w.a y
s ou t th at
st af f, access to ceov er ot he r organizations. These m th e ad va nt ag es yo u r
rt ai n materials, or ig be th e m o
a st ro ng se t o f mht ti va ti
an uf ac tu ri ng p ro o n o f ·y ou r
Y:our st re ng th s ce ss es .
ar e
it "t ic k. " W ha t do an in te gr al pa rt o f yo ur or ga ni za
you do be tt er th tio n, so th in k ab
W ha t un iq ue o r an an yo ne else?
W
out w h at m ak
an d analyze yo lo w e st -~ " 7 ° u ha t va lu es d ri ve
u r or ga m za tio n s ~ ca n ):>U aw yo u r b u - ess
'"''"' q .... e S el lin g dr up on th at o th er
~-opnsition . s c a n 't ' ~ n ti
T he n tu m yo ur
perspective ar ou • 1 en
se e as yo u r st re nd and as k yo ur se
ng th s. W ha t fa
ct or s m ea n th a
lf w ha t yo u r com
t you g e t th e sa
le a. ., .- ~ tit or s m
.
R em em be r, an tg
ad va nt ag e. fo r
y as pe ct of_ yo ur
organization ~ on • ~ o f th e m ?h t
~ m p J e , if _all o ly S tr en gt h if it
th en a _hi gh -q ua f yo ur ~ m p e ti to bt i
ht y pr od uc tio n pr rs pr o~ id e h ig h -q u
ocess is n o t st re a ~ s YOU a d e a
ne ce ss ity. ng th m Y ou r rnar1<:!! ~ • r

•
1 . WEAKNESSE
S
 Be hon est! A SWOT Ana lysi s .11 the info rma tion
~~l y be valuable if you gat her all
you nee d. So, it's bes t to be r:lis leas ant trut hs as soon
ic now, and face any unp
as pos sibl e.
.
Weaknesses, like stre ngt hs , are inhe ren t featu res of you r organization, so focus on
Ie, res our ces sys tem d
you r peo p s could
' an procedures. Think abo ut wha t you
imp rov e, and the sor ts'o f pra ct·ices you should avoid.

Once aga in, ima gin e ( or find Out how oth er P~ople in you r ma rke t see you. Do
)
the y not ice wea kne sse s tha t
mine how
_te nd to be blind to? Take time to exa
and why you r com pet itor s a y~uoing bet ter tha n you. What are you lacking?
re

•
1. OP PO RT UN ITI ES
happen but you 'll
Opportuniti_es are ope ning s or lf!chances for som eth ing positive to '
nee d to clai m the m for you rse
eye to
aris e f~om situ atio ns out side you r organization, and require an
The y u~u ally in the ma rke t
The y mig ht arise as dev elop men ts
wha t mrg ht h~p pen in the futu re. exp loit
you use. Being able to spo t and
you serv~,. or m the tec hno log y to compete
ren ce to you r organization's abil ity
opp ortu niti es can ma ke a hug e diffe
t.
and tak e the lead in you r. ma rke
don 't need to be
you can spo t imm edia tely . These
Thi nk abo ut goo d opp ortu niti es atio n's
ant age s can increase you r org aniz
gam e-c han ger s: eve n sma ll adv e or small,
pet itive nes s. Wh at inte res ting ma rke t tren ds are you aware of, larg
com
whi ch cou ld hav e an imp act ?
to you r field.
nges in gov ern me nt policy related
You sho uld also wat ch out for cha can all thro w up
cha nge s in soc ial pat tern s, pop ulat ion profiles, and lifestyles
And
inte res ting opp ortu niti es .

•
1. THREATS
the out side ,
eat s incl ude any thin g tha t can neg ativ ely affe ct you r business from
Thr a sho rtag e of
shif ts in ma rke t requi~ement~, or
suc h as sup ply cha in pro ble ms, the m before you
ats and to take action aga inst
rec ruit s. It's vita l to ant icip ate thre
r gro wth stalls.
bec om e a vict im of the m and you
and selling.
in get ting you r pro duc t to ma rkedt t
. k bou t the obs tacl es you face ·f· t· f ~r you ; pro uc s ~re
Th ,n a dar ds or spec, ,ca ions
You ma y not ice tha t qua lity stan sta y in_ th e
cha nge tho se pro duc ts 1f you re to 1
cha ngi ng, and tha t you 'll nee d to at, as well as an opp ortu nity .
nolo g.y, isnan eve r-pr ese nt thre
lead . Evo lvin g tech
 _ nd h e th e r y o u s h o u ld
ider what yo r compet1to~ are doing, a ~enge. Bu be
Alway~ con~ _u ' empha m e e t th e t re ~
u
changing Y r o rg a n iz a ti o n \ be sis to . fo r ha c do and av e m b e r th
what they're . might no . th. e ri g h t tht~~ p o s it io to
you , o id c o p yingQt
doing ·ng ho prove yo n.
them withou w it will ,m
t know,
. ll e x p o s
Be sure to e I re whether yo nization is e d to e x te
xpo u es pe c 1a / fo rnal
r o rg
ave bad deb a cash-flow p r e x a m p le , th
make you vuo,o y~~I~ to even sm
challenges. t o r ro b ~ t co u\d
es in y o u r le
m
m k e t? T h is
is
a r th e k md of
threat that caner . sly damageall cha~~siness, so .
n senou your be a le rt .
1 ASSIGNM
ENTS . .
2: ctors to co
Highlight fi nsider w h c h o o s in g
location ve fa en a b u s m es
. s
3 ·· rt from sole . e x p
. u. A pa p ro p ri e to rs la in o th e r v a ri
h ip ,
!~rms of business ownership · o us
Explain vari d g r o w th
4 . 111. ous e n tr y ·
s tr a te g ie f
b
. usiness
an so a
5 . IV . .
Dis cuss v a r ·ious pricing • .
can use s tr a te g ie s th a t a b u s in e s s e n
tity
STUDYUN
KS
-www .entre
preneur.com

w w w .score
.orq
www .bp)ans.c
om
T O P IC TH
REE: MARK
ETING P lA N
LESSON E
IG H T
OBJECTIV
ES

1 . Explain
cu
2. Do th e c s to m e r id e n ti fi c a ti o
o m p e ti to r n b y a bus
analysis o in
f th e busin e s s
CUSTOME
R ID E N T IF e ss
IC A T IO N
The custom
er identifica
Know Your tion proces
Customer o s is globally
authorizatio r known a s K
n o f th e cu know y o u r clients. I t is YC, w h ic h
s ta n d s fo r
stomer con th e proces
sidering ris s o f id e n ti
k factors re
KYC is gene
rally practic la te d to th fi c a ti o n a n d
,i regulation e d by bankin e busi
o f general g and finan
enterprises b a nking and a cial in s ti tu ti
n ti -m o n e y ons as par
b ri b e ry comare also practicing K la u n d e ri n g t
pliant asse YC to contr a c ti v it ie s .
ssment w it h ol th e ri s k
th e ir clients fa c to rs and
ensure
 d the
o f a su cc es sf ul b . id en tif yi ng yo ur customers an
A critical p a rt an is s and
S ol id bu si ne ss pl us,~ess pl se ar ch on po tential customer
co m pe tit io n. te re
~nlclorporaqu tips on
tit or s. B eg in by asking :hns e ,o owing e st·ions, and then apply the
compe . .
inning business
how to b ecome a w

e r Q u es ti o n s
T h re e C u s to m
?
• Who is buying
buy?
• W ha t do th e y
y?
• Why do th e y bu
s
ti to r Question
T h re e C o m p e
ey?
• How big are th ter?
ers are th ey af
• Which custom
rategy?
• What is th e ir st

W in
T h re e W a y s to
e bone
• C ut costs to th
unique
• O ff er so m et hi ng p
cu st om er grou
• Focus on one

S A N A L Y S IS of
COMPETITOR em en t is an assessme n t
strategic m an ag
a ly s is in m ar ke tin g and potential comp
etitors.
C o m p e ti to r a n t an d identify
an d w ea kn esses o f cu rr en
de fe ns iv e st ra tegic context to
th e st re ng th s fensive and
n a ly s is pr ov ides both an of
This a
and th re at s.
op po rt un iti es
analysis:
ar e st ep s to do co m pe tit or
The fo llo w in g
S
COMPETITOR sses o r
1: L IS T YOUR or s. Th es e are the busine
pe tit nd to serve
ur main com s. They also te
lis tin g a t le as t three o f yo se rv ic e to yo ur
S ta rt by r pr od uc t o r
ov id e a si m ila
people who pr
e t. yours. For
the same m a rk e o f a similar size as
es th a t ar e, big
lo ok fo r those business m ad e potholders onlin
It 's also be st to
tr ep re ne ur selli
ng ha nd ig h t carry
u' re a so lo en co m pe tit or s, even if they m
example, if yo n 't yo ur direct all to medium
gr oc er y st or es usually a re y. In st ea d, lo ok fo r ot he r sm
chain inventor accessories.
olders in th e ir similar kitc'1~n
handmade poth po th ol de rs an d
s o f handmade
scale producer
W
RIEF OVERVIE
2: WRITE A B
Wr\te a br\
ef descn.pt1. of the c o m p . , busines
on e ti to rs s and wh
y y o u th in
compet\to
r.
k they 't~
~
P..\so, how h do you k
the businemuc now abou t each com e ti to r in th e fi r s
ss we\\ en h to fl\\ up m o s t f th ep w o rk t p\ace? D
you ha\le o ug o s h · h o Yo u k
to d\g dee e e t w it ou t re
per? searc h or ~~
00
Note if yo
u'\le made
meeting th contac t w \th each c t it o r w h e
competiti\l em at industry e\le . om thpaet in fo' rm th e r as a c u s to m e
e ana\ysis n a ti o n n e a th t ro
wi\\ he\p yts. H a ~ ': ( r e op f r by
competiti\l
e c\imate. ou qu1c y e how much y o your
se o u do k n
o w abo u t
vo u r
3 : KNOW
'T H E IR 'T
ARGET C
USTOM ERS
Next, iden
tify the cu
~!e~~~n~~~~~uti:t: stomers t~
a t your c?
trying to re
ach.
~~:~;~~:~~- mpe n1o•r s te n d to a tt ra
~ii~e~a~~
• a es cw
9
t. You can
e b s it e , blodo th is
~r~~t:~11 g,
~:1~\~u fi
g ~ re o u t
SOME QU who they
ES 'TIONS Y ar
COMPE'T OU 'TO A
l'TOR'S 'T NSWER
ARGE'T M AS Y O U
ARKE'T: ATTEMP
T T O ID E
• Based on N T IF Y Y
your com O UR
custome petitor's
r does th m a r k e ti n
h im or he e v ie w e r g messa
r? What is h a v e to b e ge, wha
What's the their age fo r th e s e t k in d o f
ir professio ra nge? Whe message
infer? You n re do th e y s to a p p
're essenti , if any? What othe have to b
e located
eal tt
character a\\y trying r custome ?
to r demograp
• Do th e who best represents come up w
ith a "b u y hics can y
ir m a r k e ti the person e r person ou
marketing n g m a te r your com a", a
materia\s ia ls a p etition is
form of th specifica\\y p p e a r gendered? tr y in g to
rea ch
e \anguag refer to m T
other mark e they use en or wom his ju s t means : do
eting con , the imag en? This the
• Are th e could be
e y ta r g e ti tent. Or do they ap s, and illustrations in the
their pricin n g lo w , m peal to a b in th e ir a
g informa iddle, or roader au ds and
discounts, ti o n, inc\udin h ig h in c d ience?
sale, afford g how the o m e c u s to m e
income cro ab y p r s ? Look
wd. Also \o le, or cheap, t~en th hrase it . If they us at
a brochure ak at the ey ~ren't e words lik
or onl~ne b m ta rg e ti n g e
• What
is th e m a anner._ Are arketing matena\s th e high
m messa the y ~ th e m s elv
common c gmg of th ttention-grabbing o es w h e th e r it's
a pet sitte usto_mer problems e ir m a r k e r
ti n g m a te elegant?
r going thro ?r goals_ d r ia ls ? Wh
difference ug o t~e
between a h a nval business y often refer to? L at
updates, a brochure e brochure. et's say y
nd anothe m T h ou're
The group r brochure phasizing frequent ere is a huge
o e m re al-time on
are often f clients who are att phasizing pet pam
focused on racted by pering and line
for more p the safety frequent re grooming.
am a a
appearanc pering and groom nd welfare of their \-time online update
e. ing service p
• Do th
ey have s are focu ets, while those loo s
s s ed on com king
segm e n ts., someparate n:'ark~tin fort and
· etimes, yo g messag
u might se es
e a stark d _for d if fe r e n t
ifference b
etwe
 ts th ei r .
co m pe tit or m ar ke bu si ness fo r one t customer versus ho
w they
es en t th em se lv es pe of cu ty pe of
pr · to an ot he r ty e, if you're
tr yi ng to sell serv at h tu to r to ;ig ohme~ For exampl
'~~s _as a m o are
st ru gg lin g to pass su bj ec ts yo u' ll ;c ool _students wh y
e, r m at h ing a completel
di ffe re nt pi tc h th yo u w ou ld to th os~ st d e mak n_eed additional help
an u . ents who_
w ith th ei r SAT at h so th at the cou 1 t,g,ous universities. ly
Your
m es sa m ~ ge t in to pres
g stud Y help you final
ge to th e st ru gg lin hil en ts m ig ht be closer to "I' ll
te st s! " W ar ke t will be
p_as~ yo ur m at h r m es sa ge to the other m
you ge t i~ t~ ou , be sure to
si m ,l~ r to "I 'll he lp th e s_ ch oo_l o_f your dreams!" Also omer
no te if yo ur co m
pe tit or does with th ei r own cust
some th ing similar
se gm en ts .

PR IC IN G
4: L IS T T H E IR
. . . ices. Include
D on 't fo rg et to lis t ho w yo ur com
or s pn ce th ei r products and serv
such as prici ~e t,~ product and
ot he r in fo rm at io n al lm en t plans, pricing fo r
, as well as sh~g
_o r in st th ei r prices
ur worksheet howservices.
se rv ic e pa ck ag es
co m pa re w ith yo
ur s- if yo u' ve re f
p,ndg
a a Y set rates
fe es . No te in yo
fo r your products
and

RATEGY
R MARKETING ST
5: IT EM IZ E TH EI
s independently
or s w ill be ru nn ing yo ur businesse '
yo ~ a nd yo ur co m pe tit
ll be ;1 oi ng he ad to head.
Th o~ g~ re you'
of th e areas whe
m ar e mg is on e execute
e re so ur ce s or th e opportunities to
ve th the
ss~s m ig ht n? t ha ting is essentially
Mos~ sm al l busine iv e m ar ke tin g plans, bu t yo ur marke ur m essage
de ta ile d an d ex pa
ns
Th e m or e th ey are familiar with yo
ur cu st om er s' se e. oose you.
m es sa ge th at yo it, th e m or e lik ely th ey are to ch
ity w ith
an d fin d an af fin ting
ta nd in g no t ju st of yo ur own marke
unders
po rt an t to have an
This is w hy it' s im co m pe tit or s as well.!
ur
m es sa ge s, bu t yo THE
M AR K ET IN G W ORKS. ANALYZE
H O W THEIR
D EC O N ST R U C T
FO LL O W IN G : Make
oc hu re s, po st er s, billboards, etc.
as br e high qu al ity
ng m et ho ds such aterials. Do they us
• P ri nt m ar ke ti e co nt en t bu t a/ so th e m ocopied?
no te no t ju st of th an d in co lo r or were th ey ju st phot
e th ey glossy of yo ur
in k an d pa pe r? Ar m ed ia ch annels where each ? How
S oc ia l M ed ia . N ot e th
e so ci al
an y fa ns or fo llo wers do th ey have
m
• a presence. How
co m pe tit or s ha ve th ei r posts get? bsite? Is
co m m en ts or sh ares do in yo ur competitor's we
m an y vi si to rs se e
W eb si te . W ha t's
the fir st thing there is, what does
it emphasize
te , a1 1d 1if
• on th e w eb si views and
th er e m uc h te xt ss ? Do th ey have customer re
tit or 's bu si ne atic and
ab ou t yo ur co m pe gn as w el l. Is th ei r website st
e no te of th e de si ? Apart
te st im on ia ls ? Mak io n an d ot he r interactive features
es it have anim at e site
m in im al is t, or do fe at ur es of th e site itself, does th
copy, design, and u th in k yo ur pote
ntial customers
fro m ju dg in g th e ch te rm s th at yo
va nt sear
ra nk well fo r re le
 ~t' try dr,,rtr) ' 1 r J'1'1 fl f(
th r•r Vfi1 ll ,.:, ' 1 ' .,
- dl'Y'iadc lea . d e if any r;f /')!Jr , '; rr r,, . •·
ing han '" " -:in '~e.- . r.t.,,
? If you're se Il t Ool wallets ,_
could use • d leather i
h for "handma e d hoW oftr,;n fr, t ,;prJ,;t:(-,~ i I
searc , pages.
are in the first ,ew - ompanY blog?
If thr•y o, ·~ ·e
- r• blog postc., I
Blog. Do they have a c_ I media shares on th - Hnr· in fr;c,af ne'//'.,p,J f;'· "'> ' .
• there comments or soc1a any of their ads on th.. ~·ir a<Y ,,; it tr..1 ,/jr ,::i ' ,
•
. .
Advert1smg,
Have you seen ctirJn on
? What is the call-to-a . - A
.. .J'
there cou pvn'., ,:,tt..dr,r ';r! i,
in the yellow pages . ck out a website t r_c 7 ,
number visit a store, or che th y promoting •
the ads; What product features are e r competitors hold an I r~C. iJrr r ';;
Promotions Sales, or Events. Do you t new customers? Do tr1'-".; / ottu·,:
• ' eant to attrac
sales promos, or events m t 7
trade' show~ or sponsor third-party e~~~e~· businesses or indi 1✓1dua ls 7 /Jr o'
• Partnerships. Do they partner wi thd hat do they typically cross- pro ,.1"'0 tt
types of partners do they choose an w
with these partners?

6: IDENTIFY THEIR COMPETITIVE ADVANTAGE

Next, find out what makes each competitor unique. This is their 1\competit i te
advantage," the aspect of their business that could help them outperform you ar.c
the other businesses on the list. What do they offer that the other businesses or
the list don't? Why would some customers pick them over you or your other
competitors?

• targeti~g an underserved market (these are the people whom most of your
competitors don't address or explicitly sell to)
• targeting a highly specific market
• lower prices
• frequent discounts and promos
• location
• a long company history
• a famous or high-profile founder
• an interesting company story (interesting f . .
by the media) ou nd ing stones tend to be profiled
• compelling marketing (such as memorabl .
• large online audience via their website bl~ imagery~ taglines, or jingles)
• broader range of products and service~ g, or social media accounts

s you're filling up this section, you'll start think·

mpetitive advantage will be. Go through the li~~g about what your own
here you can do much better than the compert above and try to spot
1 ors you've r areas
. .• esearched.
FIND THEIR STRENGTHS AND WEAKNESSE~
l
is section serves as a summary and anal¥Sts·f,
far. You'll review all the aspects of your com or _all of the research
ther they are strengt h s or weaknesses. listPetition'
th . s b usiness andYou'v e done
er: "Strengths" in the worksheet. Note down ~Ir strengths and d determine
ow equipped You a vantages
are to deaf With
these strengths. Can you d0 b
them elsewhere? etter than th em or WOUid it

The same goes for their weak serve You better too td
nesses. Do th e1r
for you? Will they. be able t o over . w u o
cometurns
It affect your b usiness if a co mpetitor P
eaknessesea~fi5~nt
thesett~aknesses an opportunity
Jf you need additional Inform . eir weaknesses i~toIf so, how will
competitor's product or serv·ice
at1on
. Se
for this port·
ion lo k
strengths?
social media and see what peo arch fo_r their bu/ for any reviews of each 0
weakness and strengths basedple on wh asaying
are Th'is can
. ·custom
t their helpname
mess or products n
you see a business'

MARKET SHARE ers see.

-
product.share is the portion of a market controlled by a particula r company or
Market

the percent of total sa 1est .ink"an .ind us try generated by a particular

Market share is et
company. ar share is calculated b
M itkby the total sales of th/in~u~ng th e company's sales over the period
and dividing th
used to give a general Idea of the size of a try over e same penod. This metric is
competitors. company '" relation to its market and its

PROMOTION
The Product Promotion is the disseminating the information about the product,
product line, brand and company to the prospective buyers with the intent to
generate sales and develop a brand loyalty
The Promotion is the fourth element of the marketing mix (Viz. Product, price,
place, promotion) which Is considered as a mode of communication that business
adopts for achieving the specific set of objectives such as:
l I

• To provide information about the availability of features and uses of the

product to the prospective buyers. b eating awareness and interest
• To stimulate demand for a product Yer
among the customers. th competitor's product bY creating the
• To differentiate the product from e
brand loyalty. . . the importance and features of the product.
• To stabilize sales bY highlighting N THAT coMPANIES ADOPT•

THERE ARE FOUR KINDS OF pROMOTIO l ·

1. Informative promotion
2. Persuasive promotion
3. Reminder promotion .
4. Buyer Behavior Modifications
 THE BASIC p SE OF PROM S T O PERSU
ADE
PES O f SAL CUSTOMERS la
U RPO OTION I TY
BUY AND PR y INCLUDES
IMARIL THREE ES A C T IV IT
Y:
-Advertising
,
-Personal S
elling, a nd
-Sales Prom
otion.
The importan .
ce of pr~duct
promotion he 5 in th e fa c t th a t n o fi rm
.
market witho effectively an can s u rv ive
other market ut reach1_ng the ~u stobm
players 1f no u ersfits are offe d could n o t c o m p e te wit in th
nique ene 1 red to th e c h
u s to m e rs .
There are sev
e
p ro m o ti o n s ral types of promotions
(Advertising, su
li n e p ro m o ti press release ch as above _line
o n s (trade d s, schemes,
iscounts, free d is c o u n ts , e
bies, awards tc .) a n d b e lo
REVIEW , e tc .) w th
Q U E S T IO N S

1. Discuss o
n consumer id
en
hy it is import tification o f a business
2. Explain w
venturing into an
t to perform
business a c o m p e ti to r'
3 ,. Describe s a n a ly s is b
the reasons p e fo re
romotion is k
STUDYUNK ey to a busines
S s

-www.entrep
reneur.com

w w w .s c o re .o
rg
www.bplans.c
om
~ O P IC THR
EE: MARKE
TING PLAN
LESSON N IN
E
OBJECTIVE
S

1 . E x p la in v
a ri o u s pricing
strategies th
RICING SJ:R a t a bus·
A'iEGY •ness e n te r
I t,
,, r is e can use
ri c in g s~rate
gy refers to..._~ {'
ri c e th e ir g o all o f ~he vari
o d s o r servic ous methods
in g s li k e : e~~ -~~.,s, an a th a t smau
ll-encompas
sing term th .
busanesses u s
• M a rk e t c o n d a t can e to
it io n s a c c o u n t fo r
 • Ac tio ns th at co m e . or s tak e
• Ac co un t se gm en ~ ttt
• Tr ad e ma rg ins
• In pu t co sts
• Co ns um er s' ab ilit y t
~:.Y
• Pr od uc tio n an d di st ib 10 n co sts
• Va ria ble co sts

us efu l fo r n ns can va ry
Pr ici ng str ate gie s ar e oo ~r; :er ou s ~e as on~, though those reaso
an y. Ch ow yo u to
fro ~ c~ mp an y to co mp wh ~ the ng ht pn ce fo r a pro du ct will all
ins if tha t's lar be lie f,
m~~•mrze pr of it ma rg ou tt yo u wa nt ~ do. Co ntr ary to po pu
't alw ay
pn cm g str at eg ies ar en se rvi ce at
s ab you ma y op t to
pro fit_ margins._ For:_ instance,
se t th e co st of a go od
or
to ma mt am yo ur ho ld on ma rke t
fro a low pn °:
mp eti to ter rit or y.
sh ar e an d pr ev en t co rs m encroachrng on yo ur
. . . on
the se ca se s, yo u ma y be wi flin 9 to sa cn fic e pr ofi t ma rg ms m or de r to foa.Js
In . Bu t ac tio n lik e thi s.
co mp et itiv e pr ici ng st be ~r ef ul ~h en en ga gin g in an
Al tho ug h it co uld be
usel
of
O
~ ;u
1 0 ?o ur busmess, it also ~~ Id en d up cri pp
th
lin g yo ur
at yo ur
co mp an y. A go od ru le
e~ be r wh en pn an ghigpr od uc ts is thbu sin es s
e um ~: em h bu t yo ur
cu sto me rs wo n't pu rch
as ice It to o
yo ur ..,, v.. tUc t if yo u pr tow. '
, it too
t be ab le to co ve r- e~penses if yo u pr ice
wo n
IN G STRATEGIES
EXAMPLES OF PR IC
KET PENETRATION
1. PR IC IN G FO R MAR
rk et so
e fik eiy loo kin g fo r wa ys to en te r th e ma
ow ne r, yo u'r to at tra ct
As a sm all bu sin es s re we ll-k no wn . ?e r:e tratior! s-...racegies aim
co me s mo eti tor s.
th at yo ur pr od uc t be s on go od s an d se rvi ce s th an co mp
er pr ice
bu ye rs by offering low
pr od uc t fo r $1 00 . You de cid e
to sen
th e
a co mp et ito r se lls a
fo r ins tan ce ., im ag ine th e sa le.
m ea ns yo u'r e going to ta ke a loss on
pr od uc t fo r $9 7, ev en if ft sin es se s an d ca n
at eg ies dr aw at te nt ion aw ay fro m ot he r bu nn
Pe ne tra tio n pr ici ng str en es s and loy alt y, wh ich can th en lea d to Jo ng -te
aw ar
he lp inc re as e br an d
co nt ra ct s. l Jo ss of income
be ris ky be ca us e it ca n re su lt in an initia
o ive pr of its
Pe ne tra tio n pricing ca n
als
ve r, th e inc re as e in aw ar en es s ca n dr
fo r th e bu sin es s. aver tim
e, ho we
ng ru n, af te r
ou t fro m th e crowd. In th e Jo
an d he lp sm all bu sin
es se s sta nd r re ffe d th e
sin es s ow ne rs ca n in cr ea se prices to be tte
pe ne tra tin g a m ar ke t, bu et .
sit ion WJthin th e ma rk
st at e of th e pr od uc t's po
G
2. EC ON ON Y PR .IC IN rketing
"'n o- fri lls • ap pr oa ch th at involves minimizing ma esses,
a
This pricing str at eg y is ch as po ss ibl e. Us ed by a wi de ra ng e cf busin
ns es as mu g ai m s to
an d pr od uc tio n ex pe
su pp lie rs an d aJS Co un t re tai ler s, economy Pfidn
inclucfmg ge ne ric food
 . _ PRIC
ES ICINl!f~
..G
Designed
to help bu
sk1mmm sin
Involves s esses maximize s
etting rate ale
s high du s on new produc
compan
y then lo
An exam w e rs prices ring the ln ts and se
p g lt r
when cur le o f this ra d ually la l p h a se a l a pr vlces, p1 le<'
rently onlyis seen with th e ln as oompetltor goo oduct. 1 h
4K TVs an tro ds e
d HDTVs duct\on of new te appear on the m1
e xlst ~n th c hnology, a rk
o n e o f th
e benefits e maf!ket. Uke an S et .
rofits on e of pri K TV,
aity adopt- ce sklmmlng ls tha
nsumers. ers before t It allows
N businesse
evelopme ot only does prloe dropping Prices to s to max\m
n t o
t introduc osts, I t also skim ming help a t t r act more lz
e y o u r pr c ates an a small b 1)111ce-sen e
oduct re
to the maIllusion of qua u sin ess recou s lt lve
PSYCHOL rketplace. lity and e p Its
OGICAL xduslvlty
PRI ING when you
cholo ~
•
tamers t o •cm refers t.o tec
respond b hniques t
ased on e h a t mark
e rs ~
xample, s
motional
Impulses, rte 11
1~ enco
urag
umers tih e ttin g ttle price a t h e r t h an lpglca e
an settling of a l ones.
lt at $200 Watch a t $199 ls
, even '-b ough the proven to ~ \f• •· '
attr n~,........-
a,~.. .,_..,.1...... a c t
- ·
 if ,. ,n fo r lh ic ..
small, One ey,frtnr on a P rk t r d 1:; th ~t
n the first m be r
nu ag th rnPrs t" nd t o Put more attention
an the 1:~n ,.,uhP
by cr ea tin g~ . , 90dl of
~crease demand dn fflu sfon of e ->t r:holog f pricing is
to
nhanccd va lue f:,.s e consumer.
IN G
6,BUNDLE P R IC
-
in g, small bu s1. ncsses 1I multi pl
With bundle pr ic se an
s w ou Id. f ace if th ey ite ~ f~~~~cts for a lower rate th
er each of
consum st fi o ~crh ased
~ r lo ca l fa A useful eYample
,dually.
this occurs a t yo di vl du al l esta urant Where ft' s cheaper to bu y a meal than
ite m ln
it Is to bu y each y.
.
g go od s an effl ce inv t .
Not only is bu nd lin n in th e ey es e~t,ve way to redu ory, rt can also in
cr ease
the value pe rc ep tio stom ers Custoen
cu
ce iv in g m or e ba ng fo r t~ yo ur y
as though
s~ al l bu;: rs feel ~ose to
they're re ende,rf buck . Man
st ra te gy a t th e esse~ ch
0 a product's life cycl e' es pecially if the prod
uct
implement th is
Is slow selling.
. th earn on th e
small bu si ne ss
higher-value ite
ow ne rs sh ou ld kee ·1
m s m u st m ak e
up 0
f \~'~d
at the profits they wer-value
s th ey take on th
hr e osseth
e lo
sh ou ld al so co ns id er 7I save in overhead and storage
product. T he y ts.ow much ey
e by pu sh in g o u t ol de r produc
spac

A L P R IC IN G
7. GEOGRAPHIC it's
po in t ba se d on the location where
tting a price fs, shipping
ic in g in vo lv es se gs like taxes, tarif
Geographical pr prices incl ud e th in
r th e changes in
sold. Factors fo nt .
sp ec ifi c re
costs, and lo ca tio n- and. For
d be ba sic supply and dem
icin g co ul to set a
ct or in ge og ra ph ic al pr cl ot hi ng . You may choose
Ano th er fa rfo rm an ce you do in
, im ag in e yo u se ll sp or ts pe ur co Jd -d im at e retail stores than
instan ce yo in
ic e p o in t fo r w in te r clothes in ar e m ore likel y to buy the dothes
higher pr know people e of demand.
at e st or es . You e to take advantag
your w ar m -c lim se t a hi gh er pr ic
nm en ts , 50 you
the w in te r en vi ro
ce,
A L P R IC IN G r product. For instan
8. P R O #O T IO N · d. nts on a particu la
le them to a
h coupons that entit
rin g ,sc ou uy One Get
o ot io na l pr ic in g in vo lv es offe with vo uc yersu or
co uld also entertain a "B
Pr m . e yo u r cu st om er s .
as an add-on.
VOU can pr ov id o ff th e go od or _s_ervrce.ro~uct Pr

certain pe rc en ta ge ta ck in g on an ad di tio na l P
r instan~e, you m
ay run
One" ca m pa ig n, ho rt-term ef fo rts . fo Memorial Day ... 1 r"
_
. can b e s ded holiday, Hke
ig ns ners can
Promotional pr ic
in g ca m pa
er an h~ ~~ ;r m offers, busine~s_ow
ic in g st ra te gy ov nal pricing also
a Promotional pr e de al s as 5 roduct. Promotio
ri ng th es
Weekend. By of fe ci te m en t ab ou t
aP
te bu zz an d ex
9enera
 ince n ti vi ze s cu .
st o m e rs to act la
a c o n s u m e r's now be fore ,t's to o te · T h is p ri c in g s tr a te g y
fe a r o f missin play s to
g o u t.
9 . VALUE P R
IC IN G
V a lu e p ri ci n g
recession, fo occurs when e xt e rn a l fa c s . s h a rp in c re a
se
rce th e small to r ,_ lik e al
sales . b u si n ess to p ro vi d to it s c u s to min c o m p e ti ti o n or d
e va ue e rs to m a in
ta in
T h is p ri ci n g
s tr a te g y w o rk
e x c e ll e n t "v a s because cu
lu e " fo r th e g st o m e rs feel
d o n 't ca re h o ood o r servic as th o u g h ~h
w m u ch a p ro e. The a p p ro ey a re
fe e ls th e y 're d u c t costs a co a ch re c o g n iz e th re c etiv in g an
m p a n y to m a s a
g e tt in g an e xc
e lle n t va lu e b k e , so lo n g a t cuS o m ers
y p u rc h a si n g s th e c o n s u mer
T h is p ri c in g it .
s tr a te g y could
b e n e fi c ia l to c u t in to th e b
re ce iv e "s o m o tt o m lin e , b
is seen in th e e " p ro fi t ra th u t b u s in e s s e
fa sh io n in d u s e r th a n no p ro fi s m a y fi n d it
d re s s e s th a t tr y . A co m p a n y t. An e x a m p
th e y sell fo r m a y p ro d u ce le o f v a lu e p
$ 1 ,0 0 0 . T h e y a p ro d u ricing
th e n m a ke u c t li n e o f h ig
T h e u m b re ll a m b re ll a s th a t th h -e nd
s m a y co st m e y s e ll fo r $
s e t a t a h ig h o re th a n th e 100 .
e r p ri ce p o in dresses to m
m u c h b e tt e r t b a k e . H o w e v e r, th
v a lu e fo r th e ecause cu st o m e rs feel as e d re s s e s a re
p ro d u c t. th o u g h th e y
a re re c e iv in
1 0 . C A P T IV g
E P R IC IN G
If y o u h a v e a
to c o n s id e r p ro d u c t th a
a c a p ti v e p ri t c u s to m e rs w ill c o n ti n u a
s tr a te g y is se ci n g s tr a te g y lly re n e w o r
. A p e rf e c t e u
e n w it h a c o x a m p le o f a ca p d a t
c u s to m e rs m
a k e a o n e -t im
m p a n y lik e D o
ll a r S h a ve Clu r e , ~o_u ,11 w a n t
p u rc h a s e n e
w ra z o r b la d
e p u rc h a se fo
e s to re p la ce
b. J
r a ra zo r. T h e W it h 0 1~ ~ ;~ n c in g
n , e v e ry m
th e e x is ti n g a
B e c a u s e th e o n e o n th e h odn th1 thv e C lu b ,
to b u y b la d e
c u s to m e r p u
rc ea o f th eera y
s fr o m th e c h a s e d a DSC ra z o r h a n d le z o r.
"c a p ti v e " u n o m p a n y as w , h e o r sh e h
ti l th e y decid e ll. T h u s , th e a
company. B e_ to b re a k a company h
u s in e s s e s ca v: a y a n d b u y Id s n o c h o ic
p ro d u c t d o e n in c re a s e p a ra z o r h a n ~ le e but
s not exceed n c e s so lo n g ~ rc u s to m e rs
th e c o s t th a t as th e c o s t o
f th o m a n o
A S S IG N M E th e r
NT: STUDE e s e c o n d a ry
NTS SHOUL
D RESEARC
H ON:
•
1 . S a le s ta c
ti c s
2 . D is tr ib u ti
o n s tr a te g y
3 . c u s to m e
r s e rv ic e
R E V IS IO N
Q U E S T IO N S

How does · ne
a b u s • s s e n ti ty id e n ti fy it s c
u s to m e rs ?
 rn ,,,
What is m ea nt by th e te
hl ar ke t share'' a bu .
'"'etermine it of s1ness? E
" ><pla in ho w to
e cu st
f,cplain ho w to im pr ov on ie r serv ·tee Prov · ·
·ness
is1on of th e bu s1
•••••••
.,1 .. I..IIII I............... •· ••.. •••• ········
··· ··· ··· ··· ··· · I I I I I II I I I I
I I I I I I I

•••1 ••1 1•• •••• ••u

•• •• •• •••• • ••• . .. ·• ••• · •• • •• • ••• ,., . ., ,
.... .... .... .... .... . , ••• • •• •
............. .... ............................. .
,,

LESSON TEN
-----
Q_BJECTIVES
b .
1. Explain th e sa le s• ta rg et s of a us,ness .
• h ov e cust
2. Exp Iam ow to im pr om er service provisi
on of th e business

TE GI ES OF A BUSINESS
SALES TA RG ET S ST RA
cces sf u1sa 1es strategy?
at co me s to m in d wh en th ink ing about a su
Wh
sful sales
tin gs ta lki ng ab ou t coming up with a succes just
ee
We have all been in m "W e ca n sit aro un d planning forever or we can
says, on is a waste
strategy wh en so m eo ne An d, rig ht ly so . Strategy without ex~cuti
et hi ng ."
get going an d do so m
t, successful
of time.
po rta nt ly I be lieve in a well thought ou
I believe in st ra te gy . Mo re im ge ahea d
wh at ha pp en s wh en sales teams of all sizes for
seen
sales str at eg y. I ha ve
sh or t, it's chaos.
without a cle ar pla n. In
gy should de liver
gy , m ar ke t str at eg y or successful sales strate
A business st ra te
these cr itic al re su lts :
nd
ea r pr io rit ie s ev er yo ne un de rsta s
• Cl
er yo ne can measure
• Clear ou tc om es ev
er yo ne can followrd
• Clear gu ide lin es ev
ne can wo rk towa
• Clear go als ev er yo is best
decisions based bon what they
rs ma sh k e ause
d leade lfis h or ort -sighted, but ec
les te am s an re se
Without a st ra te gy , sa
t. No t be cause th ey a
at the m om en
tu re .
don't know th e big pic
en
works most effectively wh
where they are going. If
• is a ship. A strong crew for a shipwreck. '~v ..,;...,; ..
and k~ow
r
e be st an alo gy I ca n th in k Iof instructions, a recipe
' Th ve c.ea_r then that's
they are well tra ine d, ha missing,
ar e
any., pf those ele me nt s
11,,1011• y1111, "" ,,,.,,,11 ,,. 111,111 11,,, 1'10111,-, m•.1 1,,,,,, 1,,w,,1,111 ,,. rr,
d",'./"1
1
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qi,, ..... ,, .'~t' '"' #1rl
,r, · •UGh ,1•~ :
• Wh,11 did y,,11 d<> li1•1I y, 1,11 ? IJfq h1f1, v1,1u •,,11.:•. tiUtr,~ ,.
~,-y 1t,c11,,,1,11•, •.11,.1, ,,•• : , ' 10 .,., 'llclf ,m,i ,,,,y _,,
,, I fcJW lrtll<.li did y,,w V 1i1tr1 •,,,II t 1
(1 "t
WI If> '1<1l<1
,, I<, wli,,111 did 11,,:y •,,;II 11 (
,, I 1,,w 1r111< h wlll tt: 1 ,1411 ft1 ;,;p1:,1f bu•,fr,, 1•.•,t
1, Whlc Ii dl,:trf •, bt<JIJtJl,1 Ir, tf11..: l1·,1•,t ,Hid r,,,, .. t Ptc,tit
•,11pp,,1 t t1m0I1 1
'"•1 k-c iu, .
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11 Whld1 c,ll<;t1f.', h,,d f.h0 hl<Jht: ,t ti; 11;r11J1; 1
1

,, Whiit Ii,,,, U1,1t1r1,~d1

(, I tr,w F-trt! y(JIJ fJ1,•,fH,,r,,:d f<J ,~r,,t,i,;v,: the r,:,,•flU(· t
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1
c, Wli<:t<; I•, t ltt: t(l(J',f l<J<Jl<.,,I r,l,JU; f (J /fJfJY for fJtr,wfh! ~I',

u Wft,,f r:x1•,t,, f () ·,1Jpf)(>rt H1,; <fo•,lr1:rJ <Jr<1wttH

c, Wh,)f :idd/1 f<Jtl;J/ •,upr)(>tf wlll /<>Ur t,;,~m ncccJ t11 'l{.Jift:!v,,..
lnr.r<.:.,~(,<.:.t:'I tht! dt-:~;
, fi;,J
BY understanding where you h
should go. ave been, You ca n begin t
., CREATE A CLEAR IDEAL C o determine whe
,,-::---- USTOMER re you
PROFILE

for rnost companies, 80% of

your previous year, you can firevenue
1gure outcomes f rom 2001iO
more an one pro d uct, are th . which cli of clients. B .
cycle. th
Figure out what your t e easiest to work ents spend the mosl rev1ew10g
1
become your Ideal Customero~r~ients do and m::~ ! ~-d have the sh~~~:i's~ ~Y
psychographics of your ideal custena. Dig into the demist of those criteria. Thi/will
omer to create ograph,cs and
a complete pr0 fl1
An ideal customer profile provid . . e for your reps.
spend their time efficiently on es guidelines for your sales th
repeat business quickly • prospects who are most likelyr~ps 0 convert and
at help deliver
them

3. TIME FOR A SWOT ANALYSIS

How wellones
like the is your
you company
have andpositioned
land new to
id; ro w .st.ing accounts, find new accounts
e;i
1
and product teams tog~ther to do the s.:o~~s omers? Pull your sales, marketing,

A S~OT is not an exercise in imagination. It should be as rooted in reality as

possible. Your job is to figure out how to leverage your strengths to capitalize on
opportunities. Consider your weaknesses and threats, the internal and external
obstacles that will hinder your ability to achieve those goals. Ask yourself and your
team what needs to be done to minimize these threats and weaknesses. Be specific
in your efforts. Look for the reasons you are not selling more to existing clients,
and the reasons reps are having a hard time closing business. Underst and which
products sell well and why. y u will need this information to build your plan.
0

4. SET A CLEAR MARKET STRATEGY e been and what has worked start
Now that you have assessed where you haV
thinking about where you are going. consider the following questions
st
This is the time to think about a market rategY-
based on your work so far:
~~!~g
. ting accounts? I ?
• How much can you grow accounts to get_refer~~;itories with existing
• How can you leverage exis I e inside e,ostin9
. ase revenu
• How much can you 1ncre ,_ _ .15t. 9 territories with new
11
products?· . se revenue inside ex in
• How much can you ,ncrea
roducts?
 .
·d e e x is ti n g te rr it o ri e s w it h exi stin
re o u ts i
you increase venue . g
. te rr it o . h
HoW much can .d e existing ri e s w it new
• ts 7 revenue o u ts i
produc c·h n yo • ease
How mu ca ·
u ,ncr
• roducts7 . t·,ng a c c o u n
P ue will be fr o rn e x Is ts , th e n
t fa st est reven e n s iv e n e w re v e n u
It is likely that t he cheapes , nd m o s t exp
. e Will
down th e line. T slowest a te rn to n e • 5 I w o u ld s ta rt this
refen-als, and ~~va he roducts in
ting sa les ne_w t
result from fo r new py
count plans fo r our to p 10 c11en s.
I
process withcularg
e ac
s CREATE CLEAR
REVE
NUE GOALS
·
When you com
. iven revenue ta
rg
t w it h t he m a rk e t s tr a te g y y o u ,v e
bi e s
created based onne your g sment o f th e past an n t s it u a ti o n , y
ou can
an asses Is fo r te rr it o ri e s d c ~ rr ; ·d u a ls .
generate realistic and m 1v1
revenue goa
N ow is time to o u r sales te a m h
go al s. Get your
think about wha
t support Y n e e d s to re a c th e s e
marketing team d
a plan. , sales team, an p ro d u c t te a m to g e th e r to
w o rk on
H an di ng yo u r
sales team new
quotas with no
disappointed an basis, in re a li ty1
d frustrate d. will le a v e a ll p a
rt ie s
The m a rx e t stra
tegy you create
,company and p d will help d e te
roducts to achie rm in e h o w y o u
segments th a t ea ve g ro w th . R e m n e e d to p o s it
ch need a clear e m b e r, y o u h a io n you r
positioning plan v e d if fe re n t m
. a ri k e t
• L a rg e Accou
nts
• Opportun~~es
• Opportumbe !" s! d e ex!st!ng acc~un~s w it h
s msade existing d
• Companies th te rn to n e s and if fe re n t p ro d u c t !l in e s
a t m e e t y o u r ,id m a rk e ts
o How will yo ea'I cu st o m e r p
u id e n ti fy th e m ro fi le
o How will yo ?
u make th e m a
o How w ill sa ware o f y o u r p
les a n d m a rk e ti ro d u c t?
o N e w Mark
ets, N e w Produ n g w o rk to g e th e r to ·
cts. ,~ ·• ,: i
PT'OSl)ect a n d
It is n o t su ff ic ie
n t to ask salesp s e ll
ma~~eti~g, and eople to fi g u re
p ro d u ct te a m s o u t th e P0Sitio
sItIon1ng st a te m need to wo~k to .
e n ts and v a lu e g e th e r to c
p ro p o si ti o n s th n tn g . The sale
a t m e e t reate s
• Ct;EAR A C T IO b u y e r P e rs o '
N PLAN each d if fe re n t n
nas or
e te n d to send e e c l.
sales r:eps o u t
s to be success to pnior;itize th
ful , it is ti m e to e ir w o rk
portura1ty p la n n im p le m e n 1
t a w e ll -f u ~
in g pr:ocess. n e : If YoU w a n
ty
onang funne1
a fl d o Ur ~
r

d
y o u k n o w h ow m u c h e n u e y o u neec, to g e t hwhere it :h o u ld
come
a t ;e v n
le s rep wm
oW th n e e d t s h oa
N
° a funnel th a hey inte~d to
rrom, e a c h s a re v e n u e . T h e y 01 ~ a t eor~ successful wo;~ngoww_tti h marketmg a n d
gen e ra te th a t upay e m
ts . goals
in g e x is ti n g le a d s th a P o rt specific
in d u d s the
mselve
re p s c re a te th . fu
coach th e m to ask the
When y o u r
s a le s e ,r nnel,
ti o n s :
es
fo fl o w in g q u
e?
h o f e a c h ty p e o f re enue do I need to mak
How mu c v
th a t present?
•
m a n y s a le s d o e s re
• H o w
e s th a t re present?.
~1 1 s d o nt? close
• How many d oe s th a t represe ne ed to make to
ti m e ny caJls d o I
• How m u c h 5 ti ng d ie n ts , h o ~ ma
• i~ ~~~i 1
9 1en on n
id e
i
mnd~ ontsex ew p ro d u c ts ?
a l c u s to m e
rs wm 1 n e e d to c all on to close
?
ext
• How man y n e w
n n e l along w it h the n
rep's fu xt
s e q u e s ti o n s on each te s a n d ~ o re a b o u t n e
e rs to th e u t d o s e da
c a p tu re th e a n s w o rr y less a b o
o n s a n d ti m e ii n e s . But,tews.
acti x t a c ti o n da th is
acti ons a n d n e s tr a te g y . A t the e n d o f
a le s
b a s is o f an a e c u ta b J e s ry o n e u n d e rs ta n d s , d e a r
th e es eve ear
n s te p s a re d e a r p ri o ri ti n fo ll o w and d
These seve wm h a v e v e ry o n e c a
r s a le s te a m
p r o c e s s , y o u ry o n e c a n measure, d e a
r guideHnes
e
e
o u tc o m e s e v hich e v e ry o n e can work:.
g o a ls to w a rd w

I S I O N Q U ESTIONS ? . .
REV tom e rs
ti fy it s cus f a busmess? Explam h o
w to
e n ti ty id e n
s a business rk e t s h a re " o
• H o w doem e a n t b y th e te n n u m a f th e bus·mess
W h a t is · · n o
• · 1S1o rov
e o u s to m e r se:rv1ce p
d e te rm in e it ~ p ro v
• h o w ~·t:O 1m
• ExpJam

S
STUDYUNK
p re n e u r. c o m
-w w w .e n tr e
ra
www.score.o
.com
www.bpJans

ELEVEN ANAGEMENT PLAN

I.ESSON nONAL A N
D M
- ..a1a .n c A
O~Pl~C~FO~U~R~:~O~R=-=-UR.=::-.;;;;---"W~
.!..:T
L
 business
. tion struc tu .
re of a
and o th e r b u s in e s s p e r s tu 1u" i
. oescribe an or ga n1 ia t tearll
1. !: oescribe th e anagernen . ,, h<JVI ,,,c rt . , , 1
2. 11. rn
. r:yst
th at c;ut ltn ~ P rtv ·LJ '. d ' t iV
,r,
u ~t i1tfos tl ·•
tu re ,s a er n 1t 1 ,.. ,, , ·m
An orga~izat1·0 na l struc al
;J
n oryan 11,1 t1on . I ""
•

to achieve the ~0·11 s of rJ ,

11 ·Jt1o n r.1 .., tr q r t ,;re ,) • ., J
1
di rected ,n order t·e s,
and respons1b1 . .1., fhC orqan .; hin tt ic c,orr1p,H
include rules, rol~ •en lf:vcl<., WI 11/ '
sformation flows
determ ines how in bc tw e
J: ~ S J; :LON
ORGANIZATION
AND MANAG
WHAT TO PUT IN
THE
ain area'J :
This section of your b iness plan covers tw o m
us
1. The organizatio .
ss is st ru c t u re d and th''. P''.'1r1I<; in
.
2. The
n, or how your
b~:';~out what your .. tc,I1~
management team
, or deta te a m brin'J"J tr ; +rt~ "
business
With in these sectio
ns, you have spec. .
structured and who ific areas t 0 cover a b o u t h o w y o u r b1Y,
's involved. ln!;'h t,
In the open ing of
the section, you w
management team ant to give a b ri e
, including size, co f su m m a ry o f y
management team mposition, and ye our
of five has more ars e xp e ri e n ce (
industry .) than 20 years o f I. f_; ., ''; /
e xp e ri e n ce in th e w1dg'..:~
O R G A N IZ A T IO N
A L STRUCTURE
The organization
sect
business. It 's o~e~ ion sets up the hierarchy of th e
set up in a c_hai:: pe op l .
m em be r ~LC, this form. If you have .
1s where you indi a e in vo lv ~ d in
o f m ar ke tin g, an
d any ot he r roles
cate who is pr es
id en t~ ~ rt ne rs h1 you~
you have in yo ur p o r m u lt i-
b .
If yo u' re a single us1ness.CEO, th e CFO di r'"'-r +,-,,
on th e chart. Whi
-person home bu
siness, th is beco
, _,,,_.., , .
le technically, th m
plan to outsourc is pa rt o f th e plan
e work or hire a ~s easy as You 1
exampl~, you m vi rt ua l as si st an t 15 re th
ig ~ t have a freela y a b o ~ t o w n e
co py w ri te r. You nce webmaster', 0 r m e o n ly c,r- e
m ig ht even have m ~ r ca~ in cl ud e
yo ur ot he r freela a vi rt ua l as si st an th e m b e rs , if ; 0.,.
ncers. These peop t w :e ti n ~ as si st
le a i e rn
yo u r business. ar en 't ow ne rs b t°
se Job it is
u ha ve si gn ifi c~
tt,a s w e ]I . r.:0,
and
THE M A N A G E M W ork w it h
ENT TEAM
nt d u ti e s in
This section hi gh
lig ht s w ha t you
business br in gs and th e ot he rs in
to th e table. This vo lv d .
yo u r board o f di no t on ly includes
· d. re ct or s (i f you ha owe in th e ru nn
in ,ca t·mg yo b · ve on e) and su p
p
·
u r ustness· st ru o rt Pnerfs an_d rnan
~n
m em be rs . ct ur e (i .e . pa rt ne rs g Of Yo
hi p o r LLro
C)ess,ona1s. Q 9e
S tars Ur
' an d th e n . rt b u t
1 b y a ls o
IS t tn e
 ~~e R/M AN AG ER /ME MB ER s
~ -
vide the following informatio non each
pro 0 wner/n,
anager/member:
• Name
• percentag~ of ownership (LLC
• Extent of mvolvem ent (act· ' corp oration et )
f . IVe or Sil ' C.
gent Partner)
• Typ~t- o ~wtnhersbh1p ~ toc k options , eneral Partne
• Pos1 10n m e usiness (CEO _ r, etc.)
• Duties and responsibilities ' CFO, etc.)
• Edu cati ona l bac kgr oun d
• Exp erie nce or skil ls tha t are rel
• Pa~t e~p loy me nt evant to the business and the duties
• Skills will ben efit the business
• Awards and rec ogn itio n
• Com pen sati on (ho w paid )
w· 11
• How eac h per son s' skil ls and experience 1 comp 1ement you and each other

BOARD OF DIR EC TO RS
r management team. If you don't have a
A board of dire cto rs is ano the r par t of you
tion. But even a one-person business
board of dire cto rs, you don 't need this informa
ness owners who might be willing to
could ben efit from a sma ll gro up of other busi
accountability that comes from an
provide you with the fee dba ck, support, and
advisory board.
nd
rmation as in the ownership a
This section provides mu ch of the same info
management team sub -se ctio n.

• Name
• Expertise
• Pos ition (if the re are positions)
• Inv olv em ent with the com pan y

know you're on the ball

~ PR OF ESS ION ALS • I investorsre involved .in you r .
. let potent1a
ls tha~t~actors you're using. Like
CSJ)ecially if you 're see king fund1~~~r professiona
With a lawyer acc oun tan t, to an~ o freelancers or co
..., __: ' 11st anY
~n ess . Thi s is the plac e t to include:
the other sections, you 'll wan

• Name . r certificates
• Tlt:le ducat1on o
fon suc h as e ular }
I eed ed, r~ you need
• Bad e.gr oun d info rma our business , as-n
• Services pro vid ed to '! (i.e . retamin~r,dea
1for the wor
• Rel atio nsh ip info rma tion king the
rien ce rna
 f\.fflJI..JIP'- r,t\ \v\\ y, e•.
" ovrr whrlrnln ~ p t Glolly
4

11 vau'r ~
r.~N,,u \\KCn o Iiu' ,Ill<.,
1\n~,...on 1)11r.\nr< ut w, \\ mtl ' ii," l < ',11 III . I' •I
~1i\l11Q n bo&II I
\I''~ 1 t Iv
~"'n\\,
,nrtlf,o nA trt\\"oh\tl'r , 1 'i'l, I
\ iP\ (\ 0\ 1 h orw."rc ,
u
I po\n\ of lhl~ ,,{\ r:\~o, \o yo, ll '1[' \t ll nGI l ho Ge wh o wo, k with
~er\\011 Is 10 • , \n chm ge f" I n \ You c11
w
on1, ' o
h O
~ w
\C OU ()\ w\\\ ''• \1 111n ,1 l'l
bC {\1"d\"9 yo l1 1f'd 1 ' li i.!f we on lh
\\

nekgrolmd nnd s \dl\ th~\ w~,, ,' ,,~r.on\ \\\)U\ \mJ t O , iJ ucccm, of th e hu :.lll" fl!l.
o, ~ •
s
1 0 f th e bus\"r.ss \111 ,, t hb h, n ,-c<,., \on you•II wont t c)
~!e :~ P ~ ,~ ~ ~ Pu ' updat c Uyou
\ Pam m b ,.~ :..
dd\t\onn\ b<\\n
r ch nllgcs, o\ ~";~~
:~~ ~ em t?r ~ 't ."' lv•'4"' ~ny
,"'l e
\t,g, nwnrds o 1
,o ~ 1 d;;~ •~'hnl be MIii' Ihe ~
bu sInesi. ,
use lt h\gh ., ~ , ce o
t'eat resouroe \\gh\'S t'.hc !;\<\\\ s ~nd ex,pc1 u and your te
l'.O refe1 to w
hen set! \< ng p \cnblldty and marketinam ofter, it can be a
u . g opp ort unit h:s.
~N~GEMEN
T TEAM B
USINESS PERSONNEL
tt u a u re the
managem
ent team sec
m a ll busine t\on to lnc\u
ss, indudlng de an organlz
ployees. B departments atlonal chart
io g , dep a
wners. Spedfrraphical information abortument managers and of your
t y
hip p e r c e n ta ou, th e o w n e r , a n d
rour owners
,, , responsib
ilities wlll be
. Biograph\ca g e a n d e x a c t ly a n y other
a ~ .•· The cre \ w h a t y
dentials of ln fofimatlon o o u r d a v - to-
v,ce, such a an
s a n acooun y advisers who wm be n your m a n
tant and a la a t y o u r sld a g ement
wyer. e p ro v ld in g
u should de expert
anagement vo te o n ly a b o u t one ip
sedtion. B u t in th e e da ra g ra p h tO
d it will requ th
lre some fine each perso
sse tonp~II n yoca p ro fi
it ~ ;~ o u ld b le In th e
m e a n d tide, e one s u b s
E d ta n ti v e para
fo rm a ti o ucation and graph,
n an d Pn.m a ry p ,o .:
,e s s1o n a f c -
responsibi\i t:\es a
v id in g n a m • -..;;.uen..ua als
e s a n d ti tl e t and s
ra g ra p h sho
uld proc
s s h o u ld b e Your s m a ll
business o m e p e r s o n a I
eed • th
w it h ease if e e a s y p a rt
• vou • .,...L.
Education include:· u e m o s t ro b u
1
certificationtt eclentials
s. Emp1o ., ; . . st part of y
our
company a ff
w o rt h menti
il ia ti o n s
oning. S k il
!~,:nt
tndud,ng C.O
highlights. a
llege
~;c"d ma1or,
.
truly excels l s there Is and a n y
someu, _k the
at
serve as a s o r is k n o : ~ 5 Pec::ia
0
la s t o r la s t re le v a n t
ubliminal m lties ~ n g tr tw o ti tl e s a
business. en or.* Mota
b
u ly s te ll a r
in
nd
ssage th a t thA l~ eaning th o s s o m e o n e 's
e th in g s th p a st
'-y c•a~ at someone '
np bel i s h m e n ts w
re p e a te d a '# h ic h c a n
t your sm
 wh ·ich m a y . ythi
P e rs o n a l in s ig h ts , ' . include aninin ng from community
• . e o n e t
I t to som
1nvo v e m e nh e re so tr y t s r~intikoni t
ale for jo gY our comp any. You have a lo-
of wha t co can
mark of a ading
o f la ti tu d e . ' on. If o oth ' . n ermsed by it h nveys the so meone re
e rs ss
d o, e n e rg e ti c pplan Will by u re impre ' c ances are
ss
y o u r busine e too.
G AND NEL IN A
T T R A IN IN M O TIO N OF PERSON
RE CRUITMEN PRO
BUSINESS . romotions
n c y p ro c es s and cnteria f or appo•rntments and p ruitment
tr a n s p a re ' shared se. . .
olicy docume
nt. Rec
To enhance n te d a n d e lr n e o r p
w of
shou Id e
b docume th e re c ru i~ :: iu id cess as _follows: Revie er.
e li n e s c o u ld d e s c ri b e
e s v a c a n t \P r?1 re v ie w e d b y the anag m
guid beco m I w1 l b
e
hen a p o s t
vacancy: W post has
rm · W h c1
..
s1 on to re cruit for the rvice co-
fo en the d~ e se
r u it m e n t re q u eits t t • b e c o m p leted by thth
e c
• R n m a d e a re c ru w ill re e
bee m ff~ n re que~t form d by th e m anager befo
c o o rd in a te ,
/ fi n a n
ce o rcer m and srgne
enced. ons and
.
n t p ro c e s s is co m
c if ic a ti o n : Job descripti to ensure
re c ru it m e o n spe each post
ri ~ ti o n a n d pers wed and prepared for erience
d e ~ ~
• T h e jo b c1f1cat1ons will be rev
ie
th e s k ills , q ualities, exp
t es
p e rs o n spe a n d a d e q uately reflec u ti e s a n d responsibiliti
d on
th a t th e y a
c c u ra te ly
fo r th e p o st. As roles, e s c ri p ti o n a n d / or pers
d d updated to
te s re q u ir e advertiseme
nt, jo b
hecked and·
a n d a tt ri b u , w h e re a n m u s t b e c
r ti m e e; they b. Job
c h a n g e o v e re a lr e a d y in existenc u ir e m e nts o f the jo
n a
t th e c u rr e n
t re q ust be
s p e c if ic a ti o a rl y re fl e c a n d a d v e rt isements m
y c le cifications
e n s u re th e rs o n n e l spe rdinator.
c ri p ti o n s a n d p e
n d o r [r e s p onsible] coo ly and as wide
ly as
de s n a g e r a a s o p e n give
y th e m a dvertised f the jo b and
a p p ro v e d b n t: Vacancies will be a e ove~all ~ u rp o s e o
me will state th
A d v e r ti s e e n t . .
• p o s s ib le . T h e a d v e rt is e m
m e th o d o f applrcatron_ rmum o f tw o people
q u ir e d y a mrn
a n c e o n th e re g will be undert.fa.kefn b . .

rt'.
c le a r g u id s ti n
ti n g : S h o rt li n spee r ,c a ,o n .
k e n by a m rnrmum o f
th e p e rs o u n d e rt a .
• S h 0 IS n c e d a g a in s t l be
a n d re fe re te rv ie w s wil .
1ficat1on.
d s e le c ti o n ·· In p e rs o n s p e c
• a g a in s t. th e
In t e r v ie w an r e~,, erenced e ta k en up. c o m mencement
.
• an d nces w il l b g p ri o r to
tw o p e o p Ie h c k s · Referets a re s u b je c t to v e tt in
p o s
:rencef c e,. b.l e,
• ReefE tt in g : I a p p ,ca
V
•
NT:
A S S IG N M E
es .
e n ts to re s e a rc h o n : e ra ti o n o f it s e m p lo y ~ n rn Kenya
o
S tu d . s d o re m u n o f a business o p e ra ti >
n ts
th e b u s ,n es . eme -~ (j,:;--, .
s
1. H o w d o e s ta tu to ry requ,brusiness
nd
2. Legal a to a
g s e rv ic e s
3. S u p p o rt in
KS
S T U D Y L IN
n e u r. c o m
w . e n tr e p re
 LESSON TWELV
E
MANAGEMENT
TOPIC FOUR: OR TIONALAND PLAN
GANISA
OBJECTIVES
. a
1. i. Descn.be th e re m u n e ra ti o n n d in c e n ti v e s fo r
personnel
2. ii. Highlight th e su rvices o f a b u s
pport se in e s s e n ti ty

REMUNERATION
AND INCENTIV
ES FOR PERSO
NNEL
The term '4\compe
nsation" refers to
an employee rece the combination
ives in exchange o f ~ a g e s, sa !a ri
wages o r an annu for work. Compe e s a n d b e n efits
al salary, plus bo nsation m a y in cl
group health care nus payments, in u d e hour1y
coverage, short-t ce n ti ve s a n d b e
retirement saving erm disability in n e fi ts , su ch as
s account. A tota su ra n ce a n d c o
components. An l compensation p n tr ib u ti o n s to a
~empl oyee compe a ck a g e can h a v
components in ad nsation p la n " co e se ve ra l
cfrtion to the man nectivety re fe rs
w h a t purpose em ner in which th e to a ll th e
ployees receive ca co m p e n sa ti o n is
se bonuses, sa la ry p a id a n d fo r
H O U R L Y WAGE in cr e a se s a n d in ce n ti ve s.
COMPENSATIO
N
Employees da
which are calruss ified as non-e m
lated on an houxe pt receive w h a t
x ce ss o f 4 0 hours rly basis and re q J
p er week. Overtim . e m p oy.ers u s
e is o n e u ir e o u a ll y ca
m p lo ye e s w h o h
ave a collective ba v e rt i~ e p a y m e ll w a g e s ,
Jed a la b o r u n io rgaining a aoci a n t fo r w o rk in
n co n tr a ct - have h a lf ~ m e s th e h
riod. wages ;~ e e m o u ri y rate,.
e n t w it h m a n a g
se Y co n tr a ct te ement -
rm s fo r a c e rt a o ft e n
r example, a sam in
ple tabor union con
m b er s, licensed p tra
lumbers and appre ct
7 .9 5 a n d $ 1 5 .5 0 nticem fY require
, respectively, p e m p lo y e rs to p
ee m en t. u rs u a n t ti t~ m b
e rs h o u ri y w a g e s o a y m a st e r
e te rm s o f a co lle f $ 1 9 .7 ,
W U M . S A IA R Y I
ct iv e b a rg •5.
COMPENSAno am1ng
N
ough th e re are sa
laried empJoyees N I" "•
fo re , e n ti tl e d to h ":'..!....•
o ve rt im e p ay th O
e wt a~e a ss ifi e d a s
' er;rn sacl la ,, n o n -e x e m p t
d
ry g e n e ra lly re fe an ,
rs to a n a n n u a
l
salary the em plo ye e rece
ives or a
method of employee com en .
·ire ov e rt·tme pa y. Fo r instanc :at1oln tha~ ?oes not
requ
ed to de scr ibe a wo rke , t he ref ere nce to a "sa lai ed mp oyee is
generally us er Who do es not re ce1. ve overtime pay.

An example of an em plo ye e comp ens atr.on plan f on a

.
ed uca t·1o n or salary leve ls is one based
I h
salary sea e tt · at co ns ide rs f ·
, yearsa of pro e~srona l experience, credentials
·r, job co mp ete nc
and qua l r rca tons such as ii ~d functiona l expertise. Sa
lary levels
such as the
Management
wa
co
ge
nta
tab
in
les
an
pu
nu
blis
al wa
he
ge
d
s
ann
a ua i Y ~he U.S . Office of Perso
as rn~ reases b~sed on step
nne l
and grade
l go ve rnm en t 'e~ 7e
promotions for fed era ing the General Services
r Ex ec uti ve Se rvi ce wa ge scaie~:ees pa,ci accord
and Se nio

PLANS
RETIREMENT SA VI NG S
nity to pa rticipate in
tio n sce na rio giv es employees the opportu
A sample co mp en sa tributi ons to
ore d 40 1k pla n. Em plo yees designate pre-tax con
the em plo ye r-s po ns nt of th eir
ch pa ych eck . Fo r em plo yees who contribute 5 pe rce
be deducted fro m ea nt of the employee 's
wa ge s, the company matches SO perce
gross_ sa l~r y or utions equa l 2.5
n. In oth er wo rds , the employer's matching contrib
co ntr ibu tio
gross salary.
percent of the em plo ye e's
tion is
ou nt of tim e be fore wh ich the employer 's contribu
Vesting ref ers to the am ywhere from one to fiv e
ail ab le to the em plo ye e. Vesting periods range an er the emplo ye r
fully av me ans that for the first year aft
e-y ea r ve sti ng pe rio d the mone y
years. A fiv yee 's 401k plan, 20 percent of
ibu tio n to the em plo
makes its co ntr
ployee.
actually belongs to the em
, and in subsequent years,
sec on d ye ar, 40 pe rce nt belongs to the employee vested and
In the
rce nt of the em plo yer's contributions become
60 80 and 10 0 pe pleting five
em plo ye e. If the em plo yee leaves his job before com
av~ilable to the ested employer's
priate portion of the non-v
years, he for fei ts the appro
co ntr ibu tio ns .
INCENTIVES
RA ISE S, BO NU SE S AN D
a
tem is usually what drives ed on
Th , rformance management sys receive an nual raises bas
ployees
1
e em p o~er s Pe, salary increases. Em d. rf
compensa tio n p 1an s
d rat ing s. Fo r exa mp le, an outstan ing pe ormance
~ kin an t salary increase.
pe, ,or ma nc e ranres ult g . 5
in a pe rce n
appraisal could a
e cash incentives based on
b s and incentive plans includ ployee's share based on a
1 ee's gross salary or an em to employees whose
Sample em p oyee on~o • t d for distribution
percentage ofpo the, emp Y desig na e .
bonuses and
cre tio na ry ol of fun ds succes s. Many exe cut ive
dis .b t d to business the bottom line or even increases in the value
performance co ntn u _e provemen.t 0 f
incentive s are tied to 1m
of sha res for pu blicly held companies.
 . a f: N ~
l".'lff
,; OUP t-tEAt.Tt-f ,.-,1
I (fl • qrfJIJP ~b,' th ',,r!; t-J,:ndlf•. 111,m ~ , '·mt,1,, (
,, 1n r: u , r,-m iu ,,. ,v1r1q ,1 pr
,rt l() t1 ,,11h e, /
I t1on pl,H' rn• 11 11
rn , ,,
r, tot,, Ccm p11nt,a J
'. ~ ,,~rortlon th1•tOlt1 1 rn()nthlf P J'r<•miurrt', for <.;rnp I
r•
r>
;J

pny :i •,17.!..•t, , c1 of t~1,: HnrlnY'; ., , ,., ,

--

llY• , hi r ,, /' t •
pti•mium to I), ,,durt,·d frr,m t,-durt,;d frorn pr
c - 1, J/ ln<,<1rnf.;,
'II C ,,r , Ot t)','\
,, pl,1n•, dr u' • I

:,pon sor ed l,c dl t ~1 rm "'

enrnlngr...
r•rrwnt ;..al co'/r:r;Jq<.; -
rnr.1Y lnrlud<; •,uppl .• fo r d<:nt ,,I ,m ,J I·.
Group hcnlH1 ;ovr·~·:f
CfllC as wc•II. )o
,1

--ploy,;rt, pH/ th'! lot_r. ;J,

< t for ~h<Jrt
tr.;rrn d1·.,,lb tllt / r ·.,tJr 'Ul
rnt "'mI q t(.;rrn dbr.t 1\ ,, ~r;.mU; t1:.. p;.1rt <A rJn ,,r ,;
and off er covn,ig c for on blllt I nu !;Hlpl<, /' ~' '·, \f;t,;
compcns,,tion.
BUSINESS SUPP
ORT SE RV IC ES

111c 5ecretary of f<;st ~ . d to vn

eryr::~r need;a de ov, how to tarf.; ~ ho rt ha nd , t IP ';
us in g a ta p,.; reco-:1 r d
answer_th_c phon~. To als with dl ct at io n
transcnpt1on equi da: _., stecrde f~ im pl y rd <;r ~n1
and the office telepment, ms ea O typing she in pu ts
phone she uses is '
da ta in to a c.o rr p Jtr;r;
actually a com ., ~ -f
p ie / co m m un ic a io n.., c, r:,.Jr t,4x.
r:
What we now call
the business suppor
ond perhaps even m t services in du st ry
ore remarkable ev ha s eYperienc.ed
ty pi ng services, olution. It began a s1rn ilar
and typing was pret as se cr et ar ia l se
gone the wa1 of th ty much all th ey di r1 ices or
e horse and bugg d. B ut th os e op er
entrepreneurs wh y, re pl ac ed by m od at io ns t-.aV'!
o w an t to take ad er n, techno-sav·✓
vantage of a vi rt ua {
lly lim itl es s m ar lt'
Thoug~ ~h et .
e ~e;m "s ecretarial service"
re co gn it1 on , has a
and tra ns cr ip1ttiosnno(hlonger an ap pr op ria te de sc st ro ng de gr ee of co ns um
er
istoricall t . . t·, .
consumers often np to n o f th e in du st ry . . .
do n' t thin/ofY_Ptc 1 W
spre~dsheet design a secr~tarial se ht ie ty ping
, In te rn et -r eld atse
, cretanal service rv ic es ) ar e still a m ai ns ta y,
service pa cr ag es . ed .
The phrase "bu . 5 · as prov,.d..m g des k
jo b of con,,eying ervices , an d ot he to p pu bl 1's1"'.ir g,
what th e in du st ;• r so ph is tic at ed pr
~~e c~a_nges_that are likely .n es ~ su pp or t se
rv ic es 11 do es a
od uc t ard
. addmm, st to oc cur'fn~h about to m uc h be tte r
da y and st ill le av
1n ustry. rat,ve support services'' and ,, ffie futu es fle xi bi lit y fo r
o tee supp
re. You'll also he ar
te rm s such as
0 rt .
In 19 98 , th se rv ic es " ap pl ie d
A.sso · t· e !Jational Assoc·,-t· to th is
c,~ t0n of Busines d ion of s
M. Smith says, "W s Su • ec
e fe lt th ~f ,bOrt ~erv1c re ta ria l Se •
's ec re ta ria l servic es Intern t rvices
es' of co d . usin
ess support a io_ ch an ge d its na m
e
m or e re sp ec ta bi lit
y to th e . ve nn g th · se rv
na l · E xe cu tiv e D ir ec to to the
. e sc
profession u ope of
ic e '
5 d.td
r Lynette
To understand the ou r ni er nb a b e tt e r jo b th an
future • ,
O ve r th e span of • er s se rv ic es an d bringi.ng
h th e 20 th p Otent1a1,
ta ke a I
ce nt y
en do us ly , cr eaur
av e gr ow n tre m ook at h
tin ~ the actrn inistrar ow th e in du
a need fo r se iv e st ry has evolved.
de m an ds o f do in
cretar· 1 g business
ia an d cl er ic al su
pp or t.
 sarne tim e, th e ge ne ra l business land scape has chan d
e . ge dramatically Bi
r,.t thinesses are loo.kin g fo r wa ys to str ea ml ine th eir operations , and one pop~I g
us wh er e th ey re ta in anoth company to provide a servic:rth
b tion is ou tso ur cin g, y er at
0
Py have tra di tio na lly be en do ne by em plo ees. Small compa nie .
s wa nt to sta y lean
u .
r,,a th o, ar e tu rn ing to outso rcing , rather than fatten ing up
nd profitab Ie, so ey , to
:heir payroll.
. th b .
ob vio us ne ed wi th th e new way of operating i~sin~ss _world ,
combine th e g ind us try wide open with o~;ort~n
na m ic yo un 'tuhsiness clear
and you ha ve a dy e is so mu ch op po rtu nit y th at .,f You dy:on ave a
rvi ce s. In fa ct, th er are slim . But
support se·fi · rk et , yo ur chan ce s of su cce ss
an d a ta rg e! ma can
plan, spec, IC se rv ice s ount of cash you
th ou gh t an d pr ep ar at ion , and a minimal am '
with a lot of pr of ita bil ity .
th e ro ad to
quickly be on

TYPES OF SE RV IC ES
asses what we
e of se rvi ce s. The following list encomp
You can of fe r a wi de ra ng e services
t it is by no me an s ex haustive. So me of thes imary
found on th e m ar ke t, bu of th em se lv es ; ot he rs ar e an cil lar y to a pr
in an d , and then you
could be bu si ne ss es th ey 'll let you know what they need
ur cli en ts;
se rv ice . Lis te n to yo
ov ide it.
can decide if yo u can pr

• Word pr oc es sin g
• Tape tra ns cr ipt ion
• Ph on e- in dic ta tio n
• De sk to p pu bli sh ing
n
• Sp re ad sh ee t de sig
rs an d re po rts
• College pa pe
.
• Te lep ho ne an sw er ing a rd ing
fo rw
• Mail re ce ivi ng and
• Packing an d sh ipp ing g
lis t m an ag tm e; ~d billin
• Da ta ba se /m ail ing k prepara ,on
• Bo ok ke ep ing , ch ec
• Re su me pr ep ar at ion
• Pr oo fre ad ing
, .
• Pr int br ok er ing iving
d re ce
• Fax se nd ing an
• Ph ot oc op yin g
• No ta ry
ch d aintenance
• In te rn et resea.r n an m
• Web pa ge de sig
• Ev en t pla nn ing
• Co ns ult ing
• Tr ain ing

TA RG ET MA RK ET
 7
or t se rv ic es busine
sines s su PP ss: the
our bU . sed bUSI ·nesses; an d la rg e
Kets for Yd
broad mar ercial an horneba
you have thf,e~ srnall
cornrn
general pu!'.c, in di vi du al cl ie nt s
corporat10 blic," we rn Who are not
"general pu nts of ~a n ar ke t ar e people
th is m ne eding
General pu bli C, BY
h two larges t segm e
students.
• businesses. T r:tio
n and college
resurne prepa lly w ri te th e do cu
. a resume rnaY m en t and
. b hunter ere ating or updati~gt·ng.
a~ ua ne ed you to as si st in w
A JO . nd pnn 1 , he or she m Yte is lo riting
bring rt to yo u for IIlayEv
out a m en t ra w ' th e re su m e market
th
the content as we . en when e unemtoP 1be oy
un em p lo ye d to ne ed a re su m e.
eo le don't have
. •gnificant because
,s s, P P .
. tit ut io ns In. th e U ni te d S ta
te s w ith a
There are thousa nd s Of higher-learning ins ho u h m
collective enrollment f m illions of st ents. Alt an y st ud en ts pr ep ar e
o I es enouud gh of them Wt-~ tu rn to a pr of es si on a l wor
reports and papers th d-
processing firm to ma ~m;~-: m~rket substantial.
e '
Students working on such as gr ua te
particula_rly lon~o~a~
dissertations , are stron e;:~ervice. A ndad th es es
, of co ur se , onor
graduate, they may co g candri~tes fi r assi ce th ey
me bac O you stance w ith th ei r
re su m es .
In addition to stude
(think professors whnts, the academic commun.ity m ay a lso be a
o so ur
their books and artic need word processing, ed iti ng an d pr . ce o rvf business
les). oo fr ea di ng se ic es for

• Small Businesses.
Chances are, the m
this category. These aj or ity of yo ur cl ie
are companies th at nt s w ill fa ll un de
~dministrative suppor re qu ire se cr et ar ia r
t but do not have th l an d
~tme e~ployee. Or th e m on ey , sp ac e
ey may prefer to ou o r ne ed fo r a fu ll-
,~~est 1n the talent an ts ou rc e sp ec ifi c ta
d equipment necess sk s ra th er th an
htnn
de g te ary to ge t th e jo b
man d.mporary employees can be do ne ri gh t. And
more co st ly th an
sm al l bu si ne ss es
' needs
As the number of sm
all businesses c t'
market. And the lis
t of services th on
persona_! ~reference in_ue~ t? gr ow , so
s. As you deve~~ u~ 15 do es yo ur po te nt
,n a pos1t1on to m e • ltmtt~d on_ly by ia l
ake suggestions th~t yo ur im ag in at io n
scope--of the work yo ~~ti_onsh1ps w ith an d
u do for th 111 sm al l bu si ne ss es
em. increase th e vo lu m , yo u 1 ll be
~ypically, small busin e- -o r ev en ex pa nd
esses turn t b . the
·
,rocessin ~ ·
g, ,axing, Photocopyi o us,ne
nanagement, dictat ss support services
ion and tr ng, s_hip
ping, de sk to p pub1 f f d
anscr,ption. · h' ir m s _ol_r wo1· r
• Large Corpora ts m g, m a, m g 1s
tions E . t
and administrative
a •. Ven fairly large Ic
company has a tern st .
ss , ants rnay be
can handle in-housePorary sit op ~r at ,o ns
th uat1.on Whe ca nd id at es f With fu ll- tim e se cr et ar ie s f

' ey rnay turn t or yo ur se rv ic · es If

. a
0 re th ey ha ve m or e w
or k th an th ey
You to Pick up th
e ov er lo ad . O r,
lik e
-
 the srnall bu sinesses menfI
proJects rath er than hiring ~ned earlier they
t,irln9 temporary empto e emporary ~orker~ay _Prefer to outso
adequately equipped wirke~ ~eans training th This nd
i,assle and cost. work
s ation • Sending theem
is a smart ~pecial
. .them' w
a toproviding t an
eca,huse
you eliminates that
mi::
Large companies also use busines
are unavailable due t o v acations: support services when th .
that is, someone to com e in and br illness. They may not act'\~wn staff members
someone who can handle all or pa~ prfesent in the
o the work of office
the a'bbutut~ Y need
ey a "temp,"
may need
sent staffer

EJNDING A NICHE .

lt's a good
number idea to
of very select
valid one or
reasons formore k market groups to target. There are a
choos·ey
a very specific market segment, you c~~~a~l:ell-defined_ market niche. BY targeting
and customer service system to meet thats r your.service menu, mar~eting efforts
marketi ng efforts and gain a reputation w·theg~hent s needs. You can refine your
areas--which means you can charge mor~ ;~. / ~dustry for expertise in certain
earns mor f . .• • '" a out it: In the medical field who
e~-a am1 y ~ractItIoner or a neurosurgeon? The neurosurgeon, natu~ally
1
because hes a specialist, and what he does requires greater skill. '

SOME MARKET NICHES you MIGHT CONSIDER INCLUDE:

• Other business support services, Let existing business owners know
you' re available for overflow or to work on a contract basis. Expect to have to
sign confidentiality and noncompete agreements, but be sure any such
contract limits you to only being prevented from marketing directly to the
service' s clients whose work you actually do. You might have to discount
your rates to allow them to make a profit, but your market.ng and sales costs
will be minimal, which offsets the discount; however, be sure you are

compensated for rush jobs,

s "f " f · s or industries, If you have expertise in a specific fle\O,
• peel ic pro ess1on erv\ce to that fie ld, I woof the most common are the
you may targe_t yo~r s artlcularlY transcribing for these groups, because
legal and medical fi elds, P . list of specidl terms and formatting
you'll need to be familla: w~~t 1~i~arget protesslonol salespeople, such as
requirements. Or you rn Y k f . ........ their ho 111 es and need occasional
manu ac urers ' rep s , who wor ,r 0Joann
", v. focuses on the •msuri:ince industrv,
5
f t
administrative support. Ch_lfca,9 fa targets the legal fic\d.
and Cindy P. in 1rvIne, call o rne In' a densely popul11ted area, perhaPS an office
• Geographic areas, If you arrk ou ,nay want to choose your market bY
center or a light industrial ~a a~aymeters, and then ,narket to_thc con1panles
geography . Determine you Ph sizing the convenience of using your service,
within your service area, ernP a
 ' ,, , , nr, 1:;1t ,' ,, It,,,, ,
/ tf,ltr
nu,lltmt~ \,t1ti<ll1t1l ~, u,,I I' t (,.I
. .I t,ur · ,11 ~
11 t11 (i I,, w "1d11tllf ,~, J
lli r1
l\r.ftdcmll, II ~~' NI 11ltllt%
ti I t1rt1rJe11 ,It ll
II I ,.., 111 I
g(ll\11111~ I u

I t l I /1I ''f~ l,J'l1t{;,ffI

IU UP (;{)!:ii N I Ihu iiLlt1 11 ,oM, /J I/{//':~! ,r'., i, /', I I hf/ I,f f,.,
lie ,1, h1,11r•!lfl"
' I ." 111111 Ii cl!Jfl•irC (
11 y1111 ltflVll I (llll vf fl{d r.(
,r·.~
·!:-•hlft,1,,,,,, /', 1'/1 fL';f/ ,'.
llu ' ll ( mi I I
IV ltlt vlll11hlly 11 t , <.;flfiltti,
' r olll(l [, ' 111111

in r,ii g,u Ill hNVL1 "l tii iv,.11 If <, I f II;{:,(,

11•111,111', 111· , f
1
I !Wt''""· /itilt,.p t i·d 1,, ,.t,Jrt Vm,r ,,
i1ln•,1d/ ,,1~11' 11,,,1l 1t,iiJ,t1,,ri,,f t,,
J ,

'r.q ot the ht1Lll,1•GLi .., tl1Py I I VI ;,,u

eq11 p' l,:1,1
Kl t.11pplnt1
Iv.
1N s111101 ,ov111gu ,11 ✓I'
ILmI' 11•l,1I I I I, , t ft,,., I'· 1id ,ill,', i1 i ,
ier~us~ Ihe tit u1 t u1, 'o~ ~1 lc-1Ul1,1 ,, wr,11itl ttlllt, ' I,1
t
,,
o oht,1111
lliM you'll•b,mk1, o11d o\~1lllicl lo )!1 1 i1lih· t,, q11t1llf / I t .
1lcNJ ond Lll c, , Y

Many opc1ato1'!; e.l~tl llll•II hw,ln~.[,f,(:•. :ltt. IiII<·i'iut

fill! •,ld1, vth/1<,
If /111! "',r\JiV,r,,J
ril,,r1 r,l•Hf ,Jf-tJa,1;
'J'; Ir •.,, /', , .•fll,'•'//
;,-,-.,
thclt pctsonol llvlng t·xprn,~ct, ,111.Iwvu·uy,c u tr, /C• r-r1(,!J1Jh ,,,i•.r, ,,r, , r,, ,; ,,, ',', ,,,.
bu<lncss lull tlrnc fto1n tho r,l:rnt, ><: !.Ute: ' ' • • , •• , ,· • , If;
yo~t e;renscs until tho n:v1mu1: r,1.Jltl/, i.ornlnq In. /\t ; i min 1rrpu;,, /.'' ; ; · :~
the equivalent of thtl'l' month1.' t,xp1,nu,r. In ;1 ' ,;i 1lnw. iJU.1,,;n1, I'' , _ · ' ✓-r,
11
you'll p1 ohably sleep bt•ltur It you h<1vt: r:I1 to I/ rnr,nth'. 1,f ':/r,,,r, '.<:•. '·<-'J':t, ,zq, ~
It vi nc, California's Cindy I', puJd t ,I O,000 to hu / iJO ,,11:.tl nq b 'J',lr ,,,,.·. ; ' • :i• f•:e
Includcd the client list <ind lh u lc:<111c, on lh,: c,ffl c,,, hut n,, fu rtIIt,i r,: ,, r ',,, , :. " " -~
lhe yca,s.
She spent another ~4,ooo on lnltl<li uqulprn"nt purcha,.1,•. ;m1J h.,,•, ,.,,;,;,,,; ·r ', ·e O'✓f:•
Joann In Chicago
neededV.was
·,tijrltid
a t YIJPWnter " '>hP • ''J h bufor1, th" d·<1 ' ,
h1:r, husln1:sr; "'· •o,," - ;flv' ,;;fl I ,
y• , f i,r,
some paper, and
. \Otn1•one
I needed to start."
' lo;,n<:cl
, •<IY!,, . , . <ln
rne . tOUoht • ~or 4$,;or,
. ,,1r,<.1.rrm1,_ tyr,,, 11rj•,,, • ,

<t r<tn ,<.nptJon unft. r hilt fla r, 1t--tr1;,,. u~ -

-
(, ~
As You consider Your own ittw1tron don• _ , .• . • 0

your business plan to calculate, hoW rnuc~ PUii d M<1rtup nurnb,,r ,,,J~ ,,, •.r,E cir; ,5€
and tht>n flgu rr• out how mut h You h<ivc, / ou n"',d to ',tart yo •.r Jde., J OP': -~~i-: -,
sta1 t Playing With the number~ unct ll<:cid1i You _don't h;,v,, ,,11 tr~e cash, /',, ''="'1 tr.
~
OPERAl'JONs g Wh,,t You r..,n do 'llltt-,,:,,JL
I
As a solo operutor, expect t . 'I ,
O
business management a f,P<inct at least one.
bigger Your business 00 ;~hadm1nlstratiori lliqrk fowrth of Your tirn.,, on 9":"'3"'-:_
managing them rather tho e more Peop1; You heting, Purchasing "lnct b'II: ·,:; •. o'3
n actually doing the ave, the n)ore tirne /OLJll s~-s.-,;
Work Yourself. Witti four emula ,ee,;
---LOCATION
....,,.,

A.s YOU ,·, 11sld,·r ttw \SSli<' ,,f Inc,1t1011, i,_,:l1\l , 1 t, ,w thlil\lS 111 1,1111t1. 1>nµc11dln<I on the
1
s~c1fic servlc'<'S , •NI 01f,•1 ,md 111-ll'i--,'\ you tm11d, ym1'1l posslhly Im dn,1lh1q both
111th the gencr-11 put,11c, wlw wtll 11,,,,d ,1,-.-,1ss to your ot'flcn, 111011\1 with sni,111-
business owners ,111d ni.11i.1q,•1s 111 1,,111or n,rporntlon~ who ll"IY ntso w.u1t to visit
your faci Ii ty or h-1 v ,, ttwh <, , ploy,,,,s ,, r ,, 1n,1ss,in\1,:1· pick up ,mcl dd 1v,1r work.
11
In any business, but ,,,;p,•ct,illy In t1,1s on<', :, profllssto1inl 1111.100 Is ,1 ~rltlc,11 clement
of success. Homeb:is,•d l'~"•rat1t,ns
. .,,~, i·v, n1 , ~ ,cl 111
tl 11. y ncc,,pted todny's uccnll$O
!,un•)llcr~ worldtinvc
bus111,1ssthey (In
~ ~ pr<'f<'I' <1oulh1<1~ w 1 11011t
ac ' many custon1er'- 85
11
.. ·).. µl l•tl' · you ~ttll noocl
• r• · to present the
1
t overhead and ,·,111 \ht'l'<ifor,·
faower - ~ t•Vt'll
b ·Idi.il!lll " thoUClh
' ' you• c·Iwo.,t...: . work fron1 your
...... to
I ppearance of being ,1 s,•rlollS 11 ~ 1:: ss, •. '
1 1,,; 011
siir<i It's ,, 11tnt I$ conwotlblc
house. And if you opt for a con1mc1 d,1I lo,,.,tlllll,
, ,. f tht' N,,oclntton of Bt1slnoss Support
with your goals.
ln the mld-1990S, about h:ilt t hC 111<'lll bl>I ;· o s ,cl ; bY the turn of tlJ!' cnnwrv, an
Services Jntorn'1t1onal tAl3SSl) wert' i,oinoi>"• ' ·,1-~on op,,rul1011s, "Many of our
estimated 70 percent wc1 c ho111d,nsud, oiw· I'' 111 ·\ 1,,ir nvcs bY ,novlng back to o
1
prev\ouslv offlce-bnscd n1cmbe1 s nr,, sl11 PllfV 11 tc;i•~
,,xcc,uttvc dtroctor. "ThCY
tl t h I IS no onCJ ~
res\dent\;il \octitlon," says Lynct\l' M, 51111th, 1\ 1· ~·. ,· ,· t·l)C exception b11t the norm ,
1 d ltl b h g
acknow\od9'-' '" " omcbascd bllS nqs:, • 1 Liq,na , ssock1tc w · 1 e ' ·

In the perception
" of clients, thcro no 1oni1cr I~ ' s · '
(I'''
kC <Jrowtli challcnglng, smith
homebasu · d
Wh\lC co11.::odh'9 th:,t operntlng frotn 1101110 can 0,na dltlonal n,cons of hlrln9
" 11011 , one cannot expund throu~h th tra
10
 , br< Jnt rar t rJu f 11c,rv
ali';,tlf t(J ,U
. 's brcorn1n9
rnor'' re
However, it the
employees, ·ption--to o rs."
espec1·ally transcn
Billing
'din g on 1o r:1ppr<Jdth 1,;
·t cornf'S to dect h t othr•rurr orn
Inc om e &
u have a number of op f.10 nsI wh en I f d ou t w a pant';', ,Jr'•
call around, in decide •11hat thr; / tlr. m t tr) "-;r
J ,

Y~cing. Some operat_ors ~1m;i~ n

tha t range. Oth ers o hoW ,t rel
~harging and s~t their pr~c~n tha ate ~ to thr~
t wit ho ut _regard ~e proJeCt,
and set their prices bas~ the issu the page or the hour.
e of pncing b I t
competition. Then ereth 5
. de rs the svtll le 1el
ch is a multifaceted one th at co
of th'.! wr1rr,
The bestfi~pgpi~1: and the marke ntu p a sy ste m tha t 911es /OU d
your pro t. You need to ~=tent rea so na
structure to work with. . u can quote cons1 ble an d fai r rat es .
in so yo ,

MULTIPLE HOURLY RATES

_ . h
If you re gom g to c arge bY the hour, consider tha t dif fer en t rat es sh ou ld ap
·
depending on t he comp 1ext·ty of the service and ski.ll lev e 1 · d f pl /
req u ire . or I
Cindy P.'s hourly rate ranges from . ey am p e,
$28 for str aig ht wo rd pro ce ssi $
complex desktop publishing. ng up to 40 for

THE ASSOCIATION OF BUSIN

ESS SU PP OR T SE RV ICE S
SUGGESTS A STRUCTURE SIM IN TE RN AT IO NA L
ILA R TO TH E FO LL OW ING
:
• Lev~I 1 (l~ we st ho url y rat
services, simple proofreadinge): Basic wo rd pro ce ssi ng , rou tin e cle ric al
• Level 2: Enhan~ed ~ord pro
spreadsheet design, internet ces sing, cop yed itin g, pro ofr ea din
research g ba sic
• Level 3: Desktop publishing '
simple web page maintenan~espreadsh t d . .
ee es1gn, sim ple we b pa ge
• Level 4: Graphic design, wri de sig n,
ting (acad . . .
web page d_esign, web page ma
intenan~~rc, bu sin ess , res um
• Level 5 (hi gh est ho url y e, tec hn ica l),
rat e): Cons It· ..
u tng, tra ini ng
Note that the same basic task
need to make a . d . h .
apply. m1g t fall into mo re th
Ju gment call based on the pa
rtic ula :n o~ e pri cin g lev el,
an d yo u'l l
pro Jec t as to wh ich rat e to
HOUR POWER

When the Association of Bu .

memb ·
ers, 1t found tha t the sin
h
ess Sup
Port Services
by respondents were· ourly rate ranges f
. Int ern ati on al su rve ye d it
. or the mo st
• Basic word processin po pu lar se rvi ce s soff ere d
• Enhanced word pr g -. $7-
40
ocess1ng _ $)-so
 • co py ed iti ng - $7 -75
_5
• oataba~e ~n tr y _ $ 18 0
r
ne 1
• rranscnpt1on, geng _a$ -7 $15 .. 45
• co ns ul tin g/ tr ai ni
_ -9 0
• Spreadsheet de si gn -7 5
• Deskt~p pu bl is hi ng
_ $$ 7:5
• Graphic de si gn _ $ l 4 -1 0075
·t
•
•
Web s1 e de si gn _
In te rn et re se ar ch
$ io
_$ 7~~;0
JOB
~STIMATING THE
ne ss ow n er s fimd est·imating one Of the most h nging things they
Many ne.fw bu siap
ut· I yo u pr oa ch th e procesrast systematically, it's simp~ alle
o, ec t to
ojed
d
~t b ria te ho ur ly
e~ m ek an ap pr opth e m at h
.
e,
. e._You Justprne
calculate the length of tim e the
s ou ta e, an d do
1
.
Regarid dlesstoo fmthake fo rm at you use to pr ov id e the u ~; ; 0 :r~~~ie°d' verbal), it's a
e kn o~ ~~
good ea :~ t_ ;:~ i!o :ir io ts el f so you u~o; you
a~ved a t th at fig ur
~c es sa ry if th e actual project turis"~
ffe re nt th an w ha t th e cl ie nt de!c ~i
if th e cl ie nt ques tions the invoice 1~:er
di o t! \-or
:e n th ou gh th ey
ag re ed to th e q u
ov id e to th e cl ie nt
a~~
;; a y ev en
eep a copy m
w an tyo ean
tourcrow ans.estimate'
te file
rm th at yo u ca n pr

MARKETING
It 's so mething man
w he re y,aur crea !ive_ side can shininge.to build a successful Y
M ar ke
pe do
op letin lst a-~ ar ea
gn' es se nt ia l 1f you're
go
l!k e to do , bu t 1t s ,

Profitab) b
e usmess.
immediate
rts don t produce an s at precisely the
1

ur m ar ke tin g ef fo
1scouraged ·1f yo ne wr n have a need fo r yo ur
service
D on 'tonbe d- th at so m eo al, attractive
resp se. It 's ra re bu t if yo u pu t to ge th er a profession when they
ac t th em , on file and call you
~ o m e n t yo u co nt th e in fo rm at io n
ag e, th ey 'll ke ep ve the need. It' s not
in fo rm at io n pa ck ue w ho m ay ha ar.
u- -o r th ey 'll re fe r yo u to a colleag a response fo r months--or even a ye
ne ed yo ne ra te
s co nt ac t no t to ge
un us ua l fo r a sa le are Issues
si c m ar ke tin g pl an her,; , bu t there
ho w to cr ea te a ba you need to know as
you
You ca n fin d ou t or t se rv ic es th at find out
to bu si ne ss su pp phon~ company to
an d id ea s sp ec ifi c ec k w ith yo ur lo ca l
e, plan to
. F or ex am pl e, ch date and, 1f poss_1bl_
~ e lo p yo ur pl an ct or y di st rib ut io n ill be an
its ad ve rt is in g de
ad lin e an d di re
cl ud ed . Yo ur Y el lo w Pages l1st1ng w
ss in tim e to be in e early day:5, so do
n' t ge t so
la un ch yo ur bu si ne s es pe ci al ly in th
of ne w.b us in es rtunity.
im po rt an t so ur ce sk s th at you miss this oppo
r st ar tu p ta
di st ra ct ed by ot he tin g m at erials are ~rofe,ssio
nal
.~r " all yo ur m ar ke
t po in t to be su re is area
-.c
A no th er Im po rt an or t se rv ic es th at do a grea_t JOb ~n- th
pp
t. M an y bu si ne ss su
15 nng a
an d le ~r -'. "'° rf ec e sa m e fo r th em selves. Consider hi
te n fo rg et to do th
fo r th ei r cl ie nt s of
 I ,ou WI·th \i OU r ma r-~er"'c-
rofessional ,~ n trade-out tha will benefit "ou bet~.
, •ter to he P ) t
nd/or P
graphic designe~ a be able to nego
tiate a
pac kage·, you m Y

E ESSENTIAL . so it's a good dea to

~EFERRALS AR =--- , )'OU get new che,dntsb~ able to identif) \\ ho s
rimary wa) "' u shou · t d
Referra Is will likely
. be a P to the process.
pproach 'o
business so you can cult1va e an rewaro
have a systematic a ltimatel\ turn into
making referrals that u

those referral sources. f Is For example. print and

of re erra . b
;i;P!~;:;~~~nb~!~ee~~~~oai!f~{:i:~~=i:~o~~:~~ec~~!~1 S:r\~~!;~op pu I ,sn ng
ut don't ha, e the equipmen , s

,.de cash compensation fo ... ne\,

~'ou,. ►eter ..al ar'"angements can be set up to prot\ '.vhere you and other cooperat,ng
. I\ have an agreemen
bus ness or\ ou ma\ Slmp 1 he need arises.
bus nesses refer clients to each other as t

Accorcfng to L) nette M. Smith, e>.ecutive director of the Associationo;~:eu~~~sS~\; to

Support Ser,, ces International, typical referral fees are 10 percent . ,
12 months of business from a new client; 15 percent of the first three months. \. r
25 percent of the first transaction only.

Of course manv referrals involve no compensation at all--satisfied clients will be

happ~ to refer others to you simply because you do a good job. And you'll probabl1
also get referrals from friends and associates. Charlene D. sa\ s a major portion of
Winter Park. Florida, company's business came through referrals from people at
her church.

ADVERTISING

dvertising is a great way to bring in new busine . .

may take some experimentation. Probabl th . ss, but choosing effective media
our local Yellow Pages, because that's w~er: single best Place to advertise is in
nd don't know who to call. Many commu ·r P~ople look When they need a ser,, ,ce
1
irectory publi~her, so you may need to d~ ~es ave more than one telephone
,rectory (or directories) should carry You • 0 ~e research to determine Which
r 1isting and ad.
on't limit yourself to the telephone d.
adio ads on a local news and talk st irectory. Bili H. in Iowa Cit I
pecific new business to then,, he sa~~~~•
and although he can•/~re~~a, does some
he spots. He also places ads in the . s current customers do h much
good response from that. university newspaper cla- ·ri dear a~d mention
EVIEW UESTIONs ,._nn, C !:>SI ie section and gets

1. What are business support .

services?
 f th e se rv ic e s e . .
outline so m e o a ki n g so m e You ~ o u ld embrac
m within Your busin ess to
2, ensure yo u a re n s fo r st ra te P.r~f1tson rem
a so g1zing
3 Explain th e re uneration sch e to employees
em
.
~
ODU CTION PLAN
PIC FIVE: OPERATIONAL/ PR
ro
~

osJECTIVES
--- a.
c ti o n fa c T t·
O u tl in e p ro d u d e v e lo ~ ~ •e : an~ capacity gy
1.
E x p la in h o w
to
c u ct ao ; an d operation strate
2. b. ro d u c ti o n p ;: O th
3. c. E x p la in th e p a ff e ts e P~oducts ss
D is c u s s th e re g u la ti o n s
e;pa ng t~ p er~t •ons of a busine uction
4. d.
e te rm in e h o w to p re p a re e ra ion ti m e ta b le / prod
5. e. D
s c h e d u le

SINESS
C IT Y U T IL IZ ATION IN A BU
N D CAP A
F A C IL IT IE S A
PRODUCTION to which an ente
rprise or
n is th e ex te nt
it y u til is a tio p between
a_ ci ty u ti l~ za ~ion o r c a p a c c a p a c it y . It is the relationshi l output
Cap a lle d p ro d u ct iv e t, and the potentia
u se s it s in st e q u ip m e n
a nation in st a lle d
p ro d u ce d w it h th e lly used.
outp ut th a t is
ce d w it h it , if c a p a c it y was fu
p ro d u
which co u ld b e of potent ial econ
omic output
th e pr op or tio n ~evel
ty u ti liz a ti o n ra te m e a su re s en ta ge , th e ca pacity utilization
The ca p a ci e d . D is p la ye d
as a perc
omy or a firm at
a given
a ct u a lly re a liz a t is in an ec on
th at is ll sl ac k th
ov id es in si g h t in to th e o ve ra rate is:
pr fo r fi n d in g th e
T h e fo rm u la
po in t in ti m e . ion Rate
u t ) x 1 0 0 = Capacfity UtilizIat
tp ill be
ct ua l O u tp u t/ P o te n ti a l O u h du ctio n facilities that w
(A .
o u ld also e n lis t all t e pro
si n e ss p la n sh
This p a rt o f b u
e ss .
used in a b u si n deral,
C T IN G O P E R A T IO N S. . to comply with fe
S AFF E 5
R E G U L A T IO N m ~a ;;~ eg islative bodies a~
d
ss re qu !r ~ co w hi ch .
m e n t re g u la ti o n s on busi
ne
m 1 15t ~re
n im pact the ways in of their
All g o ve rn g u la ti o n s ad theY dispos e.
, a n d lo ca l st a tu e s an d re es . Some regulation~late hoW action,
st a te
d o u t b y re g u la to ry ag en ci s; ot he r~ reg f industry and trans
ca rr ie p a y ta xe 0
ort in co m e and
b u si n e ss e s re.p ju s t a b o u t an y ki nd
ls o r w as te . For
e xc e ss m a te ri a e n t re g u la n s on
tio business.
g o ve rn m
th e re a re s1NE S~
T REGULA T IO N S O N su
ERNMEN
MAJOR GOV
 3 1111 <) , .. ,,.v, n bar,lc categories
1

int1or1Gt ll ,.. w,1 y ,:ntlrn c.at egortes ·

I
. nnW"' ,,~a,\', ,,1.i 1h"j 1-,H~fncJ on your lndu~try.
1
nd guv' ', y,-,w 1,1;Li , , dcpem
11 lt1W' • 1~' 1r11•:.,i,1,
I ,.ri,,,l'.JI 1,,w1 r ·•,~11011 , 1101 lrn! ; your 1>rw ,, nJ<,Jd ly, applies to You .
1I11Ill ~r.ll 1I
Not(j 111 °
·f1:, 1111110 rJll' err'
110
111

1 10
,r,,111 e out w, ,,11 I
might 11 ,.,.1r1 Y"" 011
. n quw;t Ions almost al"."ay~
11wyPt 'nn •nt r•i uulnt lo d Ing them - -knowing
Yow t,w Im, owneiu,
w f ,,iv
oov,.
1111~: tt1nr1 mert~lywptr rct up your business to
nd ho . .I •
thNn, ,l . f headc1ches w h en it comes
lnC&b ;ix '
I , most smnll bllb t thcro•~ mm••
IJ~glo with tax.er,:;:
to pay, w~1•••~~•~:JJ tll you ,I ton 0
which J1u '" • ·c tax p:iymcnt ., , , ' k
oooount I~1 ~~~~ gov•••orn1•nt
ch•.•· '
3
h to pay fed era I taxes. Most
5
Um~ tow c ti, llw United Stnlc~dl~g on the state in which t he
Every compony rcglste,ed pa1Y1,~ tat~ 1axc&,
I have towit Id blcdcpenfdlng
Avo taxes-or deciding not to
companies witl II so •d l hcsc m,1 unavo d • d potential ja II t me.
company is rcgistcrc . Ith hefty pcnaltlcs an 1
l~lght - comcs w . .
pay them ou u fo~med your business. In t his
th kl ds of taxes you'll pay dcpends on how'»nl<'
. me yo propneto, => h ,pc; pay tax es
But rde nt au businesses are treated the ~a f' 11 rundown of the different taxes
rega , no t'onr Heres a u d t fil
diffi?rentlv than, say, s-corpora ' ,;·etermlne what your business nee s o I e.
for business
Despite structures to
the differences help you
between eac h kl nd of business, there are a few general
tcnns you should know :

• Income tax: Most businesses flle an annual income tax return. Businesses
must pay income tax as they earn and receive income, and then file a tax
return at the end of the year.
• Estimated tax: Estimated tax payments offer an alternative to paying
income tax throughout the year as your oompany earns money. Sole
proprietors, partners, and S-corporatlon shareholders must usually make
~ mated tax payments if they expect to owe $1,000 or more once they file
their retum. N~te that corporations are usually required to make estimated
tax payments ,r expect to make more than $500 . . . ,
• Emplovrnent tax• c or more in llilcome. •
taxes related to h~vi;m~anies th at have employees are expected to pay
and Medicare taxes fid!r:~1
th
°"
eir Payroll. These include Social Security
unemployment tax• For mo n~~me tax withholding, and federal
Tax:s for Small Bu~inesse/e n or-rnation, see the IRS page on Employment
• Excise taxes: Excise taxe!, ,

~;mspemcific 900ds, and are o~:, ~:ofdl wd hen Your business makes purchases
1

on example of 1 "' u ed in the ·

taxes are baked . t 0 exc
th se tax is the PU Price of the product. One
the transaction ~: e Price Per gallonrtl:l~e of Qasoline, where applicable
or sen certain 9oodu may be under cert . i:at er tl:lan as a tally at the end of
certain kinds of se~i use various ki1:1d a,n excise tax law if you manufacture
the IRS uide on Ex/es, and much rn s of equiPl:lilent receive payment for
S
ome bus1nesses
. also h tse laxes. or:e. For additi~nal information ' refer t o
ave to Colle
ct sales t
ax, Which 'II .
We cover more ira a btt.
 A N D L A BOR LAW
orMENT
j, ,~,_,., eg
a ny g o v e r n m e n t r fi u1ations on bus;n esses that employ w
re also m tr a c
e
tors, in t h orn, o f fed eral and t r la w s orke rs
t c o n la b o
~:ependen s ate .
,7d ,n on la b o r Iaws :
st c o m m
are the mo
Here
n d h o u r s : Accordin to the Department o f labor, the Fair la ~
b--
, wages a ct (FLSA) p r e s c r ii bs ~tandards for wag es and ov ert·ime pa y. This
e
filandards
A .
a t e and PU lie em PIoyment, and r u,res employers to
o s t p r iv
act affects m pIoyees a t lea . federal minimu eq e an d overtime pay
red em s t the :,::;
pay cove d-one-half-times th regular rate o f pay c t he y a re exempt
of one-a n e
). d
employees a n d h It h ational S a fe ty .
pla c e s a f e t y
: The Occup
r e ~ ~ H ~a:t~,
• Wo rk
OSHA) re
e ~
mployers,
un de th
e d c ' _pro
vide
a ti o n ( th a t e recogniz
A d m in is tr w o r ~ ~ ,~ ~ s la ce fr e e fr o m :~~1ous
m p lo yees w it h
i a wo rk p
p la c e in spection ;
th e ir e A c t is gh w o rk
a r d s ." T h e OSH e n o r c e d throu
haz
ti o n s . must
. mployees
in v e s ti g a
o r t u n i t e
t y : M o s ; '; ; , '~ ; : r ! ~1th ~ b e a s t 1 5
q
e
u a l E mploymening
t
p p e E
• Equal ow it h e q u a l o p p o r t u EOC) Th nEoErocce maYndates th a t certaeinr elements
n th h ir
comply Commiss1
0n (E • e
, disabi.lity
, and o th
o r t u n i t y io n , a g e
Opp h e , relig
p r a c ti c e d a s ~ e n d e r , r a c in g p ra c ti c e s . a n dates th a
t
11 u e h ir t m
are not s,a o w e t o in fl u e n : T h e federal govern permission to work legahll n
s c e m e y

c i t i z e n workers ir e m ployees h
ave
c a te gories ea
ch wit
S t th e
• Non-U ~ m u s t v e r if y th a a r e several e m p lo y m periods o f stay (fo r e n t
~ploye d S ta te s . T h
ere
n s , a n d a u th o
ri z e d
m te n d it io ).
In t h e U u ir e m e n ts , c o id e n ts o r citizens e n :i o n or_
welfare
r e n t r e q a l re s ff e rs p
losure,
diffe h o a r e n o t le
g
f y o ur co~pa
n y o
~ fi d u ciary, disc e c u ri ty
e s w y : .I o
e m p lo y e e b e n e f it s e c u r it bJect to a w id e rang etirement Income S e
ye e su ee R
• E m p l o p l a n s , y o u m a y b ts u n d e r th e Employ ertain
b e n e f i t r t i n g r e q u ir e m e n m a y n e ed to file c
s , you . See
and repo a s u n io n employee
e rs in s p e cific ways
ation.
s in e s s h it h u n io n m e m b fo r m ore inform
w s it e
Ac t: e la ti o n s s ' web {FMLA)
n s : I f your bu g e m e n t S ta n d a rd e d ic a l L :a v e Act s of
• Unio a n d h a nd1 e ~ a n
a
e : T h e F a m il y a n d
M
to p ro v id e .12 week ption o f
r e p o r ts cal leav ployees th o r ado
e o f J..ab<> ~ ·t h 5 0 o r m o r e em ployees fo r the b ir
the O ff ic
li g ib le em hild, o r
i l y a n d med . a v e to e y e e o r a spouse, c
• F a m s e r n p J o y e ~ e ~ ' le lness o f th e emplo d or
r e q u i r e b - P r o t ! s e r io u s il n o ti c e s to be share ings
e
u n p a i d , jo t h L
s requir
a b o r s~a~e ( fo r example, alco
hol warn
a c h il d , o r fo r e n t o f isor is an
e o e p a r tm r e m p lo y e e s view e d a w s Poster Adv get
p a r e n t~ s o r nw o r k p la c e fo ) . F o rt u n a te ly , th d y o u c an use it to
rs : de r s need, a n
• p o s t e in th es h in g r e m in h ~ ost~rs yo~ le languages.
pos te d w h ic
r m in e m u lt ip
d - w a d e te p r in te d copies m
and han
t o ·c a n d
e a s Y weacYtrox11
e1
fr e e
s
Rosr ~ w
 . _ arty vendors, or _ other
t ·tors, third
These arP e the issues illll.!kYst
w1·th .,ts CornPelaWS,
, --.....
n consp1 ·res ftrust
ul of an , . .
Any time a ~mp; ~ay run afothe tollov,11ng,
t pa 1 . es with competitors-even
refevan . rties,
address, su ch as • Discusstn . g pnc

~ stnve to
Conspiring to fix mar
ket prices.
I ce
II marketp a. . favorable product P
rices from buyers When
.
• , it affects
., sma . n·· securing
. a•minat10 . h other businesses regarding the
• Price d1scn . can't. tions wit .
other companies o cott: Conversa titor or supplier. reements between
• cons~iring to!
boy::
potenti_al_
0~ another com:eor custo_rners: A~rkets are illegal. This

allocate marke :rs territories, or mtdominate the particular

• Consp1!1ng divide up custom ' etitors do no
competitors to when the comp ...
provision ~ppdliestryeven ly position through the acquh1s1t1ontofl
• market or m us · ing a rnonopo
Monopolization: Pre, s~: of competitors toth e g iven market, or t e con ro
competitors, the exc us10
of market prices. d
If your company run s afoul of any of these regu Iations ' the federal tra e
commission might contact you.

4. ADVERTISING

A good advertising strategy can do wonders for your business. But before you dive
in, you'll need to make sure that you're playing by the rules and government
regulations. For example, you have to make sure the daims in your ads are not
untruthful or purposefy deceptive. Using testimonials in your ads comes with
additional regulations. Violating these rules can result in fines which defeats the
purpose of your advertising in the first place" '

HOW YOU CAN AVOID MISLEADING CUSTOMERS:

• Comply with labeling laws for cons . .

ingredients and chemicals With• umer Products, meaning that you list out
• Know the specific rules for adv~" y~ur Products.
• Understand the rules for adver/':1s1ng and selling Products over the internet
alcoholic beverages or 900 Ising SPecific Products-whether it be
~~re;;ori<ing With a lawye~°w~':~- This 1l be SPecific to your industry, a~d
Y nefitthe
• Understand
email.
ru1
You. ~
es for marketing and
~~s
the rules around your business will
. •
• lean, the rui es for '11ak~ advertising over the phone or via
advertising Mo~ tng environme
. eon that below. ntany friendly or ~green"
 G
a1•"L~ MARKETIN
5, fr ,_
a·,
a d v e rt is in g is em I m a rk e ti n g . If Your bu .
elY re lated to
la r _engages in ernan
aosr1<eting, there a re s e p a ra te re g u ions you'll need to co~inP,eYssWrth Under
m; CAH.-SPAM A c t.
th ..---
At m .
are se ve ra l th in g s th a t th is c regulates, b u t some o f the am components
There
are as follows:
headers
n:tt u se dfal se o~ misleading
• oo es
cept,ve headlin
• 0 on use e d .
a te th a t th e message is an ;1 e n t
• Indic
r b u si n e ss 's n ame an~ ~ ~ ~ !! ests
• Include y o u e r h o w to t O .
ils, and honor the opt-o ut requ
s to m O
p u t o f ema
• Show th e c u
p ro m p tl y

is sub •ect t O h e ft y fin~s, so make sureteyou know th e

m a il v io la ti o n ra gy.
Each separate feth is la w before you le t u P y o u r email marketing st
ins and outs o

ONMENTAL REGULATIONS
6. ENVIR e ntal protection Jaw
s
u s e nvi ro n m '
~ c q u a in t yo urself with vario pe ci ally pe rtinent jf you 're
to es
You m i~ h t need r m d u s tr y o r business. This is ing with claims to be natural
y o u n yt h
depend_mg on e a n in g p ro d ucts 1 food, or a vironmental rules and regulati~ns
, cl n
marketing, s a y e n d ly . Y o u 'll fi n d dozens of e te level.
ga nic, o r e c o -f ri e ss , both a t th e federal and sta
or usin
c t y o u r sman b
that m ig h t a ff e to m ak
ss is
e sure your busine yo u r
re so urce
1s a great to consul t
ll B u si n e ss G a te w a y a t yo u may also need
The EP A S m a l la w . N ote th requi rements
n ce w it h e n vi ro n m e n ta a ke su re yo u m e e t th e ir
in complia l p ro te ct io n a
g e n cy to m
n ta
state e n v ir o n m e
as well.
ve personal
7 . PRIVACY u p am as si ng a ton o f se ns iti s and
e s w in d y o f rule
. ff n d e m p lo ye As a re su lt, th er e a re a va ri et
s
.
it h st
a ~ pJoyee cure th is data.
Busanesses w th pl oy er s ~ u s t sa ve an d se
b o u t e ir em
information aab o u t how e m fo rm at io n, includin
g S od al
regula ti o n s p ri va te in mbers, o r
~ n empJoyee's on s, cr ed it card, bank nu
an a m e h e a lth
co nd iti spreading
sc Jo se s ep bu sinesses fr omt· F
va rl o u s la w s e . I -ing sens,·t·1ve .in ,o rm a 10 n. ?~
ss dJ st to ke
If y o u r b u si n e ad dr es l
5
'd o
xi 4=

e r, os 1ts
S ec u ri ty n u. mt bry n o t eom n y lo ye es ca n sue fo r disc nt ab ili tv A ct (HIPAA) proh1b
~ , a n d Acc . . ou
p e rs o n a ) h 1s
n , b u \ Pra n ce P o rt a b ili tv , s1on.
th is in fo rmtha H e a lt h dnasuta w it h o u t a p a ti e n ts perm1s
ti o
ea lt h lace, th e
in st an ce , e f- h ts to pr iv ac y in th e workp
th e re le a se o d sp ec ifi c ri gh to m o n ito r th e
ir business
h a ve cl ea r an s' pr iv ile ge s
5
th e empJoyer
lt h o u g h e m p Jo y: ~ a g a in st
A nc
. h ts a re baJa
rag
 ve as a bu si ne ss to
t rig ht s You htath at m . .
d wha nt ab on tto nn g t o Your
derstan ns OU
nt to un and tra pare
. It' s ;mporta be
operations. es c1ear
monitor employe , and to
employees.
MITS
uc eN SI N G AND pER on bu si ne ss so fa r,
nm en t re gu l~ t 1~~ ns
5 but
s. ~~:::;...-- 11aws and gover le st at to co ns id er fo r yo ur
e re gu a th ei r ow n
We've focuse d on fed era n' t amP re qu ire m en ts for
that doesn't meant that there are I overnrnen ts ha ved as th . f d
tate and 1oca g t to
un de rs ta n ei r e er a I
small business. Manv,:e
ju st as importan
businesses, and theY
rts.
counterpa . 7 ,, In de ed , in m an y st at
. "do I need a business 11 es
ce:~ =t ~. This ca n be
You might be wondering
da
and JocaJities, yo~ , business Hcensg_ ~od
do neein heavily regula
important for busme_sses
sta te
ted in u;
optr ie s su ch as ch
pa rt ic ul ar ly
ild ca re or health.
si n~ ss or ev en re vo
Without the proper licen s can fine yo ur u ke yo ur
ses,
authority to operate.

9. INSURANCE

:~':~ :~::~:~i!~~~:~~!n::.\iist~t~s, with the e~ceptio

.

businesses with employe

lo ee ou 're le ga lly ob lig at
ed to pu rc ha se
es to purchase w or ke n of Texas, require
rs co m p in su ra nc e.
Workers oomp insurance
protects both yo u an
accident on th e job. The d yo ur em pl oy ee in
employee will receive th e ca se of an
some of the income they m ed ic al ca re an d
lose whHe injured,, w hi co m pe ns at io n fo r
defray the costs of an y le th e in su ra nc e co
lawsuit fil ed by th e in m pa ny w ill
ju re d w or ke r.
(!ther tv,stapes of ins ance
arcum nces. Four generally en 't requ
r example if yo urarbu 1red, bu t it de pe nd
a government-guarantee . s OA th e
d l~an th s1
business insurance. ~ess co nt ra ct s w ith
., en yo u 11 ne ed to th e go ve rn m en t or
sh ow pr oo f of ce rt gets
ai n ty pe s of
10 . REPORTING PAY DA
TA
lf you employ more than
contractor}, you're re 100
down by race/ethnici qu . people (o r m or
,~ed to report how m e th .
Opportunity Commis: u an SO if yo u' re a
~;ob category, and Qen~ fe de ra l
,r . . h You pa y ea ch of
each Year. th em , br ok en
his is to ensure th er , to th e E qu al E
m pl oy m en t
~hat you're not pa y~ Yo
Job title and res u're complyin .
_g .~
be submitted bJ ~; s1 b1 woman s. . 9 Wtth federal
hties). irh '9ntficantly le ss . . .
e end of eache~epor th no nd is cn m m at io n la w s .
ll.. COLLECTING s t, Which is k an a m (1.e,,
an w ith ex ac tly th
ay, no w n as th e E E 0-
tt same
AllESl'A)( 1 fo rm ,, haS to
 ical
e s th a t self phys v 9 0 0 ds m u s t cou ect ~a t s ta fr. om custom
bvsine ss
s ta te 's r e enu e depa r t rnent. A few---= ..!.:!x s do
ta ers ano
to th e ir s te tes
~ ~;t th
0 e ta x not collect sa
sub
tat• t .
s p ecifies th a a bu sin. ess rnust coll in any sta
g
e la w
eneral, th h . l connectio
,c a n , in legal te
ect sa le s tax
"nexus"). ThEva
~ w,tt,
. h y s kn o w , a s ~
In a P
which ,t as m e a n a physical re
t;., C emi s te
t ~ s h o p , o r hiring P oy e es m the sta • en
h
nexus mig rs m ig h t h a v e to coll e sales tax in an Y s ta te th a t th ey sen to.
online selle .
s afe s ta laska '
.
e s s h a sa n e x u O
. n e ed to co lle c t s
o ~t· If you veIIin A
ll
m u
w Ha,;,Y s ire, o r Oregon ' y·ou d
If your bus ta n a , N e n need to ~ ect sale
g,
s tax
you
e faw are, Mon d o n 't h a p h ales ta e n d in g on h a t you re selH n
r,
o s e s ta te
s ve s x. Dep w
a n y w a y - th be g in w it h
.
. x e m p t to
might be e
NS
M S I O N QUESTIO
R .
o n fa c il it i p a c ,t y
p r o d u c tivelo es a ~ d c a a teg y
1. W h a t is a
how to d e ind
c t,~ n o
2. Explain e p r o d u c t io :;~ ~ d uss o t e _prod ucts ti ons o f a business
p era ti on s tr

in th .e g o p era
3. Expla th e v a r io u s r egulat,ons a ff eetin
s s
4 . Discu

ESSON F OURTEEN
L
N
! F I N A N C I A L PLA
X
TOPIC S I
s
ES t s o f a b u s in e s t it y
OBJECTIV t io n c o s s en
t e r m i n e p r e - o p e r a a p it a l o f a b u s in e s e s s
De g c u s in
t h e w o r k in io n s o f a b
1. i. D e s c r i b e c a s h - f lo w p r o j e c t b u s in e s s
he fa s
2 . ii . E x p la in t e p o t e n t ia l r is k s o z a t io n o f a b u s in e s
h li
3 . ii i. E x p la in t e p r o p o s e d c a p it a
in t h
4 . iv . E x p la
5. v. se
enterpri of the
E N S E S n ta l to th e crea ti on
EX e s incid e iness
RATING d expense e d in s ta rt in g a b u s
PRE-OPE es, co s ts a n
in c u rr
- a tiv e fe d e x pe nses ce
.
s tith g fe e s c o s ts a n
p o rt e d o n th e balan
e inv e as been re
Means t h a n d e
7

y b e fo re in c o m e h ,
Compan curred
h a t a r e in •
t s it ie s , m a rk e ti n g ,
Co s t plies, u ti J the
They are ll , r e n t, office sup th e c o s ts to keep
p a y ro entially

, •
sheet.

These co n -
s t
:a
s :~xes.
_ Jude it
e m s li k e
o p e r a t in
g e x p e n s e s are ess

i n s u r aenscser u n n in 9 •
•
b u s tn
APITAL
... ~ N G C
wo~
oetween _a ,:;on•di~~entorie ,, ... ratln9 ••
S o~ e ra ti n g current as
npaid bills) a ; as accoun ~~le- Net oP~ce betwee
n ,~
sets
ts pa to the differe ses th ~ a tio n s a re th e same and
iabilities,, s~c •ditYand ref~~s In rnanY ese ca 1us in v e n to ri e s ,
ompanY s 1tqu1 t liabiht1es. ca eceivable p less
t . g curren . accoun ts r
nY cas h plus penses
nd opera '"
~e derived from co mdpa less accrued ex ,
ccounts payable an

AL RISKS o f AB us1NESS
. O"fENn
. ess can face. T h e most common ones are
.
ese are the possible ns that a bUSI n
ks
s explained below

1. THEFT & LOSS

fe w h e n yo u lo c k u
I ur bu siness pr em ises p a n d head
ou may f ee Yo are prdettv tsano p ro p
for the night, especi.al ·t ·t'5 alarme • 5 u e rt y is in fa lli b le a n
ome ly 1 ~ . th a
d theft,
ptus ensuing loss of eq . t ,s t e ve ry b u si n e ss o w n e r n e e ds t
wpmen , somethmg
th in k seriously abou
t. Faili~g to a~ekquat 1
. .
sure yo u r bus1ness f h ft d a o •
putting your whole en
terpnse at ns , espe
e vc;;lly
if yo u d o n 't
o r t e an ,oss,
have th e capital to
replace vital equipm
ent.
2. DAMAGE & LOSS O
F INCOME
If you have the type of
business that's oper
laptop and WiFi, then ational o n lin e and a
ll y
portable. But if your
you can escape the ri
gors o f storm season o u need is a
business is office or si m p ly b y being
weather system can im shop-based, then a
pact your ability to op p a rt ic u la rl y nasty
power outages and a
tack of customers. er at e d ue to damage o f p
remises,
While stom,s are phys
more damaging due ically da m ag in f- b .
to loss of g o r us,nesses,
that businesses have th e d o w n ti m e can
no contr~~~enue. Fire b e even
you don't have insura is also a n o th e r u n fo
nce. re se e n ca
ve r' b u t ca n poten
tially p u t y o u o u t o t;amophe
f o p e ration if
3. 'Changes in Infras
tructure
Cities are ever changi
success, then a chan n
9_
fu~her on down the fe pl~aes, and if your bu . .
in infrastructure Cali\
being constructed or b s,n~ ss rehes o n it s loca
:c k . Examples can be e di~astrous, e it h e r tion fo r
have the PCltential to i : c, im m e d ia te1Y or
~to_rner base You a zo n
4 o . in g la w ch a n g e , a n e w 'hig
Pa directly on Your~ hwaY
•~ te ! to ch an g in g o ve r ti
m e . These all
USiness n o w o r in th
• -\..1 ......
e future .
 ti,ree ris\<S we've dlooked
t b at .stem
. from ext
wst I rtsl<S that nee o e considered such ernal factor b
as te h . s ut every business
11¢ 1nterna ) and human error (staff making mistake t~ nical failures (equipment
,isiKdownsese can rnean a potential loss of revenues at cost the company
b~neYl· -r11 rt out the problem immediately Risk insuas well as customer loyalty if
rr1ou can'\, ~p you operational during this p~riod . ranee can help to bridge the
5
YP and ,..e
g8 .
--"'lit~
~.~ want your business
• . to be a success , t hen you have to invest time and effort
Jf Y \cepttonal customer service and build a reputation for being reliable and
0
1nt~~ortl1Y · '/oU may take you_r reputation for granted, but if it is damaged the
tru I<- on effect can be almost instant, resulting in loss of revenue, Joss of staff, loss
Kn°~vertisin9 offers and negative online reviews . But many a business has survived
of a of reputation and corne out the other side stronger, simply because they had
a\oss
adequate insurance.

llEVISIOI\I QUESTIONS
~
What is the pre-operation costs of a business
1. Explain the cash-flow projections of a business
2, • · \< of a business
3. Explain the potent1a1 ns \ r tion of a business enterprise
4. Explain the proposed capt a ,za

LECTURE FIFTEEN
FINANCIAL MANAGEMENT

OBJECTIVES . f financial n,ana9 ernent

. t h e 01 eanin9
Explain ° f business finance
a) . sources o
1dentifY the various records
b) f business
1dentifV types o . . the books of accounts
ctions ,n
c) trans a
d business
Recor • I staterne nts
d) are financ,a t for business decisions
pre P . I staternen s
e) f ancIa .
interpret "' of bUdgetin9 to a business
ortance
f) . tne it1"P
£:)(p1a1J1
g) MANAGEMENT

M£AN1N
 cessarY to start, run and expand a business.
Business finance refe rs to the funds ne . . ortant to re alizeethat some
various sources
sources ofOf
When looking for busin~stse ~hile it ,s ,mp
anceothers ot There
marys~m~ ar are..
of which
b appropna reneu
finance may e ·1able to the entrep ·or source of capital
business funds ava, nal savings are a ma~tained from former
. Personal finance-
·n savings/ .savings
peros~alftxed d e posit be oounts ' sale of personal
m~y ace
during
1)
employment, mo neystage.di
the start-up
save The pers
assets such as land.

ADVANTAGES .

. sine
It is the least expenstve . e no interest is paid.
It does not involve lega pro
I cess of acquiring
It allows for flexibility on the use of funds

DISADVANTAGES:

It may be inadequate for business needs.

May be used without proper planning.

May take too long to raise adequate capital.

ii) Family and friends contributions - The family may provide fun~\
and/or free without necessarily taking up a share of the business. Sometimes, it
do not require to be
possible
paid to then
back, thisfinancial
ask for would be a form offrom
assistance equity capitalIf they
friends.
1

-
ADVANTAGES:
-
Funds can be made available to the entrepreneur without condit ions.
The funds may . ~:
1 1
carry itt e or no risk to the business
Re-payment Period may not be fixed.
 family and friends may contribut
e to them anag
ement of the
' -11esS·
~~,1
~DVANTAGES:

.
TheY might interfere in th e busmess mana
. gement
TheY might claim part of th e profits. ·

It may result in differences wh.ich may Iea d to serious

1/ENTURE CAPITAL consequences,

~
venture capital is a type of private fund· .
high potential for profitability and grow;;gVmamly provided for start-ups with a
institutional investors and high-net worth ..in de~~udre capital typically comes from
1v1 uals.

--
ADVANTAGES:
i) Entre~reneur~ can enjoy value addition activities that come with the capital e.g.
mentoring, business alliances, management assistance.

ii) Entrepreneurs planning to source venture capital must embrace creativity

and innovation.

DISADVANTAGE: . I t·
the borrower to the lenders condition thus limiting
Venture capita iesking certain personal decision.
•·
i) f m ma
entrepreneur ro
the

·1vl GOVERN MENT GRANTS . e from time to time for

vernment haS put in pl~~iaries such as financial ..
These are grants that the go neurs through interm th enterprise fund, the disability
onward borrowing bY en:~!~:e have included t~~n~~uand so on,
institutions. In the p~s: fund, fresh graduate
fund, women enterpns fl.rl_M.Ef'IT G~ r1_rs: d to commercial lenders,

ADVANTAGES Of GOIIE friendlY compare

111 ore
•tions are
Len d.,n g con d1 teS are charged- . . mentoring, ;ncut>ation)
i) . . terest ra 9 tra1n1n9,
ii) r,1intrn 31 ,n ent se rVices( e- ·
111
oeveloP
55
Hi) 5usirie
b 0 rro wers
ace nrovided to
 DISA DVA NTA GES:
. . for the funds.
i) There is high competition . to red tape s.
. edur es Iead1 n9
ii) Bureaucratic processing proc ith the lend ing proc ess.
iii) Political patronage may interfere w
-1 bl are limit ed•
The amo unts of cred it ava, a e
iv)

v ) BAN KS AND NON - BAN K FINA NCI AL INS TIT

UTI ONS

A bank is a financial institution that accepts depo

sits, gives loan s and othe r fina nc
services. Non- bank financial institutio ns prov ide ban king se rvice s with out mee tin
prov ide both sho rt term and
the legal requ irements of a bank. These institutio ns
long term cred it at their prescribed cond itions.

ADVANTAGES OF SUCH INS TIT UTI ONS ARE :

to sta rt or eve
i) En~repreneurs can borrow large amo unts of mon ey n expa
a busin ess.

. ns
from th ese .mst1. tutIo
ii) An entr epreneur can get diffe rent type s of loan s

. The entre pren eur may receive n -fi . .

iii) r~ancral serv ices e.g . netw orki ng '
mark eting information business best on tices , train ing etc.
, prac

DISADVANTAGES:

i) The entr epre neur mus t have colla tera l to b

. . arro w any fund s
ii) •
High inter est rates are ch arge d.

iii) There are some hidd

en loan char ges.

BORROWED FUNDS {LOANSJ

 I'
11r1d11~t II 111\1 ll\', I11dlKhl: k1:111v W11111111I I Ii ltll Ii (I II Ilb! I
1 1l,n, Plrm \ntoi lh1t\u1h,I ,llhl '-,l, ui,ut l\qith,,-,
1111
~ m11i1 I t~11vn, I 1',1 , 11,,,1,i
' ' UI I lit\ 1 '11 1 l111 f I tih tit'" / ,1 fl11 /
oYANTAVfS OE THOSl ms n Ill lWNS Alm,

FlexlblL, ll'ndlnq l\ 1lu~

Colllltt'I ttl llhlY not II tvolvt phy~,ll,;lll p1 upu1ly,

I

May offer llhll kl'tlltll ,,~~IStd11n 1

gISADVANTAGES;

May not operntc In ull n1 ulom. of llm l~orn1l1 Y

May limlt the cntn,p, t'lll~lll lo 0 1wr llln ,,~. ll Woup,

• Some of the Institutions n1i,y l,uqot ',pm Ille uioupr; tJ,U,

Women/men/orphans/the dMllt 'IHJt 'd •

There is a limit to the fu nd s llwy h'tHI ,

Regulations of gettlnq fu 11d s .,, c I l(lld .

 ,.. ,,i;,,111 y.
No secw ii ,cs nr C Ill'' •'-'

1· 11 J lonll ,
1t is siniplc t o ol>t ,, '

.-, JloW',:
COMM ERCIAL BANKS. j( /01 1/tb ,ti<' ii'• fo
Adwmtaqes of con11 1/l'I r./. i/ /J,J/1
, m oun t,,, of 111ort<'Y·
Ca n ,~nd out lnrgt ' 1 I
• •- 11NJOl lr1 t< :(,
. I can Im I,.. I r
Rcpi.1) ment per ioc b I u•,lm.:!;', opur,Jt. on ,.
They aIso Off Cl • non - fln,inc 1cii udvlco on )

DISADVANTAGES: . t he borrowed dmount.

The collateral required is hig her in value t han

High interest rates are charged.

The amount to be borrowed Is restrict ed to the ability to repay.

Some costs on the borrowed loan may be hidden .

Some loan conditions are ambiguous.

TYPES OF BUSINESS RECORDS

Business records are essential for survival of any business. Records are important
for various reasons such as taxation, decision making among others.

The following are some of the basic records that an entrepreneur should use
THE CASH BOOK.

The cash book is a record in which cash r . .

divided into two sides. The left side Is ~ce,ved and paid are recorded. It is
right side is used for recording cash use for recording cash received while the
Payments.
Format of a cash book

r--,--..;;;;;:...:.:..::::.::.::~~~j~ r£as~ ] an k -D - --
- ·- ate_ .l'i!_rticulars Fo Cash Bank
 f URCHASES
·~
Ii)

ThlS \S a diary in wh\ch t1\\ 8lock bouuhl UI\ rr(,dl'l 1, r

wee columns which Include thu dtill•, doltili, ;111d ;;rr:;'.;',ii:'.'''1rm'' d,ill/ r,,1•,fu, !t /1,,·,
The date column records thu elate whnn the: ~JC>ocJ;, VN ;r1; r,qrrJ,,1,,!!tJ ,

The details co\umn records the pcrscm or oro,mlmtl()ri that '/Jld th0 cy;1, 1J·,
on cred\t.
The amounts column records the value of goods purc.hc1c1.:d.

FORMAT OF A PURCHASES JOURNAL

-□~!!!i:==========p~i~~=====
.--
\ Date . ===t \ oetails
Amount

I d a daily basis .
.. ) s-a•lp.,e~s 1·oo~uroa. credit are recorde on
I\ ~ oods sold on ·1 and amount colurTH),
hiCh a II g
This is a dlarY in VI
I it has
t;
d te detal 5
three columns:~~: whom goods were sold on
n,es of pers
.ou rna the na
Uke a purchase ~n records
- colu
The deta' 15
credit. . 0 urr1 31
ales
0
fas
Format
 . . he books of accounts
Recording business transactions 1n t

BOOK KEEPING
... can be exoressed in money,
T~1s · t-a ,....·sact-1·ons
· ·ti"' \ 0 , es reco rd"mg a 11 ttie . · snicn · t-ief'Y"' ·m th e
ur and e"' ~ering
~ sing r 0-n t"c> business act \ t es as tne \ occ
~pprop Z\te b00,-.s.

Systems of bookkeeping

There are two systems: the sing le ent rv and t he doub le e,..,try. The double entry
is "'10st common l\ L.sed in industrv and commerce.

THE DOUBLE ENTRY SYSTEM IS BASED ON TWO PRINCIPLES.

1. The principle that every transaction has hvo parts, therefore two entries are
made in the books of account in respect of each transaction .

One entry to record the item coming into the business

One entry to record the item teaving the business

1. !the pr)inci~le that the value of the item (s) com ing in is equal to the value of
1 em{s going out.

Value com ing in = value going out

Thus, a transaction involves an exchan e f ,

the same value i.e. Assets= liabilities agnd o tterns and the items exchanged have
' owner's funds~

DEBITS AND CREDITS

The terms debit and credit are u

categories of the accountin . se? to describe an inc
expenses. g equation (assets, liabilitie~ease or d_ecrease in the
and capital) and incurred
The following are the rule f
s O doubr
. e entry systern t ,.

r
Type of accou:::
n:-t _ __