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Each session contains a list of required readings from one or more of the three startup books included: The Plan-As-You-Go Business Plan, 3Weeks to Startup, and The Art of the Start. Click on the session reading links below to see the reading list for that session:
Session 1: Course Introduction
Session 2: Concept Kick Start
Session 3: Business Basics
Session 4: Market Analysis
Session 5: Marketing Strategy
Session 6: Basic Financials, Part 1
Session 7: Basic Financials, Part 2
Session 8: Getting Financed
Session 9: Building a Team
Session 10: The Web
Session 11: Cash and Taxes
Session 12: Plans and Pitches
OTHER RESOURCES:
In addition to the required readings, online resources are provided for each session. If an online resource is required for a session, it will be referenced in the Required Reading section. Otherwise, online resources are provided to give additional feedback and background information about the key points of discussion for the session, and are considered “viewing optional.”
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Video Overview
This video shows the resources available to students (such as classroom handouts, in-class exercises and reading assignments). If you are interested in becoming an instructor, you will need to apply for instructor access first.
Software and Books
This curriculum requires Business Plan Pro business-planning software and three startup books, The Plan-As-You-Go Business Plan, 3 Weeks to Startup, and The Art of the Start. Check with your instructor to see if the software and books are included as part of your course registration, or if you will be required to purchase them separately. You will need the software and books before the first class session.
Course Sessions
Your course materials are divided into 12 sessions, with objectives, required reading and online resources listed by session. Links to the course sessions are provided in the navigation sidebar.
Objectives: Review the objectives to see what will be covered in the session.
Reading: You are expected to complete reading assignments before coming to class; required reading helps prepare you for in-class discussions.
Online Resources: Links to online resources provide additional research and background information which support the content covered during a session. If a video or other online resource is required, it will be included in the required reading section. Otherwise, the online resources are provided as optional supporting content.
Student Handouts: Your instructor will be working with PowerPoint presentations during class. Student handouts of each slide presentation have been saved as .pdf files. You can download the handouts to look ahead to the next class or catch up on sessions you missed.
Student Resources
Assignments: The assignments link in the sidebar gives you the detailed page view of all assignments. Your assignments will be completed using a custom business plan outline, created in Business Plan Pro, which correlates with the plan-as-you-go approach to writing a business plan. Click here for instructions on how to download and save this custom outline file for your assignments.
Online Resources: This sidebar link gives you a detailed page view of all online resources by session.
Readings: This sidebar link gives you a detailed page view of all required reading by session.
Here are a few more links to help you get going:
- Working with the Business Plan Pro custom starting file.
- Information about PDF files.
- Tips and help about business writing by Tim Berry.
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- The Art of the Start, Chapter 10, The Art of Rainmaking.
- The Art of the Start, Chapter 11, the Art of Being a Mensch.
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PDF files are like electronic documents, easily transferable, easy to send as attachments to email, easy to view on the web. The acronym stands for “portable document format” files. The classic way to produce PDF files is by having an Adobe software product called Adobe Acrobat. There are lots of other ways these days. Business Plan Pro automatically produces PDF files as one of the export formats. The Mac produces PDF files as an alternative to printing.
If you’re not familiar with the various tools to create the right kind of files, find out from friends, check Wikipedia on PDF or Google creating a PDF file. Business Plan Pro exports anything to a PDF format too, so you can create the PDF file automatically.
Macintosh Users
If you’re using a Macintosh, at least if it’s a relatively new Macintosh, there is an automatic facility to print your documents to PDF files. It’s related to the Preview application on Macintosh. Use the Print command on the file menu and you’ll get something like the one shown here, which is taken from the Print dialog that comes up with PowerPoint 2007.
Move your mouse over the PDF button on the lower left, and push to open a drop down menu.
Select “Save to PDF” and use the Finder to set a file name.
That will be the PDF file you can use to send to me as an attachment to your email.
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While this isn’t a class in writing, and not even in business writing, it is about starting a business and that, like it or not, includes being able to communicate well. Here are some tips:
Simple is better. Simple writing makes the same impression as a clear and uncluttered room when you enter it.
Bullet points are fine. When a thought is so completely obvious that nobody could ever want more explanation, then you can get away without more explanation. Most bullet points, however, need dressing. Don’t just tick off an entire topic and think you’ve covered it.
The following are common errors in word usage. Think of the feeling you get with fingernails on a chalk board:
- Then and than. Then is sequential, than is comparison. If we have more of this than that, only then can we move forward.
- It and its. It’s annoying when an apostrophe shows up where it’s none of its business.
- Apostrophes.
- Showing possession: Susan’s book, Bill’s book
- Showing contraction: don’t, please, didn’t, won’t.
- Apostrophes don’t have anything to do with plural except for their natural look when it’s the boys’ book, for example. Or the cars’ problems. You have a plural word ending in s, like so many plurals do, and then you add an apostrophe to show possession.
- Common misspellings. Buisiness makes me unhappy. Use spell check to catch these.
- Their, there, they’re. Their problem, they’re going to fix it, but not until after they get there.
- There is, there are. Unless there is just one item, then there are more than one items. Unless there is a set of problems, or a number of problems.
It’s not hard to avoid most of the very common mistakes. If you’re not sure, take a look at this quick Google search for common writing mistakes.
Business Plan Pro 15th Anniversary Edition produces a file format with an extension, .bpdx. This format is used by Business Plan Pro to keep a business plan. Assignments for class will use a customized .bpdx file created especially to work with The Plan-As-You-Go Business Plan. The file can be downloaded from the step 2 link below.
Step-by-step
- Install Business Plan Pro. Notice the video tutorials, and the extensive help, and the technical support available for free by email or telephone.
- You can use this link to get the MinimumBusinessPlan.bpdx file. How you actually download depends on which browser you use. For example, in Internet Explorer you right-click the mouse and use the “save target as” option to download a file. Get the file downloaded and saved on your disk.
- Open this minimum business plan file from within Business Plan Pro.
- VERY IMPORTANT: use the Save-As command to save the file with a different name. You don’t want to work with the original, because then you can never start over; and you’ll run the risk of having a classmate using the same name.
- VERY IMPORTANT: Don’t use the tasks view option provided in the software. Instead, use the Outline view to work on your business plan. This starting file has a customized outline directly associated with The Plan-As-You-Go Business Plan approach to creating a business plan. All assignments have been written for this custom outline; working in the Outline view will guarantee that you see what is being discussed during the class sessions.
- VERY IMPORTANT: Use the Plan Setup to make sure you’re set for the standard plan: not the simple, and not the more detailed. If you don’t, then the wrong outline points show up.
Your screen should look something like this, with instructions showing on the upper left, an action window in the lower left (for text or tables), and the outline in the right.
If you have questions about this, you can use the Business Plan Pro help facility — search for bpdx — or call Business Plan Pro Technical Support at 1-800 229-7526 (international callers, use 1-541-683-6162). Phone support is available for registered customers from 8:30 a.m. to 4:30 p.m., Monday through Friday, Pacific Time.
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(This discussion was created as an option for use with Session 3: Business Basics.)
Here’s a case for discussion. You be the judge.
Mary comes up with a great idea for an iPhone application. She works on it for three months in her spare time. She creates sketches and designs, trying to figure out how it would work. She looks at other iPhone apps doing related things.
About three months into it, her interest in the project has waned a bit, but she’s still thinking about it. She’s spent 10 to 20 hours on it so far. Her best friend suggests she talk to Ralph about it. She doesn’t know Ralph, but her friend does. They meet for coffee. Ralph is a programmer. He works for a company in town doing Web programming. He’s also an iPhone user and has been thinking about taking a course on programming the iPhone. Ralph is excited, and his excitement rekindles Mary’s excitement. They agree to be partners in a new business based on this iPhone application.
Four months go by. Ralph takes Mary’s idea and starts developing it. It turns out, as he gets into the code, that what Mary imagined isn’t quite possible on an iPhone. Ralph revises the idea radically, makes it practical, and develops a prototype. Mary meets with him three times, they talk, she accepts his changes begrudgingly. At this point Mary’s total hours have gone to 25, but Ralph has worked almost 120 hours on the programming.
At Ralph’s suggestion, he and Mary take the prototype to Terry, who both of them know, but neither of them know well. Terry has been through a failed startup, has a business education, and is looking for a startup to do again, this time the way it should be done. Terry’s skill is mostly marketing, but he knows how to develop a plan and look for funding options. Terry does a business plan and networks with local business development groups, to find investors. They win an opportunity to present to an angel investment group.
Another three months have gone by. Mary has now put in approximately 40 hours, Ralph 250 hours, and Terry 120 hours.
The three of them meet to plan their approach with the investors. Ralph wants to quit his job and work full-time on the new thing, but needs to get paid. Mary doesn’t want to quit her job but wants to stay involved, she’s not quite sure how. Terry wants to lead the new company as soon as he can get financing.
The business plan indicates it’s going to take $250,000 to develop the business for the first year, after which it will need another $750,000 to have enough cash to run on its own.
During this meeting, Mary and Ralph and Terry come to a difficult realization: they’ve never talked about who should own how much of this company, or how much they will offer to investors in exchange for $250K.
Class exercise: solve this problem. Suggestions: depends on style, but …
- you might choose volunteers to represent each of the three characters in the story, and let them do a mock meeting in front of the class;
- or, another alternative, divide the class into three groups, keep the groups separate, and then ask them to report to the class on what they came up with.
All assignments should be completed using Business Plan Pro and saved as a .BPDX file or exported to a .PDF file.
Must Have:
Your business plan must include as a minimum the following components, identified here as either text topic or table. Most of these were separate assignments throughout the course, and should now combine into a single business plan document.
- Summary (could also be called “Executive Summary”). This is a text topic. It should include all of the information detailed in Assignment 1: The Business Opportunity. Business Plan Pro automatically includes the Highlights Chart. You could also use what you did for Assignment 6: Summary Memo and bundle that into the plan. Edit this portion, so it isn’t redundant; you probably used your assignment 1 as a beginning draft for assignment 4.
- Market Analysis. Text topics and at least one table. Should include all of the information detailed in Assignment 2: Market Analysis. Pictures and pie charts and bar charts are welcome.
- Strategy. One of more text topics. Ideally you’ve got something along the lines recommended in the reading, strategy as a combination of identity, market, and strategic focus. There’s an outline example here,
and you can click on it to jump to the Heart of the Plan material available online, which you also have in that Heart of the Plan section of The Plan-As-You-Go Business Plan book in the readings. In addition, the Heart of the Plan video included in class 11 videos also covers that same material. - Competitive Edge. This is a text topic. It’s also called Secret Sauce. This would have been discussed in class 5, Marketing Strategy. And you can also, read The Secret Sauce on the Web.
- Startup Plan: This is exactly as in Assignment 3: Startup Plan. That’s at least one text topic and two tables, one for startup costs and another for startup funding. The best way to handle the text topic is to make sure that it includes the most important assumptions and explains how you intend to raise the money required (loans, investors, personal savings, etc.)
- Sales Forecast. Exactly as in Assignment 4: Sales Forecast. That’s sales and cost of sales estimated for the first 12 months and then added up into year 1, and then a larger more general projection for years 2 and 3 of the plan as well. And it includes a text topic that explains your assumptions, and, ideally, a couple of business charts as well.
- Projected Profit & Loss. Exactly as in Assignment 5: Projected Profit & Loss. At least one text topic and a table; business charts would also be nice. If it’s obvious how you make money then you don’t need to elaborate, but for some of the more innovative new technology plans, if how you make money isn’t obvious, then please make sure you talk about the business model.
Nice to have:
You’ve got a lot of resources here on this website, including two complete online books, so you can see that there’s potentially a lot to add. Use outlines recommended in the readings, or some other order. Here are some specific suggestions, in more-or-less order of desirability — but not the order they appear in the plan:
- Cash flow. That requires some interaction between the profit and loss, which you already have, and the balance sheet, which you don’t necessarily have. With Business Plan Pro, it’s almost automatic. There’s a lot of detail available in the appropriate sections of The Plan-As-You-Go Business Plan book and Hurdle: The Book on Business Planning ebook found within the software resources.
- Business offering (describing your product or service). This goes well after the summary and before the market analysis.
- Company description: ownership, facilities, and so on. Goes well right after the summary, before the business offering section.
- Business model (as noted in the Projected Profit & Loss point above, only if it isn’t obvious).
- Financial plan: description of funding sources, return on investment for investors, exit strategy.
Remember that business planning requires a lot of flexibility. Every business plan is unique to the business and its specific situation.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
ARTICLES
Seth Godin: Nine steps to PowerPoint magic
Seth Godin: Really Bad PowerPoint
VIDEOS
The Back to Fundamentals Series
This is from November 2008. The total is 50 minutes. It divides into four parts.
- Part 1: Back to Fundamentals
- Part 2: The Heart of the Plan
- Part 3: Flesh and Bones of the Plan
- Part 4: Dressing and Growing
Nancy Duarte On Slide Presentations
The book is called Slide:ology. This five-minute video is a great summary.
If you can’t get the video off of this site, click here for the source.
Tim Berry: Video Summary of Business Planning
This interview is a pretty good summary of business planning for real-world companies. It was done at a trade show of eBay vendors.
PLANS
- The Art of the Start, Chapter 3, The Art of Writing a Business Plan.
PITCHES
- The Art of the Start, Chapter 4, The Art of Pitching.
- The Plan-As-You-Go Business Plan, Chapter 5, pages 233-236
In this session you will learn about:
- A business ‘pitch’ and a business ‘plan’
- Plan vs. actual
- Where to go from here
OVERVIEW
You have your business idea. You know who your target market is. You have planned your sales, costs of sales and expenses. You now have the key elements in place to describe your business. Whether it’s a pitch or a full business plan, use the format that best meets your needs.
A summary memo is a 2-5 page document that you could present to a potential investor. It should summarize the business opportunity, the strategy, the market, the business model, startup costs, startup funding plan, and initial sales numbers.
If you have been updating your own Business Plan Pro .bpdx file with each previous assignment, all of the information you need to create a Summary Memo is now completed. To select specific areas of your outline to include in the Summary Memo:
- Choose the Export option from the File menu in Business Plan Pro.
- From the Export dialog, chose to export to Adobe Acrobat PDF Format.
- From the outline display in the dialog, choose “Export only selected items” button, then click the boxes for each item to be included.
For more on the Summary Memo, read pages 228-233 of The Plan-As-You-Go Business Plan book. Or you can click here for the online version of the book.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
Internal Revenue Service (IRS)
The IRS offers free information to help you understand the tax laws. Click on each link and choose to read online or save to your computer. These and other resources can be found at irs.gov
- Tax Guide for Small Business (Publication 334)
- Business Expenses (Publication 535)
- Travel, Entertainment, Gift and Car Expenses (Publication 463)
- Circular E, Employer’s Tax Guide (Publication 15)
- Employer’s Supplemental Tax Guide (Publication 15-A)
Locate an Accountant
- GoodAccountants.com = registry of certified public accountants, public accountants and bookkeepers
- 1800accountant.com = Consult for free with a local accountant
Taxes Prepared Online
- Chapter 15, Keeping Track, 3 Weeks to Startup
- Chapter 17, Paying Taxes, 3 Weeks to Startup
- Chapter 5, Pages 194-210, The Plan-As-You-Go Business Plan
In this session you will learn about:
- Cash and profits
- Cash flow and cash balance
- How your legal setup can affect your taxes
- How a calendar year or fiscal year can affect your taxes
- Types of business expenses to deduct from taxes
- Online resources for tax questions
OVERVIEW
Critical content is cash flow and understanding the difference between cash and profits. This is vital.
DEFINITIONS
Cash: Normally means banknotes and coins, as in paying in cash. The term is used in a business plan to represent the bank balance, or current account balance.
Cash Flow: Cash coming into and flowing out of a business over a period of time.
Profit: Start with sales, subtract all costs of sales and all expenses; that equals profit before tax. Subtract tax to get net profit.
This assignment will be completed using the Business Plan Pro .bpdx outline file that you downloaded and saved as part of Assignment 2: Market Analysis, and which you have been adding to as you complete each assignment.
Assignment Steps
This assignment includes two tables and text explanations for each table. The tables are:
- Personnel plan: This table should list your projected salaries and wages for the first year, broken into 12 months and then summed for the year, and then annually for the second and third year.
- Profit & Loss: Once you have completed the Sales Forecast and the Personnel plan tables, Business Plan Pro automatically transfers the totals to the Profit and Loss table. Within the P&L table, you will need to list ongoing expenses. Each expense row should include estimates for the first 12 months, then summed for the first year; and then annual estimates for the second and third year.
You can find examples of the Personnel table in these places:
- The section on Spending Budgets in The Plan-As-You-Go Business Plan book/ Remember, this book is also online, just click here.
- The Management Team chapter in Hurdle: the Book on Business Planning discusses Personnel tables. Also online, just click here.
You can find examples of the Profit & Loss table in these places:
- The section on the Income Statement (P&L) in The Plan-As-You-Go Business Plan book/ Remember, this book is also online, just click here.
- The Bottom Line chapter in Hurdle: the Book on Business Planning discusses the Profit & Loss tables. Also online, just click here.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
- Chapter 11, Spin the Web, 3 Weeks to Startup
In this session you will learn:
- What you want your website to do for you (contact only, sell online, etc.)
- How to bring visitors to your website
- What is Search Engine Optimization (SEO) and what it means to your website
- What “analytics software” is and what it can do for your website
- Marketing programs to get people to your website, and how to keep them coming back
OVERVIEW
Whether you do business in your own town or around the world, the Internet has become an important tool to market your business. A website can be as simple as contact information about your business, its location, phone number and email address. Shoppers who used to use the phone book to locate businesses in their town now search online. You want them to find you.
DEFINITIONS
Search Engine: A program that searches for keywords and returns a list of the pages where the keywords were found.
Types of Search Engines: There are a number of search engines. They all use Web crawlers (also called bots) to index pages and the words on the pages. Indexing helps people use keywords to find information online.
Search Engine Optimization: A process to increase the number of visitors to a website coming from search results. The higher up in the results list, the more people will visit that website. Unpaid search results are also called “organic” results.
Pay-Per-Click: Advertisers pay the host website only when their ad is clicked.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
Articles
Angel-Eyed Skepticism on Sweat Equity (originally discussed as part of Session 3: Business Basics)
Videos
- Tim Berry on SBTV: Building a management team.
- Tim Berry on SBTV: Are family businesses underrated?
- How to manage employees on Stanford’s eCorner video resource.
- Chapter 8, Build Your Team; and Chapter 9, Manage Your Team, 3 Weeks to Startup
- Pages 107-113 on metrics; Pages 156-161 on budgeting and payroll, The Plan-As-You-Go Business Plan
- Chapter 6, The Art of Recruiting, The Art of the Start
Optional Reading
- Gather Your Team (a blog post)
In this session you will learn about building your team, working with outside advisors, and how to hire employees.
OVERVIEW
Even if you have no employees, you are likely to need bookkeeping, accounting and legal advice. These advisors should be considered part of your team. You don’t have to know, be and do it all to have your own business. You do have to gather a team who can cover the areas you don’t know.
DEFINITIONS
Burden Rate: (also called Payroll Burden or Payroll Taxes) Besides wages and salary amounts, there are other employee-related costs, depending on their part-time or full-time status. These can include employer taxes, insurance benefits, etc.
COBRA (Consolidated Omnibus Reconciliation Act): A federal law that extends health insurance to employees and their dependents beyond the point when they would normally lose coverage, such as after quitting, being fired, or changing personal status (employee divorcing a spouse, children reaching majority). Companies do not have to pay for this coverage.
Equal Opportunity: The Equal Employment Opportunity Commission guidelines, and related state and federal laws, which stop employers from asking potential hires personal questions not related to the job. This includes questions about age, sex, race, creed, religion, country of birth, disabilities, military discharge, whether they are married, have children, have health or mental health problems, and citizenship (although you can ask whether they have the right to work legally in the country, and you will be required to obtain proof of this at hiring).
Outsourcing: Sending certain job functions to an outside company, instead of handling them in-house.
Sweat Equity: The time and knowledge that a person or a group puts into a business to make a result, without pay.
(Part of Session 8 Online Resources)
What do investors want? A common topic for blogs, entrepreneurs, and investors. So here’s another view on it, from somebody who knows:
Naval Ravikant, the speaker, has been through the ringer a few times, on both sides of the investment table. I watched one of his ventures, epinions.com, very closely, because my daughter and son in law were employees. So I now, a few years later, I follow his Venture Hacks blog.
Most of what he says here is pretty standard. And if you’re interested, his fellow blogger transcribed this interview on venture hacks. Some highlights:
“I look for two things that are paramount above all:
- Great team. It’s obvious. It’s a tautology. Everybody says it. You have to be working with some of the best people in the industry you’re in.
- Huge market. Niche markets just don’t work because the first idea never works. You always have to change the idea, so you need room to maneuver in a big market.
“There are three more factors that I look at. Not all three of them are required but I prefer a company to have at least two of them:
- Difficult technology that is compounding over time.
- A proprietary distribution channel. A clever viral marketing, or SEO, or partnership, or whatever strategy that gives them a leg up over competitors.
- A direct monetization model. Something more than throwing up 10 cent banner ad CPMs.”
Naval has more authority on this than I do, but his reference to niche markets bothers me a bit. I like niche markets in a world that is constantly splintering and dividing itself finer and finer. Some of the biggest markets there are started as niches: Facebook, for example, focused first on a few university campuses. Yahoo was a niche — the Internet — when it started. Starbucks was once a niche (gourmet coffee, affordable luxury) in the Northwest.
This is a web-embedded video from an entrepreneur who is also an investor, talking about what investors want to know, and what they want to see in a pitch.
If for whatever reason you don’t see the video here, you can click this link to go to the source video on the TED site.
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These resources provide ideas from other business and marketing experts. They are not required reading for this session.
ARTICLE
Five Alternate Sources of Financing, from the Wall Street Journal.
VIDEOS
What Do Investors Want in a Startup? (Naval Ravikant, speaker)
This speaker has been on both sides of the funding table. One of his ventures is epinions.com. He also has a blog called Venture Hacks.
Most of what he says here is pretty standard. And if you’re interested, his fellow blogger transcribed this interview on venture hacks.
________________
10 Top Things for Pitching VCs (David Rose, speaker)
This speaker is an entrepreneur and an investor. Here he talks about what investors want to know, and what they want to see in a pitch. If you don’t see the video here, you can click this link to go to the source video on the TED site.
- Chapter 5, Getting Financed, 3 Weeks to Startup,
- Chapter 5, The Art of Bootstrapping, The Art of the Start
- Chapter 7, The Art of Raising Capital, The Art of the Start
Optional Reading
In this session you will use your startup costs and expenses from Session 7 to build a Startup Funding table. You will also learn about ways to finance a new business, and what works for what kinds of startups.
OVERVIEW
Many classes on starting a business talk about getting money from outside investors (venture capital). We will also talk about:
- Most startups are self-financed (called “bootstrapping”). A study made by Wells Fargo bank (2005) showed the average cost to start a business in the U.S. is $10,000.
- Owning a business yourself or having partners. If you can own it yourself, then you’re probably better off, unless you want to have partners to reduce risk and to bring in know-how and experience.
- The amount of startup costs will depend on the business. For example, there may be little or no startup costs for a catering company or a portable lunch stand. The startup costs will be much higher for a high-end restaurant in a major urban location. The need for funding depends on these costs.
- Types of funding for a startup can depend on how much money is needed, whether the investor feels there is a good rate of return from their money, and whether the company agrees with the terms.
- More than 500,000 new businesses are started in the U.S. each year. Only about 5,000-6,000 receive venture capital per year.
- Angel investors must qualify according to the SEC rules. Research has shown there are more than 200,000 angel investors in the U.S.
- Getting funding from friends and family should be limited. There are a lot of legal restrictions. This type of funding might work for tens of thousands of dollars, in some cases hundreds of thousands.
DEFINITIONS
Angel Investor: A person who invests his or her own money in a startup business who meets the SEC guidelines.
Bootstrapping: Starting a business by yourself, with no outside investors, with or without bank loans, credit cards or other borrowed money.
Venture Capitalist (VC): A person or firm that makes business investments. A VC can also bring management and technical knowledge as well as money.
Business Valuation: What a business is worth. There are many ways to value a business, such as:
- Asset-based valuation
- Book value
- Adjusted book value
- Liquidation value
- Replacement value
- Earnings-based valuations
This assignment will be completed using the Business Plan Pro .bpdx file outline that you downloaded and saved as part of Assignment 2: Market Analysis, and updated for Assignment 3: Startup Plan.
Assignment Steps
Your Sales Forecast assignment should include the following:
- A text explanation. You should include at least a paragraph or two explaining the main assumptions. Why your forecast is this amount and not double, or half of that? For example, if you built your Sales Forecast based on some assumptions (good idea), such as the number of chairs and tables and occupancy in a startup restaurant, then please describe those assumptions.
- Sales by month for the first 12 months of your plan, summed into a total for the first year, and then projected by year for the second and third years. These should usually (but not always) be broken into units and price (revenue) per unit.
- Direct costs of those sales estimated by month for the first 12 months of your plan, summed into a total for the first year, and then projected by year for the second and third years.
You can find examples of the Sales Forecast table in these places:
- The chapter on Sales Forecast in The Plan-As-You-Go Business Plan book, beginning on page 131, continuing through page 154. Remember, this book is also online, just click here.
- The Forecast Your Sales chapter in Hurdle: the Book on Business Planning. Also online, just click here.
And don’t forget that there are about 500 sales forecast examples in the sample business plans free online at www.bplans.com. You can do a key-word search to look for different types of businesses to find a sample similar to your business type.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
- A three-minute video titled, “How do I Start a Sales Forecast?”
- The “Forecast Your Sales” chapter from Hurdle: The Book on Business Planning, by Tim Berry, at www.hurdlebook.com.
- 3 Weeks to Startup, Chapter 16, Managing the Money
- The Plan-As-You-Go Business Plan, Chapter 5, pages 126-131; 148-161
- The Plan-As-You-Go Business Plan, pages 129-155, sales forecast
In this session we will pull together the numbers of a business plan. Using Business Plan Pro, we will forecast sales and starting costs and ongoing expenses. This will show how the numbers in the plan come together.
OVERVIEW
Forecasting is like the weather forecast. It’s a mix of research, knowledge, and educated guessing. Whether you like numbers or not, there are some estimates you just have to make. You can do it.
DEFINITIONS
Sales Forecast: The planned sales a business expects to make in the future.
Costs of Goods Sold (Costs of Sales): The costs of materials used to make the goods a business sells. These costs vary in direct proportion to the amount of goods sold.
Before you begin…
Re-open the Business Plan Pro minimum outline .bpdx file that you saved as part of Assignment 2: Market Analysis. You will continue to build into this .bpdx file with each assignment.
Assignment Steps
Your Startup Plan should contain a text explanation of what your startup costs and startup funding numbers are, plus two tables, the Startup Costs and the Startup Funding tables. The table explanations can be found here:
- Startup costs, as explained on pages 161-165 of The Plan-As-You-Go Business Plan book. Or you can click here for the online version of the book.
- Startup funding, as explained in the online example from the online version of The Plan-As-You-Go Business Plan.
- The online version of Hurdle: The Book on Business Planning also has sections covering Starting Costs and Startup Funding in Chapter 6: Describe Your Company.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
Business Plan Financials
(9-part video series)
This series is about 30 minutes long. It talks about the six key financial building blocks. It also gives examples of how they come together in the three main statements — income, balance sheet, and cash flow.
In this session you will learn:
- The difference between ‘startup’ and ‘ongoing’ expenses
- How expenses vs. assets are treated for tax purposes
- The difference between profits and cash
OVERVIEW
Start-up expenses happen before the business is running. If expenses come after the start of the plan, they are ongoing expenses. Ongoing expenses belong in the profit and loss table.
DEFINITION
Expenses: Items or services paid for that a business can deduct from income for tax purposes. Common expenses are rent, salaries, advertising and travel.
Assets: Property that a business owns, such as cash and inventory, office equipment, buildings, accounts receivable, and investments. Assets cannot be deducted from income for tax purposes.
Costs of Goods Sold (COGS): The costs of materials which are used to make the goods a business sells. These costs vary in direct proportion to the amount of goods sold.
Sales Forecast: The planned sales a business expects to make in the future; this may be shown by months and/or years.
Liabilities: Debts; money owed that must be paid. Short-term (current) are generally debts to be paid in less than five years; long-term debts are generally for longer than five years.
Capital Input: New money invested in ownership in the business, not as loans or payment of loans.
What a resource: check out this list of 250 top blog posts on advertising, marketing, media, and PR. I got the tip from Seth Godin’s blog post of last week, which started with that list, and then highlighted his top 20 favorites from his blog.
Add Duct Tape Marketing to that list, and you have the ultimate course in 21st century marketing.
I had lunch yesterday with one of my favorite people in the textbook publishing industry. Seeing this list today, again, and thinking about that lunch and the world of textbooks reminds me, it has to be hard to sell a marketing textbook these days, when the really good stuff is coming up every day in the blogs.
And it has to be hard, from the professors’ point of view, to select and recommend marketing texts costing the students $100 or more, when the real world is happening so much faster on the web.
Click here for the PowerPoint slides.
Click here for the sample Business Plan Pro file
- Review issues from previous class.
- Additional resources for the market analysis assignment
- Grading discussion: your own plan vs. group plans.
- Readings: are you keeping up with the readings. What did you think about marketing vs. branding, in the readings?
- Discussion: John Jantsch defines marketing as getting people to know, like, and trust you.
- Discussion: What’s branding? Personal branding? Why does it matter? How is it different from marketing?
- Discussion: differentiate marketing vs. sales.
- Discussion: using the class example from last time (the art theater). What kind of marketing would be appropriate? Advertisements, where? Flyers? Direct mail? Email?
- Slides: Marketing Your Business
- Discussion: how does segmentation fit into this
- Discussion: how is marketing changing. New media: blog, twitter?
- Discussion: marketing expense levels. What’s appropriate? How to tell.
- Discussion: marketing strategy pyramid
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
PR vs. Advertising vs. Social Media vs. Branding
What do these terms mean, and are they the same? This post gives examples of each as well as how the meaning can change when you use them together. It helps to use the right words and phrases so that other people know what you mean.
Great Marketing Lists
Check out this list of 250 top blog posts on advertising, marketing, media, and PR.
Seth Godin included this list and then highlighted his top 20 favorites.
Add Duct Tape Marketing to the list, and you have a complete view of 21st century marketing.
Pricing is Magic
This blog post talks about the three common pricing methods and the #1 pricing error made by a startup business.
Target Marketing
- Segmentation is Critical to Marketing Success
- Market Analysis is the Foundation of the Marketing Plan
- Prove Your Market
The readings discuss marketing and branding. How are these different?
- 3 Weeks to Startup, Chapter 10, Branding
- 3 Weeks to Startup, Chapter 12, Spread the Word
- The Art of the Start, Chapter 8, the Art of Partnering
- The Art of the Start, Chapter 9, The Art of Branding
Optional Reading
Optional readings give more information, but they are not required reading.
- The Plan-As-You-Go Business Plan, Chapter 3, Pages 83-92
- The Plan-As-You-Go Business Plan, Page 97, The Business Model
In this session you will learn:
- How marketing is different from sales
- How to create a “brand” for your product or service
- How to best reach your ideal customer/target market
OVERVIEW:
Knowing about your market isn’t enough. You also need to decide who will be your customer, how you will find new customers, what you will offer and how you will keep them as your customers. Then you will have the strategy you need to market your business.
DEFINITIONS
Advertising: The paid promotion of a product or service, in print, TV, or other media. (Answers.com)
Branding: To create a name, symbol or design for a product which sets it apart from other products. (Entrepreneur.com)
Marketing: The set of planned activities designed to persuade the purchase choices of people for your product or service. (page 367, The Plan-As-You-Go Business Plan)
Sales: Exchange of goods or services for an amount of money or its equal value. (Webster’s Dictionary)
Marketing Strategy:
- Choose which groups of people you want to target within your market
- Decide on the message for the target market
- Estimate what will it cost to create the message
- Choose the best method to reach this target market
- Plan the cost to put this strategy to work for you
- Decide how to get your customers to ‘Know, Like and Trust’ you (John Jantsch, Duct Tape Marketing)
Public Relations: Using the news or business press to carry stories about your company or your products which promote a positive image to your customers and the public. (Entrepreneur.com)
This link provides an example of advertising, promotion, public relations and sales and how they are different.
Social Media: A shift in how people find, read, and share news and information. It combines social and technical aspects to go from monologue (one to many) to dialogue (many to many.) (WebProNews.com)
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
Two examples of finding a market need:
- The right way (identify a need and fill it): Turbo Pascal
- The wrong way (build a product and sell it): Apple Newton
Need vs. Recognized Need
Sometimes you can see a need and still not be able to explain it to customers. This post, True Story, Good Idea, but Hard to Explain, is an example.
Sometimes you can make people more aware of a need they already have. This post, Marketing: Creating Wants or Filling Them? is an example.
More resources
For more information on how do divide a market into segments, how to analyze a target market, and marketing in general, visit mplans.com.
This chapter is required reading for this session:
- 3 Weeks to Startup, Chapter 3, About Your Market
Optional Reading
This chapter is not required reading, but it does support the reading for this class session:
- The Plan-As-You-Go Business Plan, Chapter 5, Pages 210-218
In this session you will learn:
- What is a “target market” and what does it mean for my business?
- How can I find out who my target market is?
- What is it that makes my customers buy from me?
OVERVIEW
How many buyers are there? Where are they, and what do they care about? What do they read, what do they watch, what do they listen to? The more you can learn about your buyers, the better you can market your business to them.
DEFINITION
Demographics: A way to group people based on similar traits, such as age, income, and home ownership. This can help a business understand the buying habits of the group in order to better market to them. The best free source for this kind of information is the U.S. Census online. You will find information on housing, income, businesses, and more.
Market Analysis: Looks at the total market size and growth, then breaks the market down into segments, which leads to marketing to each segment (target) with a special message for that segment.
Psychographics: A way to group people based on lifestyle, beliefs, values, buying habits, and product usage. The original research is the VALS Framework. Click the link to see more detail.
Target Market: A segment of people a company identifies as the main customer for their product or service.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
- This Entrepreneur.com article is a nice summary of the basics of corporate entities and structure. It’s an excerpt of a book on business structure.
- The blog post Just Getting Going, Building, or Ready to Fly is about the same three types of startups we talk about in the presentation (on Tim Berry’s Up and Running blog).
- 3 Weeks to Startup, Chapter 2, Need to Know, pages 21-23
- 3 Weeks to Startup, Chapter 4, Make it Legal
- 3 Weeks to Startup, Chapter 17, Paying Taxes
Optional Reading
- Just Getting Going, Building, or Planning to Fly (web only)
- Nice Summary excerpt of book on business structure
- You Need a Lawyer blog post (Tim Berry)
- True Story: the Name Game Disaster blog post (Tim Berry)
In this session you will learn:
- There are many types of startups, from the simple one-person business to a complex technology startup, with a lot in between.
- How to choose a business name, and how to own the name.
- Basic legal business types: corporations, limited liability corporation, sole proprietorship, fictitious business name and “doing business as” (DBA).
- Business locations: home office, retail store, business offices, and so on.
- What is a business plan, and why is it useful?
OVERVIEW
Now that you have decided on the business concept, how do you want to set up your business? Making these decisions now will help you build your business foundation:
- What is the best legal setup for your business? What are the costs?
- Will you have a partner? If so, what will the taxes be for each of you?
- Is your business name already used by someone else? How can you find out?
- Do you need a storefront location to reach your customers?
DEFINITION
Intellectual Property: Common types include copyrights, trademarks, patents, industrial design rights and trade secrets.
These resources provide ideas from other business and marketing experts. They are not required reading for this session.
“The following blogs supports my belief that an idea alone has no value. Ideas on their own are just not that important.” Tim Berry, curriculum author
A Really Good Answer to a Very Common Question
“What Were They Thinking?” Awards
Forget it; Your Idea has no Value
If Execution is What Matters, Where Does That Leave Ideas?
Slippery Idea Ownership Updated
And one more, on learning business from failure. “Why things fail is important. Each case is different, and your case and my case are more different still; but you and I should go through these cases.” Tim Berry, curriculum author
25 Best Startup Failure Post-Mortems of All Time
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These chapters are required reading for this session:
- 3 Weeks to Startup – Chapter 1: Concept Kick Start
- The Art of the Start — Chapter 2: The Art of Positioning
Make sure you have also finished the reading for the first class — Chapter 1: The Art of Starting from the book The Art of the Start.
Optional Reading
This chapter and video are not part of the required reading for this session. They are provided as additional resources only.
The Plan-As-You-Go Business Plan — Chapter 3, The Heart of the Plan
This video a recorded interview of Tim Berry on SBTV.com: What is The Value of Your Idea? How Do You Protect It?
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