Business Plan for a Startup BusinessThe business plan consists of a narrative and several financial worksheets. The narrative template is the body of the business plan. It contains more than 150 questions divided into several sections. Work through the sections in any order that you want, except for the Executive Summary, which should be done last. Skip any questions that do not apply to your type of business. When you are finished writing your first draft, you’ll have a collection of small essays on the various topics of the business plan. Then you’ll want to edit them into a smooth-flowing narrative.
The real value of creating a business plan is not in having the finished product in hand; rather, the value lies in the process of researching and thinking about your business in a systematic way. The act of planning helps you to think things through thoroughly, study and research if you are not sure of the facts, and look at your ideas critically. It takes time now, but avoids costly, perhaps disastrous, mistakes later.
This business plan is a generic model suitable for all types of businesses. However, you should modify it to suit your particular circumstances. Before you begin, review the section titled Refining the Plan, found at the end. It suggests emphasizing certain areas depending upon your type of business (manufacturing, retail, service, etc.). It also has tips for fine-tuning your plan to make an effective presentation to investors or bankers. If this is why you’re creating your plan, pay particular attention to your writing style. You will be judged by the quality and appearance of your work as well as by your ideas.
It typically takes several weeks to complete a good plan. Most of that time is spent in research and re-thinking your ideas and assumptions. But then, that’s the value of the process. So make time to do the job properly.Thosewho do never regret the effort.And finally, be sure to keep detailed notes on your sources of information and on the assumptions underlying your financial data.
Business PlanLaMeka Wright-Potter, Julius Potter, & Audrey WrightCate’s TLB LLC
Street Address
1515 Overton Crossing
Memphis, Tennessee 38120
800-210-1200
800-210-0200
catesbeveragesllc@gmail.com
Table of Contents TOC h z t “Heading 3,1” I.Table of Contents PAGEREF _Toc52620470 h 3II.Executive Summary PAGEREF _Toc52620471 h 4III.General Company Description PAGEREF _Toc52620472 h 5IV.Products and Services PAGEREF _Toc52620473 h 6V.Marketing Plan PAGEREF _Toc52620474 h 7VI.Operational Plan PAGEREF _Toc52620475 h 15VII.Management and Organization PAGEREF _Toc52620476 h 19VIII.Personal Financial Statement PAGEREF _Toc52620477 h 20IX.Startup Expenses and Capitalization PAGEREF _Toc52620478 h 21X.Financial Plan PAGEREF _Toc52620479 h 22XI.Appendices PAGEREF _Toc52620480 h 25XII.Refining he Plan PAGEREF _Toc52620481 h 26Executive SummaryWrite this section last.
We suggest that you make it two pages or fewer.
Include everything that you would cover in a five-minute interview.
Explain the fundamentals of the proposed business: What will your product be? Who will your customers be? Who are the owners? What do you think the future holds for your business and your industry?
Make it enthusiastic, professional, complete, and concise.
If applying for a loan, state clearly how much you want, precisely how you are going to use it, and how the money will make your business more profitable, thereby ensuring repayment.
General Company DescriptionCompany Name: Cate’s Tea Lemonade Beverage (TLB) LLC
Significance: The significance of Cate’s Tea and Lemonade Beverage is to be able to be consumed as a nutritious andenergy replacement. It will contain a required daily consumption amount of proteins, calcium, vitamins and other essential elements including B-12. The drink will be sold in retail stores, fairs, and restaurants. It does not have to be refrigerated and tastes great hot or cold. This is a good source of energy for people on the go who do not drink coffee or use energy drinks.
Mission Statement
Cate’s TLB provides our customers with high quality beverages, made with simple ingredients, at competitive prices. We produce our beverages with a professional quality team environment built on accountability, compassion, and respect.
Cates organization goal is linked to the company’s mission statement. Cate’s goal is to sell the highest quality of natural and organic tea and lemonade products. Cates objective is to offer a satisfying and delighting taste to customers. Consumers are high on the list of importance at Cates.
Cate’s target audience will be middle-class citizens and live in the Suburban areas.
There are various trends in the non-alcoholic beverage (NAB) surrounding the tea and lemonade industry. The diversity amongst tea and lemonade is one of the key trends regarding the industry. In the past manufacturers offered concentrate and power formula that the consumer had to add water and sweetener to make. Today the process is much simpler; you can purchase tea and lemonade ready for consumption. The tea and lemonade industry offer a variety of flavors. The industry offers some organic while other is concentrated or artificially flavored. The NAB industry is constantly growing since customers are demanding more natural and healthy on the go drinks. This demand has been heavily influenced by the raise in obesity and diseases.
Cate’s TLB LLC SWOT Analysis
Cate’s TLB faces various risks. These risks fall into two broad categories. These include labor risks and unforeseen risks. Regarding labor costs, the company faces loss of employees to competitor firms because competitor firms offer employee benefits. To mitigate this risk, the company wishes to implement better employee benefit packages that will attract top talent in the industry. There are also management issues facing the company. Recently, there was embezzlement of funds by the firm’s marketing department. To mitigate this risk, it has implemented electronic payment mode such that employees can also get their payments through the banks as well as various departments to carry out their transaction through the use of non-cash money transfers. Semiannual auditing has also been implemented to trace any instances of fraud. The unforeseen risks that the company faces include destruction of products by natural disasters such as flooding and earthquakes as well as a change of customers’ taste and preferences.
Unforeseen risksLabor
-Loss of owner -Can’t find employees
-Demand low/ high -Management Issues
-Competition
-Natural Disasters
Strengths Weaknesses
– High-quality product-Market Share/Sz (100m.)
– Capital-Needs Investors
– Culture- Growing Pains
– Legal/Regulatory/Ins
Opportunities Threats
– 35 Billion in Market share available – Competition
– Geographic expansion- Legal/Regulatory
– Workface expansion – No investors
– Product portfolio expansion – Cash flow shortages
Strengths
•High-quality product
Cate’s TLB is known leader in the manufacturing of high-quality lemonade beverage. As a result, most consumers prefer to buy their lemonade from this company. The well-established brand name has also helped it in retaining its customers hence making high volumes of sales that translate to high-profit margins.
•Culture
The company has a very efficient company culture that enables it to carry out its functions efficiently and smoothly. The high levels of understanding among the different levels of management keep the stakeholders united a factor that promotes productivity. The management holds and treats each and every employee with respect. They feel appreciated as part of the company hence boosting their work morale.
•Capital
The company has a sound financial background that enables it to carry out all its activities efficiently. For instance, Cate’s TLB is can carry out all its marketing activities since it can finance hence increasing its visibility in the market and industry.
Weaknesses
•Small market share
Due to its few years of operation in the market, Cate’s TLB has not acquired a significant market share. Its current market share is only 100 miles. This has limited its ability of growth compared to closest competitors who have large market share.
•Growing pains
The company has experienced various issues that have in one way or another affected its rate of growth. For instance, embezzlement of funds by part of the management team has led to lagging behind of the company in fast growth in newly established regions.
Opportunities
•Expansion
Cate’s has the opportunity to expand into other geographical areas. Currently, it only operates with a 100 miles radius of the home area. The expansion will increase its consumer and revenue based on more sales. Granting the opportunity to hire more employeesand will allow Cates to meet production function more efficiently.
•Growth of market share
Cates currently have limited market share being it is just a starting up. Cates tend to improve its finances by encouraging investors to finance operations.
Threats
•Stiff competition
Cate’s TLB faces stiff competition from its closest competitors. Price competition is one of the aspects. The competitor firms offer their products at relatively lower prices. Some of the competitors include PepsiCo, Tyson Foods Inc. among others.
•Lack of investors
The company does not have investors since it is a start-up. This is a significant threat because the competitors can expand their operations globally with ease because they have capital.
Products and ServicesI believe quality positioning is the best strategic position for Cates TLB. Quality positioning may be defined a method of product positioning in which a company chooses to manufacture high-quality products compared to its closest competitors. The customers, therefore, choose the company’s drinks because they are of better quality compared to those produced by rival firms. Cate’s TLB wishes to be the world best leader in natural non-alcoholic beverages. Distribution channels are the paths of which goods and services follow from vendors to consumers through payments by customers to suppliers. The product can have a small distribution as from vendors to consumers while others may include several intermediaries such as agents, distributors, wholesalers, etc. Where intermediaries are involved, one broker receives the product at a particular pricing point and then moves it to the next higher pricing point till the product reaches its final consumer. Our distribution channel involves retailer, agents, wholesalers, and direct sales through catalogs, mail orders and web services. Our sales force contributes most towards our sales within this region including our online marketing team who markets our products within the region and outside world as a whole(Food & Drink – October 2003 : Bacon, Flavored Alcoholic Beverages, non sweet biscuits, pre packed and dressed salads, sweet biscuits., 2012). Contract bids also take part where we make contracts to supply our products to big firms and organizations including institutions of learning. All people from young to old including children consume our products, and many people come to our products daily leading to the high returns currently experienced by the business (Reve, 2015).
The non-alcoholic beverage industry is a rapidly competitive and a dynamic segment. Several innovations as well as the increasing focus on consumers on their health and wellness have driven this growth with an evolving competitive landscape. This business encompasses a broad range of liquid refreshment beverage categories such as energy drinks, carbonated soft drinks, juices, enhanced and bottled water, RTD coffee, and tea, sports drinks as well as probiotics. Several of these subcategories have experienced growth driven by both the companies’ abilities to deliver products that are compelling as well as the customers rising demand for healthier and functional beverages. Although there is no stiff competition currently, with time, there may be considerable competition from these similar firms offering the same product or relatively similar goods and services (Food & Drink – October 2003: Bacon, Flavored Alcoholic Beverages, non-sweet biscuits, prepacked and dressed salads, sweet biscuits., 2012).
Three classes of marketing vehicles will be used to market the product. The social vehicles will include population density which enables sharing with less friction, mindset sustainability as well as trends in lifestyle among the youths. The economic drivers will involve increased world population, economic disparities including sustainable resources. Technological drivers will include mobile technologies, social networking technologies as well as payment systems. Our competitors have been using mobile technologies of late and mindset sustainability and hence possible competition in recent years to come (Gregoriou & Ali, 2016).Describe in depth your products or services (technical specifications, drawings, photos, sales brochures, and other bulky items belong in Appendices).
Marketing PlanMarket research – Why?
No matter how good your product and your service, the venture cannot succeed without effective marketing. And this begins with careful, systematic research. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts. Your time will be well spent.
Market research – How?
There are two kinds of market research: primary and secondary.
Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies.
Start with your local library. Most librarians are pleased to guide you through their business data collection. You will be amazed at what is there. There are more online sources than you could possibly use. Your chamber of commerce has good information on the local area. Trade associations and trade publications often have excellent industry-specific data.
Primary research means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus-group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research themselves.
In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important sales projection.
Economics
Facts about your industry:
What is the total size of your market?
What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.)
Current demand in target market.
Trends in target market—growth trends, trends in consumer preferences, and trends in product development.
Growth potential and opportunity for a business of your size.
What barriers to entry do you face in entering this market with your new company? Some typical barriers are:
High capital costs
High production costs
High marketing costs
Consumer acceptance and brand recognition
Training and skills
Unique technology and patents
Unions
Shipping costs
Tariff barriers and quotas
And of course, how will you overcome the barriers?
How could the following affect your company?
Change in technology
Change in government regulations
Change in the economy
Change in your industry
Product
In the Products and Services section, you described your products and services as you see them. Now describe them from your customers’ point of view.
Features and Benefits
List all of your major products or services.
For each product or service:
Describe the most important features. What is special about it?
Describe thebenefits. That is, what will the product do for the customer?
Note the difference between features and benefits, and think about them. For example, a house that gives shelter and lasts a long time is made with certain materials and to a certain design; those are its features. Its benefits include pride of ownership, financial security, providing for the family, and inclusion in a neighborhood. You build features into your product so that you can sell the benefits.
What after-sale services will you give? Some examples are delivery, warranty, service contracts, support, follow-up, and refund policy.
Customers
Identify your targeted customers, their characteristics, and their geographic locations, otherwise known as their demographics.
The description will be completely different depending on whether you plan to sell to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end consumer and the middleman businesses to which you sell.
You may have more than one customer group. Identify the most important groups. Then, for each customer group, construct what is called a demographic profile:
Age
Gender
Location
Income level
Social class and occupation
Education
Other (specific to your industry)
Other (specific to your industry)
For business customers, the demographic factors might be:
Industry (or portion of an industry)
Location
Size of firm
Quality, technology, and price preferences
Other (specific to your industry)
Other (specific to your industry)
Competition
What products and companies will compete with you?
List your major competitors:
(Names and addresses)
Will they compete with you across the board, or just for certain products, certain customers, or in certain locations?
Will you have important indirect competitors? (For example, video rental stores compete with theaters, although they are different types of businesses.)
How will your products or services compare with the competition?
Use the Competitive Analysistable below to compare your company with your two most important competitors. In the first column are key competitive factors. Since these vary from one industry to another, you may want to customize the list of factors.
In the column labeled Me, state how you honestly think you will stack up in customers’ minds. Then check whether you think this factor will be a strength or a weakness for you. Sometimes it is hard to analyze our own weaknesses. Try to be very honest here. Better yet, get some disinterested strangers to assess you. This can be a real eye-opener. And remember that you cannot be all things to all people. In fact, trying to be causes many business failures because efforts become scattered and diluted. You want an honest assessment of your firm’s strong and weak points.
Now analyze each major competitor. In a few words, state how you think they compare.
In the final column, estimate the importance of each competitive factor to the customer. 1 = critical; 5 = not very important.
Table SEQ Table * ARABIC 1: Competitive Analysis
FACTOR Me Strength Weakness Competitor A Competitor B Importance to Customer
Products Price Quality Selection Service Reliability Stability Expertise Company Reputation Location Appearance Sales Method Credit Policies Advertising Image Now, write a short paragraph stating your competitive advantages and disadvantages.
Niche
Now that you have systematically analyzed your industry, your product, your customers, and the competition, you should have a clear picture of where your company fits into the world.
In one short paragraph, define your niche, your unique corner of the market.
Strategy
Now outline a marketing strategy that is consistent with your niche.
Promotion
How will you get the word out to customers?
Advertising: What media, why, and how often? Why this mix and not some other?
Have you identified low-cost methods to get the most out of your promotional budget?
Will you use methods other than paid advertising, such as trade shows, catalogs, dealer incentives, word of mouth (how will you stimulate it?), and network of friends or professionals?
What image do you want to project? How do you want customers to see you?
In addition to advertising, what plans do you have for graphic image support? This includes things like logo design, cards and letterhead, brochures, signage, and interior design (if customers come to your place of business).
Should you have a system to identify repeat customers and then systematically contact them?
Promotional Budget
How much will you spend on the items listed above?
Before startup? (These numbers will go into your startup budget.)
Ongoing?(These numbers will go into your operating plan budget.)
Pricing
Explain your method or methods of setting prices. For most small businesses, having the lowest price is not a good policy. It robs you of needed profit margin; customers may not care as much about price as you think; and large competitors can underprice you anyway. Usually you will do better to have average prices and compete on quality and service.
Does your pricing strategy fit with what was revealed in your competitive analysis?
Compare your prices with those of the competition. Are they higher, lower, the same? Why?
How important is price as a competitive factor? Do your intended customers really make their purchase decisions mostly on price?
What will be your customer service and credit policies?
Proposed Location
Probably you do not have a precise location picked out yet. This is the time to think about what you want and need in a location. Many startups run successfully from home for a while.
You will describe your physical needs later, in the OperationalPlansection. Here, analyze your location criteria as they will affect your customers.
Is your location important to your customers? If yes, how?
If customers come to your place of business:
Is it convenient? Parking? Interior spaces?Not out of the way?
Is it consistent with your image?
Is it what customers want and expect?
Where is the competition located? Is it better for you to be near them (like car dealers or fast-food restaurants) or distant (like convenience-food stores)?
Distribution Channels
How do you sell your products or services?
Retail
Direct (mail order, Web, catalog)
Wholesale
Your own sales force
Agents
Independent representatives
Bid on contracts
Sales Forecast
Now that you have described your products, services, customers, markets, and marketing plans in detail, it’s time to attach some numbers to your plan. Use a sales forecast spreadsheet to prepare a month-by-month projection. The forecast should be based on your historical sales, the marketing strategies that you have just described, your market research, and industry data, if available.
You may want to do two forecasts: 1) a “best guess”, which is what you really expect, and 2) a “worst case” low estimate that you are confident you can reach no matter what happens.
Remember to keep notes on your research and your assumptions as you build this sales forecast and all subsequent spreadsheets in the plan. This is critical if you are going to present it to funding sources.
Operational PlanExplain the daily operation of the business, its location, equipment, people, processes, and surrounding environment.
Production
How and where are your products or services produced?
Explain your methods of:
Production techniques and costs
Quality control
Customer service
Inventory control
Product development
Location
What qualities do you need in a location? Describe the type of location you’ll have.
Physical requirements:
Amount of space
Type of building
Zoning
Power and other utilities
Access:
Is it important that your location be convenient to transportation or to suppliers?
Do you need easy walk-in access?
What are your requirements for parking and proximity to freeway, airports, railroads, and shipping centers?
Include a drawing or layout of your proposed facility if it is important, as it might be for a manufacturer.
Construction? Most new companies should not sink capital into construction, but if you are planning to build, costs and specifications will be a big part of your plan.
Cost: Estimate your occupation expenses, including rent, but also including maintenance, utilities, insurance, and initial remodeling costs to make the space suit your needs. These numbers will become part of your financial plan.
What will be your business hours?
Legal Environment
Describe the following:
Licensing and bonding requirements
Permits
Health, workplace, or environmental regulations
Special regulations covering your industry or profession
Zoning or building code requirements
Insurance coverage
Trademarks, copyrights, or patents (pending, existing, or purchased)
Personnel
Number of employees
Type of labor (skilled, unskilled, and professional)
Where and how will you find the right employees?
Quality of existing staff
Pay structure
Training methods and requirements
Who does which tasks?
Do you have schedules and written procedures prepared?
Have you drafted job descriptions for employees? If not, take time to write some. They really help internal communications with employees.
For certain functions, will you use contract workers in addition to employees?
Inventory
What kind of inventory will you keep: raw materials, supplies, finished goods?
Average value in stock (i.e., what is your inventory investment)?
Rate of turnover and how this compares to the industry averages?
Seasonal buildups?
Lead-time for ordering?
Suppliers
Identify key suppliers:
Names and addresses
Type and amount of inventory furnished
Credit and delivery policies
History and reliability
Should you have more than one supplier for critical items (as a backup)?
Do you expect shortages or short-term delivery problems?
Are supply costs steady or fluctuating? If fluctuating, how would you deal with changing costs?
Credit Policies
Do you plan to sell on credit?
Do you really need to sell on credit? Is it customary in your industry and expected by your clientele?
If yes, what policies will you have about who gets credit and how much?
How will you check the creditworthiness of new applicants?
What terms will you offer your customers; that is, how much credit and when is payment due?
Will you offer prompt payment discounts? (Hint: Do this only if it is usual and customary in your industry.)
Do you know what it will cost you to extend credit? Have you built the costs into your prices?
Managing Your Accounts Receivable
If you do extend credit, you should do an aging at least monthly to track how much of your money is tied up in credit given to customers and to alert you to slow payment problems. A receivables aging looks like the following table:
Total Current 30 Days 60 Days 90 Days Over 90 Days
Accounts Receivable Aging You will need a policy for dealing with slow-paying customers:
When do you make a phone call?
When do you send a letter?
When do you get your attorney to threaten?
Managing Your Accounts Payable
You should also age your accounts payable, what you owe to your suppliers. This helps you plan whom to pay and when. Paying too early depletes your cash, but paying late can cost you valuable discounts and can damage your credit. (Hint: If you know you will be late making a payment, call the creditor before the due date.)
Do your proposed vendors offer prompt payment discounts?
A payables aging looks like the following table.
Total Current 30 Days 60 Days 90 Days Over 90 Days
Accounts Payable Aging Management and OrganizationWho will manage the business on a day-to-day basis? What experience does that person bring to the business? What special or distinctive competencies? Is there a plan for continuation of the business if this person is lost or incapacitated?
If you’ll have more than 10 employees, create an organizational chart showing the management hierarchy and who is responsible for key functions.
Include position descriptions for key employees. If you are seeking loans or investors, include resumes of owners and key employees.
Professional and Advisory Support
List the following:
Board of directors
Management advisory board
Attorney
Accountant
Insurance agent
Banker
Consultant or consultants
Mentors and key advisors
Personal Financial StatementInclude personal financial statements for each owne
