• Advantage
• Capabilities
• Assets, people • Experience
• Financial reserves • Value proposition
• Price, value, quality
||• Disadvantages
• Gap in capabilities • Cash Flow
• Suppliers
• Experience
• Areas to improve
• Causes of lose sales
| | :- | :- | :- | :- | ***SWOT*** **OPPORTUNITIES THREATS** ||• Areas to improve • New segments
• Industry trends
• New products
• New innovations • Key partnership
||• Economy movement • Obstacles faced
• Competitor actions
• Political impacts
• Environmental effects • Loss of key staff
• Market demand
| | :- | :- | :- | :- | 9 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **5. OPERATING PLAN** Additionally, it is necessary to outline how the company currently and will continue to develop and maintain a loyal customer base. This section includes management responsibilities with dates and budgets and making sure results can be tracked. What are the envisioned phases for future growth and the capabilities that need to be in place to realize growth? The operating plan describes how the business works. Depending on the type of the business, important elements of this plan should include how the company will bring services to market and how it will support customers. It is the logistics, technology, and basic blocking and tackling of the business. Depending on the type of business, the following sections may or may not be necessary. Only include what is needed and remove everything else. Remember: try to keep the business plan as short as possible. Excessive detail in this section could easily make the plan too long. • **Order fulfillment:** Describe the company’s procedures for delivering services to its customers. As a service company, determine how to keep track of the customer base, form of communications, and how best to manage sales and data. • **Payment:** Describe the standard payment terms and the payment methods accepted. Describe the pricing plans (one-time service fees, hourly-based fees, markups, and any other fees) and any impact on cash flow. • **Technology:** If technology is critical to the business, whether it is part of the service offering or is fundamental to delivering a service, describe the key technologies used that are proprietary. If the business data (company or customer) is at risk, describe the data security plan in place, as well as any backup or recovery in the case of a disaster or outage. • **Key customers:** Identify any customers that are important to the success of the business due to a partnership, volume, or pathway to a new market. Also identify any customers who bring in more than 10% of the company’s revenues. • **Key employees and organization:** Describe unique skills or experiences that are required of the current team. If necessary, describe any proprietary recruiting or training processes in place. List key employees that are necessary for success. Include an organization chart to support this section. • **Facilities:** As a home-based business, be educated on legalities and tax filings for such business types. 10 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **6. MARKETING AND SALES PLAN** Promoting the business, whether through generating leads or traffic to a website or store, is one of the most important functions of any business. In this section of the plan, provide details of intended marketing of the business. Describe the key messages and channels used for generating leads and promoting the business. This section should also describe any sales strategy. Depending on the type of business, the following sections may or may not be necessary. Only include what is needed and remove everything else. • **Key messages:** Describe the key messages that will elevate services in the target customers’ eyes. If there is sample collateral or graphical images of some messages, include them. • **Marketing activities:** Which of the following promotion options provide the company the best chance of product recognition, qualified leads, store traffic, or appointments? o Media advertising (newspaper, magazine, television, radio) o Direct mail o Telephone solicitation o Seminars or business conferences o Joint advertising with other companies o Word of mouth or fixed signage o Digital marketing such as social media, email marketing, or SEO • **Sales strategy:** If needed, what will be the sales approach? Will there be full-time commissioned sales people, contract sales, or another approach? 11 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **7. FINANCIAL PLAN** Creating a financial plan is where all of the business planning comes together. Up to this point, the target market, target customers, and pricing have all been identified. These items, along with assumptions, will help estimate the company’s sales forecast. The other side of the business will be what expenses are expected. This is important on an ongoing basis to see when the business is profitable. It is also important to know what expenses will need to be funded before customer sales, or the cash they generate, is received. At a minimum, this section should include estimated start-up costs and projected profit and loss, along with a summary of the assumptions being made with these projections. Assumptions should include initial and ongoing sales, along with the timing of these inflows. • **Projected start-up costs:** The table below shows a sample of ongoing and one-time cost items that the business might need in order to open. Many businesses are paid on credit over time and do not have cash coming in immediately. It is necessary to make assumptions about how many months of recurring items, in addition to one-time expenses, to estimate when cash will begin to flow into the company. To begin with, the company will have to fund out of savings or an initial investment. There is a blank table in the Appendix to complete potential start-up cost projections. 12 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **START-UP COSTS** Your Home-Based Agency January 1, 20XX **COST ITEMS MONTHS COST/ MONTH ONE-TIME COST TOTAL COST** Advertising/Marketing 3 $300 $2,000 $2,900 Employee Salaries\* 4 $500 $2 $2,002 Employee Payroll Taxes and Benefits 4 $100 $1,500 $1,600 Rent/Lease Payments/Utilities 4 $750 $2,500 $5,500 Postage/Shipping 1 $25 $25 $50 Communication/Telephone 4 $70 $280 $560 Computer Equipment $0 $1,500 $1,500 Computer Software $0 $300 $300 Insurance $0 $60 $60 Interest Expense $0 $0 $0 Bank Service Charges $0 $0 $0 Supplies $0 $0 $0 Travel & Entertainment $0 $0 $0 Equipment $0 $2,500 $2,500 Furniture & Fixtures $0 $0 $0 Leasehold Improvements $0 $0 $0 Security Deposit(s) $0 $0 $0 Business Licenses/Permits/Fees $0 $5,000 $5,000 Professional Services - Legal, Accounting $0 $1,500 $1,500 Consultant(s) $0 $0 $0 Inventory $0 $0 $0 Cash-On-Hand (Working Capital) $0 $1,000 $1,000 Miscellaneous $0 $2,000 $2,000 **ESTIMATED START-UP BUDGET $26,472** \*Based on part-time employees. This may change once you hit your growth benchmark. 13 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **Projected profit and loss model:** The model below shows a sample of the projections a small business is forecasting for their first 12 months of operations. The top portion of the table shows projected sales and gross profit. This is a good place to begin creating the company’s sales forecast. The next section itemizes the recurring expenses the business is projecting for the same months. These should be consistent with the estimated start-up costs completed in the prior section. At the bottom of this model, it will possible to see when the company is becoming profitable and what expense items are the most impactful to its profitability. There is a blank table in the Appendix to complete the business’ own start-up cost projections. **START-UP COSTS** Your Home-Based Agency January 1, 20XX **REVENUE JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD** Estimated Sales $5,000 $13,000 $16,000 $7,000 $14,500 $16,400 $22,500 $23,125 $24,549 $22,000 $25,000 $27,349 $216,423 Less Sales Returns & Discounts $0 ($350) $0 ($206) ($234) $0 $0 ($280) ($1,200) ($1,600) $0 ($2,400) ($6,270) Service Revenue $0 $0 $0 $0 $0 $250 $350 $100 $0 $0 $1,245 $1,360 $3,305 Other Revenue $0 $0 $0 $0 $0 $0 $0 $1,500 $0 $0 $0 $0 $1,500 Net Sales $5,000 $12,650 $16,000 $6,794 $14,266 $16,650 $22,850 $24,445 $23,349 $20,400 $26,245 $26,309 $214,958 Cost of Goods Sold\* $2,000 $5,200 $6,400 $2,800 $5,800 $6,560 $9,000 $9,250 $9,820 $8,800 $10,000 $10,940 $86,569 Gross Profit $3,000 $7,450 $9,600 $3,994 $8,466 $10,090 $13,850 $15,195 $13,529 $11,600 $16,245 $15,369 $128,389 **EXPENSES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD** Salaries & Wages $2,500 $2,500 $3,500 $5,000 $5,000 $5,000 $8,000 $9,000 $9,000 $9,000 $9,000 $9,000 $76,500 Marketing/Advertising $400 $450 $450 $450 $900 $900 $900 $900 $900 $900 $1,200 $1,200 $9,550 Sales Commissions $250 $650 $800 $350 $725 $820 $1,125 $1,156 $1,227 $1,100 $1,250 $1,367 $10,821 Rent $1,250 $1,250 $1,250 $1,250 $1,250 $1,250 $1,125 $1,125 $1,125 $1,125 $1,125 $1,125 $15,000 Utilities $250 $150 $200 $200 $200 $250 $250 $250 $200 $200 $250 $250 $2,650 Website Expenses $175 $175 $175 $175 $175 $175 $175 $175 $175 $175 $225 $225 $2,200 Internet/Phone $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $110 $1,320 Insurance $165 $165 $165 $165 $165 $165 $165 $165 $165 $165 $165 $165 $1,980 Travel $100 $0 $0 $250 $0 $0 $0 $0 $675 $800 $0 $0 $1,825 Legal/Accounting $1,200 $0 $0 $450 $0 $500 $0 $0 $0 $0 $0 $250 $2,400 Office Supplies $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $125 $1,500 Interest Expense $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Total Expenses $6,525 $5,575 $6,775 $8,525 $8,650 $9,295 $12,100 $13,131 $13,827 $13,825 $13,575 $13,942 $125,746 Income Before Taxes ($3,525) $1,875 $2,825 ($4,531) ($184) $795 $1,750 $2,064 ($298) ($2,225) $2,670 $1,427 $2,643 Income Tax Expense ($529) $281 $424 ($680) ($28) $119 $263 $310 ($45) ($334) $401 $214 $396 **NET INCOME ($2,996) $1,594 $2,401 ($3,851) ($156) $676 $1,488 $1,754 ($253) ($1,891) $2,270 $1,213 $2,246** \*In the service industry, Cost of Goods Sold is the monetized value of the time spent on the client. 14 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **APPENDIX** **START-UP COSTS** Your Home-Based Agency January 1, 20XX **COST ITEMS MONTHS COST/ MONTH ONE-TIME COST TOTAL COST** Advertising/Marketing Employee Salaries Employee Payroll Taxes and Benefits Rent/Lease Payments/Utilities Postage/Shipping Communication/Telephone Computer Equipment Computer Software Insurance Interest Expense Bank Service Charges Supplies Travel & Entertainment Equipment Furniture & Fixtures Leasehold Improvements Security Deposit(s) Business Licenses/Permits/Fees Professional Services - Legal, Accounting Consultant(s) Inventory Cash-On-Hand (Working Capital) Miscellaneous **ESTIMATED START-UP BUDGET** 15 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **Instructions for Getting Started with Estimated Start-Up Costs** Determining a business' startup costs is critical to ensure enough cash is available to begin business operations within the budgeted time frame as well as within the cost budget. Startup costs typically fall within two categories: monthly costs and one-time costs. Monthly costs cover costs that occur each month during the startup period, and one-time costs are costs that will be incurred once during the startup period. **Steps for preparation:** • **Step 1:** Enter the company name and the date this estimate is being prepared. • **Step 2:** Enter the number of months and the monthly cost for each cost item that is recurring. For one-time costs only, skip the monthly costs. If there are cost items that have both recurring and one-time amounts, enter those as well. • **Step 3:** Once all of the costs are entered, review the individual items and total amount to see where the budget can be fine-tuned or move something out into the future when more revenue is coming in. 16 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **START-UP COSTS** Your Home-Based Agency January 1, 20XX **REVENUE JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD** Estimated Product Sales Less Sales Returns & Discounts Service Revenue Other Revenue **NET SALES** **COST OF GOODS SOLD** **GROSS PROFIT** **EXPENSES JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD** Salaries & Wages Marketing/Advertising Sales Commissions Rent Utilities Website Expenses Internet/Phone Insurance Travel Legal/Accounting Office Supplies Interest Expense Other 1 **TOTAL EXPENSES** **INCOME BEFORE TAXES** **INCOME TAX EXPENSE** **NET INCOME** \* In the service industry, Cost of Goods Sold is the monetized value of the time spent on the client. 17 **HOME BASED PROFESSIONAL SERVICES** *Business Plan* **Instructions for Getting Started on Profit & Loss Projections** Completing projections for Profit and Loss of a new company is a good exercise to understand and communicate when the company will begin to break even and see how sales and profits will grow. The top portion of the model to the left, Revenue, is a good way to forecast sales, month by month for the first year. The lower portion then applies estimated expenses for the same period of time to derive the business' profitability. **Steps for preparation:** • **Step 1:** Enter the company name and the date this projection is being prepared. • **Step 2:** For each month, beginning in January or whenever the start is estimated, enter the expected sales to be. This could be for a single service or multiple services. Add lines to this model for additional offerings. From this, subtract any product returns or discounts that are to be tracked (these should be shown as negative numbers, for example, -10). Below Net Sales, enter the Cost of Goods Sold. This refers to the monetized value of the time spent on a particular client. • **Step 3:** For each month, enter the estimated salaries, marketing, utilities, and other items that are projected. • **Step 4:** Once all of the costs have been entered, review the individual items and total amount to see where projections can be fine-tuned or move something out into the future when more revenue is coming in. The objective is to get to profitability and positive cash flow as quickly as possible. 18