Module 8 Entrepreneurship

NC-NET Employability Skills

Resource Toolkit
Module 8: Entrepreneurship
Overview ....................................................................................................................................................... 2
Presentation Materials ................................................................................................................................. 3
Teaching Resources..................................................................................................................................... 12
Activity: Business Plan (Part 1)—The Mission Statement ....................................................................... 13
Activity: Business Plan (Part 2)—Marketing Research............................................................................ 18
Activity: Business Plan (Part 3)—Products or Services ........................................................................... 20
Activity: Business Plan (Part 4)—Marketing and Sales ........................................................................... 22
Activity: Business Plan (Part 5)—Financial Projections........................................................................... 24
Activity: Business Plan (Wrap-Up) .......................................................................................................... 29
Activity: Networking ............................................................................................................................... 30
Activity: An Essential Guide to Starting Your Own Business ................................................................... 33
Activity: Advertising ................................................................................................................................ 34
Assessment Tools/Strategies ...................................................................................................................... 35
Rubrics for Instructor Assessment .......................................................................................................... 36
Rubrics for Self-Assessing Entrepreneurship Skills ................................................................................. 37
Rubric for Assessing Entrepreneurship Skills .......................................................................................... 40
Video and Weblinks .................................................................................................................................... 43
Video ....................................................................................................................................................... 43
Weblinks.................................................................................................................................................. 43
Additional Resources .................................................................................................................................. 44

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Overview
Entrepreneurship is the engine that drives a motivated and productive
workplace. We get our word “entrepreneur” from the thirteenth-
century French verb entreprendre, which means “to do something” or
“to undertake.” From the early use of the word in business circles, we
see that entrepreneurs are people who are willing to bear personal
financial risk to undertake a business venture. Sometimes the new
business succeeds—making a profit, growing, employing workers,
expanding to more than one location, and so forth. Other times the
business may thrive for a time and then shrink and die due to lack of
growth or motivation or leadership, or any number of possible
distresses. In our system of capitalism, such successes and failures help
to sort through the many ideas that spring forth from creative business minds to yield the vibrant,
thriving economy that has made our country great. Business ideas that are efficient and profitable will
flourish. But, just as important, ideas that use resources poorly and are intended only to enrich the
business owners—without considering public need or demand—are quickly extinguished.

The successful businesses we see today are of the former type. Every one of them began with an idea by
an individual—someone not altogether different from the students in your class. In the world of
electronics, for example, both Bill Gates and Steve Jobs were willing to risk everything to promote ideas
that obviously flourished, proven by the fact that we all have Microsoft and Apple products in our
workplaces, schools, homes, pockets, and purses. Similarly, Sam Walton developed innovative ideas in
product distribution warehouses and inventory management to create WalMart, the largest retail chain
in the world. Many more examples could be offered, but the point to make with students is that it all
starts with an idea and the courage to take whatever risks are necessary to bring the idea to fruition.
Some of your students may have what it takes to turn an idea into a real business venture. One of them
might even be the next Sam Walton.

In the activities that follow, students will discover factors that have contributed to the success of new
entrepreneurs, including the process of converting an idea into a plan (specifically, a “business plan”);
the importance of family, friends, and business associates in forming a network; and the need for
succinctly telling people about your business ideas, in other words, advertising.

In this module we have provided:

• Presentation materials organizing topics for discussion and introducing the activities
• Teaching resources consisting of activities to help students explore aspects of entrepreneurship
• Assessment tools and strategies consisting of rubrics that can be used as observation checklists
or for peer or self-evaluation
• Online resources for further exploration of the topic

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Presentation Materials
SLIDE TEACHER NOTES

• We usually think of entrepreneurs as

starting a business. Consider some of the
businesses represented by the logos (in
the background of this slide) that we all
recognize. Every single one of them had a
beginning! Yet, consider where they are
today!
2

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SLIDE TEACHER NOTES

• Click the link to go to the SBA website for
the Readiness Assessment. Each student
can do this on his or her own, or, for the
sake of this activity, you can simply
review the 25 questions (reproduced in
the following slides) for their educational
value and the whole class can formulate
4 “good answers” to the questions.

• Questions are from the Small Business

Administration’s SBA Readiness
Assessment Tool. An interactive version is
available at
https://eweb1.sba.gov/cams/training/bus
iness_primer/assessment.htm
• You can use the questions on this and the
5 following slides for class discussion. Ask
students: Why do you think this question
would be important for your
consideration before starting a new
business?

• Questions from SBA survey

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SLIDE TEACHER NOTES

• Questions from SBA survey

• Questions from SBA survey

• Questions from SBA survey

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SLIDE TEACHER NOTES

• Questions from SBA survey

10

• Questions from SBA survey

11

12

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SLIDE TEACHER NOTES

• Continuing on with the new business
idea, we will proceed to develop the
business plan. To that end, the class (or
student teams) should watch the short
video, “How to Write a Business Plan.”
http://www.youtube.com/watch?v=SMr_
uLZV-eM (2:27 min)
13 • Then the team should use the
Entrepreneurship module handout,
“Questions to Answer Before Drafting a
Business Plan,” as a starting point for
developing a business plan. Students
should write the answers to these
questions, as they will be used and
revised repeatedly in the module
activities that follow.
• As the students formulate a better
concept for a new business, the ideas
about their product, service, customers,
and competition will become clearer. In
the first module activity, encourage
students to have a robust discussion and
then conclude by trying to identify and
14 list concrete ideas on paper. The next
activity will ask student groups for much
more detail about these topics.

• This activity is different from the

preceding one in that much more detail
about the product or service is required.
If the business product is pizza, for
example, we need to know ingredients
for the pizza, sizes available, varieties,
pricing, inventory, number of employees
15 needed, and so forth.
• Similarly, considering the customer,
students now need to have an idea about
the number of customers to expect,
different types of customers, and
behavior at different seasons.

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SLIDE TEACHER NOTES

(Notes for Slide 15 continued)
• Finally, students need to create a detailed comparison with the competition. What other products or
services currently fill the niche in the market?
• As before, the enthusiasm of the teams’ discussions should be transcribed into written notes that will
be used to compose a business plan document. The more words written in this stage, the easier it will
be to produce that document.
• As noted in the activity guidelines, some teams may go so far as to actually develop a prototype
product. It would also be constructive to develop a sketch of a brochure or handout describing the
product or service, which could also be included in the final business plan.
• The four P’s are a helpful way to
remember these four facets of
developing a marketing and sales strategy
for the new business.
 Pricing. Think of clever ways to price
the product and make it more
appealing than the competition.
16
 Packaging. “By the box” or “by the
barrel”? “By the gallon” or “by the
pound”? Think of the big picture here,
for the sake of potential investors.
 Promotion. What marketing methods
are appropriate for your type of
product? Is a sign on the store front
adequate, or do you need flyers? Ads
in newspapers and magazines, or will
only online advertising bring customers
in?
 Place. The location and size of your
store is very important. Or maybe
there won’t be a store at all, but only
an Internet store-front or mail-order
catalog.

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SLIDE TEACHER NOTES

• In this portion of the activity, students
will need to understand some technical
terms [sole proprietorships, partnerships,
corporations, asset, liability, equity, cash
flow, income].The Entrepreneurship
module activity guidelines include links
on the SBA.gov website that provide
17 concise definitions for these terms.
• Since the teams are (most likely)
describing a fictitious business, they are
free to use any business structure they
like. Organizational structures are
described here:
https://www.sba.gov/business-
guide/launch/choose-business-structure

• Also on the SBA.gov website are sample spreadsheet templates that take into consideration the
financial aspects of the business plan, such as assets, liabilities, equity, and income.
• The SBA Business Plan tutorial, https://www.sba.gov/starting-business/write-your-business-plan,
covers many of the financial considerations.
• Having created the six main parts of the
business plan, students can now merge
them all into a coherent document.
• The executive summary is written last,
after the plan of the new business has
been drawn in detail. Students will likely
want to revise this paragraph or two to
18 reflect the changes that have evolved
through the course of the previous
activities.
• Ask student teams to present their
business plans to the class. Those
listening should analyze the plans as
though they were in the role of a loan
officer being asked to invest in this
business startup. What questions need to
be asked in order to feel confident that
this business is going to succeed and
repay the start-up loan?

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SLIDE TEACHER NOTES

• Mapping and managing the relations and
connections in a business environment
allows business owners to better
understand and capitalize on the business
landscape.

19

• This module activity asks students to

consider their network of friends and
family. Some will have very extensive
networks, others minimal (an indication
that they would likely struggle as an
entrepreneur).
• Students should view the list of life
20 scenarios (or others provided by the
instructor) and highlight the members of
their networks who would be involved.
• The last bullet is an incomplete question.
You can “fill in the blank” with just about
anything! But remember: You can’t start
a new business all alone! You will need
some help!
• This module activity is a twist on the
“elevator speech.” Students are asked to
prepare for a three-minute interview.
That’s a great exercise that requires them
to boil down the selling points of their
business to the essential facts.
• But then, at the last minute, just as they
21 are wrapping up their preparations,
spring on the class the fact that they will
really only have 30 seconds with the
reporter. Their pitch suddenly MUST be
made VERY concise: truly, the elevator
speech.

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SLIDE TEACHER NOTES

• This online course (presentation) will take
about an hour to complete.

22

• http://www.brainyquote.com/quotes/qu
otes/n/niklaszenn479716.html

23

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Teaching Resources
ACTIVITIES
The following activities can be completed in class to emphasize, teach, and practice entrepreneurship.
This subject is broader than most of the other modules in this series, so it will naturally require a bit
more time to infuse into an existing curriculum. For example, writing a business plan is an essential skill
for any business. It requires more than a few extra minutes to learn how to describe the many parts of a
new business idea and to assemble those into a draft document. Both the U.S. Small Business
Administration, http://sba.gov, and the North Carolina Community College System Small Business
Center Network, https://www.ncsbc.net/images/Biz_Plan_Start_Up_Guide.pdf, provide guidance on
this process.
This important entrepreneurial tool is covered in a set of connected activities, designed to be conducted
in sequence. The final fruit of this effort is a real business plan for a student-proposed business, tailored
to your subject areas/career pathway. A few additional subjects related to entrepreneurship (e.g.,
networking, advertising) are included as optional activities for students interested in starting their own
business.

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ACTIVITY: BUSINESS PLAN (PART 1)—THE MISSION STATEMENT

Instructor Preparation
Anyone considering starting a new business must address some basic requirements, usually presented
as a set of questions to be answered. Many versions of these questions exist, but the bottom line is: Are
you prepared to take the plunge? Simply making an effort to answer each thought-provoking question
will clarify the true challenges presented by entrepreneurship. In this activity, students will answer those
questions and begin the process of developing a business plan.
The U.S. Small Business Administration website (http://sba.gov) contains a wealth of resources,
including several designed to help students understand the importance of the business plan for a new
business. Watch the 2½-minute video entitled How to Write a Business Plan at
http://www.youtube.com/watch?v=SMr_uLZV-eM
and the online tutorial, How to Write a Business Plan at
https://www.sba.gov/tools/sba-learning-center/training/how-write-business-plan.
(Printouts of the slides and a transcription of the accompanying narration are provided under
“Additional Resources” at the end of this module.) The students will be watching parts of this tutorial as
they construct the different parts of their business plan.
Students should work in teams (2–4 students per team). It will be helpful for the team members to share a
common interest and for each member to have some experience or knowledge that they can apply to the
new small business venture that will be addressed in the sequence of activities that follow. For example,
 In the Automotive Technology career area, a student team develops a business plan for a new
auto-detailing shop. All the team members own a car and are familiar with auto detailing. One
of the team manages an auto-body repair shop during the summer months. Another just
finished detailing his own new car with a ground-effects package. And another did part-time
work for a car-wash firm that did detail cleaning for customers.
 In the Arts, A/V Technology, and Communications career area, a student team develops a
business plan for a new video conversion business—converting still photography and video to
digital. All of the team members have experience using video production software. One team
member runs a wedding videography business. Another recently converted his own family’s
home movies to digital. And another student ran the sound system at his church for several
years.
 In the Transportation, Distribution, and Logistics career area, a student
team has chosen to start a bicycle courier service operating in the
downtown business district. All of the students on the team are
members of the local cycling club and are eager to mix their passion for
cycling with a money-making business. Two of the students had
newspaper routes as youngsters. One worked in advertising sales at a

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local radio station, and another worked as a clerk in the county courthouse for the justice of the
peace. They plan to call their business Pedal Power.
This module includes several small activities that culminate in the creation of a business plan for a new
business of the team’s choosing. In this first activity, students will form their teams, select a new
business, answer questions to get things started, and try drafting the business mission and vision
statements. (They might even be willing to try to write the executive summary, although, as stated in
the SBA tutorial, this is normally the last thing written.) This activity will address the first two items in
the business plan video—the executive summary and the company overview.
Encourage students to go ahead and write something down to reflect the idea they have today for their
new business, knowing they can (and probably will) revise it later. Also reassure students that there will
likely be many unanswered questions in their predictions about their business. That’s partially explained
by the artificial nature of the activity, planning for a fictitious new business. If this were a real business
plan, those holes would be filled with real information. So at this point they can feel free to make up
realistic answers and change them as they proceed.

Objectives
Students will:
1. Select an idea for a new business and draft an executive summary.
2. Assess their readiness to begin their businesses.

Materials
• Folder (for collecting the results of the next several activities)
• Handout—Small Business Ideas
• Handout—Questions to Answer Before Drafting a Business Plan
• Computer with Internet access and projector for slides

Activity Guidelines
1. Identify student pairs or teams of three or four who share a common interest that will provide a
focus for a new business plan. (See examples given at the start of this activity.)
2. Each team should identify a new business idea that appeals to their skills and interests. If students
need help, they can consult the broad (but not exhaustive) list in the handout Small Business Ideas.
3. Show the video How to Write a Business Plan (https://www.youtube.com/watch?v=SMr_uLZV-eM) for
a high-level overview. The goal of the next several activities will be to complete the business plan for
their new business idea by following the six-part outline given in this video.
4. Using the chosen new business idea, each team should complete the handout Questions to Answer
Before Drafting a Business Plan. The answers to these questions will form the basis for the draft of
their first business plan. Most of the answers will be “educated guesses,” subject to change, but will

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help solidify a plan for the company vision and convey to students the type of thinking necessary to
plan a new business.
5. Optional: Complete the Small Business Readiness Assessment available at the sba.gov website
(https://eweb1.sba.gov/cams/training/business_primer/assessment.htm). This assessment tool
reinforces the Questions handout and also suggests the personality strengths required for jumping
into a new small business venture.
6. Introduce students to the tutorial at https://www.sba.gov/tools/sba-learning-center/training/how-
write-business-plan.
7. The students of each team should:
a. Agree on a name for the new business.
b. Draft a short paragraph that describes what the new business will do, whom it will serve, and
how it will make money.
c. Identify where the company will be located, who (and approximately how many) will work in the
company, and the key people who will own and manage the company. These facts will play a
large role in the organization of the company, to be addressed in a later activity.
d. If the team has sufficient enthusiasm, they should draft an executive summary using the above
information (knowing that it will likely change).
e. Start a file folder to hold the developments for the new business plan, including these first pages
of work.

Group Reflection Questions

Give each group 5 minutes to present their business idea and executive summary to the class. Some may
even have selected a name for their new business. Engage students in a discussion centered around the
following questions:
 Which of the proposed businesses is most likely to succeed? Why?
 On which of the businesses would you like to collaborate as a class? (If the instructor plans to
engage the class in a capstone business development activity, the class will need to identify at
least one favorite new business idea coming from this activity that will require the combined
efforts of the whole class rather than a small team.)

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Handout—Small Business Ideas

Air Duct Cleaning Gardening Personal Chef

Antique Furniture Sales Genealogist Personal Concierge
Appliance Repair Gift Wrapping Service Personal Training
Aquarium Maintenance Grant Writing Pest Control Professional
Art and Printing Services Green Consultant Pet Couture Designer/Selling
Automobile Detailing Gutter Cleaning Pet Farewell Services
Bakery Hair Salon Pet Grooming
Basement Remodeling Handmade Crafter Pet Sitting Service
Beauty Consultant Handyman Photo Restoration Service
Bike Store Hauling Services Photography
Blog Designing Holiday Decorator Pizza Parlor
Bookkeeping Home Decorator Pool Cleaning and Maintenance
Business Consultant Home Renovations Private Tutor
Candle Making Home Theater Designing Professional Organizing
Candy Making Home Weatherization Project Management
Car Wash Service Hot Lunch Delivery Proofreading
Carpenter House Painting Public Relations Agency
Catering Services Ice Cream Shop Business Residential Cleaning
Childproofing Expert Identity Theft Protection Resume Writing
Cleaning Services Image Consultant Sales Consultant
Cloth Diaper Service Ink Cartridge Refilling Scooter Sales and Repair
Clothing Design Interior Designing Scrapbooking
Composting Internet Researching Senior Care Provider
Computer Repair/Maintenance IT Security Consulting Senior Transportation Services
Computer Training Jewelry Making SEO Consultant
Construction Cleanup Laundry Service Sewing and Alteration Services
Courier Service Lawn & Garden Irrigation Snow and Ice Removal Service
Customer Service Professional Lawn Care Services Soap Making
Data Entry Service Life Coach Social Media Consultant
Daycare Locksmith Speech Writing
Delivery Services Marketing Copywriter Tax Accountant
Desktop Publishing Martial Arts Training Translation Service Provider
Direct Mail Marketing Service Massage Therapist Tree Farming
Disaster Planning/Prevention Medical Transcriptionist Used Books
Dog Training Mobile Apps Development Used Car Sales
Dog Waste Remover Mobile Phone Repair Video Production/Dubbing
Doula (labor coach) Motivational Speaking Virtual Assistant
eBay Seller Nutritionist Virtual Call Center
Energy Conservation Consultant Online Mortgage Brokers Voice-Over Professional
Event Planning/Consulting Organic Foods Website Designer
Fitness Center Organic Hair Care Products Wedding Consultant/Planning
Florist Organic Lawn Care Provider Yoga Instructor
Freelance Writer Party Planning
Furniture Moving Patient Advocacy

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Handout—Questions to Answer Before Drafting a Business Plan

Synthesized from sba.gov and other sources

Answer these crucial questions before starting a new business:

1. How would I describe the business...in one paragraph (your elevator speech)?
2. What products or services will my business provide?
3. Who is my competition? How will my business/product/service be different/better?
4. Who and about how many will be my customers?
5. What will it take to attract new customers and promote the business?
6. Where will/should my business be located?
7. How many employees and managers will my business need?
8. What types of supplies and suppliers do I need?
9. How long will it take for my products or services to be available?
10. What will be the legal structure of my business initially? In 3 years?
11. What will be my approximate operating costs in Year 1, Year 2, Year 3?
12. What other expenses will my business have (taxes, insurance, advertising, rent, etc.)?
13. What is my potential profit per year for Year 1, Year 2, and Year 3?
14. How will profits be handled? How will losses be covered?
15. How can the business grow in the future?
16. What advice will the new business need and who can provide it?
17. How much money will the business need to get started, until making a profit?
18. From where/whom will the startup funds come?

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ACTIVITY: BUSINESS PLAN (PART 2)—MARKETING RESEARCH

Instructor Preparation
In this activity, each team will continue work on the business plan,
agreeing on a preliminary description of the product or service to be
provided (the next activity will address this in more detail) and describing
the market for the product or service. The work here should also
demonstrate an awareness of the competition and any obvious legal
requirements that will impact the business planning and operation. As
stated in the video (How to Write a Business Plan,
http://www.youtube.com/watch?v=SMr_uLZV-eM), this part of the business plan shows that the new
business owners have done their homework.

Objectives
Students will:
1. Briefly describe the product or service for the new business.
2. List the features of the market (customers) for the new business’s product or service.
3. Identify other existing or planned businesses that will compete with the new business.
4. Identify any obvious legal requirements that will limit or control the new business’s activities.

Materials
• Paper or computer with word processing software
• Folder (continued from previous activities)
• Computer with Internet access and projector for slides

Activity Guidelines
Each team will:
1. Draft a brief description of the product or service of the new business to enable the discussion to
move forward. This is a very preliminary description—subject to change. Don’t spend a lot of time
here on the product details.
2. Identify the characteristics that define the typical customers for the business’s products or services.
Approximately how many customers can be expected over a given time period (e.g., per year)?
3. How can these customers effectively be reached (e.g., website, email, mail, radio, television, or
billboards)? Describe the general marketing strategies here, not details. (Details will come later.)
4. Are there any existing (or planned) businesses that will be competing for the attention of these
potential customers?

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5. Are there legal requirements under which this new business must operate? Make a general list of
those that are known at this point. (Specific details are not necessary for this activity.)
6. Add the notes from this activity to the new business information folder.

Group Reflection Questions

Discuss the following questions with the class. The realistic answers to these questions will determine
how profitable the company can expect to be in the coming months and years.
 What is the approximate size of your customer base?
 How broad (geographically) is your customer base?
 Will you be able to reach/serve customers in another city? Out of state? Out of the country?
 Will these customers be motivated to return for more business, or is it likely a once-in-a-lifetime
encounter? The realistic answers to these questions will determine how profitable the company
can expect to be in the coming months and years.
 After comparing marketing ideas around the room, do you have ideas for updating your
marketing plan?

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ACTIVITY: BUSINESS PLAN (PART 3)—PRODUCTS OR SERVICES

Instructor Preparation
In this activity, students will describe in greater detail the products or
services to be provided by the new business, which will have a strong
bearing on the proposed costs to be addressed in the next activity.
Perhaps a quick prototype or model would be helpful to facilitate the
discussion. (Don’t let the creation of a prototype steal an inordinate
amount of time, however.)
As students develop the product or service description, they will
naturally need to consider the customers’ needs. This is a good place to describe the customers who
must want the product or service for the business to be successful. And since they must want it more
than the competition, the plan should demonstrate an awareness of the competition. Who are the
competitors? How many are there? How are they positioned in the market? How much does their
product cost? Student groups need to think about how the customer will know how their product
compares with the competition’s product or service. To answer that, some documentation is necessary,
such as a brochure, a webpage, or other advertisements.

Objectives
Students will:
1. Write a detailed description of the product or service on which the new business is based.
2. Identify the customers who will have an interest in the new product or service.
3. Compare the new business’s product or service with that of the competition.
4. Create a brochure or webpage that gives relevant details about the new business’s product or
service.

Materials
• Computer with word processing, presentation, web publishing, and/or video editing software
(Activity can be completed on paper, if computer is unavailable.)
• Folder (continued from previous activities)

Activity Guidelines
Ask student teams to:
1. Write a detailed description (or perhaps develop a prototype or model) of the product or service to
be sold by the new business. Include drawings, photographs, or even video. For service-oriented
businesses, develop a simple brochure or flyer that describes the service being offered.
2. Identify the characteristics that define the typical customers for the business’s product or service.
Describe how customers will benefit from the product or service being offered.

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3. Prepare to address the following questions in the marketing piece. How does the product or service
compare to the competition? Is it “as good as” or “better”? More or less costly? More or less
accessible? Of better quality? Compare as many attributes as is reasonable, as the answers to these
questions will inform the marketing strategy.
4. What is it that this business offers? Develop a brochure, webpage, magazine advertisement, or
video that communicates to the prospective customer exactly what it is that this business has to
offer. Does the business product or service exist now, or must it be designed and perfected before
being sold? If the latter, work with the team to decide what sort of timeframe is required. (Realize
that any investors or financing agents will want to know this!)

Group Reflection Questions

Allow the class to display their work, then ask them to discuss the following:
 Comparing your team’s work with that of other teams, do any of their product or service ideas
make you want to return and revise your proposed description?

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ACTIVITY: BUSINESS PLAN (PART 4)—MARKETING AND SALES

Instructor Preparation
Equipped with a much clearer understanding of the product or
service, students are now ready to think about how the new business
will successfully deliver the product or service to the customer. The
first step is settling on a pricing strategy and packaging method for the
product or service. (Customers need to view the product as being a
good value for the amount paid.) Next, the customer must be made
aware of the product or service and realize that they need or want the
product or service. Finally, the marketing and sales plan should show how the product or service will be
made available to the customer (e.g., via a traditional brick-and-mortar store, door-to-door sales, mail-
order catalog, or online storefront).

Objectives
Students will:
1. Develop a strategy for promoting the new business’s product or service.
2. Develop a strategy for offering and delivering the new business’s product or service to the
customer.
3. Develop a competitive pricing strategy for the new business’s product or service.

Materials
• Computer with word processing software and Internet (optional)
• Folder (continued from previous activities)
• Optional: Projector for slides

Activity Guidelines
In this activity students will consider the four P’s of marketing for the new business:
a. Pricing: How will the product or service be priced, including any discount programs?
b. Packaging: How will the product or service be sold or bundled so that customers will want it?
c. Promotion: How will the product or service be advertised or promoted?
d. Place: How will the product or service be made available or delivered to the customer?
Ask student teams to do the following:
1. Develop a strategy for pricing the new business’s product or service. Consider and compare several
pricing methods (e.g., bulk discounts, early-bird specials, and so forth) and even innovative schemes
that might start a clever marketing trend. Decide which ones are applicable to your product or service,
which are efficient and manageable, and which would yield a profit. Tailor price differences to attract
customer business, but avoid hard-to-defend disparities among models, brands, styles, etc.

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2. Closely related to pricing, develop a strategy for packaging the new business’s product or service.
Consider both standard, well-understood methods (e.g., “by the dozen”) as well as other clever
bundling ideas (e.g., “buy eleven, get the twelfth one free”). Will this product be sold in bulk (e.g., a
pound of customer-selected and weighed tomatoes in a grocery store) or packaged (e.g., a shrink-
wrapped carton of four tomatoes)? Will this service be sold as a one-time job or an annual contract?
3. Develop a strategy for promoting the new business’s product or service. Compare several marketing
methods, decide which ones are applicable to this product or service, which are affordable, and
which would likely be effective. Ignore short-lived, clever promotional gimmicks. Instead,
concentrate on just the big picture for the sake of potential investors. It might be helpful to
construct a timeline indicating the implementation of different promotion methods now and in the
future.
4. Develop a strategy for placing (delivering) the new business’s product or service. Consider and
compare several delivery and sales methods, deciding which ones are applicable to this product or
service, which are affordable, and which would be most efficient. Consider all the options: a
traditional brick-and-mortar store, door-to-door sales, mail-order catalog, or online storefront. It
may be helpful to consider a timeline, perhaps starting with one method, and growing and
expanding to include more methods at a later date.
5. Add the notes from this activity to the new business information folder.
6. Optional: Visit the NCCCS Small Business Center Network’s instructional page on conducting market
research, https://www.ncsbc.net/DocumentMaster.aspx?doc=1011.

Group Reflection Questions

Allow the teams to present their completed “four P’s”plans, then ask them to discuss the following:
 Compare your team’s plan with that of other teams. Which of their pricing, packaging,
promotion, and placement strategies would also work for your product or service?
Note: This activity is the one most students immediately associate with the business planning, as it deals
with all the tangibles: the product, the advertisements, the customer, and the profits. But students will
gradually grow to appreciate the necessity of the other details, too, especially when they consider the
final activity in this series, where the need for financial backing demands meticulous financial planning.

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ACTIVITY: BUSINESS PLAN (PART 5)—FINANCIAL PROJECTIONS

Instructor Preparation
In this activity, students will consider the various accounting documents
that must be included in a solid business plan. These will be explored in a
superficial way since an in-depth treatment is beyond the scope of this
short activity. The SBA tutorial covers these with sufficient detail for our
purposes.
A critical decision impacting the financial projection of the company is
the organizational and management structure for the new business. The structure answers the
questions:
 Who’s in charge?
 How will the business make money?
 Is the business organized as a sole proprietorship, limited partnership, or corporation?
Students will likely need some introduction to these terms, and that can be found at the sba.gov website
and the tutorials available there.
The business plan must ultimately convince investors how the new business will meet its financial
obligations from month to month and maintain a healthy balance sheet and cash flow. The SBA website
has some powerful templates for use by real businesses to achieve this goal, but use of those tools is
beyond the scope of this activity. For this activity, students should appreciate that the new business will
have to follow accepted accounting standards and documentation.

Objectives
Students will:
1. Learn the major features of sole proprietorships, partnerships, and corporations and propose
the best structure for their new business.
2. Determine the management personnel for the new business.
3. Learn business vocabulary: asset, liability, equity.
4. Develop a general cash flow model for the new business.

Materials
• Templates available at the SBA website or handouts included here
• Folder (continued from previous activities)
• Optional: Computer with Internet access and projector for slides

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Activity Guidelines
Students should complete the following activities.
1. Read the six articles on the SBA website that describe the various organizational structures available
to the new business, see https://www.sba.gov/business-guide/launch/choose-business-structure.
Create a table in a new document that summarizes and compares the advantages and disadvantages of
each structure. (Hint: Copy/paste the items presented in each of the articles on the SBA website.)
2. Select one of the six organizational types for your team’s business and defend how the features of this
choice will align with the new business.
3. Decide who will manage the business and how it will be managed. Include a short biographical sketch
of relevant facts for the major players.
4. Consider the spreadsheet templates provided at the SBA website (and shown in the handouts below).
Together, they effectively describe the financial picture of the business: its existing assets, liabilities, and
equity, as well as its typical cash flow.
a. The assets should include current assets (cash, accounts receivable, inventory, notes receivable),
fixed assets (land, buildings, machinery and equipment, furniture, and improvements to leased
property), intangibles (research and development rights, patents and copyrights, market research
information, goodwill, and existing organization), and other assets (e.g., miscellaneous accounts,
deposits, and notes).
b. The liabilities—financial obligations such as loans, accounts payable, mortgages, deferred
revenues and accrued expenses, both current (payable in less than 12 months) and non-current
(more than 12 months), and possibly contingent liabilities (e.g., warranties, lawsuits).
c. The equity or net worth is the difference between the assets and the liabilities. This will represent
the owner’s share in the financing of all the assets.
d. An income statement shows the profits (e.g., earnings) and losses (e.g., expenses) experienced
over a period of time.
5. A new business must be registered with the state, and probably with the city and county taxing
entities. A tax identification number is needed if selling a product or service. For the purposes of this
activity, you will not actually do those things, but realize that those activities would be required for a
real business startup.
6. Add the accumulated notes and artwork from this activity to the new business information folder.
As noted earlier, it is beyond the scope of this brief activity to fully develop an understanding of the
financial picture necessary to plan a new business. However, the SBA tutorials and the handouts
provided can convey the breadth and depth of content that is involved.

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Handout
Template: Income Statement

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Template: Balance Sheet

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Template: Cash Flow

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ACTIVITY: BUSINESS PLAN (WRAP-UP)

Instructor Preparation
Now it’s time to collect all the pieces, modify the executive summary if necessary (since it’s quite likely
that the big picture has changed), and assemble the whole package. There may be some additional
details that can be placed in the appendix. Also note that there are several sample business plans
available at the SBA website.

Objectives
Students will:
Assemble the business plan for the new business from the several pieces developed earlier.

Materials
• Folder containing previous activities’ completed work
• Optional: Computer with Internet access and projector for slides

Activity Guidelines
Before asking student teams to assemble all of the pieces of the business
plan developed over the preceding several activities, ask them to complete
the following tasks.
1. Revise the draft executive summary to incorporate any changes that
have been made during preceding activities.
2. Include any attachments and details that will assist the reader in understanding the business plan,
such as brochures, list of equipment and other property of the business, photos and graphics
showing the business location, important business agreements and contracts, and so forth.
3. Assemble the parts of the business plan that have been accumulated in the team’s folder. Develop a
table of contents page to be inserted at the front.
4. Using your executive summary as a guide, present the new business idea to the class in a 3-minute
presentation.

Group Reflection Questions

Ask students to present their business plan to the class. As they do so, have the class consider the
following questions:
 If you were the bank’s business loan officer, what additional questions would you need
answered before feeling confident enough to invest in this new business?

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ACTIVITY: NETWORKING
Instructor Preparation
A critical component of any business is the array of connections to key personnel with influence.
Mapping and managing the relations and connections in a business environment allows business owners
to better understand and capitalize on the business landscape. For example, through relationships with
others (“contacts”), an owner may be able to reach those who know prospective decision-makers. As a
business grows, the network of relations can grow as well. A map of the key influencers will provide
students with a graphic illustrating the connections between members of their network.
In this activity, students will map out the relations for a more familiar group—their own network of
family and friends. Then, choosing one or more topic areas, they will use the map to propose different
ways to find answers to problems.

Objectives
Students will:
1. Create a relationship map for one’s own network of family, friends, acquaintances, and co-
workers.
2. Apply the network map to solving a typical problem.

Materials
• Handout—My Network
• Optional: Computer with Internet access

Activity Guidelines
1. Distribute the handout My Network to students as a starting point for mapping their own network of
friends, family, coworkers, fellow students, and others.
2. Students should make a list of family members, friends, and acquaintances (including co-workers
and fellow students), and place them on their new drawings patterned after the handout My
Network.
3. Ask students to consider how the members of the network might know each other. If they do, have
students show their connections, possibly with a different color.
4. Students should next choose one of the following scenarios (or others provided by the instructor)
and highlight the members of the network who would be involved. Imagine that one of your family
members is the focus of the effort.

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• Joining a little league baseball team • Recovering from major storm damage
• Fighting traffic • Accepting teaching role at church or club
• Adding on a room to your home • Graduating from college
• A wedding in your family • Winning a big prize in the lottery
• Planning a big vacation • Being awarded a full university scholarship
(e.g., a cruise or overseas trip)
• Buying a new car
• Drafting a last will and testament
• Having a major surgery (e.g.,
appendicitis)

Facilitate a discussion among students as they share their network maps with others in the class,
especially with others who chose the same scenario.

Group Reflection Questions

 What relationships seem most important for the chosen scenario?
 What relationships might turn out to be surprisingly helpful?
 How many distant relationships actually are likely to be intertwined? How could you facilitate
such intertwining and use that to your advantage?
 How many students in the class network electronically, via Facebook or LinkedIn? How might
this lead to business development and growth?

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Handout—My Network

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ACTIVITY: AN ESSENTIAL GUIDE TO STARTING YOUR OWN BUSINESS

Instructor Preparation
A free online course is available from the SBA.gov website:
http://www.sba.gov/sba-learning-center/training/364041
Students will need to register and then devote almost an hour to completing the self-paced course.
(Screen captures and a transcript of the narration are provided at the end of this module.)

Objectives
Students will:
Complete the online course: An Essential Guide to Starting Your Own Business

Materials
• Computer with Internet access

Activity Guidelines
If time does not permit students to complete the activities in this module, this self-paced course can be
used outside of class instead. Students should:
1. Sign up and complete the online course.
2. Download and print the certificate of completion provided at the end of the course.

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ACTIVITY: ADVERTISING
Instructor Preparation
Now that students have conceptualized their new business, how can they attract customers? In this
quick activity, students must prepare for a 3-minute interview with a local television reporter. After the
students have composed their thoughts, the reporter will inform them that they really only have
30 seconds. In effect, they will have to create an “elevator speech.”
After the recordings are completed, show them to the whole class. You can have everyone vote on the
best spot and give an award to the winner.

Objectives
Students will:
Create an informative explanation and sales pitch (30 seconds) for their new business venture.

Materials
• Optional: A video camera, smartphone, or tablet (preferably mountable on a stand) for
capturing video of a news-reporter interview

Activity Guidelines
1. Assign student teams the task of preparing for a 3-minute interview by a television news crew
who will be arriving in 30 minutes.
2. After about 30 minutes of work by the teams, spring the news on everyone that you just got a
call from the news team that there’s been a change of plan: each interview spot must be
trimmed down to 30 seconds! Each team should respond to a prompt like, “Tell our viewers
about your new business.”
3. If possible, invite a pair of students from the school’s audio-visual department to record each
team’s 30-second interview.

Group Reflection Questions

Engage the students in a discussion of how difficult—yet productive—it was to boil down the company
description and sales pitch to a 30-second elevator speech. Were all the teams able to do it? Was
everyone able to describe their business and their product (or service) and extend an invitation to the
public during the allotted 30 seconds?

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Assessment Tools/Strategies
This section includes specific strategies and instruments for assessing students’ knowledge, skills, and
attitudes in regard to entrepreneurship.

RUBRICS
Rubrics are valuable assessment tools. Students should be provided with the rubric by which they will be
assessed before an activity begins so they will understand the performance expectations. When time
permits, students can contribute to the rubrics by brainstorming with the instructor about what a
quality behavior or product looks like. For example, before assigning a team project to research a topic
and prepare a group presentation, ask students to describe how the ideal team would handle the
assignment, how they would assign roles, divide the work, create and make the presentation. Prompt
students with specific components. Then have them describe a poor performance. These will be the
descriptions of the characteristics for the highest and lowest ends of the Likert scale for each
performance criteria. Instructors should add any required attributes to the rubric if the students do not
come up with them on their own. Several entrepreneurship evaluation rubrics have been provided as
examples.
• The first rubric for instructor assessment lists desired observable attributes of entrepreneurship
and includes blanks where the instructor can adapt the rubric for a specific activity, project or
career field by inserting additional criteria. These first rubrics were intended to be used by the
instructor or other observer assessing each student.
• The second entrepreneurship rubric is a self-rating rubric intended for use by the students
themselves. The students indicate the degree to which they think they are performing each
attribute. They can periodically return to the rubric to reassess and determine whether they are
improving those skills.
• The final rubric is the most complex. The student completes a rubric by providing examples of
satisfactory or exemplary performance of the tasks/behaviors listed. Then the student meets
with the instructor or peer observer and compares his/her reflections with their instructor’s or
peers’ observations and formulates an action plan for improving attitudes, behaviors or skills.
This type of rubric most resembles the type of assessment an employee might receive on the
job. It is also the most time-consuming. Ideally, this rubric would be used at least three times
during a course:
• At the beginning of the course, to get a baseline and to give students suggestions for specific
actions they might take to improve their performance,
• At the midpoint of the course, to check progress and refine the recommendations for
improvement, and
• At the end of the course, to assess the progress made over the duration of the course.
Additional suggestions can be made for students’ continued growth beyond the end of the
course.

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RUBRICS FOR INSTRUCTOR ASSESSMENT

Outcomes from Entrepreneurship: In completing this module, students are expected to appreciate the
process, requirements, and value of starting a new business. To that end, the activities walk them
through the typical process of developing a business plan—the first step in starting a new business.
Additionally, the importance and power of networking is explored, as well as the ability to distill an
informative business description down to a very brief presentation.
Relevant to a new business idea selected by the student, the student is able to:

Select a new business idea as part of a team effort. 1 2 3 4 5

Complete an executive summary for the new business, as part of a business plan. 1 2 3 4 5
Complete a description of the product or service of the new business. 1 2 3 4 5
Describe the market features (i.e., customers) for the product or service of the
1 2 3 4 5
business.
Describe the current market competition for the product or service of the business. 1 2 3 4 5
Identify the prominent legal requirements for the product or service of the business. 1 2 3 4 5
Create a brochure or web page to provide an informative advertisement for the
1 2 3 4 5
product or service of the business.
Develop a strategy for promoting the product or service of the business. 1 2 3 4 5
Develop a strategy for delivering to the customer the product or service of the
1 2 3 4 5
business.
Develop a pricing strategy for the product or service of the business. 1 2 3 4 5
Identify and defend the choice of structure (i.e., sole proprietorship, partnership, or
1 2 3 4 5
corporation) for the new business.
Describe the general cash flow expected for the new business. 1 2 3 4 5
Assemble a complete business plan for the new business. 1 2 3 4 5
Deliver an informative explanation for the new business that lasts 30 seconds or less. 1 2 3 4 5
Create a relationship map that illustrates the network of family, friends, and
1 2 3 4 5
acquaintances.

5 Always Excellent
4 Most of the Time Good
3 Sometimes Adequate
2 Occasionally Fair
1 Never Poor or None

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RUBRICS FOR SELF-ASSESSING ENTREPRENEURSHIP SKILLS

Use a copy of this instrument throughout the course to self-monitor your entrepreneurship skills. Note:
It is fairly common to overrate your skills during the initial assessment. You may rate yourself a bit lower
as you get feedback from others and discover the complexities of each attribute. By the end of the
course you should see improvements in your ratings if you focus on improving the quality of your work
and depth of understanding in addition to getting the assigned work completed.
Objective: In the process of developing the idea for a new business, your understanding and confidence
about the business will evolve and strengthen. This evolution will occur as a result of research and the
help and advice of others.
Essential Attribute I II III IV
I am able to improve the focus of my Seldom Sometimes Usually Consistently
new business idea, based on research.

I am willing to modify my ideas, based Seldom Sometimes Usually Consistently

on the input of superiors (supervisors,
instructors).
I am willing to modify my ideas, based Seldom Occasionally Often Consistently
on the input of colleagues (coworkers,
fellow students).
I am willing to share the workload of Seldom Sometimes Usually Consistently
organizing and running a new business
with others.
I am willing to share the profits and Seldom Sometimes Usually Consistently
benefits of a new business with others.

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Objective: An entrepreneur must invest a great deal of their own time and resources, and take some risk
with their own possessions, popularity, and so forth.

Essential Attribute I II III IV

I devote sufficient time to finish an Seldom Sometimes Usually Consistently
assignment, even if it means sacrificing
my own leisure time.
I contribute my resources (time, Seldom Sometimes Usually Consistently
money, materials, etc.) to complete an
assignment.
I offer my ideas during brainstorming Seldom Sometimes Usually Consistently
sessions.

I describe and defend my new business Seldom Sometimes Usually Consistently

idea when given an opportunity, such
as an advertisement or interview.
Seldom Sometimes Usually Consistently

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Objective: An entrepreneur must create a business plan, with all the required parts, to have a
reasonable chance of obtaining the required support needed for a successful venture.

Essential Attribute I II III IV

I am not intimidated by the task of Seldom Sometimes Usually Consistently
completing long or difficult
assignments.
I chart or check-off my progress in Seldom Sometimes Usually Consistently
completing long and difficult
assignments.
I am willing to perform the research Seldom Sometimes Usually Consistently
necessary to complete a difficult
assignment.
I learn, research, compose, and Seldom Sometimes Usually Consistently
assemble the parts of a plan for my new
business.
Seldom Sometimes Usually Consistently

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RUBRIC FOR ASSESSING ENTREPRENEURSHIP SKILLS

Outcome: An entrepreneur must be sensitive to the customer and the market, listening to and
responding to feedback and critique.

Performance Criteria

Reflection Personal Plan

Reflect on your actions during class or at a workplace and identify Based on your examples and the
examples of when you: feedback of your peers or
instructor, describe the steps you
might take to continue or improve
in this area.
Listen to your fellow Example: Steps:
students, and respond in a
Peer /instructor review:
positive way.

Use the Internet to find an Example: Steps:

answer to a question.
Peer /instructor review:

Make a change of my Example: Steps:

plans as a result of
Peer /instructor review:
research finding or advice.

Example: Steps:
Peer /instructor review:

Peer comments and suggestions:

Instructor comments:

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Outcome: A successful entrepreneur must be realistic in assessing situations, making wise decisions that
reflect reality, not wishful thinking.
Performance Criteria

Reflection Personal Plan

Reflect on your actions during class or at a workplace and identify Based on your examples and the
examples of when you: feedback of your peers or
instructor, describe the steps you
might take to continue or improve
in this area.
Make a realistic cost/sales Example: Steps:
prediction for your new
Peer /instructor review:
business.

Limit yourself or your Example: Steps:

business in the interest of
Peer /instructor review:
achieving a higher goal,
rather than immediate
profit.

Avoid decisions that incur Example: Steps:

excessive risk to the
Peer /instructor review:
business or personnel.

Consider the investor’s Example: Steps:

position when making far-
Peer /instructor review:
reaching decisions about
the business (e.g., product
addition or alteration).

Example: Steps:
Peer /instructor review:

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Peer comments and suggestions:

Instructor comments:

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Video and Weblinks

VIDEO
http://www.youtube.com/watch?v=SMr_uLZV-eM
Instructions on writing a business plan, from the U.S. Small Business Administration.

WEBLINKS
https://www.ncsbc.net/
The North Carolina Community College System Small Business Center Network offers a wide range of
services and resources designed to encourage entrepreneurs to be involved in their local communities.
http://www.entre-ed.org/
Consortium for Entrepreneurship Education, a webpage for teachers, instructors, youth leaders,
program developers and others who help students of all ages find their own entrepreneurial
opportunities. Includes National Content Standards for Entrepreneurship Education and supporting
summaries, presentations, examples, and other resources.
http://www.sba.gov/community/blogs/guest-blogs/industry-word/business-planning-online-tutorials
A collection of short online video tutorials produced by Tim Berry, Founder and Chairman of Palo Alto
Software covering topics related to the business plan. All the videos total a little over an hour.
http://www.sba.gov/sba-learning-center/training/364041
A free online course: An Essential Guide to Starting Your Own Business (approximately 45 minutes)
http://www.bplans.com/samples/sba.cfm
Hundreds of sample business plans.

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Additional Resources
1. Screen captures from SBA.gov tutorial How to Write a Business Plan
(https://www.sba.gov/tools/sba-learning-center/training/how-write-business-plan)

How to Write a Business Plan

1 Course Introduction
1.1 Course Purpose
Welcome to the How to Write a Business Plan
course.
Produced by the SBA’s Office of
Entrepreneurship Education, the How to
Write a Business Plan course expands on
topics relevant to those individuals who are
planning to write a business plan.
The How to Write a Business Plan comprises
two topics.
The course begins and sets the tone by
defining a business plan as well as
appropriate audiences and its importance to
business success.
The course continues by explaining in detail the contents of each section within a business plan.
We recommend completing the Course Introduction and Topic 1: What Is a Business Plan? before
proceeding to other topics.
Click the Next button below to get started. Use this button to navigate through the course or to go
directly to a specific topic. Select the desired topic from the menu to the right.

1.2 Course Logistics

How to Write a Business Plan is a self-paced
45-minute training course that offers practical
training with real life examples and helpful
tips for writing a business plan.
You will find the course easy to follow and the
subject matter indexed for quick reference
and easy access. Accessibility enhancements
such as keyboard shortcuts, image tags, and
transcripts are available for the content as
well as the course. The course also includes
audio narration, so adjust your speakers
accordingly.

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When you complete the course, you will have the option of printing a certificate of completion from
the SBA.
Resources available throughout the course provide reference materials to apply what you have learned
to your personal business situation and engage you in the process of writing a business plan.
At the conclusion of the course, access the downloadable checklist that outlines the business plan
sections covered in the course.
Finally, the ACT NOW! screen provides additional references (Article, Course, and Tool) specifically
related to writing a business plan.
Note that additional time will be needed to review these materials.

1.3 Course Objectives

By the end of this course, you should be able
to apply planning principles and design
practices when writing a business plan.
To accomplish this objective, you will, one,
define a business plan and, two, explain the
components of a business plan.

2 Topic 1: What Is a Business Plan?

2.1 Topic 1 Objective
By the end of this topic, you should be able to
define a business plan. To meet the objective,
this topic will cover the following discussion
points:
• Planning = Success
• Blueprint for Business
• Audience Consideration
• “One Size Does Not Fit All” Video

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2.2 Planning = Success

“By failing to prepare, you are preparing to
fail.” – Benjamin Franklin.
Imagine you throwing a surprise party for
your favorite relative, who is turning 90.
Would you plan the food, entertainment,
table setup, etc.? Of course you would.
Starting or running a business without proper
planning is like throwing a party for 100
people, without a plan.
Planning will help shape the end result and
provide the best path to get you there.
Planning gives you a roadmap to follow.
If you don’t plan for the success of your
business, you will likely fail. It is that simple.

2.3 Blueprint for Your Business

Like throwing a party without an agenda, if
you’re running a business without a plan, you
won’t know in what direction you’re headed.
For businesses, planning is usually presented
in the form of a business plan.
As the blueprint for your business, a business
plan provides an outline to the framework of
your business, declares your visions, and
showcases the necessary steps to fulfill the
vision you’ve outlined.
It summarizes your business’s history and
background and models your core values and
mission.
As the roadmap for your business, a good business plan helps you navigate your business towards your
strategic direction.
The more thorough you are, the better your blueprint for success will be.

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2.4 The Big Picture

To put it into perspective, a business plan
explains:
• Who you are
• Why you’re in business
• What you do
• How you do it
• Where you operate
• How you will generate profits
• Who your customers are
• Why your business is important

2.5 Audience Consideration

So who will read your business plan? Who’s
your audience?
Business plans are designed to communicate
to a specific target audience: internal or
external stakeholders. Stakeholders include
anyone with a potential vested interest in
your business.
Even if you’re not looking for outside funding,
a business plan is useful for persons internal
to the business: you, employees,
management, sales, etc. to know your mission
and vision as well as your target market and
customer.
However, business plans are often the first thing an outside funder will request. Therefore, much of
what is in the plan will be directed at an external audience such as potential investors or lenders
(government). So, for investors, banks, and loan advisors, business plans are essential.

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2.6 Tailoring Your Plan

Tailor your plan to your intended audience.
And, remember, as your business expands, so
will your plan.
When writing for internal stakeholders, focus
on the detailed operation of the business. For
example, include comprehensive data on the
operating budget, market research,
competitor analysis, sales lists, product design
specifications, etc.
When writing for external stakeholders, focus
on the financial aspect of the business. For
example, if you’re looking for a traditional
loan, you should include the amount you’re
looking for, how the funds will be used, what
those funds will accomplish, how you plan to repay, and any collateral you have to offer.
If you’re looking for investors, talk about growth, e.g., what funds you will need in the short term as well
as the long term (up to five years) and how you will use those funds to grow.
Calculate return on investment (ROI) estimations and how financial reporting will work. Tell them what
percent ownership you’re willing to give to investors, what milestones or conditions you will accept,
how you expect them to be involved (board membership, management, etc.), and any proposed
investor exit strategy (such as buyback or sale options).

2.7 Categories of Plans

There are two main categories of business
plans: traditional and alternative.
While traditional business plans cover key
established business aspects, alternative
business plans offer their target audience
innovative approaches that emphasize speed,
flexibility, and the ability to change direction
and adapt.

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2.8 Traditional Business Plan

Depending on a company’s needs, a
traditional business plan can cover key
business concepts such as marketing and
finances, and/or be used as a tool to
effectively operate the business by organizing
company goals and objectives.
A traditional business plan can save your
business money because its primary function
is to manage current and future financial
projections. You are better equipped to
manage spending since budgets are set within
the plan.
In addition, marketing dollars are allocated
more effectively because the plan helps
pinpoint the characteristics of the company’s target market.
A business plan contains mini-plans to address the different aspects of your business:
• Sales and marketing analysis provides specific information regarding the industry in which the
business operates.
• Financial information such as accounts payable and receivable, break-even projections, and the
current financial picture of the business give an accurate depiction of the business’s finances.
• Ownership and management structure of the business is also a key element of the business
plan, detailing the qualifications and duties of the individuals in charge.

2.9 Alternative Business Plan

Alternatives to the traditional business plan
provide the target audience with an
innovative approach when outlining the
business framework.

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2.10 Video: One Size Does Not Fit All

This video discusses a variety of business
plans and considerations when deciding
what’s best for your business idea.

2.11 Scenario: Michael and Jennifer

Michael and Jennifer, who are brother and
sister, have both worked in their mother’s
veterinary clinic as technicians for many years
after college. While clients are very happy
with the veterinary care, many clients have
voiced concerns about having nowhere to
take their animals for grooming services.
Michael and Jennifer decided to open a
separate business catering to their furry
friends that initially will provide grooming,
supplies, and dog walking services, but
depending how the business goes, may
eventually steer towards kenneling the
animals as well.
As you progress through this course, Michael and Jennifer will need your assistance with making
decisions that will help them write their business plan.

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2.12 Think About It

Let’s see how you apply what you’ve learned
in this topic.
As Michael and Jennifer begin the planning
process, what vital document, considered the
blueprint of the business, do they need to
create for themselves as well as for the bank?
a. Marketing Plan
b. Financial Plan
c. Business Plan
d. Staffing Plan
The correct answer is c. Business Plan.
All other options are incorrect because they
are components of the business plan. The business plan is the blueprint, the roadmap for the entire
business.

2.13 Think About It

Let’s see how you apply what you’ve learned
in this topic.
Michael and Jennifer will need a financial loan
to start the business. Based on what you have
learned about the categories of business
plans and given what you know about
Michael and Jennifer’s situation, which type
of business plan do you think they should
write?
a. Their business is too small for any type
of documented plan.
b. Traditional business plan
c. Alternative business plan
d. Marketing plan
The correct answer is b. Traditional business plan.
The other options are incorrect because they will not provide the detailed financial data essential for the
lender.

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2.14 Topic 1 Summary

This topic presented the definition of a
business plan and its importance to business
success.

3 Topic 2: Traditional Business Plan Components

3.1 Topic 2 Objective
By the end of this topic, you should be able to
explain the components of a traditional
business plan. To meet the objective, this
topic will cover the following discussion
points:
• Company Description
• Market Research
• Product/Service Line
• Marketing & Sales Strategies
• Funding Request
• Financial Projections
• Optional Appendices
• Executive Summary
• Putting It All Together—where we discuss best formatting practices, cover page, and table of
contents
You may notice the discussion point Executive Summary is towards the end of the topic. although it is
the first section (after the cover page and table of contents) of a business plan, it is the last section you
will write. Therefore, we will discuss this section later in this course.

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3.2 Creating a Traditional Business Plan

When establishing your business, writing your
business plan is one of the most important
steps you will take because the plan serves as
your road map for the early years of your
business.
The business plan generally projects 3–5 years
ahead and outlines the route a company
intends to take to reach its yearly milestones,
including revenue projections. A well-
thought-out plan also helps you to step-back
and think objectively about the key elements
of your business venture and influences your
decision-making on a regular basis.
A well-organized business plan is simple,
flexible, and manageable. A well-written business plan declares your business’s vision as well as the
steps to achieve the vision.
Small business owners or new entrepreneurs are often intimidated when it comes to writing a business
plan, thinking it’s complicated or simply unnecessary. Nothing could be further from the truth.

3.3 Principal Questions to Consider

Your business plan should be a living
document, constantly revised to match
changing markets and business needs.
Before you begin writing your business plan,
consider these four core questions:
1. What service or product does your
business provide and what need does
it fill?
2. Who are the potential customers for
your product or service and why will
they purchase it from you?
3. How will you reach your potential
customers? And,
4. Where will you get the financial resources to start or grow your business?
Reflect on the answers to these questions as you progress through the course.
Topic 2 follows the template of the free SBA business plan tool. At the end of this course (and available
24/7 on the SBA website), you will have the opportunity to use SBA’s business plan tool.
Now that we’ve learned why business plans are important, let’s begin explaining the various sections of
a business plan.

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3.4 Company Description

This section provides a general background
and description of your company. You should
include things like a mission statement,
company goals and objectives, and a general
overview of your product or service, target
market, and industry. You will also go into
detail about your company’s management,
organizational, and legal structures.
Total suggested page length for this section of
the business plan: 3–5 pages
Select each element of the Company
Description to learn more.
Mission Statement: The mission statement is
a brief statement about who the company is and what it stands for. Some companies use the mission
statement as a marketing slogan. However, the true intent of a mission statement should be to describe
the purpose of the business—a futuristic expression of hope and inspiration. For example, Google’s
mission statement is “Organize the world’s information and make it universally accessible and useful.”
Michael and Jennifer’s mission statement might be: “To provide the best service for your pet at an
affordable price to foster the collective care and love of our furry friends.” Don’t just write down a
mission statement. Think about it, get input from others, and carefully develop a statement that is an
expression of your business.
Business Goals and Objectives: Your business goals and objectives should be specific and attainable.
Remember, goals that are not specific will probably not be achieved. An example could be that your
business meets a specific level of customer satisfaction or reaches an annual sales target. If your
business is already in operations, describe any major accomplishments or successes.
Products or Services: How is your product or service new and exciting? How are products developed or
services provided? Give a brief yet enticing overview of your product or service to include descriptions,
pricing explanation, and competitive edge. Keep it short (details come later in the plan). Reference
applicable graphics and brochures (in the appendix).
Target Market: This section should briefly describe to whom you will market your products. You will
describe this more later, but give a short description of who you think will buy your product and why. To
give a frame of reference, include your company’s location and whether you anticipate moving in the
future.
Industry: Here briefly describe your industry. (You will go into more detail later.) What is your industry?
Is your industry growing? What changes do you foresee and how does your company plan to take
advantage of these changes? How does your company compare to competitors in your industry?
Management Structure: This section should describe the processes that support what your company
does. For instance, how is your company’s management organized? Who makes decisions? What are the
values that drive your company? How many employees do you have, what do they do, and how are they
paid? Do you anticipate this changing?
Organizational Structure: This section should describe the leadership of your company and include an
organization chart, if you have one. Who are the principal members of your company and what are their

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roles? This section of the plan should include a brief resume on each key manager within the company
to show that they are qualified to complete this work. If you have a board of directors or outside
advisors (such as an attorney or accountant), list them here and describe the relationship. In this
section, you should also explain how things get done in the company. Talk about your company’s core
competencies.
Legal Structure: What is the legal structure of your business? Here describe what legal requirements
your business faces, such as licenses and/or permits your company operates with or needs. It is also an
opportunity to highlight special operating achievements or certifications your company has. For
instance, your business may have specific security clearances, hold patents, or be quality-certified as an
ISO 9000 firm. This section should also describe how the company is organized. Specifically, it should
explain the legal form of ownership such as the business model. That is, are you organized as a
proprietorship, partnership, or corporation and why?

3.5 Market Research

Your market is an important part of the
business plan. Before you can sell something,
you have to know who might buy it and what
price they’re willing to pay for it. Research is
the foundation to marketing. To conduct
market research, you must gather facts and
opinions in an orderly, objective way about
your target: the industry and your potential
customers.
Select each button to learn more about the
two elements that comprise your market and
how to include the results from your research
into your business plan.
Total suggested page length for this section of
the business plan: 9–20 pages

3.6 Market Research: Industry

The first step in defining your market should
be to describe the industry you operate in, as
well as the potential or prospects for your
business within that industry. Your industry
knowledge as well as the prospects for your
business should be clearly illustrated in the
plan. For instance, if you are a retail store
selling pet care services, describe the general
outlook for sales, as well as your potential for
capturing a growing segment of the market.
To describe the industry in which you
operate, as well as the potential or prospects
for your business within that industry, answer
these questions within this section of your

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plan:
• What is your industry?
• What is your industry’s current size and what share of that market will you have? When
identifying characteristics of your target market you should also determine the size of your
potential market. You can determine the size of your market by examining the number of
potential customers in a particular area; reviewing the geographic area they live in; analyzing
prior annualized sales and considering market growth. If you don’t know who your customers
are, you can’t develop a strategy to reach them. And, if you can’t reach them, you will likely not
be effective in selling your products and services
• Who are your competitors in your industry? Who will be your direct competitors?
• Are there any regulations that apply to your industry?
• What are the trends in your industry (growth, consumer preferences, product development)?
• How and where does your company fit in the industry? What advantages or disadvantages do
you have over you competitors? Do a competitive analysis to show how you stack up against
your direct competitors on things like price, your products, service, etc.
• What are the barriers to entering this industry (such as high initial capital costs, unique
technology, or customer need for brand recognition)?

3.7 Market Research: Customers

The next step in this section of your plan is to
identify your target market and profile your
customers. Your goal is to find out what
people want to buy, not just what you want
to sell them.
You should describe your customers’ needs,
including information about the degree to
which those needs are (or are not) currently
being met. Again, if you are selling pet care
services, explain why customers will want
your services and products. Specifically, what
needs are you satisfying with your business?
To determine what needs your business will
satisfy, answer these questions within this
section of your plan:
• Who are your current or prospective customers? Describe demographic information like age,
gender, income level, etc. For businesses that sell to governments or other businesses, describe
demographic information such as industry, location, size, and typical purchases.
• What do they buy and why? Can they, and will they, buy my product? What price will they pay?
Why might your customers prefer your product over the alternatives? Try to describe how each
of your major products or services gives value to the customer.
• And, what market segments or groups are more likely to buy your products?

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3.8 Market Segment

A market segment or targeted group of
customers is a grouping of people sharing one
or more characteristics that cause them to
have similar product needs. Market
segmentation or target marketing is the
process of dividing a market into distinct
segments that behave the same way or have
similar needs. Because each segment is
somewhat similar in their needs and
attitudes, they will likely respond similarly to
a specific marketing strategy. This is an
important point, and we will discuss
marketing to targeted groups later on in this
course. However, it is critical that you
understand the value of defining your market.

3.9 Product/Service Line

In the Product/Service Line section, you will
identify and describe all of the products and
services your business sells or provides. You
should also explain how the items you sell are
priced. In addition, and perhaps most
importantly, this section should explain how
your products and services are competitive.
Keep this section focused easy to follow.
Emphasize your competitiveness. It is easy to
list your products, but it is far more
worthwhile to explain how you are
competitive. Finally, if you have pictures or
brochures describing your products,
reference them in this section and include
them in an appendix to the business plan.
Total suggested page length for this section of the business plan: 4–10 pages

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3.10 Product/Service Line, cont.

To provide your audience with a clear
understanding of why you are in business,
what you sell, and how you compete, answer
these questions within this section of your
plan:
• What product or service will your
company provide? For each product
describe: What is unique about it?
What are its important features?
• What will it do for the customer?
How does it benefit them? Why is it
better for the customer when
compared to the competition?
• Describe your pricing structure.
• What factors give you a competitive advantage or disadvantage?
• Do you keep inventory? What kind and how much? How is your inventory turnover?
• Who are your suppliers?
• In which lifecycle stage is your product or service?
• What research and development activities are you performing or planning?
• What intellectual property rights do you have for your product or service?

3.11 Think About It

Let’s see how you apply what you’ve learned
so far.
As co-owners of their business, Michael and
Jennifer are the only two employees at this
time. However, both come with an extensive
background in animal care and services. In
what section of the business plan are
descriptions of the owner’s background and
experience included?
a. Product/Service Line
b. Market Research
c. Cover Page
d. Company Description
The correct answer is d. Company Description. As the principal members of their business, their résumés
(background and experience) are important to include as part of the company description in their
business plan.

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All other options are incorrect because they are not the appropriate sections of a business to include the
background and experience of the owners.

3.12 Think About It

Let’s see how you apply what you’ve learned
so far.
After researching their market, Michael and
Jennifer learned their business is unique to
their area, with many pet owners living in a 5-
mile radius of their location. Therefore, they
want to properly describe their products and
services in their business plan for their
audience. What contribution does the
Product/Service Line section give to the
business plan?
a. Provides a clear understanding of why
you are in business, what you sell, and
how you compete.
b. Provides a general background and description of your company.
c. Gives information about the industry and potential customers.
d. Describes legal requirements, such as licenses and/or permits.
The correct answer is a. Provides a clear understanding of why you are in business, what you sell, and
how you compete.
All other options are incorrect because they are descriptions of other sections of the business plan.

3.13 Marketing & Sales Strategies

After you’ve conducted your market research,
you can create your marketing and sales
strategy to reach your customers.
To develop your marketing and sales strategy,
answer these questions within this section of
your plan:
• What is your plan to grow your
company?
• How will you communicate with your
customers?
• How will you sell your product or
service?
Total suggested page length for this section of the business plan: 4–6 pages

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3.14 Marketing Strategy

Marketing is the process of promoting and
selling your products or services. Don’t
confuse advertising and marketing as one and
the same. Advertising is a component of the
entire marketing process; other components
are:
• Community involvement
• Customer support
• Distribution
• Market research
• Media planning
• Product pricing
• Public relations
• Sales strategy
In simple terms, marketing activities and strategies result in making products available that satisfy
customers while making profits for the companies that offer those products.
Creating a marketing strategy can be difficult. It deals with people and their constantly changing feelings
and behaviors, which are influenced by countless subjective factors.

3.15 Marketing Strategy, cont.

• A good marketing strategy identifies
market segments in which a business
can better serve than its competitors.
• It also tailors product offerings,
prices, distribution, promotional
efforts, and services toward those
identified segments.
• Ideally, the strategy will address
unmet customer needs that offer
adequate profitability for the business
and focus on the target markets it can
serve best.
• However, both customer needs and
the business environment in which you operate are constantly changing. Your marketing
strategy needs to consider what changes are taking place, and emerging opportunities and
threats.
• A marketing strategy will also help you assess how successful you are at meeting your
customers’ needs, as well as how successful your competitors are.
• It may also help you identify new markets that you can successfully target.

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• A good marketing strategy will be based on your market research to determine what customers
want and what they will pay for.
Central to any successful marketing strategy is an understanding of your customers and their needs. The
ability to satisfy your customers’ needs better than your competitors can help you build customer
loyalty and increase sales. Remember, trying to convince people to buy something they don’t want is
extremely expensive and seldom successful.

3.16 Marketing Mix: The 4Ps

A successful marketing strategy will typically
mix the 4Ps of marketing—place, price,
promotion, and product—to reflect the wants
and desires of consumers in the target
market.
Select each puzzle piece to learn more.
• Place refers to how the product gets
to the customer. Specifically, it refers
to the channel by which a product or
service is sold or distributed. This is
an important piece of information.
Are you selling online, in a store, or
through sales agents? In your own
store or in someone else’s? Is that
consistent with what your customers want? Is it convenient, comfortable, or ideal for them?
How does your distribution channel compare to your competitors? If you have a physical
location, how far are you from your competitors?
• Pricing refers to the process of setting a price for a product, including discounts. You’ll want to
discuss how you set prices. How does your price compare with your competition? How sensitive
to price are your potential customers? How much of your product do you think you will sell at
various price points? Are you going to change your prices often?
• The product aspects of marketing deal with the specifications of the actual goods or services,
and how it relates to the end-user’s needs and wants. In this section of your business plan, you
can talk briefly about where your product fits in the market.
• Promotion includes advertising, sales promotion, and publicity, and refers to the various
methods of promoting the product, brand, or company. How do you plan on communicating
with customers? What message will you communicate? You’ll want to discuss your promotional
plans, the budget for this promotion, and how that budget will change through your business’s
life cycle.

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3.17 Sales Strategy

You will also want to include a sales forecast.
Prepare a month-by-month projection based
on historical sales (if available), industry and
market research, and the marketing plan
described earlier. You may create more than
one projection based on multiple scenarios,
particularly if this is a new business or new
product. Align forecast assumptions with your
market research or historical sales. Don’t pull
numbers out of thin air. Finally, discuss how
these sales will lead to company growth.

3.18 Funding Request

In this section, identify exact (no estimates!)
amounts of funding you will need to start
your business or have already invested and
make sure it ties specifically to your financial
projections.
If necessary, you can include different funding
scenarios, such as best- and worst-case
scenarios, but remember that later, in the
financial projections section, you must be
able to back up these requests and scenarios
with corresponding financial statements and
projections.
If you are planning to self-fund your business,
be aware that while it may not be a required
section of your plan, it might be advantageous to know this information for future planning purposes.
If you are seeking funding for your business, include these funding requirements in your business plan.
• Your current and future (5 years) funding requirement. Include time period that each request
will cover, type of funding you would like to have (e.g., equity, debt), and the terms that you
would like to have applied.
• How you intend to use the funds you receive: Is the funding request for capital expenditures?
Working capital? Debt retirement? Acquisitions? Whatever it is, be sure to list it in this section.
• Any strategic financial situational plans for the future, such as a buyout, being acquired, debt
repayment plan, or selling your business. These areas are extremely important to a future
creditor, since they will directly impact your ability to repay your loan(s).
Total suggested page length for this section of the business plan: 2–4 pages

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3.19 Align the Numbers

As you move to the next section of the
business plan (Financial Projections), ensure
your financial projections match your funding
requests.
All possible credit sources will be on the
lookout for inconsistencies, and few, if any,
will allow you to correct problems they have
uncovered.
It's much better if you catch mistakes before
they do; it can mean the difference between
approval and decline.

3.20 Financial Projections

The financial structure of your business is its
foundation; therefore, the Financial
Projections section of your business plan is
critical to write well.
This important section explains your revenue
forecasts, how much money you have and
need, and when and how the business
expects to make a profit. It also details what
your marketing and operational processes
and plans will cost.
To clarify your business’s financial situation,
the Financial Projection section of the plan
includes economic estimates and three
financial statements: Projected Balance
Sheet, Cash Flow Projection, and Profit and Loss (Income) Projection.
This section of your business plan is considered the most important, as it outlines the complete financial
situation of your business. Therefore, ensure this section is reviewed by a financial professional, such as
your accountant.
Total suggested page length for this section of the business plan: 12–25 pages

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3.21 Financial Projections, cont.

The financial performance of any business is
measured by the interrelationships among six
essential elements.
These elements comprise the three financial
statements (Projected Balance Sheet, Cash
Flow Projection, and Profit and Loss [Income]
Projection) and are: revenue, expenses,
profits/losses, assets, liabilities, and net
worth.
A business will prosper or fail based on the
owner’s effectiveness in planning and
controlling these components.
Select each financial statement term on the
image to learn how these statements measure and illustrate your financial situation.

3.22 Projected Balance Sheet

The Projected Balance Sheet represents the
basic accounting equation: assets minus
liabilities, equals net worth.
A balance sheet is made up of assets (items of
value), liabilities (debts) and net worth (equity
or the difference between a company’s assets
and liabilities).
The balance sheet provides a measure of a
business’s value at a particular point in time.
It is considered a snapshot in time.
Click the image to view an automated Balance
Sheet Template. Use the template to
compose a balance sheet for your business.

3.23 Cash Flow Projection

The Cash Flow Projection is a valuable tool
that monitors and projects the amount of
incoming and outgoing cash during a given
period (usually monthly) to gauge financial
performance.
It helps you determine how much cash your
business has on hand at any point in time. If
your business has a negative cash position, it
means that you have more money going out
than coming in and may find paying your bills
somewhat challenging.

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The Cash Flow Projection shows you if your working capital is adequate and helps you determine how
much and when you may need to borrow money. Don’t forget to account for things like selling or
buying on credit or irregular expenses.
Click the image to view an automated Cash Flow Statement Template. Use the template to compose a
projected cash flow statement for your business.

3.24 Profit and Loss Projection

The Profit and Loss Projection is a measure of
how a business’s income has performed over
a specific period of time, usually six months or
one year.
It measures all income less all expenses to
arrive at the amount of profit or loss
generated by the business for the period.
The Profit and Loss Projection is also called an
income statement or an income and expense
statement.
Click the image to view an automated Profit
and Loss (Income) Projection. Use the
template to compose an income statement
for your business.

3.25 Break-Even Analysis

Another financial analysis you should include
is a Break-Even Analysis. A Break-Even
Analysis indicates when your business will be
able to cover all of its expenses and begin
making a profit.
This analysis calculates the minimum amount
of sales needed to cover your costs. This is
especially critical for startup businesses as it
shows the sales threshold that needs to be
surpassed before the business becomes
profitable.

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3.26 Breaking It Down

The quantity of products you will have to sell
per month to cover your costs is called the
Break-even Quantity (BEQ) or the Break-even
Point. To determine your Break-even Point,
you will need the following information:
Fixed costs are expenses like monthly rent,
salaries, and insurance premiums that are
paid at regular intervals. If you pay certain
fixed costs only once per year, determine the
monthly portion of that cost. Make sure you
calculate the monthly cost of each of these
items for this analysis.
Variable costs include the costs for producing
your product or delivering your service,
maintaining your inventory, transporting products, and buying additional equipment. Variable costs
change with sales volume.
Price is the amount of money your customers pay for a specific product or service.

3.27 Michael and Jennifer’s Break-Even Point

Let’s try the formula using Michael and
Jennifer’s scenario. If Michael and Jennifer are
selling designer pet beds in their store for
$300 each, buy them for $50 each, and have
monthly fixed costs of $1000, their Break-
even Point each month would be to sell 4
designer pet beds.
That is, until they sell 4 pet beds at $300 each,
they will not make a profit that month.
There are so many variables involved in
calculating your break-even point that a
concrete “template” may not be conducive
for all circumstances. The better solution is to
understand the concept, and then analyze
your break-even situation based on expenses and costs specific to your business.
The SBA Learning Center offers additional resources about the concepts of Break-even Analysis. Take the
SBA course Pricing Models for Successful Business and the access the accompanying worksheet Pricing
Models for a Success Business.

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3.28 Continuing Your Financial Projections

If you’re adding proposed loans into your
business plan, include the sources, amounts,
and terms in the Financial Projections section
of your business plan.
If you have (or plan to get) investors, include
how much will be contributed by each
investor and what percent ownership they
will have.
If you are submitting your business plan to a
bank because you are applying for a loan, you
should also include a current personal
financial statement on each company
principal and a copy of your business or
individual Federal Tax return for the last three
years.
Select each image to learn more about Financial Projections when you are a new or existing business.

3.29 New Business Startup

If you are a new business, all of your financial statements should be projected one, two, and three years
forward and include accompanying narratives to explain any assumptions. It should also include a
break-even analysis. Do your sales projections from the previous section indicate that you will reach
your break-even point?
Do your research to accurately determine all of the potential costs and projections. Explain when you
expect to become profitable and how you arrived at that conclusion.

3.30 Existing Business

If you are an existing business, you should include current and prior Projected Balance Sheets and Profit
and Loss (Income) Statements, ideally for the last three years if available. Then, include projections for
the next three years.
You should also include a current twelve-month Cash Flow Projection statement that predicts the flow
of cash several months’ forward.
Include your business tax documents for the last three years as well, if applicable. If you plan to
introduce a new product line or if you will require a large influx of capital up front to grow your business,
consider adding a Break-Even Analysis.
Remember to include accompanying narratives to explain any issues or assumptions in your plan.

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3.31 Optional Appendices

The last section of your plan is an optional
appendix. This section can help define your
business and highlight your accomplishments
by including brochures, résumés, pictures and
other important information.
You can use this section to add color and
depth to your plan. Examples of things to
include are:
• Brochures and advertising materials
• Blueprints or plans
• Maps
• Copies of leases or contracts
• Any press coverage of business
• Industry or marketing studies
• Any other materials needed to support what you claim in the business plan

3.32 Executive Summary

The Executive Summary is a very important
part of your business plan. As the name
implies, it is a clear, concise snapshot or
summary of your business.
As mentioned earlier, the Executive Summary
is the first section of a business plan, but it is
the last section you will write. And, while it’s
the last section you will write, it’s the first
section your audience will read. Therefore,
the Executive Summary must be engaging,
while simultaneously giving solid evidence
that your business will succeed.
Total suggested page length for this section of
the business plan: 1–2 pages

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3.33 Executive Summary Contents

The Executive Summary should include short
descriptive summaries of each section of your
business plan:
• Your company
• Products or services you sell or plan
to sell
• Mission statement
• Management and organizational
structure
• Target market and ideal customer
• Competition
• Future of your business and your industry
• Banking relationships and information regarding current investors
• Financial data and projections

3.34 Executive Summary Contents, cont.

Essentially, the Executive Summary should
answer these questions:
• What product or service will your
business provide?
• How does it fill a customer need?
• What competitive advantage, if any,
does your product/service have?
• Who are your target customers?
• What goals do you have for your
company?
• Are you asking for money? If so, how
much do you need from a loan or an
investor and how will you use it?

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3.35 Final Touches

The icing on the cake, so to speak, is to
include the cover page and a table of
contents.
Cover page: Even though “we shouldn’t judge
a book by its cover”—let’s face it, we do.
Therefore, every business plan should have a
professional-looking cover page that includes
your name (and the name of any other
owners), your business name, and your
contact information (such as street address,
telephone, and email). You can also put your
logo on the cover page, if you have one.
Table of Contents: A table of contents brings
organization and structure to your business
plan by listing key sections within the plan and their corresponding order and location (page number).
Most importantly, your audience will be able to find specific topics and areas of interest in your plan.

3.36 Putting It All Together

Once written, assemble the sections of your
business plan in a quality binder (separate the
section with tabs) as follows:
• Cover Page
• Executive Summary
• Table of Contents
• Company Description
• Market Research
• Product/Service Line
• Marketing and Sales Strategies
• Funding Request
• Financial Projections
• Appendices (if applicable)

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3.37 Video: How to Write a Business Plan

This short 2-minute video showcases the
highlights of writing a business plan.

3.38 Formatting Best Practices

You’ve got an idea now of the main sections
to include in your business plan. Investing the
time to properly format your business plan
will prove priceless as a well-put-together
document stands out from a mountain of
other papers and documents whose authors
did not take the time to format.
Here are a few formatting best practices to
follow when writing your business plan:
• Font types recommended: Times New
Roman, New Century Schoolbook,
Bookman, or Palatino
• Font size 11 or 12 pt
• Single space lines
• Use numerical, bolded headings (slightly larger font size than text).
• Use headers and footers (at minimum—company name in header; page number in footer)
• Do not underline; use italics sparingly.

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3.39 Formatting Best Practices, cont.

• Include plenty of white space; use
bullets.
• Margins should be at least 1″.
• Duplex print (both sides of the paper).
• Space once after all punctuation.
• Use color sparingly.
• DO NOT USE ALL CAPITAL LETTERS;
not only are they difficult to read but
in today’s world, using all capitals is
conveyed as shouting.
• Include tabbed dividers within the
binder.
And finally, you have probably written, read, reread, rewritten to the point of exhaustion. Therefore,
hire a reviewer (or two) to read your business plan. You will be amazed at the errors they find and the
questions they ask that may require further clarifications to the plan. If reviewers find mistakes, you can
bet your end audience will too. It will be money well spent.
To minimize any possible misunderstandings, consider asking the reviewers to sign a confidentiality
disclaimer stating the content is confidential and may not be disclosed.

3.40 Think About It

Let’s see how you apply what you’ve learned
so far.
As a new business, Michael and Jennifer
should include a Projected Balance Sheet, a
Profit and Loss (Income) Projection
statement, and a Cash Flow Projection
statement in their business. These financial
statements should be projected one, two, and
three years forward and include
accompanying narratives to explain any
assumptions. In what section of the business
plan are these statements included?
a. Company Description
b. Executive Summary
c. Financial Projections
d. Marketing and Sales Strategies
The correct answer is c. Financial Projections. Through these three financial statements, this important
section of the business plan explains revenue forecasts, amount of money you have and need, and when
and how the business expects to make a profit.

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All other options are incorrect because they are not the appropriate sections to include the financial
statement.

3.41 Think About It

Let’s see how you apply what you’ve learned
so far.
After writing the main sections of their
business plan, Michael and Jennifer are ready
to write the Executive Summary. Using the
principles that you learned in this course,
what advice can you give them?
a. As a summary of the business plan,
they should have written it first as a
method to outline and structure the
rest of the plan.
b. Ensure to describe family dynamics as
personal background is essential to
the business plan.
c. Other sections such as the Financial Projections require more time and energy; therefore, don’t
spend too much time writing the Executive Summary as it’s not a section your audience often
reads.
d. Write an engaging 1 to 2-page clear, concise snapshot of their business giving solid evidence
that it will succeed.
The correct answer is d. Write an engaging 1 to 2-page clear, concise snapshot of their business giving
solid evidence that it will succeed. The Executive Summary is often the first section your audience reads.
Ensure it captures and anchors their attention.
All other options are incorrect because they give inappropriate advice for writing the Executive Summary.

3.42 Topic 2 Summary

This topic explained the contents of each
business plan section as well as best
formatting practices.

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3.43 Course Summary

Congratulations! You have completed the
How to Write a Business Plan course!
This course provided information for small
business owners who are interested in
learning about writing a business plan. You
were presented with the following discussion
points:
• Business planning parallels business
success.
• The business plan is the blueprint for
your business.
• Audience consideration is important
to the business plan’s scope.
• The “One Size Does Not Fit All” video showcased the variety of business plans and the ‘How to
Write a Business Plan’ 2-minute video wrapped up the essentials.
• Explanations about the contents and importance of each section of a traditional business plan:
− Executive Summary
− Company Description
− Market Research
− Product/Service Line
− Marketing & Sales Strategies
− Funding Request
− Financial Projections
− Appendices
• Best practices when formatting a business plan.

3.44 Checklist for Success

It has been said that “Knowledge is power.” In
reality, knowledge is only potential power.
Without application or action, knowledge is
just information.
To download the How to Write a Business
Plan Checklist, click the graphic or select the
Resources tab on this page.

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3.45 Resources
SBA has a broad network of skilled counselors
and business development specialists. Below
is a short description of our resource
partners:
• Over 900 Small Business
Development Centers (SBDCs)
provide a vast array of technical
assistance to small businesses and
aspiring entrepreneurs. By supporting
business growth, sustainability and
enhancing the creation of new
businesses entities, SBDCs foster local
and regional economic development
through job creation and retention.
As a result of the no-cost, extensive, one-on-one, long-term professional business advising, low-
cost training and other specialized services SBDC clients receive, the program remains one of the
nation’s largest small business assistance programs in the federal government. The SBDCs are
made up of a unique collaboration of SBA Federal funds, state, and local governments, and
private-sector resources.
• SCORE is a powerful, nationwide source of free and confidential small business advice to help
build your business. More than 12,000 SCORE volunteers are available to share their expertise
and experience in lessons learned in small business.
• Women’s Business Centers (WBCs) are education centers designed to assist women in starting
and growing small businesses by providing management and technical assistance. Over 100
WBCs are located throughout the U.S. and Puerto Rico.
• The SBA has 84 District and Branch offices in all 50 states, as well as Puerto Rico, the U.S. Virgin
Islands, and Guam. These offices support the growth of small business by connecting customers
to resources, products, and services provided by our resource and agency partners at the
federal, state and local levels.
• The Veterans Business Outreach Program is designed to provide entrepreneurial development
services such as business training, counseling and mentoring, and referrals for eligible veterans
owning or considering starting a small business. The SBA has 15 organizations participating in
this cooperative agreement and serving as Veterans Business Outreach Centers (VBOC).
• The SBA Learning Center is an online portal that hosts a variety of self-paced online training
courses to help small business owners explore and learn about the many aspects of business
ownership.
Find your local resource using our handy zip-code tool: www.SBA.gov/tools/local-assistance.

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3.46 A.C.T. NOW!

The Article, Course, and Tool below are
related to the course you just completed.
They are provided to help you take action on
your path to entrepreneurial success. You can
also get in-person assistance for all of your
business needs through a local resource
center. And, if you liked the course, please
help spread the word by sharing it with your
friends!
Read an SBA Article. The article How to Make
Your Business Plan Stand Out offers tips to
help clarify what your business has to offer,
identify the right target market for it, and
build a niche for yourself.
Take Another Course. The Marketing 101: A Guide to Winning Customers course provides a basic
overview of marketing for small business owners who are looking to reach a broader customer base and
expand their markets. Learn what marketing is and why it is vital to growth. The course covers how to
conduct market research and developing marketing strategies while providing marketing resources for
small business owners.
Try a Tool. To help you build a successful business plan, SBA provides a free online business plan tool.
The tool will prompt you through writing the various sections of the business plan with questions,
guidance, and tips. The tool is best used after you have reviewed this course and sample business plans
(by doing an internet search). You can save your work and, when finished, print it out.
Find Local Assistance. SBA works with a number of local partners to counsel, mentor, and train small
businesses such as Small Business Development Center, SCORE Business Mentor, Women’s Business
Center, Veteran’s Business Outreach Center, etc.

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2. Screen captures from SBA.gov tutorial, Young Entrepreneurs: An Essential Guide to Starting
Your Own Business

1. Young Entrepreneurs - An Essential Guide to Starting Your Own Business

1.1 Introduction
Welcome to SBA’s online training course
“Young Entrepreneurs—An Essential Guide to
Starting Your Own Business”
SBA’s Office of Entrepreneurship Education
provides this self-paced training program
designed to provide an overview of the
opportunities for and unique challenges of
young entrepreneurs. It also outlines the
essential steps you need to take to get
started and be successful.
You will find this course easy to follow and
the subject matter indexed for easy access. It
will take approximately 45 minutes to
complete the course. Additional time will be
needed to review included resource materials and to complete the suggested next steps at the end of
the course. Audio is used throughout the training, so please adjust your speakers accordingly. Transcript
and keyboard shortcuts are available to assist with user accessibility.
When you complete the course, you will have the option of receiving a course completion confirmation
from the SBA.

1.2 Course Objectives

Entrepreneurship can be an exciting
adventure, and if you’re young it might be
easier than you think.
This course has four key objectives.
1. Describe the fundamentals of
entrepreneurship
2. Identify the options for doing
business that are ideal for young
entrepreneurs
3. Explain the first steps to starting your
business
4. Give examples of entrepreneurial
support resources

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1.3 Course Topics

The topics discussed in this course include:
• Developing a business idea
• Conducting market research
• Running an online business
• Working from home
• Freelancing
• Franchising
• Developing a business plan
• Understanding finance options
• Identifying business structures
• Summarizing business registration
• Finding entrepreneurial support resources
Numerous additional resources are identified to assist you. Visit the Resources icon in the course player
or locate additional tools, templates, and mentors on SBA.gov after you finish the course.
Let’s get started!

1.4 Objective One: Understanding the

Fundamentals of Entrepreneurship
Starting your own business can be an exciting
and rewarding experience. It offers
numerous advantages like being your own
boss, setting your own schedule, and making
a living doing something you enjoy.
But entrepreneurship also brings with it a
variety of challenges. In this first objective,
we will discuss:
• The characteristics of an
entrepreneur,
• Coming up with a business idea, and
• Assessing the market opportunity.

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1.5 Characteristics of Entrepreneurship

Becoming a successful entrepreneur requires
sound planning, creativity, and hard work,
and it also involves taking risks, because all
businesses require some form of investment,
usually time or money.
To begin evaluating whether launching your
own business is right for you, consider some
of the following common characteristics that
are typical of successful small business
owners:
Innovation and creativity. The first step to
starting a business is to come up with an idea
or concept. It takes innovation to develop a
product or service that brings value to
customers that they can’t get elsewhere. Additionally, entrepreneurs often have to find creative ways to
tackle everyday business problems like suppliers shipping inventory late and ineffective marketing plans.
Persistence and tesiliency. Businesses, like all things, take time to grow. Very few people will produce
mass amounts of profit within just weeks or even months of being in business. There will be things that
you fail at, even if your business is successful. Inevitably, some projects fail for a variety of reasons—
poor planning, competitors offering better options, market timing, or other factors. To be a successful
entrepreneur you need to learn and grow from your mistakes to move forward. You must be able to live
with uncertainty and overcome obstacles that you didn’t anticipate.
Flexibility. Even the most well thought out business plans will change along the way. Changes in the
market, technology, and customer tastes are going to happen and they’re out of your control. Your
ability to be flexible and respond to these changes will be the key to your business’s survival.
Passion. As you’ve probably realized, entrepreneurship is not easy. If you are not passionate about what
you’re doing, it will be much harder to persist through all of the challenges that come your way. Your
customers will also notice, it’s harder to sell something you’re not passionate about yourself. Mollie
Breault-Binaghi, who was named Vermont’s Young Entrepreneur of the Year in 2011 by the SBA, said it
best: “You have to be passionate about it. Otherwise it’s not worth doing. Owning your own business is
not easy and it’s not going to make you rich quick. You’re going to be in it for the long haul so it’s got to
be something you love.”
Other characteristics that are helpful to an entrepreneur are persuasiveness, self-confidence, and being
visionary. While it’s not essential you have all of these qualities, it’s a good idea to think about them and
determine if entrepreneurship is really right for you.

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1.6 Coming up with a Business Idea

Do you already have a business idea? Coming
up with your idea is the first step to
entrepreneurship. Consider these questions:
What are you interested in? Oftentimes the
best ideas come from doing what you enjoy
most—which is why personal passions or
hobbies often lead to rewarding businesses.
Do you have a special talent or skill that could
be an idea generator? Even minor interests
can lead to innovation.
What do you have to offer? In addition to
doing what you enjoy, ask yourself what
aspects of your work do you do well and what
you don’t do so well. Knowing what you can
offer and in which areas you excel are essential to building a business.
What do you want? One of the most important considerations when planning a business is pinpointing
what you want to get out of it. Whether it’s making money, working with and creating something you’re
passionate about, or just being your own boss—it’s important to know whether your business idea will
give you the life you want.
What are current market and consumer trends? Successful entrepreneurs are always on the lookout for
new opportunities in the market. While these ideas don't always have to stem from what you already do,
it certainly helps if you can combine what's hot with your existing know-how, expertise, or passion in life.

1.7 Assessing the Market Opportunity

If you’ve determined what your idea will be
and you’d like to move forward with the
entrepreneurial process, you’ll need to do
some preliminary market research to assess
the viability of your idea. To run a successful
business, you need to do some market
research to learn about your customers, your
competitors, and your industry. Market
research is the process of analyzing data to
help you understand which products and
services are in demand, and how to be
competitive.
Some tips to get you started on assessing
your competition and your market:
Determine your target market and understand your customer. A common mistake with new business
owners is assuming that if the business owner would buy the product, everyone else will as well. You
need to know what potential customers want, what price they are willing to pay, how they decide what
to buy, and where they buy it. Think seriously about who your potential customers are and start defining
their demographics, including age, education level, geographic location, and income level.

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Use customer reviews on sites such as Yelp, Amazon.com, and ConsumerReports.org to take a look at
the customer reviews posted about businesses or products similar to your idea. This information can
provide valuable insight into why a customer chooses one business or product over another. Don’t
forget to research complimentary and substitute products. These are products that are normally sold
with (complimentary) or instead of (substitute) your product.
As you develop your business idea, don’t forget to talk directly to potential customers; these can be
family, friends, and complete strangers. See how they react to your idea. Would they buy your product?
Ask them what elements are important to them, whether it’s price, quality, reputation in the industry,
or something else.
Get to know your competition. It's very rare that any two businesses are exactly the same, which makes
it a good idea to get to know, and even network with, your competition in person. The rewards can
include referrals (if you offer something that they do not) or if they are unable to take on additional
customers, or even a joint venture.
Use the web to conduct a search on popular business listings in your market. Assess how your offerings
compare to your competitors. What do you offer that is unique? How can you work that into your
marketing plan to set you apart from the competition? Is your competition only local (for example, with
an auto repair shop) or is it global (any products that can be shipped or services that can be done
remotely can get to your customers from anywhere in the world)? Use SBA’s Size Up Tool to initiate your
search for local competitors (http://1.usa.gov/1mpk9Z1).
Understand your industry. You will need to know what others in your industry are doing, even if they are
not your direct competitors. Trade associations, the U.S. Securities and Exchange Commission filings,
and your local chamber of commerce are good places to start. Look up the North American Industry
Classification System code for your industry and use that to focus your search. Use the Internet to find
reports and analysis of your industry. This will help you see if experts are predicting a downward or
upward trend, any new laws and regulations that you have to conform to, and ascertain the general
feelings toward your industry.
There are several free government resources that can help you conduct marketing research. The US
Census Bureau, FedStats.gov, and the Bureau of Labor Statistics are good places to get started.
Remember, there is no one market research source that will answer all of your questions, so you’ll need
to get information from multiple sources. Additionally, market research is an essential to the ongoing
success of your business even after you start. You should never stop learning about your customers,
competition, or industry; they are constantly changing.

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1.8 Question 1
Let's test your knowledge with the multiple
choice questions:
Which of the following are essential to
assessing your market?
a) Knowing what potential customers
want
b) Investigating your competition
c) Understanding industry trends
d) All of the above
The correct answer is: All of the above.
You will need to know your potential
customers’ wants, investigate and evaluate
your competition, and understand industry trends before you decide if your business idea is marketable.

1.9 Objective Two: Understand Different Options for Doing Business That Are Ideal for Young
Entrepreneurs
Once you have your idea finalized, you will
need to consider what business type is best
for your goals and your idea. There are
several options for young entrepreneurs who
are just getting started, have little or no
capital, or who may not be able to dedicate
themselves to their business full time. In this
objective, we’ll explore some lower-risk
choices to help young entrepreneurs decide
on a business type, such as:
• Running an online business,
• Working from home,
• Freelancing, and
• Franchising.

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1.10 Online Business

Doing business online is a relatively low-cost
way of starting your business and one that
could potentially be done part time. Whether
it’s selling online on sites like eBay, Amazon
or Etsy, providing online services (such as
website design), or delivering goods and
services via your own e-commerce site, online
businesses can take many forms.
Online business benefits include a low cost of
entry, low overhead cost, and can be lower
risk than other business options.
Additionally, you can usually start the
business in a very short time, as you do not
need to find a physical space.
There are some challenges to online businesses. Generating site traffic is essential to sales so you’ll have
to invest in search engine optimization and social media practices to drive traffic as well as
nontraditional marketing. You will not have a lot of face-to-face customer contact, so it is more difficult
to gauge opinions and build relationships with your customers. Online businesses also must comply with
laws unique to conducting business over the Internet.

1.11 Home-based Business

Another lower-risk option for starting a
business is to do it from your home. A
growing number of people choose to launch
their business out of their home as opposed
to investing in property. Some of the benefits
to a home-based business are similar to those
of an online business.
However, home-based businesses also have
challenges. It can be difficult to maintain a
work and life balance, and you’ll experience a
lack of social interaction on the job. Home-
based businesses can look unprofessional if,
for example, you need to hold business
meetings but lack a “professional looking”
meeting space. There are also limitations as to what types of businesses you can run from a home. For
example, catering or food production cannot be done from a domestic kitchen, and zoning laws and
home owners’ associations put restrictions on certain businesses.

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1.12 Freelancing
Freelancing allows you to be your own boss
while doing what you enjoy. Oftentimes,
service-based professions like graphic design,
writing, photography, and pet-care can be
done on a freelance basis. You can usually
start with little to no investment, are able to
do it part-time, and do not normally need a
physical office or storefront. Websites such as
oDesk, Elance, and Freelancer can be great
places to explore opportunities for
freelancers.
However, it’s also important to consider the
challenges of freelancing.
It can get lonely and may be hard to gain
enough business to support yourself by freelancing alone. Don’t forget, freelancers are still subject to
business laws, so be sure to do your research regarding taxes, registration, and licensing just as you
would any other business venture.

1.13 Franchising
Franchising is also a popular and relatively
low risk business opportunity for young
entrepreneurs; however, many require a
greater commitment and investment than the
other business types we’ve talked about so
far.
A franchise is a right granted to an individual
or group to market a company's goods or
services within a certain territory or location.
Some examples of today’s popular franchises
are McDonald’s, Subway, and Dunkin’
Donuts. There are many different types of
franchises spanning many different
industries, business types, and investment
levels.
Franchising can be a relatively low-risk entry into business since you benefit from the training and
advisory services of the franchisor as you go about starting your business. You will also typically receive
marketing support and benefit from the power of an already-established brand.
It’s important to note that franchising also brings with it franchise fees and monthly costs that can be a
drain on your profits. Contracts can be lengthy and you might also feel like you have less control over
your business.

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1.14 Question 2
Let’s test your knowledge with this True or
False statement:
Freelancers do not have to pay taxes or get
licenses to run their business.
The correct answer is FALSE.
Freelancers are subject to business laws just
like any other business. If you want to do
freelance work, be sure to research the
business laws that govern your industry and
location to ensure that you aren’t breaking
any laws.

1.15 Objective Three: Taking Action—How to Implement Your Business Idea

So you’re ready to get started with your idea?
The next part of the course will help
demystify what it takes to start a business
and provide you with a series of actions that
you can take to get your business up and
running.
• First we’ll look at how you can create
a business plan.
• Then we'll help explain a few
common financing options.
• Finally, we share several ideas about
structuring and registering your
business.

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1.16 Creating a Business Plan

Many new entrepreneurs are intimidated by
the formality of a business plan or put off the
process until they need a loan. However,
many business-planning experts will stress
that you don’t need a lengthy plan to launch
your business.
Instead, try developing your business plan as
a succinct, living document that you revisit
and update as the market and business
conditions and opportunities evolve.
Some helpful tips to consider as you create
your business plan:
Define success. All business planning should
keep real goals in mind. It’s about achieving what you want.
Focus. You can’t do everything and you’re not credible when you promise everything to everybody.
Focus on a well-defined target market, and understand who isn’t in your market. Also, concentrate on a
well-defined product offering.
Create meaningful steps. Strategy without implementation means nothing. Make it real with dates,
deadlines, tasks, and measurements you can track.
Manage the planning process. The initial plan is just the beginning. What makes the real difference for
your business is managing the implementation of the plan, keeping the planning process alive, reviewing
progress towards goals, watching for changing assumptions, and revising your approach.
Break up your plan into mini-plans. In addition to your overall business plan, try creating mini-plans for
areas of your business such as sales, marketing, and technology. Revisit these plans monthly, if not
weekly. Keeping it simple not only makes the planning process easier, it makes it more likely that you
will stay true to your plan in the year ahead.

1.17 Financing Your Venture

It’s possible to start your business without a
lot of capital, particularly if you are
freelancing, working from home, or doing
business online.
However, it is important to assess your
funding needs, including assets like a laptop,
software, or inventory—as well as the
amount of cash flow you will need to keep
you afloat until your business is making a
profit. Remember, small businesses can get
started without a lot of assets and inventory.
You don’t need to buy everything you want at
the very beginning. Find a way to start as low
cost as possible—think of using garage space

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to store inventory instead of paying for a warehouse or using social media to make the most of low-cost
marketing—until you get some cash flowing. Consider working part-time when you launch your
company. This will give time to build your business with less risk and provide you with a steady cash flow
from another source. Once you’ve established a base, then transition to full time business ownership.
It is also important for you to have fully developed and tested your product or service. Ensure your
product or service is as complete and ready-for-market as it can be before marketing it or seeking
financing.

1.18 Financing Options

In this next section we’ll discuss
bootstrapping, crowdfunding, and
microloans, three different financing options
that might work for your needs.

1.19 Bootstrapping
Instead of seeking external investors,
entrepreneurs with very limited capital can
find the funds to startup by reaching into
their pockets and pinching together a mixture
of supplemental income, savings, credit cards,
and stock investments. As with any financing
option, bootstrapping your business has its
pros and cons:
• Pros: Many entrepreneurs choose
this route because they do not want
their business to be defined by the
demands of external investors.
• Cons: At the same time,
bootstrapping is risky—your personal
savings, stock portfolio, and debts may be at risk. If you are thinking about bootstrapping,
consider consulting with a trusted financial advisor who specializes in small businesses.

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1.20 Crowdfunding
Crowdfunding is a term used to describe a
network of people who pool their money and
resources together, usually via the Internet,
to support efforts initiated by businesses.
You are probably familiar with popular
rewards crowdfunding sites such as
Kickstarter and Indiegogo. This is probably
the easiest way to get started in
crowdfunding and can be a good tool to
gauge customer interest as well.
However, there are actually four different
types of crowdfunding and the rules can be
confusing. The other types of crowdfunding
that may be useful to your business are debt
crowdfunding (also called peer-to-peer lending) and equity crowdfunding (where your funders actually
take a stake in your company and its profits). Some of the rules regarding equity crowdfunding are still
being decided by the government. If you plan on using crowdfunding, be sure you understand all of the
rules and costs. Crowdfunding also has its pros and cons.
Pros:
• Relatively quick and simple to set up
• Can help you gauge interest in your business idea, particularly if it’s a unique idea
• Can be a very cheap form of financing
Cons:
• Rules can be confusing
• Can be difficult to achieve fundraising goals
• Often, if you don’t reach your goal, you see nothing in return for your work

1.21 Microloans
Microloans are small, short-term loans for
small businesses.
• Pros: These may be available through
your bank’s own loan programs or
you might be eligible for a loan that is
guaranteed by the SBA. SBA loans are
designed to help small businesses get
started—the SBA guarantees the
loans on behalf of the lender or bank,
which reduces the risk involved in
lending to new business owners.
Microloans are typically made up to
$50,000.
• Cons: While microloans are an option,

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they can be difficult to secure for someone with poor or no credit history. Additionally,
microloan programs are not available everywhere, it may be difficult to find a lender with a
microloan program.

1.22 Decide on a Structure

In the previous topic, you figured out what
needs you have in terms of cash flow. Then,
you figured out the best way to get financing
for your business. Now, as you near the point
of starting and registering your business, one
of the first decisions you have to make is how
to legally structure your business. Common
options for small businesses are a sole
proprietorship, a partnership, or a limited
liability company. It’s important to
understand each business type and select the
one that is best suited for your situation and
objectives.
This decision is important, because the type
of business you create determines the types of applications you’ll need to submit. It will also affect the
liability you have as a business owner and the taxes you will need to pay.
We will cover the most common three business structures for small businesses: sole proprietorship,
partnership, and limited liability company (or LLC).

1.23 Common Small Business Structures

Sole Proprietorship—A sole proprietorship is
the simplest and most common structure
chosen to start a business. It is an
unincorporated business owned and run by
one individual with no legal distinction
between the business and you, the owner.
You are entitled to all profits and are
responsible for all your business’s debts,
losses and liabilities. Because you and your
business are one and the same, the business
itself is not taxed separately—the sole
proprietorship income is your income.
You do not have to take any formal action to
form a sole proprietorship. As long as you are
the only owner, this status automatically comes from your business activities. In fact, you may already
own one without knowing it. If you are a freelance writer, for example, you are a sole proprietor.
However, like all businesses, you will still need to register your business with federal and state
authorities, and obtain the right licenses and permits.

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Partnership—A partnership is a single business where two or more people share ownership. In general,
each partner contributes to all aspects of the business including money, property, and labor or skill. In
return, each partner shares in the profits and losses of the business.
Because partnerships entail more than one person in the decision-making process, it’s important to
discuss a wide variety of issues up front and develop a legal partnership agreement. This agreement
should document how future business decisions will be made, including how the partners will divide
profits, resolve disputes, change ownership (bring in new partners or buy out current partners) and how
to dissolve the partnership.
Limited Liability Company (a.k.a., LLC)—A limited liability company (LLC) is a flexible form of enterprise
that blends elements of partnership and corporate structures. It is a legal form of company that provides
limited liability to its owners in the vast majority of United States jurisdictions.
The “owners” of an LLC are referred to as “members.” Depending on the state, the members can consist
of a single individual (one owner), two or more individuals, corporations, other LLCs, and even other
entities.
Unlike shareholders in a corporation, LLCs are not taxed as a separate business entity. Instead, all profits
and losses are “passed through” the business to each member of the LLC. LLC members report profits
and losses on their personal federal tax returns, just like the owners of a partnership would.
Other—Other legal business entities include corporations, nonprofits, and cooperatives.
If you are unsure which business structure is best for your business, seek advice from a lawyer who
specializes in business structures.

1.24 Registering Your Business

Next, you’ll need to ensure you register your
business with the right authorities.
Business registration essentially encompasses
a 4-step process, and applies to all businesses
whether you are a freelancer, a home-based
or online business, or a franchise, regardless
of whether you are incorporated or not.
The four steps are:
1. Register Your “Doing Business As”
Name. This is a fictitious name,
assumed name, or trade name, and is
usually referred to as “DBA.” It is
different from your personal name,
the names of your partners, or the officially registered name of your LLC or corporation. An
example is John Doe’s sole proprietorship doing business as “Doe’s Lawn Mowing Service.”
Registering your DBA is done either with your county clerk’s office or with your state
government, depending on where your business is located. There are a few states that do not
require the registering of fictitious business names.
2. Register for State and Local Tax Purposes. State taxes include income tax, sales tax, and
unemployment insurance tax (for employers only), while local authorities such as your city or
county government oversee business property tax, permits, and licenses. Are you selling

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products? If you plan to sell products and you are required to collect sales taxes, you may need
a sales tax permit or vendor’s license from your state or local government (or both).
To register your business with your state tax agency, and to understand what you need to do
based on your business type, visit your state website. Similarly, to register your business with
your city or county tax department, visit your city or county website.
3. Register for Permits and Licenses. These vary by business type and location, but every business
needs a basic operating license or permit—even if you are home-based. Most of these permits
and licenses come from your local or state government. If your business is involved in activities
supervised and regulated by a federal agency—such as selling alcohol, firearms, commercial
fishing, etc.—then you may need to obtain a federal license or permit. More information can be
found in the SBA Article, Federal Licenses & Permits (http://1.usa.gov/1qyfjyK).
4. Register for a Tax Identification Number from the IRS. Most entrepreneurs use their own social
security number to pay business taxes. However, if you have employees, you’ll also need to
apply for an employer identification number (EIN). Employers with employees, business
partnerships, and corporations and other types of organizations must apply for an EIN online.
A good place to get started learning about the registration process, what permits and licenses
you may need, and registering for an EIN is the Licenses and Permits tool on SBA.gov
(http://1.usa.gov/1iruRBU).

1.25 Question 3
Let’s test your knowledge with this True or
False statement:
You must secure a loan to start a business.
The correct answer is FALSE.
A loan is only one of many options for startup
capital. Many businesses can be started with
very small amounts of money, so you can
probably get started by bootstrapping startup
costs without going through a formal loan
process.

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1.26 Objective Four, How to Get Help

While this course is a great start to
understanding what it takes to launch your
own business, you probably have more
questions. Throughout the process of
starting a business, from thinking of an idea
to actually opening your doors for business,
seek out help to ensure your success! You
might be surprised, but the government
offers a great deal of free resources such as
mentoring, workshops, and training, both
online and locally.
Let’s talk about three ways to find advice and
help through your business’s life: Finding a
mentor, using online resources, and finding
in-person assistance.
• Mentors
• Online resources
• Resources within your community

1.27 Finding a Mentor

During the first few years of your business’s
life, you will need a mentor—someone to
turn to for advice and support.
A mentor is someone who has been there
before…they are experienced, successful, and
can provide critical guidance to help you
make an informed decision with your
business. Below are some ideas on finding
and working with a mentor for your small
business:
• Try utilizing free business mentor
organizations such as SCORE, a
nationwide network of business
mentors who provide free and
confidential counseling, mentoring, and advice to small business owners. SCORE offers in-person
and online mentoring, hosts online and in-person training, and offers free business related
templates and worksheets on their website, www.score.org.
• Mentors can be successful family members or members of the business community you admire
or aspire to become. Look within your network—whether you have admired a business owner
from afar, or know someone in your previous employment that you respect and value for their
business insight. You have nothing to lose in approaching and asking these individuals if they
would consider being your mentor.

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• A mentoring relationship is unique and can be a valuable resource for you and your business.
There are no specific rules for developing a mentoring relationship. However, you should
respect each other’s contribution to the mentoring relationship, and recognize when you need
to change the relationship, move on, or step it up.
• Mentoring requires communication, so try to find a balance between being too shy and too
aggressive and demanding with your mentor.

1.28 Online Resources

There are many resources on the Internet to
help small businesses succeed. You can use a
search engine to find online business advice,
training, or mentoring for general business
topics or based on your business’s geographic
location or industry.
The SBA Learning Center is an online portal
that hosts a variety of self-paced online
training courses, quick videos, web chats, and
more to help small business owners explore
and learn about the many aspects of business
ownership. The SBA Learning Center reaches
an extensive audience, and most of its
content focuses on entry-level concepts for
aspiring entrepreneurs who are thinking about starting a business.
Sign-up for the SBA Community where you’ll find discussion forums, blogs written by business experts,
and events boards all focused on small business topics (http://1.usa.gov/1nohoXO).

1.29 In-person Assistance

Your own neighborhood likely has many
resources for small business owners. SBA has
local offices and resources centers all over
the US and its territories. These resources
include:
• SBA’s 84 District and Branch offices
connect entrepreneurs to resources,
products, and services that can help
them start, manage, and grow their
business. These offices are located in
all 50 states, Puerto Rico, the US
Virgin Islands, and Guam.
• Small Business Development Centers
(SBDCs) are associated with
institutions of higher education—universities, colleges and community colleges. More than 900
SBDCs offer no-cost, extensive, one-on-one long-term professional business advising, low-cost
training, and other specialized services, such as procurement, manufacturing, and technology
assistance, which are critical to small business growth.

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• Women’s Business Centers (WBCs) provide free management and technical assistance to help
women and men start and grow small businesses. There are over 100 WBCs located throughout
the US and Puerto Rico.
Visit SBA Local Assitance to find a location near you (http://1.usa.gov/1kihdhJ).
Local organizations such as the Chamber of Commerce, local government small business development
agencies, and local industry groups are also good places to look for in person assistance.

1.30 SUMMARY
That was a lot of information. Becoming a
young entrepreneur can seem daunting, but
the information presented in this course
should help you succeed.
In this course, we:
• Described the fundamentals of
entrepreneurship, including the
characteristics that are typical of
successful small business owners,
how to come up with your business
idea, and how to assess the market
for your idea.
• We also identified different options
for doing business that are ideal for young entrepreneurs, such as online businesses, working
from home, freelancing, and franchising.
• We provided the first steps to starting your business by stressing the importance of defining
success and creating meaningful steps in your business plan. We provided ideas about how to
finance your venture, including possible financing options depending on your situation. We
defined the three common small business structures your business may fit under. We finished
up by giving you the four-steps required to register your business.
• Finally, we provided information about accessing entrepreneurial support resources such as
finding and working with a mentor or accessing free online training and information. We also
described various in-person resources available from the Small Business Administration and its
resource partners all over the United States and its territories.

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1.31 Next Steps

Now what? Below are a few things you can do
to take these next steps to get your business
off and running:
Step 1: Use the “Start A Business” Wizard to
find helpful resources specific to your
situation (http://1.usa.gov/1kG9tbp).
Step 2: Use SBA’s Business Plan tool to start
making critical decisions about your business
(http://1.usa.gov/1eOeygT).
Step 3: Read SBA’s article “10 Steps to Start
Your Business” for guidance on those first
critical steps (https://www.sba.gov/business-
guide/10-steps-start-your-business/).

1.32 Have a Question?

• Call SBA at 1-800 U ASK SBA (1-800
827-5722)
• E-mail SBA at answerdesk@sba.gov
• To provide feedback, comments or
suggestions for other SBA Learning
Center content, please email
learning@sba.gov

1.33 Certificate
Congratulations on completing this course.
We hope it was helpful and provided a good
working knowledge on how to get started and
be successful. Click the certificate to receive a
course completion confirmation from the US
Small Business Administration.

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2. Recommendations
A.C.T. NOW! The article, course and the tools
below are related to the course you have just
completed. They are provided to help you
take action on your path to entrepreneurial
success. You can also get in-person assistance
for all of your business needs through a local
resource center. And if you liked the course,
please help spread the word by sharing it
with your friends!
Read an SBA Article. The article “10 Steps to
Starting a Business” provides more guidance
on those critical first steps
(http://1.usa.gov/1nWqJfN).
Take Another Course. The How to Write a
Business Plan course explains the importance of business planning, defines and describes the
components of a business plan, and provides access to sample plans and resources that can help you
develop a very good business plan (http://1.usa.gov/1hYCURr).
Try a Tool. Use the “Start A Business” Wizard to find helpful resources specific to your situation
(http://1.usa.gov/1kG9tbp).
Find local assistance! SBA has a broad network of skilled counselors and business development
specialists (http://1.usa.gov/1kihdhJ).

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