Planning and Investors

By Jacqueline R. Hutchko
American Intercontinental University
MGMT250-1204A-01
September 14, 2012 Professor Ted Framan

Abstract

Bottom line you have to put a value on your product. What is the value of this product, what is it worth to my customers? With research you should know about your targeted customer and their desires/needs. What is your demand curve? Finding the right balance between these factors is the clue to being successful and making a profit. The sole purpose of any company is to make money. Honestly, what firm would invest lots of money and time; into something that they didn’t think they would receive profit? Without sales, with both your services and goods; unless you had a money tree in your backyard you would not succeed.

Introduction A business plan is like an outline. A business plan is a complete set of projected financial statements, including profit and loss, cash flow and a balance sheet. Kyle and Chad need a guide that will allow them to see ahead and perhaps overcome any obstacles that may prevent them from moving forward. Anytime when money is invested and an individual relies on profit to move ahead they need to organize a strategic plan. This will help to ensure they will have a competitive edge and will be profitable. A positive trait in which I see about Kyle and Chad is there effort in dealing with the consumers both existing and new, plus their excellent personal selling skills. “This simple regular customer contact is part of his larger vision of economic growth.” (Van Hampton, 2011) Public relations and knowing your customers and your employees are key factors in successful business. They already had their mission in place; “To provide top-quality service and convenience at a fair price.” With anything in life, when it comes to making a decision there are risks. The uncertainty of not knowing, how the changes will affect the outcome with the companies output. Between the sources and the processing of the information given we all use particular ways in making decisions. With any decision there is also trial and error. The selective perception is a way where one can pay attention to the problems and identify and make alternate plans to eliminate the problems. A clearly defined vision of the end result enables all the people to define the most efficient path for accomplishing the results. To be successful in anything you do in life, generally there is a plan or a vision that one has that helps them to see the ending results. Kyle and Chad need to lay out a plan, with guidelines, weighing out the positive and the negative consequences. This will help in establishing a more positive aspect within their company. Some people are more visual and with a clearly defined layout of a plan, it helps others see why and where the changes will occur. This can help in building the confidence that is needed in obtaining goals. Also, the banks like to see a definite plan that outlines not only the changes that will be made but the financial guidelines and what the future holds. By using effective means within their decision making Kyle and Chad should; “Focus on what’s important, logical and consistent, acknowledges both subjective and objective thinking, blends analytical with intuitive thinking, requires only as much information and analysis as is necessary to resolve a particular dilemma, encourages and guides the gathering of relevant information and informed opinion is straightforward, reliable, easy to use, and flexible.”

Goals are also important in a company, giving an insight as to where you will be in the future. Helping to prioritize and organize within your corporation and prepare you for the unexpected. (Robbins & Coulter, 2009) Kyle and Chad should remember to analyze any risk that may be involved, the importance of a risk assessment is imperative with any new operations. Those events identified as high-risk should have specific plans put into place to mitigate them so they do not, in fact, occur. They also need to put in place a contingency plan in cause of a setback or problems that may occur. Some factors that both Kyle and Chad should considering; * Mission - Strategic Direction and Intent, Goals and Objectives and Vision * Adaptability - Creating Change, Customer Focus and Organizational Learning * Involvement - Empowerment, Team Orientation and Capability Development * Consistency - Core Values, Agreement, Coordination/Integration

What do bankers, other lenders, or investors want to see in a business plan? Kyle and Chad’s financial data and history will be extremely important to the; bankers, other lenders, or investors. “Creditors also are interested to know what collateral that you may have to ensure your loan.”(sba.gov, n.d.) Are there any inconsistencies with your finances? They will need to summarize their projections as this will help in establishing belief that they have direction, including a prospective ratio and trend analysis report. “You need to show your credit history, resumes, letters of reference and any additional information that a lender may request.”(sba.gov, n.d.) Bankers, other lenders, or investors want to see that within your business plan there are your deliverables, milestones, mission, and the roles and responsibilities that each employer plays. 1. Outline of elements for Chad and Frank;
a.) Uncovering the decision.
b.) Gathering information.
c.) Identification of the driving forces.
d.) Uncover the predetermined elements of scenario.
e.) Single out the most critical uncertainties.
f.) Composing the scenarios.
g.) Analyzing the possible effects and implications of the scenarios.
h.) Selecting the best indicators of the scenario.

Upon meeting with their banker, Kyle and Chad should have all their documentation prepared and organized. The necessary paperwork which they should have would consist of: * “Personal Background- previous addresses, names used criminal record, educational background, etc. * Resumes - evidence of management or business experience? * Business Plan - a complete set of projected financial statements, including profit and loss, cash flow and a balance sheet. * Personal Credit Report - obtain a credit report from all three major consumer credit rating agencies. Inaccuracies and blemishes on your credit report can hurt your chances of getting a loan approved. It’s critical you try to clear these up before beginning the application process. * Business Credit Report – submit a credit report for your business * Income Tax Returns - submit personal and business income tax returns for the previous 3 years. * Financial Statements - submit signed personal financial statements * Bank Statements - one year of personal and business bank statements * Collateral – Only high risk loans for default, however, it is a good idea to prepare a collateral document that describes cost/value of personal or business property that will be used to secure a loan. * Legal Documents * Business licenses and registrations required for you to conduct business * Articles of Incorporation * Copies of contracts you have with any third parties * Franchise agreements * Commercial leases” (sba.gov, n.d.)

As we all know and so should Kyle and Chad be aware of when preparing to meet with any banker, lender or investor they should invest in some time with their appearance; modest yet professional. Both Kyle and Chad should be prepared to answer some questions. They should prep themselves prior to meeting with their bankers, lenders or investor as it is a good ideal in being organized. * “Why are you applying for this loan? * How will the loan proceeds be used? * What assets need to be purchased, and who are your suppliers? * What other business debt do you have, and who are your creditors? * Who are the members of your management team?”(sba.gov, n.d.)

Reference:

Robbins, Coulter, (2009). Management, Managers as Decision Makers, (10th ed.) Upper Saddle River, New Jersey: Pearson Prentice Hall.

Van Hampton, T. (2011). Down to earth. (Cover story). ENR: Engineering News; retrieved from EBSCOhost Discovery Service.
http://www.sba.gov/content/business-loan-checklist