QUICK-LAUNCH BUSINESS PLAN
AUDIO TRANSCRIPTION
SEGMENT 1B


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	Now that we've been through the Discovery process, let's look at the 
planning map that guides the rest of the business plan development.  Again, 
these are just suggestions as to how we're going to collect the data that we 
need to develop a good business plan.
  
		When we're talking about a good business plan, what we're doing is 
telling a story.  We're giving a rationale as to how the business is going to 
operate.  We're projecting into the future how it is that the person is going to 
make money.  What kind of money are they going to make?  We're also presenting 
our argument for why we think the business will be successful, how much money 
it's going to make and why it fits this person and the market at this particular 
time.  

		We're going to break that down into sections. And, you're going to go 
work on those sections.  Then, you'll come back to another lesson.  We'll move through 
the lessons.  Finally we're going to work through some spreadsheet applications.   
Later on, Dave Hammis is going to talk about the considerations of PASS and 
Social Security applications in talking specifically about self-employment for 
an individual with a disability.

		Let's start with the product and service.  Just to run you through 
the map, we started identifying what's the product or service.  We talked about 
the market environment and the business feasibility.  How are we going to 
test that we know that there is a market available to us and that the business 
is feasible?  That is, that it will move forward.  It will succeed.  It will 
make the person money.

		We're going to move into the three C's: customers, competitors and 
capabilities.  Are we going to serve customers in Thailand or are we going to 
stick to our local economy? How much can we do?  

		Then we move on to the marketing mix.  How are we going to 
sell this item?  How are we going to reach our customers?  How are we going to 
get the product or the service to the customer?  Again, what are the best 
techniques of promotion and advertising for this particular business?

		We're going to move on to operations. What kind of tools are we going 
to need?  Where is our supply chain?  Do we need multiple suppliers of the same 
product? Do we need to negotiate special prices with suppliers?
		
What happens if something goes wrong with one supplier, and they can't reach us?  
Have we thought about opportunities and figured out wholesale pricing?  What are 
our contingencies?  And, what's our production plan?  How many of these things do 
we have to sell or services do we need to provide every month to make a living?  
How are we going to measure that?
 
		Finally we move on to the financial plan.  What's the cash on hand?  Has there 
been a benefits analysis done?  Are we using Social Security work incentives?  
What kinds of assets or tangible items are we bringing to the business 
ourselves?  What kind of tools do we already own that we're going to use?  
What's our cash flow projection?

		Again, for many folks in the rehabilitation world, you may not know 
a lot about cash flow and budgeting.  And that's okay.  Anybody who has ever 
balanced his or her checkbook has done cash flow analysis.  It's not as 
complicated as some people make it out to be.
 
		Are loans going to be necessary?  Have we thought about where we're 
going to borrow money, and what are going to be the interest rates? What is going 
to be the impact on our business of borrowing money?  Again, what are the work 
incentives that we can leverage, whether it's subsidy or a Plan for Achieving 
Self-Support?  
		
There's a sample business plan in your materials.  It's the quick launch 
One-Day Business Plan.  It's called Anna's Natives Arts. I'm going to point out 
a couple of specifics.  Then we're going to go back and look again at each 
section of the business plan that we've talked about.
 
		If you look on the second page of the business plan, you'll see we 
have an introduction to Anna. She is right there in the opening 
paragraph.

		As we move down, there's a mission statement of sorts.  She has four 
parts to her mission statement. It's to establish a self-sustaining business.  
It's to hire at least one part-time staff within 18 months.  That's to relieve 
the ongoing support from her provider agency and family.  
This has obvious financial ramifications. She has to make X number of sales per 
month to be able to afford to hire that person.  This becomes a planning 
issue.  

Folks who are going to invest in your business are going to be interested in that,
folks like Vocational Rehabilitation or the workforce investment system, or
perhaps somebody who is loaning you money. Perhaps the family is saying, "We 
want to see that you're going to be self sustaining at some point.  Certainly 
the Social Security Administration is going to be interested in that if 
you're applying for a Plan to Achieve Self Support to start your business.

		It's important to look at your mission statement.  What are some of the 
financial or self sustaining activities that you're going to undertake and achieve 
through your business?
 		
You're going to develop an international repeat customer base.  That's an important 
thing in this particular kind of retail business. Repeat customers are an 
important base for most retail businesses.  It's said that 80% of your profits 
come from 20% of your customers in this kind of business.  It's very important 
to have a strong customer service and a strong repeat aspect to your business 
plan.  We're not talking about pages and pages of strategy here.  We're talking 
about a simple rule. Treat people right in your business, and they'll come back to 
you.  Keep good products at reasonable prices, and you will get repeat business.


And, [in the mission statement] she has to become known as an e-Bay leader in 
authentic Native American jewelry sales.  Her core business is that she's selling 
over e-Bay.  That's her distribution channel.  She'll be selling over e-Bay unique 
pieces of Native American art, manufactured locally one piece at a time in New Mexico.  

		As we move down you can see the products and services section.  Just 
reference this. You can print it out or look at it on your screen.  You can read 
it for yourself.  I'm not going to go through it word for word.  But her primary 
sales outlet here is going to be e-Bay.
  
		E-bay allows her to reach all kinds of people everywhere in the 
world.  Over time she will have created a strong customer base through her 
feedback on e-Bay. Really it's a virtual network business model.

		We've put in an extra little bit of data to make her case 
about why e-Bay is important.  This is going to be important when you write 
whatever business plan you're writing.  For one thing, selling on E-bay is an 
accommodation for her.  She likes the computer work, and she already has that 
kind of technology.  She obviously knows her market.  Selling in Old Town in New 
Mexico is not as accessible for her as her computer is.

		She's been selling at flea markets locally.  She's not necessarily 
going to stop that.  But e-Bay allows her to hit customers all over the world 
and not have to compete with her suppliers every weekend at the Indian market.

		
We've gone on to do a little more research about e-Bay businesses.  
CBS News estimates that over 250,000 Americans have quit their day jobs to open 
full-time businesses on e-Bay.  That's important information that establishes e-
Bay as an obvious outlet for this kind of artwork.

		Plus, she's already been selling on e-Bay.  It's part of our
feasibility testing. Not only were we selling at the flea market locally, 
not only had we established ourselves with local native artists who would 
provide the jewelry at wholesale prices to Anna, but also that we've been 
putting pieces on e-Bay to slowly start to build momentum.


		She needs enough inventory to get low enough prices
to make a profit and build her reputation on e-Bay.  We've also done some 
costing here as you can see.  We've done some estimates about sales based on 
sales at the flea markets and her trial E-bay sales.  A very simple statement 
that we think she can sell, Just to start out, 30 items at $15 per month 
(mostly the silver earrings), 10 items at $50 per month, and 2 items at $100, 
the more costly things.
 
		We discovered in researching the business that, until you have a 
reputation that your feedback on e-Bay is strong, people are not going 
to drop $100 on your product that they can't see very well.  Even though 
there are pictures of items, customers can't tell the kind of 
quality of the items.  Building up the feedback, having other purchasers say, 
"Wow.  This is some of the best authentic certified jewelry that you can buy at 
reasonable prices," is really important to building up her business.

		We're starting small with smaller ticket items.  We're going to 
building up over time to more expensive items.  We're really starting to 
understand the market here and the fact that we've got to build this loyalty 
first.

		We've also made sure that we've identified the pricing structure.  
Right?  And what are the costs of selling?  What are our wholesale costs?  
What are our sales costs?

		We know that e-Bay charges a fee.  We know that we're buying the 
jewelry in bulk at e-Bay or at wholesale prices.  We are turning around and 
trying to get double our money, a reasonable markup on e-Bay.  We are also 
paying the fees to e-Bay and the fees to Pay Pal. Pay Pal is an on-line bank 
that allows people that is owned by e-Bay that is very convenient for the 
purchaser. They don't have to mess with money orders.  Pay Pal is 
safe and credit card protected.  It does cost Anna a little bit.  But in 
the long run, we decided that Pay Pal makes it so convenient for people to buy, 
that we should go ahead and absorb that cost.
  
		You have some business decisions to make whenever you're working on 
a business plan.  You have to think about what are the costs and are the costs 
worth it.  In this case, it made sense.

		If we move down, you'll see we have our customers, our competitors, 
our marketing and our sales.  If you reference back to the planning map, you see 
that we've talked about those issues.  We're just simply outlining what are 
Anna's products and services to make it short, simple and as painless as 
possible for the customer and for the person who is going to help fund this 
business.  

	Boom, boom, boom.  She's selling authenticated handmade silver jewelry 
from the heart of Indian country.  That's whom she is going to be known as.
It's moderately priced, not the highest priced stuff.  But it's good stuff. 
She has a wide range of designs.  She's also getting unique items from her 
producers.  She's got a money back guarantee on quality and the description.

		So again, very simple, very straightforward, very to the point. 
It shows people that you'll be sending this business plan for review that you've 
thought through the process.
 
		Almost anybody, almost any kind of business, can talk about their 
primary model and their customer service.  Whether it's a money back guarantee 
or some sort of satisfaction.  Some idea that the customer is important.
 
		When I'm reviewing and writing a business plan, I want to make sure 
that you've thought deeply enough about this business that you can identify not 
only your obvious customer but also a secondary customer.  Somebody who is going 
to use the business, the product or the service a little bit differently than 
the primary user who is going to use it all the time.  
 
		  All we have to do is show that we understand the customer base.  
The primary customers are American women seeking tasteful and unique moderately 
priced jewelry for school and office.  We're looking at all age ranges here.  We 
are looking for people who are fashion conscious and have some disposable 
income.

		The secondary customer is the international trade.  People from 
Europe, Australia and Japan primarily, from our research selling 100 items on e-
Bay prior to writing the business plan. These folks are looking for professional 
or recreational jewelry that says, "Wow.  This is Native American.  This is 
something special that you don't see every day in Europe, Australia or Japan." 

		A very simple process that came out of feasibility testing on e-Bay.  
Very simple front-loading of a few hundred dollars worth of items.  Take the 
profits from selling them; buying some more and putting them back on e-Bay. 
Taking a few months to really test out this business idea.  Obviously some 
businesses you can test out about a lot faster than that.
 
		We've also talked about differentiation here or "the niche".  
Anna's Native Arts stands out.  One of the sales points here is that it really 
is going to have a sole location on e-Bay.  We're going to fade out the other 
places, the flea market, for instance.  Even though one of her long-term goals 
is to own a regular storefront and be known as a jewelry retailer, for 
right now the place that you get Anna's Native Arts is on e-Bay.

		It's quality at a good price.  It's super fast shipping.  She 
regularly heads to the post office.  That gets her out of the house.  That gets 
her known in her supply chain.  We're going to make it easy to purchase.  She's 
really going to sell her jewelry with the idea that she's right there.  She's 
right there in New Mexico where all of this stuff happens.

		The other point to re-enforce is she's going to have another web 
site, not primarily for sales.  It is a place where people are going to find her 
on e-Bay and see that she carries more items and special interest items on her 
web site.  They'll go to her other Web site to look for different items.

		It's called an add-on in some of the language.  It's a place where, 
while you have people buying and in the mood to buy, let's capture them and have 
them look a little bit deeper into our business.  We'll be growing that 
inventory over time as well.

		We're trying, when we send this to Social Security or Vocational 
Rehabilitation or the One-Stop or CRP or whoever is funding this (even the 
family) to show that we've looked deeper and to the future a little bit.  That 
this is a plan and looking down the road to how are we going to grow this.
 
		Now, the feasibility is a fairly simple idea.  We've been going to 
the flea markets to see how things sold.  Flea markets may or may not be a good 
place to sell retail.  It depends on the environment and on the community.  On 
e-Bay, part of her learning curve was to understand e-Bay. She had to her 
counselor and her family helping her with that.  Part of the learning curve was 
to see if there really is a market for good Native American jewelry on e-Bay.  
And there certainly is.

		She had sold over 100 items and earned a net profit of over $500.  
That said, "Well, boy, she knows how to do this and this looks like a great 
place to go."

		Promotion and distribution.  Primarily we're looking at e-Bay.  
E-Bay is very unique in the world.  Certainly it's not for everybody.  We 
actually have started very few e-Bay businesses.  It's not something that a lot of 
people want to do.  It really does present a very interesting business model of 
an opportunity to put a customer and a salesperson together over the Internet.  
Nothing like that existed before e-Bay.
 
		We've moved down and done a sales forecast.  Based on our 
information about what we've had available on e-Bay, we think we can move 30 
pairs of $15 earrings, 10 bracelets and 2 precious stone necklaces per month.  
We can start out there and run those numbers.  We can gradually increase that.  
As we start to do the business, we'll figure out what sells and what 
doesn't and we'll adjust that as we go.  But based on our previous sales, we 
think that we can push this much merchandise.

		We've done a very simple startup budget.  We have to think who can 
fund the business. She will need a new desktop computer and a printer.  We may 
go to the community rehab programs that support her, which in this case are the 
Cerebral Palsy Center or Voc Rehab for $2500.  She needs a computer consultant to 
set up the adaptations so she will be able to sell on e-Bay. That's another $1500.

		A high quality digital camera is about $300.  High speed Internet 
connection is $400.  Transportation to and from the post office and to her 
jewelers.  She needs some bookkeeping and tax service that's $600.  She's 
going to need startup inventory that's about $1,000.
  
		She needs shipping supplies that's another $100 to get going.  Those are 
variable costs.  As soon as she sells, she'll have that built into the price of 
the item to take care of that.  She needs a decent web site to get started.  We 
estimated that at about $500.

 		She has a total startup cost estimated at $8900.  All of our 
predictions and rollout of her business shows that it's not an incredibly 
terrible amount to start with.  It's certainly do-able.  Her 
sales in the first year will be $10,930.  We'll show you that on the 
spreadsheets later in the program.
 
		That's the basic business plan we're making an argument for funding.  
We hope that there are a variety of resources we can draw from for a Plan for 
Achieving Self-Support.  The Cerebral Palsy Center in this case receives funding 
to serve Anna to buy inventory, equipment or provide support. It will depend 
on the funding streams that they are using; obviously Medicaid causes some 
hiccups in that area.  So, you may not be able to buy equipment with that.  But 
you can certainly buy a lot of support with waiver money.

		Vocational Rehabilitation can provide equipment under the tools and 
equipment line in the Rehab Act.  They can also do it under support of 
employment funding or under general case funding.  So there are a variety of 
options for funding.  Also the One-Stop could provide ongoing support and job 
coaching, there are a variety of sources there.
  
		Let's go back now.  We looked at the sample business plan. I would 
like for you to go and read it thoroughly and see how we put it together.  See 
how it tells a story in a very noncomplex, logical way.

		We use the planning map to guide our conversation so that we don't 
get off track and stay to the point. So we're as succinct and precise as we can 
be.

		We're talking about something that hasn't happened yet.  We're 
talking about the future.   It's always hard for many of us that we're asking 
for something that we're not sure of.  But that, in essence, is business 
planning.  That's why we go back and do our research this way.

		As we get into this business mission, what we're looking at as you 
write this is that we want to describe the business in one or two sentences. 
It's also for you to get clarity about the person that you're helping. Obviously 
if the person can write their own business plan, that's great.  But most of us 
need somebody to bounce those ideas off.

		If you're working with somebody who doesn't read or write very well, 
then you use your counseling techniques to make sure you understand what it 
is that they want to do with their business.  

       If they want to mow lawns, then that's a pretty simple kind of business.  
We can clarify where it is that you want to mow lawns. Does this person drive?  
Can they get across town or does he need to mow lawns in his  neighborhood?  Do 
we need to go into a development that has 2,000 houses and try to figure out 
"Well, you know, I really need to mow 20 lawns a week to make a living.”?  We 
can run that number.
 
		If that meets that person's work abilities, that they can mow 20 
lawns a week, then we must see if there’s a market for that. We know that we 
need to canvas neighborhoods that are nearby so he doesn't require a car that 
he can take and haul equipment down by hand and get that job done. So he can get 
four lawns a day for five days a week.  That would work fine.  

		Maybe you don’t need all of that detail to start out.  But let's 
say that it's a lawn mowing business in the Quail Grove Estates Development two 
blocks from where I live. That's a very simple statement to start with.

		Think as you develop this business what problems does this product 
or this service solve for the customer.  Why do they need this?  Most of the 
stuff that we buy during the day we don't need.  I could have a Coke or a 
Pepsi.  Why did I choose Pepsi?  

		Why did I buy a bottle of water instead of going to a faucet?  Was 
there something convenient about having it in a bottle?  We make buying 
decisions all the time based on convenience, price, status or the need that it 
satisfies.

		So think that through.  Why would somebody buy Anna's art or her 
jewelry?  Why would they buy the jewelry that she's selling?  And why would they 
buy it on e-Bay?  Maybe because they are busy students or professionals.  
They don't have time to go shopping.
  
		Maybe it's a man.  There might be a tertiary customer.  Maybe it's a 
man who needs to buy a birthday present for his spouse. And he doesn't know 
anything about jewelry.  So he goes on e-Bay and looks.
  
		Anna at this point has maybe 1,000 sales.  And 100% rating.  And 
1,000 customers who have said, "Man, this was a great value.  It's really great 
stuff to wear.  I get so many compliments on this jewelry."  Then I know I've 
got a pretty safe bet and I should buy from Anna.

		These are the kinds of things that we're looking for.  You don't 
have to write all that down.  You can capture that in a sentence or two.  
But you must have that in the back of your mind that there is some strategy 
to this business.
 
		Write two or three goals for the business.  Part of what people who 
might fund the business want to see is that you're going to be self sustaining 
or that you're going to work towards being self sustaining.  We all hope to be 
independent.  We want to be financially capable of moving forward.  We want to
have enough money to retire on.

		Why shouldn't that be the goal?  Right?  Also sales goals and 
customer service goals are perfectly reasonable here.
 
		How many sales do you want to make?  How much money do you want to 
make?  All of those are reasonable goals.  Those can be monetary data goals or 
they can be qualitative goals.

		So let's go work on that.  Let’s get that written down primarily by 
telling a story with complete sentences and complete thoughts.  It doesn't mean 
that we can't do bullet items. That's fine but introduce it.  Talk about it a little bit.

		Look at the sample business plan provided or other business 
plans.  If you go to our web site, griffinhammis.com, you can find other sample 
business plans.  You can do a web search.  I wouldn't want you to copy 
somebody else's business plan, because they are not unique to your business.  But 
you will get some ideas about language and formatting techniques.

		So go do that.  Then we'll come back and start the next section 
on products and services.  

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