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29 Cards in this Set
- Front
- Back
Who Reads the Business Plan—And What Are They Looking For? There are two primary audiences for a firm’s business plan
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A Firm’s Employees
Investors and Other External Stakeholders |
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Who Reads the Business Plan—And What Are They Looking For? A Firm’s Employees
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A clearly written business plan, which articulates the vision and future plans of the firm, helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner.
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Who Reads the Business Plan—And What Are They Looking For?Investors and Other External Stakeholders
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A firm’s business plan must make the case that the firm is a good use of an investor’s funds or the attention of other external stakeholders. The key is to include facts generated through a properly conducted feasibility analysis. A business plan rings hollow if it is based strictly on what an entrepreneur or team of founders “thinks” will happen.
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Guidelines for Writing a Business Plan: Structure
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To make the best impression, a business plan should follow a conventional structure, such as the outline for the business plan shown in the chapter.
Although some entrepreneurs want to demonstrate creativity in everything they do, departing from the basic structure of the conventional business plan format is usually a mistake. Typically, investors are very busy people and want a plan where they can easily find critical information. Software Packages There are many software packages available that employ an interactive, menu-driven approach to assist in the writing of a business plan. Some of these programs are very helpful. However, entrepreneurs should avoid a boilerplate plan that looks as though it came from a “canned” source. Sense of Excitement Along with facts and figures, a business plan needs to project a sense of anticipation and excitement about the possibilities that surround a new venture. |
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Guidelines for Writing a Business Plan: Content
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The business plan should give clear and concise information on all the important aspects of the proposed venture.
It must be long enough to provide sufficient information yet short enough to maintain reader interest. For most plans, 25 to 35 pages is sufficient |
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Types of Business Plans
There are three types of business plans |
Summary Business Plan
Full Business Plan Operational Business Plan |
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Summary Business Plan
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10-15 pages
works best for new ventures in the early development stages that want to "test the water" to see if investors are interested in their idea |
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Full Business Plan
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25-35 pages
works best for new ventures who are at the point where they need funding or financing: serves as the "blue print" for the company's operations |
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Operational Business Plan
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40-100 pages
is primarily meant for an internal audience; works best as a tool for creating a blue print for a new venture's operations and providing guidance to operational managers Expensive and easily out of date (Barnum perspective) |
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The 10 Most Important Questions a Business Plan Should Answer
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Is the business just an idea, or is it an opportunity with real potential?
Does the firm have an exciting and sensible business model? Will other firms be able to easily copy it? Is the product or service viable? Does it add significant value to the customer? Was a feasibility analysis completed? Is the industry in which the product or service will be competing growing, stable, or declining? Does the firm have a well-defined target market? Is the management team experienced, skilled, and up to the task of launching the new firm? Is the firm organized in an appropriate manner? Are its strategy and business practices legal and ethical? Are the financial projections realistic, and do they project a bright future for the firm? What rate of return can investors expect? How will the firm’s competitors react to its entrance into their markets? What are the critical risks surrounding the business, and does the management team have contingency plans in place if risks become actual problems? |
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Business Plan + (internal/external reasons)
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Internal Reasons: forces the founding team to systematically think through every aspect of their new venture
External Reasons: communicates the merits of the new venture to outsiders, such as investors or banks What a new business will accomplish, and how they intend to do it Story / Narrative (do not blow off) Forces E to think through all ideas Helps banks and investors understand the company Internal document for internal use Road map for where the company is going Tells if the business is viable |
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Who Reads the Business Plan—And What Are They Looking For? *Board of directors* (KNOW)
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Never printed business plan until they approved it
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Cover page
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Contact information / company info (helps connection)
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Executive summary
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The executive summary is a short overview of the entire business plan
It provides a busy reader with everything that needs to be known about the new venture’s distinctive nature. An executive summary shouldn’t exceed two single-spaced pages. In many instances an investor will ask for a copy of a firm’s executive summary and will ask for a copy of the entire plan only if the executive summary is sufficiently convincing. The executive summary, then, is arguably the most important section of a business plan. most important 2-3 pages of business plan What everyone reads short overview of the entire business plan written last express money needs |
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The Business
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description of enterprise and its activities
talk about how you are different from the next company |
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Products and service
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how is it used
where are you in the development process |
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management team
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The management team and company structure section of a business plan is critical. Many investors and others who read business plans look first at the executive summary and then go directly to the management team section to assess the strength of the people starting the firm.
reader wants to know who they are what their experience is What they bring to the table experience, ability, board of directors (who is on it) / board of advisers |
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company structure and ownership
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want an organizational chart
representation of how authority and responsibility are distributed within the company who reports to who if public company, board of directors is at the top (CEO reports to them) |
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company structure and ownership: Legal structure
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legally, how is the company put together
sole proprietorship run it yourself partnership bring in one or two partners to run business with limited partnership corporation board of directors shares of company what you have as far as intellectual property patents/trademarks |
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industry analysis
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industry analysis describes the industry a business will enter. The market analysis, which is a separate section. breaks the industry analsysi into segments and zeros in on the specific segments (or target markets) to which the firm will seek to appeal.
This section should begin by describing the industry the business will enter in terms of its size, growth rate, and sales projections. Items to include in this section: Industry size, growth rate, and sales projections Industry structure Nature of participants Key success factors Industry trends Long-term prospects Before a business selects a target market it should have a good grasp of its industry—including where its promising areas are and where its points of vulnerability are. The industry that a company participates in largely defines the playing field that a firm will participate in. talk about the industry you operate in strengths and weaknesses of industry target markets (never everyone) - segmented Use Porter’s Five Forces - to determine the profitability of an industry |
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Marketing plan
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The best way to describe a start-up’s
marketing plan is to start by articulating its marketing strategy, positioning, and points of differentiation, and then talk about how these overall aspects of the plan will be supported by price, promotional mix, and distribution strategy. It’s also important to discuss the company sales process. how are you going to reach customers and have them buy your product how is going to be marketed Price, Promotion, Place, Product |
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operations plan
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how going to produce product
what is product, how is it differentiated operate internally risks |
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financial plan
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The sources and uses of funds statement is a document that lays out specifically how much money the firm will need( if it is raising money), where the money will come from, and what it will be used for.. An assumption sheet is an explaination of the most critical assumptions that a business's financial analysis is based on.
Two companies in the same industry may make profits in different ways. One may be a high-margin, low -volume business, while the other may be a low-margin, high-volume business. It’s important to check to make sure the approach you select is sound. Computing a break-even analysis is an extremely useful exercise for any proposed or existing business. how much money you need pro-forma income statement projections (not historical, but uses past info to guess) use other companies similar to yours for information (to project yours) past trends liquidity event recognize value of company could be going public, selling to third party |
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Critical risk factors
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what happens if
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The Oral Presentation
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The first rule in making an oral presentation is to follow directions. If you’re told you have 15 minutes, don’t talk for more than the allotted time.
The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered. |
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Questions and Feedback to Expect from Investors
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The smart entrepreneur has a good idea of the questions that will be asked, and will be prepared for those queries.
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What Is a Business Plan?
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Business Plan
A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business plans to accomplish. Dual-Use Document For most new ventures, the business plan is a dual-purpose document used both inside and outside the firm. |
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Market Analysis
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The market analysis breaks the industry into segments and zeros in on the specific segment (or target market) to which the firm will try to appeal.
Items to include in this section: Market segmentation and target market selection Buyer behavior Competitor analysis Most start-ups do not service their entire industry. Instead, they focus on servicing a specific (target) market within the industry. It’s important to include a section in the market analysis that deals with the behavior of the consumers in the market. The more a start-up knows about the consumers in its target market, the more it can tailor its products or services appropriately. |
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Milestone
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A milestone is a significant or noteworthy event in the life of a business. Milestones are used to track progress and to identify the most important steps remaining to be completed.
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