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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
A Firm’s Employees

Investors and Other External Stakeholders
Who Reads the Business Plan—And What Are They Looking For? A Firm’s Employees
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.
Who Reads the Business Plan—And What Are They Looking For?Investors and Other External Stakeholders
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.
Guidelines for Writing a Business Plan : Structure
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.
Guidelines for Writing a Business Plan : Content
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
Types of Business Plans
There are three types of business plans
Summary Business Plan
Full Business Plan
Operational Business Plan
Summary Business Plan
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
Full Business Plan
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
Operational Business Plan
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)
The 10 Most Important Questions a Business Plan Should Answer
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?
Business Plan + (internal/external reasons)
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
Who Reads the Business Plan—And What Are They Looking For? *Board of directors* (KNOW)
Never printed business plan until they approved it
Cover page
Contact information / company info (helps connection)
Executive summary
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
The Business
description of enterprise and its activities
talk about how you are different from the next company
Products and service
how is it used
where are you in the development process
management team
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
company structure and ownership
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)
company structure and ownership: Legal structure
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
industry analysis
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
Marketing plan
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
operations plan
how going to produce product
what is product, how is it differentiated
operate internally
risks
financial plan
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
Critical risk factors
what happens if
The Oral Presentation
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.
Questions and Feedback to Expect from Investors
The smart entrepreneur has a good idea of the questions that will be asked, and will be prepared for those queries.
What Is a Business Plan?
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.
Market Analysis
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.
Milestone
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.