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89 Cards in this Set
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a written narrative, typically 25 to 35 pages long, that describes what a new business intends to accomplish and how it intends to accomplish it |
business plan |
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The business plan must be substantive enough and have sufficient details about the merits of the new venture in order to... |
convince the reader that the new business is exciting and should receive support |
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There are two primary reasons to write a business plan: |
1. Writing a business plan forces a firm's founders to systematically think through each aspect of their new venture. 2. To create a selling document for a company |
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Writing a business plan forces a firm's founders to... |
intently study every aspect of their business, a process that's hard to replicate in any other way |
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A clearly written business plan is important for both the... |
management team and the rank-and-file employees |
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What is a clear written business plan? |
one that articulates the vision and future plans of a firm |
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The existence of a business plan is particularly useful for... |
the functional department heads of a young firm |
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External stakeholders who are being recruited to join a firm are the... |
second audience for a business plan |
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What are external stakeholders being recruited to a firm (3) |
investors potential business partners key employees |
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Overly optimistic statements or projections... |
undermine a business plan's credibility |
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a short set of Powerpoint slides that describe a business idea |
PowerPoint deck |
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one-to-two page overview of the full plan |
executive summary |
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refers to the process investors go through after they tentatively commit to an investment |
due diligence
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The most compelling facts a company can provide in its business plan are the results of its... |
own feasibility analysis and the articulation of a distinctive and competitive business model |
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A business plan should disclose... |
all resource limitations that the business must address before it is ready to start earning revenues |
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A business plan needs to project a sense of... |
anticipation and excitement about the possibilities that surround a new venture |
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The three types of business plans are |
1. Summary Plan 2. Full business Plan 3. Operational business plan |
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10 to 15 pages and works best for companies that are early in their development and are not prepared to write a full plan |
summary plan |
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Summary business plans are used by... |
very experienced entrepreneurs who may be thinking about a new venture but don't want to take the time to write a full business plan |
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25 to 35 pages long; spells out a company's operations and plans in much detail |
Full Business Plan |
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a blueprint for the company's operations |
operational business plan |
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Who are operational business plans intended for? |
internal audiences |
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The cover letter should briefly... |
introduce the entrepreneur and clearly state why the business plan is being sent to the individual receiving it |
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A final guideline for writing a business plan is to recognize... |
that the plan will usually change as it is being written and as the business evolves |
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The cover page should include:(6) |
the company's name address phone number the date contact information for the entrepreneur the company's website |
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The contact information should include (3) |
land-based phone number an email address a smartphone number |
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The bottom of the cover page should include information... |
alerting the reader to the confidential nature of the plan |
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a short overview of the entire business plan |
executive summary |
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An executive summary provides a busy reader with.. |
everything she needs to know about the new venture's distinctive nature |
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The most critical point to remember when writing an executive summary is that it is not an... |
introduction or preface to the business plan, but is the summary of the plan itself |
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The main body of the business plan begins by... |
describing the industry in which the firm intends to compete |
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Before a business selects a target market, it should.. |
have a good grasp of its industry |
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Fragmented industries are... |
more receptive to new entrants than industries that are dominated by a handful of large firms |
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Industry trends should be... |
discussed |
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Two industry trends |
environmental and business trends |
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The most important environmental trends (4) |
economic trends social trends technological advances political and regulatory changes |
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Business trends include issues such as... |
whether profit margins in the industry are increasing or decreasing whether input costs are going up or down |
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The company description section begins with... |
a general description of the company |
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defines why a company exists and what it aspires to become |
mission statement |
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a phrase that a business plans to use to reinforce its position in the marketplace |
tagline |
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how a product or service is situated relative to its rivals |
position |
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a noteworthy or significant event |
milestone |
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A final item a business should cover in the opening section is whether... |
it has any key partnerships that are integral to the business |
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breaks the industry into segments and zeroes in on the specific segment to which the firm will try to appeal |
market analysis |
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The first task that's generally tackled in a market analysis is to... |
segment the industry the business will be entering and then identify the specific target market on which it will focus. |
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the process of dividing the market into distinct segments |
market segmentation |
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which is a detailed analysis of a firm's competitors |
competitor analysis |
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There are four basic ways for a new firm to estimate its initial sales |
Utilize the multiplication method. Find a comparable firm. Contact industry trade associations. Conduct internet sources. |
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The economies of business section begins the... |
financial analysis of the business, which is further fleshed out in the financial projections |
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The major revenue drivers... |
should be identified |
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the ways a business earns money |
major revenue drivers |
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the materials and direct labor needed to product the revenue driver |
costs of goods sold |
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the amount per unit of sale that's left over and is available to "contribute" to covering the business's fixed costs and producing a profit |
contribution margin |
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vary by sales |
variable costs |
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a company incurs these whether it sells something or not |
fixed costs |
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an analysis of its fixed vs. variable costs |
operating leverage |
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Operating leverage is lowest in companies that have... |
a low proportion of fixed costs relative to variable costs |
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A firm with high operating leverage takes... |
longer to break even. However, once break-even is reached, most of its revenues fall to the bottom line |
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One time start-up costs (4) |
legal expenses fees for business licenses and permits website design business logo design |
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The marketing plan focuses on... |
how the business will market and sell its product or service |
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refers to its overall approach for marketing its products and services |
marketing strategy |
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The marketing strategy sets the tone and provides guidance for... |
how the company should reach its target market via its product, pricing, promotions, and distribution tactics. |
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If you're developing a completely new product or service, you need to include... |
a section in your business plan that focuses on the status of your development efforts. |
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The first issue to address is to describe.. |
the present stage of the development of your product or service. |
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the first physical manifestation of a new product, often in a crude or preliminary form |
product prototype |
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a computer-generated 3D image of a product or service idea |
virtual prototype |
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A section labeled challenges and risks should be included and disclose any... |
major anticipated design and development challenges and risks that will be involved in bringing the product or service to market |
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A final section should describe any... |
patents, trademarks, copyrights, or trade secrets that you have secured or plan to secure relative to the products and services you are developing |
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The operations plan section of the business plan outlines... |
how your business will be run and how your product or service will be produced. |
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The management team of a new firm typically consists of... |
the founder or founders and a handful of key management personnel. |
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Each profile should include the following information (5) |
title of the position duties and responsibilities of the position previous industry and related experience previous successes educational background |
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The profiles should illustrate why each individual is... |
qualified and will uniquely contribute to the firm's success |
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a panel of individuals elected by a corporation's shareholders to oversee the management of the firm |
board of directors |
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a panel of experts asked by a firm's management to provide counsel and advice on an ongoing basis |
board of advisors |
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A board of advisors possesses... |
no legal responsibility for the firm and gives nonbinding advice |
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It's important that the internal structure of a company... |
makes sense and that the lines of communication and accountability are clear |
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a graphic representation of how authority and responsibility are distributed within the company |
organizational chart |
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A schedule should be prepared that shows the major events... |
required to launch the business |
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The final section of a business plan presents a...
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firm's pro forma financial projections |
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a document that lays out specifically how much money a firm needs, where the money will come from, and how the money will be used |
sources and uses of funds statement |
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an explanation of the most critical assumptions on which the financial statements are based |
assumptions sheet |
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the heart of a financial section of a business plan |
pro forma financial statemetns |
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computed by taking numbers out of financial statements and forming ratios with them |
ratio analysis |
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Any material that does not easily fit into the body of a business plan... |
should appear in an appendix |
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Examples of things in an appendix (4) |
resumes of the top management team photos or diagrams of product or product prototypes certain financial data market research projections |
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When asked to meet with an investor, the founders of a new venture should... |
prepare a set of Powerpoint slides that will fit the time slot allowed for the presentation portion of the meeting |
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The smart entrepreneur has... |
a solid idea of what to expect and is prepared for these queries |
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AN investor who is able to ... |
identify weaknesses in a business plan or presentation does a favor for the entrepreneur. |
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In the first meeting, investors typically focus on.. |
whether a real opportunity exists and whether the management team has the experience and skills to pull off the venture |
