Presentation on theme: "The Business Plan - Visualizing the Dream"— Presentation transcript:
1 The Business Plan - Visualizing the Dream PART 3: Developing the New Venture Business PlanThe Business Plan - Visualizing the DreamMGMT 397ENTREPRENEURSHIP &SMALL BUSINESS MANAGEMENTSpring, 2014Ellis
2 An Overview of the Business Plan A document that sets out the basic idea underlying a business and related startup considerationsStarted once the idea passes the “feasibility test”The Purpose of a Business PlanIdentifies the nature and context of the business opportunityPresents the entrepreneur’s approach to exploiting the opportunityIdentifies factors affecting the venture’s successServes as the entrepreneur’s tool for raising capital
4 The Need for a Business Plan Primary FunctionsTo provide a clearly-articulated statement of goals and strategies for internal useImposes discipline on the entrepreneur and management teamHow so?To serve as a selling document to be shared with outsidersProvides a credible overview for prospective customers, suppliers, and investorsOpens approaches to lenders and other sources of financing
5 How Much Business Planning is Needed? Factors affecting the extent or detail level of a business plan – would you want a more or less-detailed plan based on:Cost in time and money to prepare the planManagement style and abilityPreferences of the management teamComplexity of the businessCompetitive environmentLevel of uncertainty
6 Types of Business Plans Comprehensive PlanA full business plan that provides an in-depth analysis of the critical factors that will determine a firm’s success or failureIncludes all the underlying assumptionsMini-PlanA short form of a business plan that presents only the most important issues and projectionsCan use the Executive Summary from the comprehensive planAlways make the plan clear & professional
7 Content of a Business Plan Factors that help determine the content of a business plan for a startup:The opportunityProduct or serviceMarket sizeCritical or unique resourcesThe entrepreneurial teamThe financing structureThe context or external factors that make the opportunity relevant
8 Abbreviated Business Plan Outline Section HeadingCover PageTable of ContentsExecutive SummaryIndustry, Target Customer, and Competitor AnalysisCompany DescriptionProduct/Service PlanMarketing PlanOperations and Development PlanManagement TeamCritical RisksOfferingFinancial PlanAppendix of Supporting Documents
9 The Content of a Business Plan Cover PageCompany name, address, phone number, fax number, and websiteTagline and company logoName and contact information of contact personDate on which the business plan was preparedConfidentiality disclaimer – better on second pageNumber of the copy – so who know who leaked!
10 The Content of a Business Plan (cont.) Executive Summary/Synopsis/Narrative (Mini-plan)Description of the opportunity – Why this is the greatest idea since the light bulb or sliced bread or the internet?Explanation of the business conceptTarget market and size of market – the most important dataIndustry overviewCompetitive advantage to be achieved in the marketBasic economics of the opportunityBrief management team descriptionAmount and purpose of the money being requested/ needed (the “offering”) if seeking financing
11 The Content of a Business Plan (cont.) Industry DescriptionBroader industry in which the firm will competeIndustry size, growth rate, trends, and competitorsDifferent segments of the industry & niche targetedTarget CustomersThe value proposition – the most important conceptDemographics and psychological variables - values, attitudes, and fearsSize: 2 billion armpits, or will you really get 100% share?
12 The Content of a Business Plan (cont.) Company Description (current and planned)When and where was this business started?What is the history of the company?What are the firm’s objectives?What changes in structure and/or ownership?In what stage of development is the firm?What has been achieved to date?What is the firm’s distinctive competence?What are the nature and activity of the business?What is its primary product or service?What customers will be served?What is the firm’s form of organization?What are the projected economic state and drivers of the industry?How is ownership of the firm to be structured?
13 The Content of a Business Plan (cont.) SWOT AnalysisInternal & External to companyPlusses and Minuses carefully consideredCompetitor AnalysisProduct or service attributes that are or are not provided by competitorsWhy is there “no competition?”Financial PlanProjects the company’s financial position based on well-substantiated assumptions and explanationsPro forma statements project a firm’s financial condition for up to five years - Emphasis on the cash
14 The Content of a Business Plan (cont.) Product/Service PlanDescribes the product and/or service to be provided and explains its meritsMarketing PlanDescribes the user benefits of the product or service and the type of market that existsOperations and Development PlanHow product will be produced or service providedManagement TeamDescribes the firm’s organizational structure and the backgrounds and qualifications of key personnel
15 The Content of a Business Plan (cont.) Critical RisksIdentifies the potential risks that may be encountered by the company and/or investorsInvestors and lenders will be checking to ensure you have thought this throughOfferingIndicates to an investor how much money is needed and when, and how the money will be used
16 The Content of a Business Plan (cont.) Appendix of Supporting DocumentsSupplementary materials and attachments to expand the reader’s understanding of the plan:Résumés of key investors and owners/managersProfessional referencesPhotographs of products, facilities, and buildingsMarketing research studiesPertinent published researchSigned contracts of sale