How to write a business plan? Jianfeng Wu Guanghua School of Management Peking University

What is a business plan? A document that describes a new venture’s internal and external environment, and its strategies. Marketing plan; Financial plan; Manufacturing plan; Human resource plan; Etc.

Who writes a business plan? The entrepreneur (yourself). Consultant. Excellent Good Average Poor Accounting and tax Marketing research Human resources Product design Legal issues Sales

Who will read a business plan? Potential employees Investors Banks Venture capitals Suppliers Customers

Three perspectives Entrepreneur: - What I am going to do step by step? 2. Customer: - Is this product/service worth buying? 3. Investors: - Is this business worth investing?

Outline of a business plan Cover page Executive summary Environment & industry analysis Company summary Production plan Marketing plan Organizational plan Risk evaluation Financial plan Supporting documents

Cover Page Name and address of the new venture Name, phone, fax, email, website, and mail address of the entrepreneur Summary of the business Investment required Secrecy issue

Executive summary Last step in writing a plan Motivate investor’s interest 2-3 pages Key issues: Business description All useful data to support this business idea

Environment and industry analysis Key questions: Major trends in the economic, technological, legal, and public policy areas; Sales per year in the target industry (5-year data); The growth potential of the target industry; No. of new ventures in the target industry in the past 3 years; New products in the target industry; Who are your direct competitors? How to compete with your competitors? How are your competitors doing in terms of performance? What are the (dis)advantages of your competitors? How about the future trend in your target niche market? How about your potential customers? Any differences between your customers and your rivals’?

Company summary Mission Why do you want to enter this industry? Why do you think you will succeed? What are your products and services? Where is your company located? How to find your office building? Is the location effective for your business? What kind of equipments do you need? Buy or rent? What kind of experiences do you have?

Production plan Marketing plan (4Ps) Organizational plan Target customers Organizational plan Organizational form (China-specific) Ownership structure Organizational structure Top management team and compensation

Risk evaluation What are the potential risks? If happen, what kind of negative outcomes? How to cope with these risks?

Financial plan Sales and expenses forecasting in the first three years; Cash flow For the first year, use monthly data; Income statement, balance sheet