© 2005 Mark T. Schenkel1 Mark T. Schenkel, Ph. D. The Business Plan Foundations of Entrepreneurship

© 2005 Mark T. Schenkel2 What is a Business Plan? Business Plan- Document Describes Internal/External Elements/Strategies For New Venture Plan (Road Map) –Short-Term –Long-Term Author = Entrepreneur Usually ~ 25 pages (minus appendices)

© 2005 Mark T. Schenkel3 Business Plan Audiences (Uses)  Employees (Internal)  Investors/Venture Capitalists (Equity financing)  Lenders/Suppliers (Debt financing)  Customers  Advisors/Consultants

© 2005 Mark T. Schenkel4 Key Question from the Business Plan: What do you need from your business? Income Wealth Lifestyle Passion Fun Built from experiences Key “must have’s” taken care of?

© 2005 Mark T. Schenkel5 Reasons For Plan Failure 1.Unreasonable Goals 2.Goals Not Measurable 3.No Total Commitment 4.Lack Of Experience 5.No Understanding Of Threats Or Weaknesses 6.Customer Need Not Established

© 2005 Mark T. Schenkel6 A Basic Framework THE VENTURE Goals & Values Resources & Capabilities Structure & Systems THE INDUSTRY ENVIRONMENT Competitors Customers Suppliers STRATEGY

© 2005 Mark T. Schenkel7 Strategic Planning Checksheet  Analysis  Formulation  Implementation  Eval., Review, & Feedback  SWOT Strengths, Weaknesses Opportunities, Threats  Competitive Advantage  Mission  Objectives  Strategies  Policies  Tasks  Timetables  Budgets  Responsibilities  Performance Review

© 2005 Mark T. Schenkel8 SAMPLE Business Plan Outline Executive Summary One page summary of the entire plan. Write this last!

© 2005 Mark T. Schenkel9 SAMPLE Business Plan Outline The Business Concept Vision of Company –Mission Statement –Core Values –Major Goals

© 2005 Mark T. Schenkel10 What Should the Mission Statement Include? Statement of who are the firm’s customers. Statement of firm’s basic product (or service). Statement of firm’s competitive market. Statement of firm’s basic values / beliefs. Statement of firm’s competitive advantage. Statement of who are the stakeholders and how they will be served.

© 2005 Mark T. Schenkel11 SAMPLE Business Plan Outline Market Analysis: Industry Size Status (growing, mature, declining) Trends Barriers to entry

© 2005 Mark T. Schenkel12 SAMPLE Business Plan Outline Marketing Plan Description of Target Market Entry Strategy Competitive Analysis (include grid and list of competitive advantages) Pricing Promotional Plan Distribution

© 2005 Mark T. Schenkel13 SAMPLE Business Plan Outline Operating Plan Map out the flow of your business Raw materials and supplies Making the product or providing the service Bookkeeping and billing Team & Advisors Space requirements and costs Basic staffing plan as you grow

© 2005 Mark T. Schenkel14 SAMPLE Business Plan Outline Growth Plan Growth goals: long and short term Growth strategies Growth requirements

© 2005 Mark T. Schenkel15 SAMPLE Business Plan Outline Financial Plan –Cash flow (including break even analysis) –Income Statement –Balance Sheet Appendices

© 2005 Mark T. Schenkel16 Do’s and Don’ts for Preparing a Business Plan Do’s Involve entire management team Make the plan logical, comprehensive, readable, and as short as possible Articulate what the critical risks and assumptions are and how they are tolerable Disclose and discuss any current or potential problems in the venture Be creative, but spell out how the investors will win Let realistic market and sales projections drive the assumptions underlying financials, rather than reverse

© 2005 Mark T. Schenkel17 Do’s and Don’ts for Preparing a Business Plan (cont.) Don’ts Have unnamed, mysterious people on the management team Make ambiguous, vague, or unsubstantiated statements, such as estimating sales on what you would like to produce Describe technical products or manufacturing processes using jargon or in a way that only an expert can understand – limits the plans usefulness Spend money on developing fancy brochures, elaborate slide show presentations, and other “sizzle,” instead, show the “beef”

© 2005 Mark T. Schenkel18 Key Issues Associated with the Business Plan Clarify Objectives –Quantifiable –Obtainable –Flexible Obsolete at the Printer –Pace of technological change –Increasing degree of global dynamism Work in progress – Bent Knees Required The Plan is NOT the Business

© 2005 Mark T. Schenkel19 Key Takeaway Points... Analysis and critical thinking are the beginnings of a good business plan. Business plans should be comprehensive, yet facilitate an ease of understanding for ALL stakeholders in the venture.

© 2005 Mark T. Schenkel20 Key Takeaway Points... If the reader is unclear on a point, then you have missed something... redouble your efforts accordingly. Utilize the full range of conceptual tools available to aid in the development and enhance the selling of the compelling story.