1. Chapter 5 :The Business Plan (Creating and Starting The) Venture

2. Learning Objectives
To define what the business plan is, who prepares it, who reads it, and how it is evaluated.
To understand the scope and value of the business plan to investors, lenders, employees, suppliers, and customers
To identify information needs and sources for each critical section of the business plan.
To present examples and a step by step explanation of the business plan.

3. What is Business Plan?
The business plan is a written document prepared by the entrepreneur that describes all the relevant internal and external elements and strategies for starting a new venture.
It is a integration of functional plans such as marketing, finance, manufacturing, sales and human resources.

4. The Importance of planning
Plans provide guidance and structure in a rapidly changing market environment.
Plans get finalized as the entrepreneur has a better sense of the market, the product or services, the management team, and the financial needs of the venture.

5. They help meet short-term or long-term business goals.
Cont.
Planning is a process than never ends for a business.
It is extremely important in the early stages of any new venture when the entrepreneur will need to prepare a preliminary business plan.
They help meet short-term or long-term business goals.

6. Using and Implementing The Business Plan
The business plan is designed to guide the entrepreneur through the first year of operations.
Business plan not end up in a drawer somewhere once the financing has been attained and the business launched.

7. Who should write the plan?
The business plan should be prepared by the entrepreneur.
The entrepreneur may consult with many other sources in its preparation, such as lawyers, accountants, marketing consultants, and engineers.

8. Scope and Value of the Business Plan – Who Reads The Plans?
The business plan may be read by employees, investors, bankers , suppliers, customers, advisors, and consultants.
There are 3 perspectives should be considered in preparing the plan :
Perspective of the entrepreneur
Marketing perspective
Investor’s perspective

9. Who Reads the Plan? (cont.)
Depth and detail in the business plan depend on:
Size and scope of the proposed new venture.
Size of the market.
Competition.
Potential growth.

10. Scope and Value …
project management, the term scope has two distinct uses- Project Scope and Product Scope.
Scope involves getting information required to start a project, and the features the product would have that would meet its stakeholders requirements
Project Scope
"The work that needs to be accomplished to deliver a product, service, or result with the specified features and functions.”
Product Scope
” The features and functions that characterize a product, service, or result.”

11. How do Potential Lenders and Investors Evaluate The Plan?
Characters
Cash flow
3. (valuable property owned by someone who wants to borrow money)
Equity of Contribution
Marketable
Payback period ,

12. Internet can be a valuable resource.
Information Needs
The information, obtainable from many sources should focus on Marketing (segmenting, targeting, and positioning),
Finance (list of all possible expenses, demand forecast, revenue),
Production (location, manufacturing operations, raw materials, equipment, labor skills, space, overhead) .
Internet can be a valuable resource.

13. Outline of a Business Plan
Introductory Page
Name and address of business
Name(s) and address(es) of principal(s)
Nature of business
Statement of financing needed
Statement of confidentially of report

14. Outline …
Executive Summary – Three to four pages summarizing the complete business plan
What is the business concept or model?
How is this business concept or model unique?
Who are the individuals starting this business?
How will they make money and how much?

15. Description of Venture
Product(s)
Service(s)
Size of business
Office equipment and personnel
Background of entrepreneurs

16. Production Plan Manufacturing process (amount subcontracted)
Machinery and equipment
Names of suppliers of raw materials
Ex:

17. Operational Plan Description of company’s operations
Flow of orders for goods and/or services
Technology utilization

18. Marketing Plan
Pricing
Distribution
Promotion
Product forecasts
Controls

19. Organizational Plan
Form of ownership
Identification of partners or principal shareholders
Authority of principals
Management-team background
Roles and responsibilities of members of organization

20. Financial Plan
Pro forma income statement
Cash flow projections
Pro forma balance sheet
Break-even analysis
Sources and applications of funds

21. Appendix (contains backup material)
Letters
Market research data
Leases or contracts
Price lists from suppliers

23. Measuring Plan Progress
Entrepreneur should check the profit and loss statement, cash flow projections for the previous month such as ,
Inventory control
Production control
Quality control
Sales control
Disbursements

24. Updating the Plan
The most effective business plan can become out-of-date if condition change.
If the changes are likely to affect the business plan, the entrepreneur should determine what revisions are needed.
In this manner, the entrepreneur can maintain reasonable targets and goals and keep the new venture on a course that will increase probability of success.

25. Why Some Business Plans Fails?
Goals set by the entrepreneur are unreasonable.
Goals are not measurable
The entrepreneur has not made a total commitment to the business or to the family.
The entrepreneur has no experience in the planned business.
The entrepreneur has no sense of potential threats or weaknesses to the business.
No customer need was established for the proposed product or service.

26. Bounce Q : Who is your Idol Entrepreneurs? Why he-she is?
H.W….
With your Group Start to brain storm your outline information for your own Project? If you have any Q don’t hesitate 
Bounce Q : Who is your Idol Entrepreneurs? Why he-she is?