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The Business Plan - Visualizing the Dream

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1 The Business Plan - Visualizing the Dream
PART 3: Developing the New Venture Business Plan The Business Plan - Visualizing the Dream MGMT 397 ENTREPRENEURSHIP & SMALL BUSINESS MANAGEMENT Spring, 2014 Ellis

2 An Overview of the Business Plan
A document that sets out the basic idea underlying a business and related startup considerations Started once the idea passes the “feasibility test” The Purpose of a Business Plan Identifies the nature and context of the business opportunity Presents the entrepreneur’s approach to exploiting the opportunity Identifies factors affecting the venture’s success Serves as the entrepreneur’s tool for raising capital

3 Users of Business Plans

4 The Need for a Business Plan
Primary Functions To provide a clearly-articulated statement of goals and strategies for internal use Imposes discipline on the entrepreneur and management team How so? To serve as a selling document to be shared with outsiders Provides a credible overview for prospective customers, suppliers, and investors Opens 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 plan Management style and ability Preferences of the management team Complexity of the business Competitive environment Level of uncertainty

6 Types of Business Plans
Comprehensive Plan A full business plan that provides an in-depth analysis of the critical factors that will determine a firm’s success or failure Includes all the underlying assumptions Mini-Plan A short form of a business plan that presents only the most important issues and projections Can use the Executive Summary from the comprehensive plan Always 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 opportunity Product or service Market size Critical or unique resources The entrepreneurial team The financing structure The context or external factors that make the opportunity relevant

8 Abbreviated Business Plan Outline
Section Heading Cover Page Table of Contents Executive Summary Industry, Target Customer, and Competitor Analysis Company Description Product/Service Plan Marketing Plan Operations and Development Plan Management Team Critical Risks Offering Financial Plan Appendix of Supporting Documents

9 The Content of a Business Plan
Cover Page Company name, address, phone number, fax number, and website Tagline and company logo Name and contact information of contact person Date on which the business plan was prepared Confidentiality disclaimer – better on second page Number 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 concept Target market and size of market – the most important data Industry overview Competitive advantage to be achieved in the market Basic economics of the opportunity Brief management team description Amount and purpose of the money being requested/ needed (the “offering”) if seeking financing

11 The Content of a Business Plan (cont.)
Industry Description Broader industry in which the firm will compete Industry size, growth rate, trends, and competitors Different segments of the industry & niche targeted Target Customers The value proposition – the most important concept Demographics and psychological variables - values, attitudes, and fears Size: 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 Analysis Internal & External to company Plusses and Minuses carefully considered Competitor Analysis Product or service attributes that are or are not provided by competitors Why is there “no competition?” Financial Plan Projects the company’s financial position based on well-substantiated assumptions and explanations Pro 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 Plan Describes the product and/or service to be provided and explains its merits Marketing Plan Describes the user benefits of the product or service and the type of market that exists Operations and Development Plan How product will be produced or service provided Management Team Describes the firm’s organizational structure and the backgrounds and qualifications of key personnel

15 The Content of a Business Plan (cont.)
Critical Risks Identifies the potential risks that may be encountered by the company and/or investors Investors and lenders will be checking to ensure you have thought this through Offering Indicates 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 Documents Supplementary materials and attachments to expand the reader’s understanding of the plan: Résumés of key investors and owners/managers Professional references Photographs of products, facilities, and buildings Marketing research studies Pertinent published research Signed contracts of sale

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