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