Venture

Report
PART 3:
Developing the New Venture
Business Plan
The Business Plan Visualizing the Dream
MGMT 397
ENTREPRENEURSHIP &
SMALL BUSINESS MANAGEMENT
Spring, 2014
Ellis
2–1
An Overview of the Business Plan
• 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
6–2
Users of Business Plans
6–3
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

6–4
How Much Business Planning is Needed?
• Factors affecting the extent or detail level of a
business plan – would you want a more or lessdetailed 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
6–5
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
6–6
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
6–7
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
6–8
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!
6–9
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
6–10
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?
6–11
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?
6–12
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
6–13
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
6–14
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
6–15
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
6–16

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