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Entrepreneurship. 7. Writing an Effective Business Plan: Crafting a Roadmap to Success. “There is real magic in enthusiasm. It spells the difference between mediocrity and accomplishment.” --Norman Vincent Peale, 1961. Business Plan.

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Writing an Effective Business Plan: Crafting a Roadmap to Success

“There is real magic in enthusiasm. It spells the difference between mediocrity and accomplishment.”

--Norman Vincent Peale, 1961

Business Plan

  • A formal, written expression of the entrepreneur’s vision for converting ideas into a profitable, going business

  • The entry card for serious consideration by venture capitalists, banks, and other sources of funding

A Living Document

  • A business plan changes often as a new business develops.

  • Do just enough business planning to get the new company started.

  • Refine the plan with information gathered from running the new venture.

Model of SuccessfulBusiness Planning

Prepare a


simple plan

Start the


Refine the

business plan

Continue to

grow the


Business Plan Components

  • What is the basic idea?

  • Why is the new product appealing—and to whom?

  • How will the idea be realized?

  • Who are the entrepreneurs?

  • How much funding is needed? What type of funding? How will it be used? How will you realize a return?

A Successful Plan

  • A serious document prepared by serious people

  • Orderly

  • Succinct

  • Persuasive

Executive Summary

  • Your elevator pitch

  • Provides a brief, clear, and persuasive overview of the new venture

  • Target 2 to 3 pages

Background and purpose



Development, production, and location


Financial information

Risk factors

Harvest or exit

Scheduling and milestones


Business Plan Sections

Background, Product, and Purpose

  • What is the nature of the idea driving your company and how did it arise?

  • What does the product have to offer?

  • What is the basic nature of the company?

  • What is the company’s mission?

Market Analysis

  • What have you done to identify the market?

  • How large is the market?

  • How will products or services be promoted?

  • What do you know about competing products and companies?

  • How will the product or service be priced?

Development, Production, and Location

  • Where are the products or services in the development process?

  • What are the projected costs and timetable for making the product or delivering the service?

  • What steps have been taken to assure quality and safety?

Management Team

  • Do team members have the experience, expertise, skills, and personal characteristics needed?

  • Do team members having good working relationships?

Financial Plans and Projections

  • Proforma balance sheet

  • Proforma income statement

  • Cash flow statement

  • Break-even analysis

Critical Risks

  • Price cutting by competitors

  • Unforeseen industry trends

  • Sales projections not achieved

  • Costs exceed estimates

  • Schedules not met

  • Difficulties raising financing

  • Unforeseen trends

Harvest and Exit

  • Management succession

  • Exit strategies

Formal incorporation

Completion of design

Completion of prototypes

Hiring of initial personnel

Product displays


Moving into production

Receipt of orders

First sales


Scheduling and Milestones

The Intangibles

  • The extra “something”

  • Pay attention to organization, clarity, word choice, and style

  • Have good writers read your plan

  • Revise according to their suggestions

Seven Deadly Sins

  • Plan is poorly prepared

  • Plan looks too slick

  • Executive summary is too long

  • Development stage of product is unclear

  • Fails to answer “Why would anyone ever want to buy one?”

  • Doesn’t state management qualifications

  • Financial projections are wishful thinking

The Presentation

  • Remember: This is important!

  • Prepare, prepare, prepare

  • Choose content carefully

  • Persuade, don’t overwhelm

  • Show enthusiasm tempered with reality

  • Rehearse

  • Don’t overlook the basics

  • Respond positively to questions

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