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Business Plan

Business Plan. Du šan Milutinović, M.B.A. m ilutind @ mgmt.purdue.edu. Why make a business plan ?. What is a business plan ? Establishment/development needs Loan Investment Reporting to internal/external stakeholder s Discipline of management action and reasoning.

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Business Plan

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  1. Business Plan Dušan Milutinović, M.B.A. milutind@mgmt.purdue.edu

  2. Why make a business plan? • What is a business plan? • Establishment/development needs • Loan • Investment • Reporting to internal/external stakeholders • Discipline of management action and reasoning

  3. What are stakeholders and investors looking for? • Form vs. content • Visualization of all functions • Management Team • Good problem prediction • Explain assumptions and predictions • Explain critical factors of success/failure • Explain major landmarks • Provide proof of top management/entrepreneur commitment

  4. Procedures and Methodology • Detailed expert and business analysis • Answer all questions • Top management interviews • Knowledge of micro/macroeconomic environment and economic laws that apply – theory and practice • Qualifications of the presenter and analyst • Consulting with experts • Review and update

  5. Formats Used • europe • EBRD • World Bank • USA • EY model • Northpoint model

  6. Length of the Business Plan • Depends on the stage of development of the firm • Start-up • Early stage • Late stage • Layers of business plan writing and presenting

  7. Structure • Executive Summary • The Firm • Market Analysis • Competitive Analysis and Barriers to Entry • Products and Services • Sales and Marketing • Operations • Finances • Appendix

  8. Executive Summary • Length – 1-2 pages • Content – the essence • A negative decision is made quickly • Method of preparation • Summary financial data • Requested ammount • Prospects

  9. About the firm • Vision and Mission • Strategy and Value Propositions • Legal forms – why, and breakdown of ownership. • Technology and alliances • Facilities and equipment • Risks – in general

  10. Market Analysis • Market description – Critical needs • Market research • Focus groups • Studies etc. • The buyer • Buying criteria – Who is the decision maker, influencer… • Buying cycle • Market size • Today • In one year • In five years • Market segmentation - criteria • Geographical • Demographical • Psychographical etc.

  11. Analysis of the Competition and Barriers to Entry • Potential and existing competition • Total market size and growth • Analysis of major competitors • Analysis of consumer perception based on focus group – perceptual map • Comparative advantage • SWOT analysis

  12. Products and Services • Product lines • R&D, future plans • Positioning • Product life cycle • Packaging • The product/service delivery cycle • Post sales services and costs

  13. Sales and Marketing • Sales characteristics and methods (internal or external) • Training of sales reps • Sales reps motivation • Sales activities • Prospect identification • Prioritization of prospects • Measurement of sales efforts by period (telephone calls etc.) and per product/services sold • Average sale size • Customer retainment rate • Up-to-date sales successes and market penetration • Graphical depiction of market share

  14. Marketing Process and Communications • Marketing Plan (4 P-s) • Distribution Channel Strategy • Results of market tests • Distribution channels...internet • Pricing Strategy (EDLP, Penetration, Value, Mark-up, lock-in) • Growth strategy

  15. Marketing Communications • Promotion, advertising • Printed materials • Fairs • Media and PR • Conferences, Seminars • Internet • Professional and industry publications • Direct mail and coverpage • Telemarketing

  16. Operations Analysis • Characteristics of the production process - subcontractors • Production process description • Necessary facilities and equipment? • Raw materials? • Cost of production? • Future capital investment needs? • Production process and inventory management? • Warehousing? • Location • Necessary time for investment to be operational • HR needs

  17. Financial Analysis • Assumptions, Assumptions, Assumptions!!! • Necessary reports and projections: • Balance sheet, income statement, cash flow, NPV, ratios • Current and prospective ownership structure • Exit strategies • ...

  18. Some sites • www.bplans.com • www.businessfinance.com/index.htm • www.ceebic.org • www.drapervc.com/Resources.html • www.edgeonline.com • www.entrepreneurmag.com • www.inc.com • www.nbia.org • www.sba.gov • www.business.gov • www.scn.org/civic/score-online/ • www.startupbiz.com

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