The Business Plan - Visualizing the Dream

1. 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 • 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