ENTREPRENEURSHIP DEVELOPMENT Crafting a Winning Business Plan Chapter
ENTREPRENEURSHIP DEVELOPMENT Crafting a Winning Business Plan Chapter # 10 www. Assignment. Point. com
The Business Plan • Business plan – a written summary of: ▫ ▫ an entrepreneur’s proposed business venture its operational and financial details its marketing opportunities and strategy its managers’ skills and abilities www. Assignment. Point. com
The Business Plan • Plan is a blueprint for future course of action. Planning means deciding in advance what is to be done in future. • “Business Plan is a written document that describes all the relevant internal and external elements involved in starting a new venture. ” • It is the road map for operating any business and measuring progress along the way. www. Assignment. Point. com
The Business Plan: Three Essential Functions 1. Guiding the company by charting its future course and defining its strategy for following it. 2. Attracting lenders and investors who will provide needed capital. 3. Demonstrating that the entrepreneur understands the business venture and what will make it succeed. www. Assignment. Point. com
A Plan Must Pass Three Tests • The Reality Test - proving that: ▫ a market really does exist for your product or service. ▫ you can actually build or provide it for the cost estimates in the plan. • The Competitive Test - evaluating: ▫ a company’s position relative to its customers. ▫ management’s ability to create a company that will gain an edge over its rivals. • The Value Test – proving that: ▫ a venture offers investors or lenders an attractive rate of return or a high probability of repayment. www. Assignment. Point. com
Why Take the Time to Build a Business Plan? • Although building a plan does not guarantee success, it does increase your chances of succeeding in business. • A plan is like a road map that serves as a guide on a journey through unfamiliar, harsh, and dangerous territory. Don’t attempt the trip without a map! www. Assignment. Point. com
Key Elements of a Business Plan Executive Summary Mission Statement Company History Business and Industry Profile Business Strategy Description of Products/Services www. Assignment. Point. com
Key Elements of a Business Plan Marketing Strategy Competitor Analysis Description of Management Team Plan of Operation Forecasted Financial Statements Loan or Investment Proposal www. Assignment. Point. com (continued)
The Relationship Among Mission, Goals and Objectives A Mission Statement expresses in words an entrepreneur’s vision for what the company is and what it to become. It is the broadest expression of a company’s purpose and defines the direction in which it will move. It anchors a company in reality and serves as thesis statement for the entire business plan. www. Assignment. Point. com
The Relationship Among Mission, Goals and Objectives Goals are broad, long range statements of what a company plans to achieve in the future that guide its overall direction. In other words, they address the question: “Why am I in business? ” Answering such a basic question appears to be obvious, but in fact many entrepreneurs cannot define the basis of their businesses. www. Assignment. Point. com
The Relationship Among Mission, Goals and Objectives on the other hand, are short term, specific performance targets that are attainable, measureable and controllable. Every objective should reflect some general business goal and include a technique for measuring progress toward its accomplishment. To be meaningful, an objective must have a time frame for achievement. Both goals and objectives should relate to the company’s basic mission. www. Assignment. Point. com
Use of Business Plan Operating the firm efficiently Funding of the firm Seeking financing Arranging strategic alliances Obtaining large contracts Attracting key employees Completing mergers and acquisition Starting international operation Selling the firm or part of its operation www. Assignment. Point. com
Features of a Business Plan A business plan is always comprehensive: all aspects of the firm have to be treated. The focus of the business plan is always in the future A business plan has to be prepared by the management team, not by an outsider. Expert assistance should be required in making the business plan. The planning process is even more important than resulting documents. www. Assignment. Point. com
Outline of a Business Plan Executive Summary Business Description Marketing Segment Research, Design, and Development Segment Manufacturing Segment Management Segment Critical Risks Segment Financial Management Segment Milestone Schedule Segment Conclusion Appended Parts www. Assignment. Point. com
Outline of a Business Plan �Summary �Business Description �General description of the venture �Industry Background �Company History or Background �Goals/potential of the Venture and Milestone �Uniqueness of the Product or Service www. Assignment. Point. com
Outline of a Business Plan �Marketing Segment �Marketing Research � Target market � Demand analysis � Market size and trends � Competition � Estimated market share � Control www. Assignment. Point. com
Outline of a Business Plan �Marketing Segment �Marketing Plan � Current Market Situation � Market situation � Product situation � Competition situation � Distribution situation � Macro economic situation � SWOT analysis � Objectives � Marketing strategy � Action program � Control www. Assignment. Point. com
Outline of a Business Plan �Research, Design, and Development Segment �Development and design plans �Technical research result �Research assistance needs �Cost structure �Manufacturing Segment �Location analysis �Production needs, facilities, utilities and equipment �Suppliers/ transportation factor �Sources of raw materials �Labor supply �Manufacturing cost data www. Assignment. Point. com
Outline of a Business Plan �Management segment �Organization structure �Management team key personnel �Legal structure : stock agreement, employment agreements, ownership. �Board of directors, advisors, consultants �Critical Risks Segment �Potential problems �Obstacles and risk �Alternative courses of action www. Assignment. Point. com
Outline of a Business Plan �Financial Management Segment �Financial Forecast � Profit and Loss � Cash Flow � Break-even Analysis � Cost Control �Sources and Use of Fund �Budgeting Plans �Stages of Financing www. Assignment. Point. com
Outline of a Business Plan • Milestone schedule segment ▫ Timing an objective ▫ Deadlines, target ▫ Relationship of events • Conclusion • Appended parts ▫ Notes ▫ Appendix ▫ Reference/Bibliography www. Assignment. Point. com
Tips on Preparing a Business Plan �Remember: No one can create your plan for you. �Potential lenders want to see financial projections, but they are more interested in the strategies for reaching those projections. �Show you plan to set your business apart from competitors; don't fall into the “me too” trap. �Identify your target market, and offer evidence that customers for your product or service exist. www. Assignment. Point. com
Tips on Preparing a Business Plan Make sure your plan has an attractive cover. (First impressions are crucial. ) Get rid of all spelling and grammatical errors. Make your plan visually appealing. Include a table of contents to allow readers to navigate your plan easily. Make it interesting. www. Assignment. Point. com
Tips on Preparing a Business Plan (continued) • Your plan must prove that the business will make money (not necessarily immediately, but eventually). • Use spreadsheets to generate financial forecasts. • Always include cash flow projections. • Keep your plan “crisp” – between 25 and 50 pages long. • Tell the truth – always. www. Assignment. Point. com
Presenting the Plan Demonstrate enthusiasm, but don’t be overemotional. Know your audience thoroughly. “Hook” investors quickly with an up-front explanation of the venture, its opportunities, and its benefits to them. Hit the highlights; focus on the details later. Keep your presentation simple – 2 or 3 major points. www. Assignment. Point. com
Presenting the Plan (continued) Avoid overloading your audience with technological jargon. Use visual aids. Close by reinforcing the nature of the opportunity. Be prepared (with details) for potential investors’ questions. Follow up with every investor to whom you make your presentation. www. Assignment. Point. com
END OF CHAPTER # 10 www. Assignment. Point. com
- Slides: 27
