week14 developing businessplan
TRANSCRIPT
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Part IIIDeveloping theEntrepreneurial Plan
Chapter 7Environmental Assessment:
Preparation for a New VentureChapter 8Marketing Research for
New Ventures
Chapter 9Financial Preparation for
Entrepreneurial VenturesChapter 10Developing an Effective
Business Plan
Copyright (c) 2004 by South-Western, a division of Thomson Learning. All rights reserved.
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Chapter 10Developing An
Effective BusinessPlan
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Pitfalls to Avoid in Planning
Pitfall 1: No Realistic Goals
Pitfall 2: Failure to Anticipate
Roadblocks
Pitfall 3: No Commitment or Dedication
Pitfall 4: Lack of Demonstrated
Experience(Business or Technical)
Pitfall 5: No Market Niche (Segment)
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What is a Business Plan?
A business plan is the written document that details theproposed venture. It must describe current status,expected needs, and projected results of the new
business. Every aspect of the venture needs to be
covered: the project, marketing, research anddevelopment, manufacturing, management, criticalrisks, financing, and milestones or a timetable. Adescription of all of these facets of the proposed
venture is necessary to demonstrate a clear picture ofwhat that venture is, where it is projected to go, andhow the entrepreneur proposes it will get there. Thebusiness plan is the entrepreneurs roadmap for a
successful enterprise.
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Benefits of a Business Plan
Specifically for the entrepreneur: The time, effort, research, and discipline needed to
put together a formal business plan force the
entrepreneur to view the venture critically and
objectively. The competitive, economic, and financial analysis
included in the business plan subject the
entrepreneur to close scrutiny of his or her
assumptions about the ventures success.
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Benefits of a Business Plan, cont.
Since all aspects of the business venture must beaddressed in the plan, the entrepreneur develops and
examines operating strategies and expected results
for outside evaluators.
The business plan quantifies objectives, providingmeasurable benchmarks for comparing forecasts
with actual results.
The completed business plan provides the
entrepreneur with a communication tool for outsidefinancial sources as well as an operational tool for
guiding the venture towards success.
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Benefits of the Business Plan
Specifically for the financial sources: Details of the market potential and plans for
securing a share of that market.
The ventures ability to service debt or provide an
adequate return on equity.
Identifies critical risks and crucial events with a
discussion of contingency plans.
A clear, concise document that contains thenecessary information for a thorough business and
financial evaluation.
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Developing a Well-
Conceived Business Plan
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The Five-Minute Reading
Step 1: Determine the characteristics of the venture and itsindustry
Step 2: Determine the financial structure of the plan (amount ofdebt or equity investment required)
Step 3: Read the latest balance sheet (to determine liquidity, networth, and debt/equity)
Step 4: Determine the quality of entrepreneurs in the venture
(sometimes the most important step)
Step 5: Establish the unique feature in this venture (find out
what is different)
Step 6: Read the entire plan over lightly (this is when the entire
package is paged through for a casual look at graphs, charts,exhibits, and other plan components)
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Putting the Package Together
Appearance
Length
The cover and title page
The executive summary
The table of contents
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Guidelines to Remember
Keep the Plan Respectably Short
Organize and Package the Plan Appropriately
Orient the Plan Toward the Future
Avoid Exaggeration Highlight Critical Risks
Give Evidence of an Effective Entrepreneurial Team
Do Not Overdiversify Identify the Target Market
Keep the Plan Written in the Third Person
Capture the Readers Interest
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Elements of a
Business Plan
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Complete Outline of a Business Plan, cont.
Section III: MarketingA. Research and analysis
1. Target market (customers) identified
2. Market size and trends3. Competition4. Estimated market share
B. Marketing plan
1. Market strategy
sales anddistribution
2. Pricing
3. Advertising and promotions
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Complete Outline of a Business Plan, cont.
Section IV: OperationsA. Identify location
1. Advantages
2. Zoning
3. Taxes
B. Proximity to supplies
C. Access to transportation
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Complete Outline of a Business Plan, cont.
Section V: ManagementA. Management team key personnel
B. Legal structure stock agreements,
employment agreements, ownership
C. Board of directors, advisors,consultants
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Complete Outline of a Business Plan, cont.
Section VI: FinancialA. Financial forecast
1. Profit and loss
2. Cash flow
3. Break-even analysis
4. Cost controls
5. Budgeting plans
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Complete Outline of a Business Plan, cont.
Section VII: Critical RisksA. Potential Problems
B. Obstacles and risks
C. Alternative courses of action
Section VIII: Harvest Strategy
A. Transfer of asset
B. Continuity of business strategy
C. Identify successor
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Complete Outline of a Business Plan, cont.
Section IX: Milestone ScheduleA. Timing and objectives
B. Deadlines and milestones
C. Relationship of events
Section X: Appendix or Bibliography
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Presentation of the Business Plan
Know the outline thoroughly
Rehearse the presentation
Be familiar with any equipment
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Business Plan Assessment:
Complete Evaluation ofEach Component
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What To Do When a Venture Capitalist
Turns You Down: Ten Points
1. Confirm the decision
2. Sell for the future
3. Find out why you were rejected
4. Ask for advice5. Ask for suggestions
6. Get the name
7. Find out why
8. Work on an introduction
9. Develop a reasonable excuse
10. Know your referral