Fahim akhtar

Business plana formal written expression of the entrepreneurial

vision, describing the strategy and operations of the proposed venture.

Why business plan• Presented to a banker, it may be called a “loan

proposal.” • A venture capital group might call it the

“venture plan” or “investment prospectus.” • Offered to potential partners or top

managers, suppliers and distributors, lawyers, accountants, and consultants.

Presented to a banker, it may be called a “loan proposal.”

A venture capital group might call it the “venture plan” or “investment prospectus.

Offered to potential partners or top managers, suppliers and distributors, lawyers, accountants, and consultants

David Gumpertentrepreneurs seeking financing in the new business environment follow this

process

• Get the business going through bootstrapping• Keep in regular contact with investors. • Show sales early.• Prove your business model. Produce a product, sell it

for more than it costs to produce, and attract repeat business—that proves the model.

David Gumpert

• Born: December 12, 1946• a journalist and writer. have been a

newspaper reporter and magazine editor, and have written a number of books and articles about food and small business. Have also written some history, in the form of a memoir co-authored with his aunt, about her experiences

Get the business going through bootstrapping

Keep in regular contact with investors

• Investor persistently need assurance that their investment is safe

• Investors confidence brings more investment • Investor’s confidence brings credibilty

Show sales early

• Your inventory need to go out• Profitability - sell price minus cost• Rotation of money and inventory• Sales assist in market penetration• Sales leads to sucesss

ELEMENTS OF THE BUSINESS PLAN

• People: Who are the key figures in the new enterprise?

• Opportunity: What is the business model? • Context: What does the big picture look like?• Risk and Reward: What can go right and what

can go wrong?

People: Who are the key figures in the new enterprise?

business plan follows the general format for documents

• The first section tells the audience what the entrepreneur is going to tell them. This prepares them for what is coming.

• The major middle sections give the audience the information and arguments that are central to the company’s purpose.

• The last section reminds the audience what it has heard and summarizes the presentation.

Preliminary Section

• Cover page• Table of contents• Executive summary

Cover page

• Company name, address, telephone and fax numbers, and e-mail address. The reader is more likely to contact the entrepreneur if it’s easy to do so.

• The name and position of the contact person, one of the firm’s top executives, who must be fully prepared to answer questions about the plan.

• The date the business was established (e.g., “established 2006”) and the date of this version of the business plan (e.g., “February 2007”).

• The full name of the organization from which funding (or credit, or a supplier agreement, etc.) is being sought.

Executive summary

• Most important part of the business plan• Most readers, especially investors, never read

beyond the summary• Only 10 percent of all business plans are read

thoroughly, meaning that 90 percent are rejected after the summary.

• The company name and contact person should appear as they do on the cover page.

Table of contents

Main parts1. Type of Business 2. Company summary 3. Management 4. Product/service and competition 5. Funds requested, collateral, use of

proceeds*6. Financial history, financial projections*7. Deal structure, exit*

Type of Business

The summary should describe the firm’s industry or sector in about ten words. Some investors will not invest in certain industries, so being clear up front saves time for everyone.

Company summary

• Thumbnail sketch of the firm’s history and background emphasizes the positive—briefly

• More than half a page (150 words) is not a summary.

• A statement defining the firm’s primary product or service should not be complicated by lists of product extensions or auxiliary services

Management

• The people running the company matter more than any other factor, but the summary need not include a lot of detail. Listing the top two or three people and emphasizing their industry experience should suffice.

Product/service and competition

• Mentioning the competition defines the position the firm occupies. Again, this description should be no longer than half a page (150 words).

Funds Requested

• This brief statement specifies the exact amount of money needed and the investment vehicle: debt, equity, or some hybrid.

• If the firm is flexible in this regard, the summary should state both the company’s preference and its willingness to consider alternatives.

• In this case an investor may make a counterproposal and the deal can be restructured

Financial history

• The firm’s financial history should include only the major categories—revenues, net income, assets, liabilities, and net worth

Deal structure

• These projections follow the same format as the financial history, covering two or three years and matching the figures in the main body of the plan.

Questions