MGMT 3710Entrepreneurial Foundations

Chapter 9

The Business Plan

Why Create a Business Plan?

For Investors and Creditors Avoidance of risk Knowing what they’re getting into

For yourself and management Really thinking hard about what that company is Very hard to find time once the business gets going Figure out who should be on your team

What a Business Plan Should and Should Not Contain Should have:

Contact information Information about the opportunity

“Real” information! Information about resource needs and

weaknesses Include ideas for solutions for these

Information about how the company will runThe assumptions you used to create your

projections

What a Business Plan Should and Should Not Contain

Should NOT have:Wild creativity or evidence of heavy spending

in structure or appearanceAggregated market information Information from last funding attempt left over

in cover letter or planSeveral voices in the writing style

The Process of the Plan

Kawasaki –Pitch then plan Design and deliver a 10 page pitch for your business

around the plan outline Then create the plan afterward, filling in the holes Provide a list of customers who might vouch for your

initial product or service Use diagrams and graphs Don’t use consultants to write the plan Have a credible person refer you to someone for

examining

Let’s Go Through a Business Plan!

Executive SummaryWhat the Business Is About

Your Management TeamStructure, Ownership, and Intellectual Property

Industry Analysis

Risk FactorsFinancial Plan

Appendix

Marketing PlanOperational Plan

The Executive Summary

Before we start, logos, logos, logos! Oh, and some contact information!

Must be absolutely convincing – may be the only exposure you have to an investment team member

A summary of the entire plan

Needs to include the amount of money sought

Write this LAST!

The Business

What was your initial need that you were going to fill as an entrepreneur? Flesh that out with real information you have gathered

through feasibility analysis

History, mission, vision, values, and objectives

Timeline for action

The product or service

The Management Team

Show any proven skills

Management ownership interests

Management’s former track record

Put resumes in the appendix

Board of Directors Insiders and outsiders

Professionals Hired to Fill in the Gaps

Structure, Ownership and Intellectual Property Ownership

Organizational Chart

Legal Structure of the OrganizationWhy that was chosen

Patents, copyrights, and trademarks

External Analysis

Industry and PESTHow your firm will take advantage of positive

trends and how it will avoid or combat negative trends

Could be the short narrative explanation of a SWOT in Appendix

Marketing Plan

Product information here if not before

Feasibility analysis summary

Market report

Promotional scheme

Pricing Strategy

Channels of Distribution

Operations Plan How you plan on manufacturing your product or

delivering your service

Who will your suppliers be? Who are your partners?

How will you ensure quality control?

How will you handle safety?

How will you go about bringing new people on board?

Financial Plan What funding will be used and how it will be

used

Three to five years of pro forma income statements, balance sheets, and cash flow statements

When investors can plan of getting their return

Assumptions either here or in an Appendix

Exit strategy

Risk Factors

Lets investors know that you as management are aware of the things that put your business at risk

The “What-if’s” and “Worse case scenarios”

Evaluate risks in all functional areas

Appendix

Important information that clutters the remainder of the plan

2MBA had Internal Analysis, Risk Analysis, SWOT, Testimonials, Production Layout, Action Plan, Team Member Details (resumes), References, and Financial Analysis Worksheets in theirs

What Not to Do in a Pitch

Go over allotted time

Prepare too many slides

Be without necessary technical equipment

Come without critical info

Forget to talk about the nuts and bolts of everyday business

Allow too many people to talk