Entrepreneurship

Frances Jørgensen

Frances@plan.aau.dk

Agenda

• The Entrepreneur

• The call for entrepreneurship

• The Business Plan

• Who should develop a business plan?

• What are the important elements of the BP?

• Tips and Examples

The Entrepreneur is…

• The economists’ heffalump• A coordinator, organizer, manager, leader.• A gap filler• An innovator, characterized by

spontaneous undeliberate learning, or a creative imitator

• A risk bearer• A highly demanded but seldom found

commondity

The Business Plan

• …describes a business in its developmental stages, that describes the most important elements of how the business will be run and developed.

• …justifies your basis for starting the business—from your good ideas to your experience and expertise to your financial and market considerations, to your long term dreams and goals.

• …is a continuously evolving and developing platform for your business.

Who needs a business plan?

• Everyone considering the start of a new business venture– Smaller businesses– Highly technical business– Larger businesses

• Everyone in this class, as parts of the activity will be included in your final exam

Objectives of the Business Plan

• To structure and define your visions (for self and others)

• To build a solid basis for your business, based on factual data

• To aid in important decision-making and short/long-term planning

• To convince others (banks, investors, family, friends, potential customers and suppliers) that your plans have merit

• To start development of a habit of professionalism

Main Elements

• Cover Page• Executive Summary• Table of Contents• Company Description• Product/Services• Market Analysis• Marketing Plan• Operations Plan• Financial Plan• Management• Exit Strategy (not always)• Appendices

Executive Summary

• Most important component, especially for the marginally involved

• A brief and precise picture of your future that: – Doesn’t tell too much, but just enough– Shows you are knowledgeable and prepared– Entices the reader to turn the page

• The LAST part of the BP to be completed (not started)!

Executive Summary Content

• Description of all actors, emphasizing your (relevant) special talents, qualifications, resources

• Description of service or product

• Customer information, including current relationships

• Most important “figures” (projected income, budgets, profits)

Vision

• Vision Statements: – Don’t be short/narrow sighted: Where would Lego be,

if their vision had been to sell small square interlocking building plastic blocks in many various sizes?

– The 30 second elevator test– Focus on the customer– The good, the bad, and the ugly (SWOT + your USP)

• Milestones:– Put your project management skills to use! Set short

term goals that are OBSERVABLE and CONSISTENT with long term goals (vision)

Company Description

• History of your company (or project or idea)

• Focus on expansion and improvement (past, present, and planned)

• Be honest (include problems experienced and how they were overcome)

• Be clear about your present status and future (planned) needs

Product/Service

• Avoid highly technical, expert-sounding, jargon. • Describe the products/services so that they

appeal to the (future) customer; be descriptive so they can ”see”, ”feel”, ”smell” it! What does it mean to ME?

• What makes yours better? What does it do that others can’t? Product positioning!

• What is involved in production? Patents? Gov’t approval?

Market Analysis

• Describe industry characteristics, market segments, trends, projected growth, target market and customers, customer behavior, complementary products/ services, barriers of entry, etc.

• Focus in on gaps in your product/service area.

• Who do you expect will buy/use your product/service? Why them?

Marketing Plan

• Tell how you will use the brilliantly composed market analysis to its fullest potential…– Detail how you will ensure that customers

know about your product/service AND will choose it over the competition.

– Provide more than one marketing tactic (cheapest to most expensive is usually wise)

Operations Plan

• Demonstrate that what you promised in the executive summary is DOABLE!

• Provides the ”nuts and bolts” of running the business…the practical details:– Location, organizational structure, equipment,

labor requirements, HR plans, customer service/support, etc.

Financial Plan

• Includes sales forecasts, profit-and-loss statements, cash flow projections, balance sheets, standard business ratios.

• Even if you have a qualified accountant, you MUST be able to respond intelligently to questions in all of these areas!

Management

• A great management team with a so-so business idea is a better risk than a so-so management team with a fantastic idea!

• Use contacts, networks, etc. to strengthen your management team, as necessary. Be sure to toot your own horns…no time for modesty!

Exit Strategy

• Provides investors with a sense of security, that you won’t always be dependent and that this is a potential $ maker for him/her.

• Usually describes plans for 3-10 years in the future

Appendices

• Verification of education, experience, etc.• Technical drawings, computer renditions of

product• Independent assessments of the

product/services• Reports drafted in your planning stages (e.g.

from accountants, market researchers, etc)• Throw out any documents that are not highly

relevant!

Tips• Know your audience!

• Be dramatic, creative…but careful!

• Explain the WHY (the product, the market, the pricing, the partners, the location…)

• Take advantage of your research background! Don’t make unfounded claims or guesses…

More Tips

• Include possible barriers, drawbacks, potential weaknesses, risks…as well as your plans for managing these!

• Stress your USP (unique selling proposition)

• Be realistic (higher quality for lower price won’t fool anyone!)

• Remember to proofread and spell check! Then do it again! Then have some one else do it!

Group Activity

• Create a Business Plan for:– Your dream business enterprise (product or

service-based)– An internal project in a company in which you

might be employed in the future, to be presented to the Board of Directors

• Use the class slides as guidelines for content; OMIT the Financial Plan section (others may be omitted with GOOD reason).