Entrepreneurship Writing an Effective Business Plan: Crafting a Roadmap to Success Ch. 7.
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Transcript of Entrepreneurship Writing an Effective Business Plan: Crafting a Roadmap to Success Ch. 7.
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Entrepreneurship
Writing an Effective Business Plan: Crafting a Roadmap
to Success
Ch. 7
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“There is real magic in enthusiasm. It spells the difference between
mediocrity and accomplishment.”--Norman Vincent Peale, 1961
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Business Plan A formal, written expression of the
entrepreneur’s vision for converting ideas into a profitable, going business
The entry card for serious consideration by venture capitalists, banks, and other sources of funding
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A Living Document A business plan changes often as a new
business develops. Do just enough business planning to get
the new company started. Refine the plan with information
gathered from running the new venture.
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Importance of a living, changing business plan
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Prepare a relatively
simple plan
Start thebusiness
Refine the business plan
Continue to grow the business
Model of SuccessfulBusiness Planning
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Business Plan Components What is the basic idea? Why is the new product appealing—and
to whom? How will the idea be realized? Who are the entrepreneurs? How much funding is needed? What
type of funding? How will it be used? How will you realize a return?
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A Successful Plan A serious document prepared by
serious people Orderly Succinct Persuasive
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Executive Summary Your elevator pitch Provides a brief, clear, and
persuasive overview of the new venture
Target 2 to 3 pages
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Business Plan Sections Background and
purpose Marketing Competition Development,
production, and location
Management
Financial information Risk factors Harvest or exit Scheduling and
milestones Appendices
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Background, Product, and Purpose What is the nature of the idea driving
your company and how did it arise? What does the product have to offer? What is the basic nature of the
company? What is the company’s mission?
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Market Analysis What have you done to identify the
market? How large is the market? How will products or services be
promoted? What do you know about competing
products and companies? How will the product or service be
priced?
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Development, Production, and Location Where are the products or services in
the development process? What are the projected costs and
timetable for making the product or delivering the service?
What steps have been taken to assure quality and safety?
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Management Team Do team members have the
experience, expertise, skills, and personal characteristics needed?
Do team members having good working relationships?
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Financial Plans and Projections
Proforma balance sheet
Proforma income statement
Cash flow statement Break-even analysis
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Critical Risks Price cutting by competitors Unforeseen industry trends Sales projections not achieved Costs exceed estimates Schedules not met Difficulties raising financing Unforeseen trends
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Harvest and Exit Management
succession Exit strategies
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Scheduling and Milestones Formal incorporation Completion of
design Completion of
prototypes Hiring of initial
personnel
Product displays Agreements Moving into
production Receipt of orders First sales Profitability
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The Intangibles The extra “something” Pay attention to organization, clarity, word
choice, and style Have good writers read your plan Revise according to their suggestions
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Seven Deadly Sins Plan is poorly prepared Plan looks too slick Executive summary is too long Development stage of product is unclear Fails to answer “Why would anyone ever want
to buy one?” Doesn’t state management qualifications Financial projections are wishful thinking
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The Presentation Remember: This is important! Prepare, prepare, prepare Choose content carefully Persuade, don’t overwhelm Show enthusiasm tempered with reality Rehearse Don’t overlook the basics Respond positively to questions