I.The Business Plan
A written narrative, typically 25 to 35 pages long, that describe what a new business intends to accomplish and how it intends to accomplish it.
1.Reasons for Writing a Business Plan
i.Forces a firm’s founders to systematically think through each aspect of their new venture. This is not a trivial effort and the founders will usually meet regularly to work on the plan during this period.
ii.To create a selling document for a company. It provides a mechanism for a young company to present itself to potential investors, suppliers, business partners, key job candidates, and others.
II. Who Reads the Business Plan - and What Are They Looking for?
1.A Firm’s Employees
Business plan that articulates the vision and future plans of a firm, is important for both the management team and the rank-and-file employees. It also helps them operates in sync and move forward in a consistent and purposeful manner.
2.Investors and Other External Stakeholders
The business plan must be realistic and not reflective of over confidence on the firm’s part. At the same time the plan must clearly demonstrate that the business idea is viable and offers potential investors financial returns greater than lower-risk investment alternatives.
III. Guidelines for Writing a Business Plan
1.Structure of the Business Plan
To make the best impression, a business plan should follow a conventional structure. Typically, investors are very busy people and want a plan where they can easily find critical information.
2.Content of the Business Plan
The business plan should give clear and concise information on all the important aspects of the proposed new venture. It must be long enough to provide sufficient information, yet short enough to maintain reader interest. After a business plan is completed, it should be reviewed for spelling. grammar, and to make sure that no critical information has been omitted.
a.Style or Format of the Business Plan
The plan should look sharp but not give the impression that a lot of money was spent to produce it. When writing the plan, avoid getting carried away with the design elements included in word-processing programs.
i.Summary Plan: 10-15 pages, work best for new ventures in the early stages of development that want to “test the waters” to see if investors are interested in their idea.
ii.Full Business Plan: 25-35 pages, work best for new ventures that are at the point where they need funding or financing; serves as “blueprint” for the company’s operations.
iii.Operational Business Plan: 40-100 pages, is meant primarily for an internal audience; work best as a tool for creating a blueprint for a new venture’s operations and providing guidance to operational managers.
b.Recognizing the Elements of the Plan May Change
The plan will usually change as it is being written and as the business evolves. New insights invariably emerge when entrepreneurs immerse themselves in writing the plan and start getting feedback from others.
IV. Outline of the Business Plan
1.Exploring Each Section of the Plan
a.Cover Page and Table of Contents
b.Executive Summary
A short overview of the entire business plan; it provides a busy reader with everything s/he needs to know about the new venture’s distinctive nature. An investor will first ask for a copy of a firm’s PowerPoint deck or executive summary and will request a copy of the full business plan only if the PowerPoint deck or executive summary is sufficiently convincing.
c.Industry Analysis
Describing the industry in which the firm intends to compete
d.Company Description
e.Market Analysis
Breaks the industry into segments and zeroes in on the specific segment to which the firm will try to appeal
f.The Economics of the Business
g.Marketing Plan
h.Product (or Service) Design and Development Plan
i.Operations Plan
j.Management Team and Company Structure
Many investors and others who read business plans look first at the executive summary and then go directly to the management team section to asses the strength of the people starting the firm.
k.Overall Schedule
l.Financial Projections
The first thing to include is a sources and uses of funds statement, which is a document that lays out specifically how much money a firms needs, where the money will come from, and how the money will be used. The next item to include is an assumptions sheet, which is an explanation of the most critical assumptions on which the financial are based.
m.Appendix
Putting It All Together
In evaluating and reviewing the completed business plan, the writers should put themselves in reader’s shoes to determine if the most important questions about the viability of their business venture have been answered.
V. Presenting the Business Plan to Investors
1.The Oral Presentation of a Business Plan
When asked to meet with an investor, the founders of a new venture should prepare a set of PowerPoint slides that will fill the time slot allowed for the presentation portion of the meeting. The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered with material.
2.Questions and Feedback to Expect from Investors
The question-and-answer period is extremely important. Here investors are typically looking for how well entrepreneurs think on their feet and how knowledgeable they are about the business venture.
A written narrative, typically 25 to 35 pages long, that describe what a new business intends to accomplish and how it intends to accomplish it.
1.Reasons for Writing a Business Plan
i.Forces a firm’s founders to systematically think through each aspect of their new venture. This is not a trivial effort and the founders will usually meet regularly to work on the plan during this period.
ii.To create a selling document for a company. It provides a mechanism for a young company to present itself to potential investors, suppliers, business partners, key job candidates, and others.
II. Who Reads the Business Plan - and What Are They Looking for?
1.A Firm’s Employees
Business plan that articulates the vision and future plans of a firm, is important for both the management team and the rank-and-file employees. It also helps them operates in sync and move forward in a consistent and purposeful manner.
2.Investors and Other External Stakeholders
The business plan must be realistic and not reflective of over confidence on the firm’s part. At the same time the plan must clearly demonstrate that the business idea is viable and offers potential investors financial returns greater than lower-risk investment alternatives.
III. Guidelines for Writing a Business Plan
1.Structure of the Business Plan
To make the best impression, a business plan should follow a conventional structure. Typically, investors are very busy people and want a plan where they can easily find critical information.
2.Content of the Business Plan
The business plan should give clear and concise information on all the important aspects of the proposed new venture. It must be long enough to provide sufficient information, yet short enough to maintain reader interest. After a business plan is completed, it should be reviewed for spelling. grammar, and to make sure that no critical information has been omitted.
a.Style or Format of the Business Plan
The plan should look sharp but not give the impression that a lot of money was spent to produce it. When writing the plan, avoid getting carried away with the design elements included in word-processing programs.
i.Summary Plan: 10-15 pages, work best for new ventures in the early stages of development that want to “test the waters” to see if investors are interested in their idea.
ii.Full Business Plan: 25-35 pages, work best for new ventures that are at the point where they need funding or financing; serves as “blueprint” for the company’s operations.
iii.Operational Business Plan: 40-100 pages, is meant primarily for an internal audience; work best as a tool for creating a blueprint for a new venture’s operations and providing guidance to operational managers.
b.Recognizing the Elements of the Plan May Change
The plan will usually change as it is being written and as the business evolves. New insights invariably emerge when entrepreneurs immerse themselves in writing the plan and start getting feedback from others.
IV. Outline of the Business Plan
1.Exploring Each Section of the Plan
a.Cover Page and Table of Contents
b.Executive Summary
A short overview of the entire business plan; it provides a busy reader with everything s/he needs to know about the new venture’s distinctive nature. An investor will first ask for a copy of a firm’s PowerPoint deck or executive summary and will request a copy of the full business plan only if the PowerPoint deck or executive summary is sufficiently convincing.
c.Industry Analysis
Describing the industry in which the firm intends to compete
d.Company Description
e.Market Analysis
Breaks the industry into segments and zeroes in on the specific segment to which the firm will try to appeal
f.The Economics of the Business
g.Marketing Plan
h.Product (or Service) Design and Development Plan
i.Operations Plan
j.Management Team and Company Structure
Many investors and others who read business plans look first at the executive summary and then go directly to the management team section to asses the strength of the people starting the firm.
k.Overall Schedule
l.Financial Projections
The first thing to include is a sources and uses of funds statement, which is a document that lays out specifically how much money a firms needs, where the money will come from, and how the money will be used. The next item to include is an assumptions sheet, which is an explanation of the most critical assumptions on which the financial are based.
m.Appendix
Putting It All Together
In evaluating and reviewing the completed business plan, the writers should put themselves in reader’s shoes to determine if the most important questions about the viability of their business venture have been answered.
V. Presenting the Business Plan to Investors
1.The Oral Presentation of a Business Plan
When asked to meet with an investor, the founders of a new venture should prepare a set of PowerPoint slides that will fill the time slot allowed for the presentation portion of the meeting. The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered with material.
2.Questions and Feedback to Expect from Investors
The question-and-answer period is extremely important. Here investors are typically looking for how well entrepreneurs think on their feet and how knowledgeable they are about the business venture.
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