The Venture Plan

Chapter 7

Life Cycle of a Business

All Ventures go through a life cycle. This begins
with the business idea.

Pre-startup Stage
At this stage we are generating ideas, initiating
research, identifying problems

At this stage you write a business plan.

Development Stage
Your goal at this stage is to reach the breakeven point.

Break-Even Point a point where your total

monthly revenues equal your total monthly
costs.

Total Monthly revenues includes all money

that comes into the business from sales or
other sources.

Development Stage Cont.

Total monthly costs includes all money paid
out by the business. This includes labour,
production costs, as well as fixed overhead
costs.

Fixed over head costs costs such as rent,

telephone, computers, office staff.

Growth Stage
At this stage the business is turning a profit.

You may now consider hiring experts to carry the

workload, and to help your business expand.

Comfort Stage
Now your enjoying the benefits of success. The
business may own the building is operates in,
as well as its production equipment.

Its assets are worth more than its liabilities.

Assets- Anything the business owns that has cash
value.

Liabilities a debt, financial obligations of the buisness.

Turn Around Stage

Your venture has gone into financial trouble. You have
had losses for two years, your capital is gone.

Liquidation the sale of assets in order to raise funds.

Venture Plan
Is a road map for running a venture. It should
include.

A mission statement, goal

Market research, detailed description of your
target market
A list of resources that you need to make your plan
work

An explanation of how the business will operate

Venture Plan cont

A plan for raising money that you need to start
a business.

Mission Statement
Identify the type of venture

The product or services

Philosophy or purpose

How you will meet the needs or wants of the

customer.

Assistance Grid handout

6 reasons for a venture plan

1 identify market

Forces you to asses your goals

It introduces you to others as a first impression
Helps you determine your funding needs
Allows you to set benchmarks, so you can asses your
performance

Makes day to day management and changes easily

Sections of your
Business/venture Plan
Executive summary

Market Analysis
Resource Analysis

Operating Strategy
Financial Strategy

Executive Summary
One or Two Page document.

Opens with your mission statement then a description

of the venture.

Should include, names of contact person and

management teams and how they can be reached

Name of venture, description of its nature and

objectives

Info on goods and services offered, what makes it

unique, the location, timelines for development

Executive Summary Cont.

Info on any security that can be offered to investors in
exchange for their investment

Info about any business loans that are required

Key highlights of the business plan

Market Analysis
Needs Assessments or market analysis describes the
research that you have conducted.

Demographics of customers
Types of products/services these customers will buy
and how you know

Description of trends that suggest it is the right time to

introduce the product

Market Analysis Cont.

Who you competitors are, where they are, how
successful they are

How will your product/service be better than your

competitor

How much will you charge

How will you advertise

Resource Analysis
Material, Human, Financial are the three types of resources
that we will discuss.

What tools or equipment you will need and where you will
get them

What human resources you will need

Where you venture will be located

How much space will you require

The kind of space that you require

Resource Analysis Cont.

Will you buy or rent, or can you exist without a bricks
and mortar space

Will you manufacture products yourself of hire an

organization to do it for you

You source of raw materials and how much these will

cost

How often your suppliers will deliver materials and what

their return policies are

The total coast of resources to start up

Operating Strategy
The operation Strategy tells you how you will manage
these resources in the day to day operation of the
business.

The first part usually deals with human resources,

detailing peoples responsibilities and how the work will
be supervised.

The rest of the Strategy should explain

How people will work together

Operating Strategy Cont.

What the operating facility will be like

How the production process will be organized

Where the supplies will come from and who is in
charge of ordering them

What records will be kept and who will keep them

How the venture can keep costs to a minimum

What rules and regulations must be followed (including

environmental)

Financial Strategy
How much will it cost to start your venture

How much will it cost to keep the venture going after

startup

Expected cost and revenue for the venture

How much capital is required and when will it be
needed

What sources of capital are needed

Your turn
Your class wants to sell Adirondack chairs to raise funds for a
class trip.

In a small group, discuss what you need to know about the

market. How will you gather this information?

In your group, prepare a research assistance grid filled with

questions that you will need to ask in order to prepare an
operating strategy and a financial strategy.

Discuss how your team will share the task of finding the answers
to the questions you described in Part b. You may need to
estimate some answers.

Write an operating strategy and a financial strategy for your class

venture.