BUSINESS PLAN

BUSINESS PLAN BASICS

The BP is a written summary of an entrepreneurs
proposed venture, its operational and financial details, its
marketing opportunities and strategy, and its managers
skills and abilities.

Research shows a clear link between planning and
performance.

However, you can be successful without a plan (most
businesses are founded without a business plan)
MAJOR PURPOSES OF A
BUSINESS PLAN
- Opportunity Development
- Strategic Planning and Benchmarking
- Raising Money
- Recruiting
BUSINESS PLAN COVERAGE
AREAS
1. Key People

2. Promising Opportunity

3. Business Context

4. Risks and rewards
BUSINESS PLAN BASICS
Many different outlines/forms of plan. If you
are trying to raise money, I recommend having
three documents prepared for potential readers:

1. Executive Summary (most important
part of a plan)

2. 5-10 Page Short-Form Plan
(PowerPoint Presentation)

3. Full Business Plan
INFORMATION NEEDS
1. Clearly defined business concept.

2. Market data support the concept by detailing
the market potential

3. Operations must discuss location, equipment,
raw materials, supply needs, labor skills, space

4. Financials at a minimum need a cash budget
(full financials w/cash flow statement, income
statement, and balance sheet is preferable)
FORMAT/MAJOR SECTIONS
Cover Page (name of company, contact info)

Table of Contents

Executive Summary

Description of Product/Service

Market Data

Analysis of Competition
FORMAT/MAJOR SECTIONS
Marketing Plan

Management Plan

Financial Info

Deal Structure/Exit Strategy

Appendices (e.g., financial spreadsheets,
resumes, supporting marketing material)
Before you get any financing, investors will
conduct due diligence on your plan

You will also have to present your business plan

Know your target
- Bankers
- Angel Investors
- Venture Capitalists
- Competition Judges
BUSINESS PLAN EVALUATION
ENVIRONMENTAL AND
INDUSTRY ANALYSIS
Environmental analysis: assessment of external
uncontrollable variables that may impact the business
plan.
Examples: Economy, culture, technology, legal
concerns,

Industry analysis: reviews industry trends and
competitive strategies.
Examples: Industry demand, competition
ENVIRONMENTAL AND
INDUSTRY ANALYSIS
1. What are the major economic, technological, legal, and political trends on a
national and an international level?
2. What are total industry sales over the past five years?
3. What is anticipated growth in this industry?
4. How many new firms have entered this industry in the past three years?
5. What new products have been recently introduced in this industry?
6. Who are the nearest competitors?
7. How will your business operation be better than this?
8. Are the sales of each of your major competitors growing, declining, or steady?
9. What are the strengths and weaknesses of each of your competitors?
10. What trends are occurring in your specific market area?
11. What is the profile of your customers?
12. How does your customer profile differ from that of your competition?
APPENDICES
Contains any backup material that is not necessary in the
text of the document. May include:

Letters from customers, distributors, or subcontractors.

Secondary data or primary research data used to
support plan decisions.

Leases, contracts, or other types of agreements.

Price lists from suppliers and competitors.
Reality Test is it realistic?

Competitive Test does the firm have an edge over
the competition?

Value Test does the firm represent a good
financial risk/return?
THE THREE TESTS A
BUSINESS PLAN MUST PASS
WHY BUSINESS PLANS FAIL
Factors can be one of many of the following:

Goals set by the entrepreneur are unreasonable.
Goals are not measurable.
Entrepreneur has not made a total commitment to the
business or to the family.
Entrepreneur has no experience in the planned venture.
Entrepreneur has no sense of potential threats or
weaknesses to the business.
No customer need was established for the proposed
product or service.
Again, you will need to present your plan if you expect
to receive any funding.

Should cover 5 major areas:

1. Companys background and its products/services
2. Market analysis and description of the opportunities
3. Competitive edge and marketing strategies
4. Management team (experience and qualifications)
5. Financial analysis (projections)
BUSINESS PLAN PRESENTATION
5 Cs OF CREDIT
Lenders/Investors will look at these 5 Cs:

Capital Contribution by entrepreneur(s)

Capacity ability to repay loan/provide a return
(cash flow)

Collateral assets that back up the loan/investment

Character of the entrepreneur

Conditions that surround the business
SCA?????

Quality of management
- Hiring agreements w/outsiders if funded
- Advisory board

Resources controlled by the entrepreneur(s)

Financials (assumptions and projections)

Exit strategy
LIKELY EVALUATION
QUESTIONS
Before you write anything, should know
specifically who your first customer is going to be

Business plan software still a lot of work

Hiring a consultant must work closely w/the
consultant in order to ensure vision is expressed

Plan does not have to be flashy
OTHER THOUGHTS ON
BUSINESS PLANS
Read and re-read

Avoid fluff and overly flattering language

Evidence of good research

Be optimistic, but realistic

Have an advisory board for review purposes
OTHER THOUGHTS ON
BUSINESS PLANS
Clearly lay out the exit strategy
- may be different for different plan readers

How will your competition react?

Be prepared to defend and constantly update your
plan as conditions change
OTHER THOUGHTS ON
BUSINESS PLANS