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Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
Crafting a winning business plan
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Crafting a winning business plan

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Crafting a Winning Business Plan

Crafting a Winning Business Plan

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  • 1. Crafting a Crafting a Winning WinningBusiness PlanBusiness Plan 1
  • 2. The more concrete and complete the plan, themore likely it is to earn the respect of outsidersand their support in necessary financialmatters. -----Jesse Werner 2
  • 3. Learning ObjectivesExplain why every entrepreneur should createa business plan and list the benefits of such aplanDescribe the elements of a solid business planUnderstand the keys to making an effectivebusiness plan presentationExplain the “five Cs of credit” and why theyare important to potential lenders and investorsreading business plan 3
  • 4. Planning The Business OperationBusiness Plan- Document DescribesInternal/External Elements/Strategies ForNew VenturePlan (Road Map) Short-Term Long-TermAuthor = EntrepreneurInternet - Resource 4
  • 5. Business Plan Audiences1) Employees2) Investors/Venture Capitalists3) Lenders/Suppliers4) Customers5) Advisors/Consultants 5
  • 6. The Business PlanBusiness plan – a written summary of: an entrepreneur’s proposed business venture its operational and financial details its marketing opportunities and strategy its managers’ skills and abilities 6
  • 7. The Business Plan: Three Essential Functions1. Guiding the company by charting its future course and defining its strategy for following it.2. Attracting lenders and investors who will provide needed capital.3. Demonstrating that the entrepreneur understands the business venture and what will make it succeed. 7
  • 8. A Plan Must Pass Three TestsThe Reality Test - proving that: a market really does exist for your product or service. you can actually build or provide it for the cost estimates in the plan.The Competitive Test - evaluating: a company’s position relative to its competitor. management’s ability to create a company that will gain an edge over its rivals.The Value Test – proving that: a venture offers investors or lenders an attractive rate of return or a high probability of repayment. 8
  • 9. Why Take the Time to Build a Business Plan?Although building a plan does notguarantee success, it does increaseyour chances of succeeding inbusiness.A plan is like a road map thatserves as a guide on a journeythrough unfamiliar, harsh, anddangerous territory. Don’tattempt the trip without a map! 9
  • 10. Key Elements of a Business PlanExecutive SummaryMission StatementCompany HistoryBusiness and Industry Profile 10
  • 11. The relationship among mission, goals, and objectives. Mission Goals Objectives
  • 12. Key Elements of a Business PlanExecutive SummaryMission StatementCompany HistoryBusiness and Industry ProfileBusiness StrategyDescription of Products/Services 12
  • 13. Features vs. BenefitsFeature – a descriptive fact about aproduct or service (“an ergonomicallydesigned, more comfortable handle”).Benefit – what a customer gains from theproduct or service feature. 13
  • 14. Key Elements of a Business Plan (continued)Marketing StrategyCompetitor AnalysisDescription of ManagementTeamPlan of OperationForecasted FinancialStatementsLoan or Investment Proposal 14
  • 15. I Executive SummaryA. Company name, address, and phone numberB. Name(s), addresses, and phone number(s) of all key peopleC. Brief description of the business, its products and services, and the customer problems they solveD. Brief overview of the market for your products and services 15
  • 16. Executive Summary (Contd.)E. Brief overview of the strategies that will make your firm a successF. Brief description of the managerial and technical experience of key peopleG. Brief statement of the financial request and how the money will be usedH. Charts or tables showing highlights of financial forecasts 16
  • 17. II Vision and Mission statementA. Entrepreneurs vision for the companyB. "What business are we in?"C. Values and principles on which the business standsD. What makes the business unique? What is the source of its competitive advantage? 17
  • 18. III Company History (for existing businesses only)A. Company foundingB. Financial and operational highlightsC. Significant achievements 18
  • 19. IV Business and Industry ProfileA. Stage of growth (start-up, growth, maturity)B. Company goals and objectives 1. Operational 2. Financial 3. OtherC. Industry analysis 1. Industry background and overview 2. Significant trends 3. Growth rate 4. Key success factors in the industry 5. Outlook for the future 19
  • 20. V Business strategyA. Desired image and position in marketB. SWOT analysis 1. Strengths 2. Weaknesses 3. Opportunities 4. ThreatsC. Competitive strategy 1. Cost-leadership 2. Differentiation 3. Focus 20
  • 21. VI Company Products and ServicesA. Description 1. Product or service features 2. Customer benefits 3. Warranties and guarantees 4. UniquenessB. Patent or trademark protection 21
  • 22. Company Products and Services (Contd.)C. Description of production process (if applicable) 1. Raw materials 2. Costs 3. Key suppliersD. Future product or service offerings 22
  • 23. VII Marketing StrategyA. Target market 1. Complete demographic profile 2. Other significant customer characteristicsB. Customers motivation to buyC. Market size and trends 1. How large is the market? 2. Is it growing or shrinking? How fast?D. Advertising and promotion 1. Media used-reader, viewer, listener profiles 2. Media costs 3. Frequency of usage 4. Plans for generating publicity 23
  • 24. Marketing Strategy (Contd.)E. Pricing1. Cost structure a. Fixed b. Variable2. Desired image in market3. Comparison against competitors pricesF. Distribution strategy 1. Channels of distribution used 2. Sales techniques and incentives 24
  • 25. VIII Location and LayoutA. Location 1. Demographic analysis of location vs. target customer profile 2. Traffic count 3. Lease/Rental rates 4. Labor needs and supply 5. Wage ratesB. Layout 1. Size requirements 2. Ergonomic issues 3. Layout plan (suitable for an appendix) 25
  • 26. IX Competitor AnalysisA. Existing competitors 1. Who are they? Create a competitive profile matrix. 2. Strengths 3. WeaknessesB. Potential competitors: Companies that might enter the market 1. Who are they? 2. Impact on your business if they enter 26
  • 27. X Description of management teamA. Key managers and employees 1. Their backgrounds 2. Experience, skills, and know-how they bring to the companyB. Resumes of key managers and employees (suitable for an appendix) 27
  • 28. XI Plan of OperationA. Form of ownership chosen and reasoningB. Company structure (organization chart)C. Decision making authorityD. Compensation and benefits packages 28
  • 29. XII Financial Forecasts (suitable for an appendix)A. Financial statements 1. Income statement 2. Balance sheet 3. Cash flow statementB. Break-even analysisC. Ratio analysis with comparison to industry standards (most applicable to existing businesses) 29
  • 30. XIII Loan or Investment ProposalA. Amount requestedB. Purpose and uses of fundsC. Repayment or "cash out" schedule (exit strategy)D. Timetable for implementing plan and launching the business 30
  • 31. XIV Appendices-Supporting documentation,including market research, financial statements, organization charts, resumes, and other items. 31
  • 32. Guidelines for Preparing a Business PlanRemember: No one can create your plan for you.Potential lenders want to see financialprojections, but they are more interested in thestrategies for reaching those projections.Show how you plan to set your business apartfrom competitors; dont fall into the “me too”trap.Identify your target market, and offer evidencethat customers for your product or service exist. 32
  • 33. Tips on Preparing a Business PlanMake sure your plan has an attractive cover.(First impressions are crucial.)Rid your plan of all spelling and grammaticalerrors.Make your plan visually appealing.Include a table of contents to allow readers tonavigate your plan easily.Make it interesting. 33
  • 34. Tips on Preparing a Business Plan (continued)Your plan must prove that the business willmake money (not necessarily immediately, buteventually).Use spreadsheets to generate financial forecasts.Always include cash flow projections.Keep your plan “crisp” – between 25 and 50pages long.Tell the truth – always. 34
  • 35. Presenting the PlanDemonstrate enthusiasm, but don’t beoveremotional.Know your audience thoroughly.“Hook” investors quickly with an up-frontexplanation of the venture, its opportunities, andits benefits to them.Hit the highlights; focus on the details later.Keep your presentation simple – 2 or 3 majorpoints. 35
  • 36. Presenting the Plan (continued)Avoid overloading your audience withtechnological jargon.Use visual aids.Close by reinforcing the nature of theopportunity.Be prepared (with details) for potentialinvestors’ questions.Follow up with every investor to whom youmake your presentation. 36
  • 37. Five Cs of Credit: Criteria lenders and investors useto evaluate the creditworthiness of entrepreneursseeking financing. 37
  • 38. The “5 Cs” of Credit Capital Capacity Collateral Character Conditions 38
  • 39. What lenders and investors look for in a Business PlanCapital: Lenders expect small businessesto have an equity base of investment bythe owner(s) that will help support theventure during times of financial strainCapacity: A synonym for capacity is cashflow. The bank must be convinced of thefirm’s ability to meet its financialobligations and to repay the bank loan 39
  • 40. What lenders and…(Contd.)Collateral: It includes any assets that ownerpledges to the bank as security for repaymentof the loanCharacter: Before approving a loan to a smallbusiness, the banker must be satisfied with theowner’s characterConditions: The conditions (interest rates, thehealth of the nation’s economy, industrygrowth rates, etc.) surrounding a loan requestwhich affect the owner’s chance of receivingfunds 40
  • 41. Reasons For Plan Failure1. Unreasonable Goals2. Goals Not Measurable3. No Total Commitment4. Lack Of Experience5. No Understanding Of Threats Or Weaknesses6. Customer Need Not Established 41

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