Start at the top and work your way down. Each is discussed in turn.
The correct answer is C – mission statement
Second step, imagine you’re caught on the 10 th floor going down in an elevator with a venture capitalist. Now quick, convince him to invest in 30 seconds or less. Who are you? why is what you offer needed and different? Why should he meet with you and discuss this further? This makes a good thing to practice in class.
Who are you? Why are you in business? Where are you going?
Patents should be mentioned here whether received or just applied for. Pictures with descriptions are helpful especially for unique products with which the reader may not be familiar.
Who is your market? Where are they? How do they purchase? How can you fill their needs?
It’s a technicality. But are you a partnership? Corporation? S-corp? DBA?
You, the entrepreneur, are the key. You have the passion. You have the desire, the vision, the idea. Now sell it. What have you done? Awards won? Contracts signed? Have you had past successes which may not be applicable to this product but to your overall success rate? Give them a reason to trust you, believe in you, invest in you.
Again, this is technical information but it does lend legitimacy to your organization.
Pictures are also helpful at this stage.
Appendices differ for different plans. You may or may not have and or need each of these. Make sure anything you include increases your legitimacy and builds confidence in you and your plan.
This is just another aspect of what your company is and the situation it is in.
The correct answer is D – operational plan.
These are risks your potential investors may point out. It is typical, because we believe in ourselves and our plans, to overstate what we can do. We become overly optimistic. If pointed out, your plan can be corrected for these problems.
ObjectivesLO1 Understand why and when to develop a business planLO2 Know how to tell the business plan storyLO3 Learn the major sections of the classic business planLO4 Focus business plan sections to meet specific needsLO5 Identify the major risks to business plan successLO6 Master presenting your business plan to others 8-2
Business Plan Background Business plan – A document designed to detail the major characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm’s present and future. 8-3
Business Plan Background External legitimacy – The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner’s family. 8-4
Business Plan Background Internal understanding – extent to which employees, investors, and family members in the business know the business’s purposes and operations 8-5
The Vision Statement Vision statement – A very simple 5–10 word sentence or tagline that expresses the fundamental idea or goal of the firm. Tagline – Memorable catchphrase that captures the key idea of a business, its service, product, or customer. – also known as a slogan 8-7
QuestionA _____________ describes the firm’s goals and competitive advantages.A.Vision statementB. TaglineC.Mission statementD.Executive summary 8-8
The Mission Statement Mission Statement – A paragraph that describes the firm’s goals and competitive advantages – Talks in terms of how it will make a difference in for the customer or the industry 8-9
The Elevator Pitch The Elevator Pitch – A 30-second action-oriented description of a business designed to sell the idea of the business to another – Leads with the hook, follows up with purpose of the service, ends with where business is now – What makes firm unique or superior? 8-10
The Executive Summary Executive summary – A one- to two-page (250–500 words) overview of the business, its business model, market, expectations, and immediate goals. – Typically put at the start of a business plan and is the most popular summary form for a business plan. 8-11
Strategizing for the Business Plan: 5-M Model 8-12
Janexia Waterproofing: A 5-M Model ExampleFigure 8.2 8-13
Business Plan Outline Cover letter – A one-page document on business stationery that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan. 8-15
Business Plan Outline Title Page – contains introductory information – Company name – Contact information – Date this version of the plan was completed – Proprietary statement to protect your ideas 8-16
Business Plan Outline Table of contents – Lists major section headings • Boldface type – Sections underneath major sections • Normal type – Put page numbers on every page of the business plan 8-17
Business Plan Outline Company background – brief description of the company, the firm’s current status, and the history of the business – Vision statement / mission statement – Specific goals, Business’ competitive advantage 8-18
Business Plan Outline The Company: Product/service and industry – Describe firm’s product or service – Explain how the customer uses the product – Proprietary technology – Industry descriptions 8-19
Business Plan Outline The Market: Market and target customer – Total population of people or firms you plan to sell to – Target customer section: focuses attention on who would buy – Demographics’ relation to the product, how often they buy, and past experience 8-20
Business Plan Outline The Market: Competition and competitive advantage – Major competitors – Competing product or service: market share, price, competitive advantages and disadvantages – what makes product or service unique 8-21
Business Plan Outline The Market: Marketing strategy – Overall strategy your firm pursues in the market – Sales plan that shows specific ways you apply strategy to secure sales from your customers – Longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you 8-22
Marketing Strategy Preselling – Involves introducing your product to potential customers and taking orders for later delivery. Research and development – The part of a business that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm’s market. 8-23
Business Plan Outline The Organization: Legal and organization structures – Legal form of the business – Organizational structure of the firm – Makes clear how many employees there are and whether they are full time or part time, permanent or seasonal, family or non-family 8-24
Business Plan Outline The Organization: Key personnel – Sell the most important single element in the business plan – you! – Who are your key personnel? – Talk about accomplishments rather than just experience – Do not limit yourself to business 8-25
Business Plan Outline The Organization: Related service providers – Identify your bank and banker, attorney and legal firm, accountant or bookkeeper, other consultants – Major relationships established with well- known suppliers or customers – Board of directors / board of advisors 8-26
Business Plan Outline The Organization: Location – Description of the facility – How it meets strategic and sales goal of the business – Own, lease, or rent the property – Plan to expand the facilities 8-27
Financials Layout for a Typical Business Plan Exhibit 8.2 8-28
Business Plan Outline The Appendices – one-page version of owner’s resume – Product or service pictures or specifications – Copies of signed contracts – Results from marketing studies or pilot sales efforts – Industry reports 8-29
Focusing Your Business Plan Pioneering business – A firm whose product or service is new to the industry or is itself creating a new industry. Test marketing – Selling your product or service in a limited area, for a limited time. 8-30
Focusing Your Business Plan New entrant business – A firm whose product or service is established elsewhere, but is new to this market. Screening plan – gives the basic overview of the firm and a detailed look at the financials. – Also called a mini-plan 8-31
QuestionWhat type of plan is designed to be used internally for management purposes?A.Informational plansB. Key employee/partner planC.Invention planD.Operational plan 8-32
Focusing Your Business Plan Informational plans – Give potential customers or suppliers information about the company and its product or service. Proof-of-concept Web site – An Internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest. 8-33
Focusing Your Business Plan Key employee/partner plan – Provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees. 8-34
Focusing Your Business Plan Invention plan – A business plan that provides information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights. 8-35
Focusing Your Business Plan Operational plan – Business plans designed to be used internally for management purposes. Private placement memorandum – A specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments. 8-36
The Most Common Critical Risks in a Plan Risks – The parts of a business or business plan that expose the firm to any kind of loss— profits, sales, reputation, assets, customers, and so on. 8-37
The Most Common Critical Risks in a Plan Overstated numbers Uncertain sales Overlooked competition Experience deficits Inadequate cushion Inadequate payback 8-38
Presenting Your PlanThe key things an influential person looks for in you are1. Your passion for the business2. Your expertise about the business and the plan3. How professional you are in your work,4. How easy it would be to work with you. 8-39