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Entrepreneurship



  Writing an Effective Business
 Plan: Crafting a Roadmap
           to Success
Small Business vs. High-Growth Ventures
                    Small Business    High-Growth
                                        Venture
Preferred Funding   Owner’s Own      Other People’s
      Source          Money              Money
 When Firm’s In      Cut Costs         Sell More
     Trouble
   What’s More          Sales          Marketing
    Important
 Personal Control      Retain         Involve Key
    Preference        Autonomy          Others
      Focus           Efficiency     Effectiveness
  Metastrategy        Imitation         Novelty7-2
Boundary                                               Resources
 Creating a place for your business –                     The money, product knowledge, etc,
   in location and in people’s minds                          that make up the business




                                        Your Small Business



                                                                        Exchange
          Intention                                               Moving resources/products/
  The desire to start a business                                services in exchange for money




The BRIE Model
                                                                                      7-3
“There is real magic in enthusiasm. It
    spells the difference between
   mediocrity and accomplishment.”
       --Norman Vincent Peale, 1961




                                  7-4
Business Plan
• A formal, written expression of the
  entrepreneur’s vision for converting
  ideas into a profitable, going business
• It is a document describing all relevant
  internal and external elements and
  strategies for starting a new venture.
• The entry card for serious
  consideration by venture capitalists,
  banks, and other sources of funding

                                      7-5
A Living Document
• A business plan changes often as a
  new business develops.
• Do just enough business planning
  to get the new company started.
• Refine the plan with information
  gathered from running the new
  venture.


                                 7-6
Model of Successful
              Business Planning



Prepare a                                   Continue to
                Start the    Refine the
 relatively                                  grow the
                business    business plan
simple plan                                  business




                                                   7-7
Business Plan Components
• What is the basic idea?
• Why is the new product appealing—
  and to whom?
• How will the idea be realized?
• Who are the entrepreneurs?
• How much funding is needed? What
  type of funding? How will it be
  used? How will you realize a return?
                                  7-8
Who reads it???




                  7-9
A Successful Plan
• A serious document prepared by
  serious people
• Orderly
• Succinct
• Persuasive




                                   7-10
Executive Summary
• Your elevator pitch
• Provides a brief, clear, and
  persuasive overview of the
  new venture
• Target 2 to 3 pages




                                 7-11
Business Plan Sections
• Background and    • Financial
  purpose             information
• Marketing         • Risk factors
• Competition       • Harvest or exit
• Development,      • Scheduling and
  production, and     milestones
  location          • Appendices
• Management


                                   7-12
Background, Product, and
         Purpose
• What is the nature of the idea
  driving your company and how did it
  arise?
• What does the product have to
  offer?
• What is the basic nature of the
  company?
• What is the company’s mission?

                                 7-13
Market Analysis
• What have you done to identify the
  market?
• How large is the market?
• How will products or services be
  promoted?
• What do you know about competing
  products and companies?
• How will the product or service be
  priced?
                                7-14
Market information




                     7-15
Development, Production, and
         Location
•   Location
•   Manufacturing operations
•   Raw materials
•   Equipments
•   Labour skills
•   Overhead



                               7-16
Management Team
• Do team members have the
  experience, expertise, skills, and
  personal characteristics needed?
• Do team members having good
  working relationships?




                                   7-17
Financial Plans and
    Projections
      • Proforma balance
        sheet
      • Proforma income
        statement
      • Cash flow statement
      • Break-even analysis



                       7-18
Critical Risks
•   Price cutting by competitors
•   Unforeseen industry trends
•   Sales projections not achieved
•   Costs exceed estimates
•   Schedules not met
•   Difficulties raising financing
•   Unforeseen trends

                                     7-19
Harvest and Exit
• Management
  succession
• Exit strategies




                          7-20
Scheduling and Milestones
• Formal              • Product displays
  incorporation       • Agreements
• Completion of       • Moving into
  design                production
• Completion of       • Receipt of orders
  prototypes          • First sales
• Hiring of initial   • Profitability
  personnel


                                      7-21
The Intangibles
• The extra “something”
• Pay attention to organization, clarity,
  word choice, and style
• Have good writers read your plan
• Revise according to their suggestions




                                        7-22
Seven Deadly Sins
• Plan is poorly prepared
• Plan looks too slick
• Executive summary is too long
• Development stage of product is unclear
• Fails to answer “Why would anyone ever
  want to buy one?”
• Doesn’t state management qualifications
• Financial projections are wishful thinking


                                        7-23
The Presentation
•   Remember: This is important!
•   Prepare, prepare, prepare
•   Choose content carefully
•   Persuade, don’t overwhelm
•   Show enthusiasm tempered with reality
•   Rehearse
•   Don’t overlook the basics
•   Respond positively to questions

                                       7-24

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Business plan

  • 1. Entrepreneurship Writing an Effective Business Plan: Crafting a Roadmap to Success
  • 2. Small Business vs. High-Growth Ventures Small Business High-Growth Venture Preferred Funding Owner’s Own Other People’s Source Money Money When Firm’s In Cut Costs Sell More Trouble What’s More Sales Marketing Important Personal Control Retain Involve Key Preference Autonomy Others Focus Efficiency Effectiveness Metastrategy Imitation Novelty7-2
  • 3. Boundary Resources Creating a place for your business – The money, product knowledge, etc, in location and in people’s minds that make up the business Your Small Business Exchange Intention Moving resources/products/ The desire to start a business services in exchange for money The BRIE Model 7-3
  • 4. “There is real magic in enthusiasm. It spells the difference between mediocrity and accomplishment.” --Norman Vincent Peale, 1961 7-4
  • 5. Business Plan • A formal, written expression of the entrepreneur’s vision for converting ideas into a profitable, going business • It is a document describing all relevant internal and external elements and strategies for starting a new venture. • The entry card for serious consideration by venture capitalists, banks, and other sources of funding 7-5
  • 6. A Living Document • A business plan changes often as a new business develops. • Do just enough business planning to get the new company started. • Refine the plan with information gathered from running the new venture. 7-6
  • 7. Model of Successful Business Planning Prepare a Continue to Start the Refine the relatively grow the business business plan simple plan business 7-7
  • 8. Business Plan Components • What is the basic idea? • Why is the new product appealing— and to whom? • How will the idea be realized? • Who are the entrepreneurs? • How much funding is needed? What type of funding? How will it be used? How will you realize a return? 7-8
  • 10. A Successful Plan • A serious document prepared by serious people • Orderly • Succinct • Persuasive 7-10
  • 11. Executive Summary • Your elevator pitch • Provides a brief, clear, and persuasive overview of the new venture • Target 2 to 3 pages 7-11
  • 12. Business Plan Sections • Background and • Financial purpose information • Marketing • Risk factors • Competition • Harvest or exit • Development, • Scheduling and production, and milestones location • Appendices • Management 7-12
  • 13. Background, Product, and Purpose • What is the nature of the idea driving your company and how did it arise? • What does the product have to offer? • What is the basic nature of the company? • What is the company’s mission? 7-13
  • 14. Market Analysis • What have you done to identify the market? • How large is the market? • How will products or services be promoted? • What do you know about competing products and companies? • How will the product or service be priced? 7-14
  • 16. Development, Production, and Location • Location • Manufacturing operations • Raw materials • Equipments • Labour skills • Overhead 7-16
  • 17. Management Team • Do team members have the experience, expertise, skills, and personal characteristics needed? • Do team members having good working relationships? 7-17
  • 18. Financial Plans and Projections • Proforma balance sheet • Proforma income statement • Cash flow statement • Break-even analysis 7-18
  • 19. Critical Risks • Price cutting by competitors • Unforeseen industry trends • Sales projections not achieved • Costs exceed estimates • Schedules not met • Difficulties raising financing • Unforeseen trends 7-19
  • 20. Harvest and Exit • Management succession • Exit strategies 7-20
  • 21. Scheduling and Milestones • Formal • Product displays incorporation • Agreements • Completion of • Moving into design production • Completion of • Receipt of orders prototypes • First sales • Hiring of initial • Profitability personnel 7-21
  • 22. The Intangibles • The extra “something” • Pay attention to organization, clarity, word choice, and style • Have good writers read your plan • Revise according to their suggestions 7-22
  • 23. Seven Deadly Sins • Plan is poorly prepared • Plan looks too slick • Executive summary is too long • Development stage of product is unclear • Fails to answer “Why would anyone ever want to buy one?” • Doesn’t state management qualifications • Financial projections are wishful thinking 7-23
  • 24. The Presentation • Remember: This is important! • Prepare, prepare, prepare • Choose content carefully • Persuade, don’t overwhelm • Show enthusiasm tempered with reality • Rehearse • Don’t overlook the basics • Respond positively to questions 7-24

Editor's Notes

  1. Small business owners do not necessarily dream of being the next Bill Gates. Many would prefer to stay small and stay in person control of the day to day business. As is discussed in later chapters, high growth firms may oftentimes be grown specifically to be harvested. Whereas small businesses are more likely to be careers for their founders.