Chapter 8 focuses on the mechanics of writing an effective business plan, detailing its importance for external legitimacy and internal understanding. It outlines key components such as vision, mission, elevator pitch, executive summary, and various market strategies, emphasizing the need for clarity and conciseness. Additionally, it provides insights into financial considerations and appendices for presenting to potential funders.

1. Chapter 8
TheThe MechanicsMechanics ofof
Writing an EffectiveWriting an Effective
Business PlanBusiness Plan

2. This Week’s KEYThis Week’s KEY
ResourcesResources

3. Resources

4. Resources

5. Resources

6. Resources

7. Resources

8. • The understanding you get from the planning
process required to write the plan is invaluable
• Details every major characteristic of the business
• Critical for TWOTWO reasons:
– External legitimacyExternal legitimacy: when somebody requires it
– Internal understandingInternal understanding: getting everything clear in
your mind
• Telling a story about your future business
The Planning Process

9. • Vision (10 words)
• Mission (25-50 words)
• Elevator Pitch (60-100 words)
• Executive Summary (250-500 words)
• Business Plan (40 pages)
Levels of Involvement

10. • Expresses the fundamental idea or goal
of the business.
• It tells everyone where your organization
wants to go to.
• Tagline, slogan or mantra:
– Our Vision is to…“Help You Achieve Your
Dream Job”
Vision Statement

11. cesces

12. • Related to the vision statement
• Adds competitive advantage information
• Written from the perspective of what
will make a difference for a customer
– Our mission is to: “Help you to find your life’sHelp you to find your life’s
passion, and make it your careerpassion, and make it your career.”
• Keep it Simple, short, and direct
Mission Statement

14. • “Sell” your firm in the time it takes to
make a ride in an elevator, around 30
seconds.
• Approximately 100 words.
• Provide memorable information about
your business.
• The “HOOK”… your business purpose -
the what and where, and the delivery.
Elevator Pitch

15. • One to two pages (250-500 words
minimum) overview of the business.
• Describes the business, market,
expectations, and goals.
• The #1 item to send to anyone who
enquires about your business.
Executive Summary

16. Resources

17. • Mantra: 3-6 words (Quality is Job 1.)
• Mission: co. name, product/service,
customer, and market.
• Measures: business goals given as
measurable results.
• Method: the activities that will turn your
business into a success.
• Mechanics: the tasks that are required
to accomplish what’s listed in the
method.
5-M Model

18. • 1st
paragraph: Introduce yourself and
your business.
• 2nd
paragraph: Explain your company in
greater detail.
• 3rd
paragraph: describe the current
situation of your business and explain
what you are looking for from the
recipient.
• 4th
paragraph: Close and thank them for
their consideration.
Cover Letter

19. • Co. Name
• Contact information
• Date the version was completed
• Proprietary statement to protect your
ideas
Title Page

20. • T.O.C
• Executive Summary
• The Company
– Co. Description: 1-2 pages
– Product/Service & Industry: 1-8 pages
Other Stuff

21. The MarketThe Market

22. • It’s all about your customers – who they are,
where they are, how to find them and keep
them
• The total population of people or businesses
you aim to serve, defined by size and scope
(where they are)
• Target customer: the ideal customer to buy
your product or service
• Competition and Competitive Advantage: who
are they, what do they offer, how much do they
charge, what makes them unique
The Market

23. • Focus on 1) overall business strategy to pursue
your market 2) sales plan, and 3) longer term
plan to protect your company against
competitors:
– Business Strategy discusses your general strategy
with respect to differentiation, cost, and focus
– Sales plan: Addresses how you are going to generate
sales. Show how you will convert the value benefits
your clients are looking for into your pricing,
promotional activities, advertising, etc.
– Long term plans to protect against competitors using
R&D to develop new offerings, key partnerships,
superior service, intellectual property, etc.
Your Marketing Strategy

24. • The legal form of the business (LLC, sole
proprietorship)
• Use org charts for larger firms
• Key personnel: owners, managers, salespeople,
influential outsiders, service providers
• Location: home-based business?
The Organization

25. FinancialsFinancials
$ $ $$ $ $

26. • Be CONSERVATIVE
• Income Statement (Profit & Loss) and
assumptions
• Cash flow and assumptions
• Balance sheet and assumptions
• Past two years of actuals (for existing
businesses) and 3 years worth of
projections
• New businesses require 1.5-2 years of
projections
Financials

30. JAN FEB MAR APR
Revenue $2,630 $1,898 $0 $0
Variable Expenses $164 $1,667 $400 $0
Gross Profit $2,466 $231 -$400 $0
Expenses/Fixed Costs $0 $0 $0 $0
Owner Salary $0 $0 $0 $0
Net Profit $2,466 $231 -$400 $0
Equity Inflow $0 $0 $0 $0
Cash Position $2,466 $231 -$400 $0

31. • Product pictures
• Industry reports
• Price lists
• Floor plans
• Marketing collateral: logos, ad copy, DMs,
websites, blogs, PR, case studies
• Testimonials
Appendices

32. • AKA Screening Plan.
• Used to send to professional funders like
private banks, angels, VC firms,
investment clubs
• Include your price lists.
• Very brief overview of the firm and the
financials.
• Includes cover letter, title page,
executive summary & your financials
• Informational plan: include everything
EXCEPT the financials.
The Mini Business Plan