2. Previous Lecture Review
• Conducting a Feasibility Analysis
• The Feasibility Study
• Five Forces Model
• Product or Service Feasibility Analysis
• Financial Feasibility Analysis
3. Objectives
• Why Develop a Business Plan?
• The Elements of a Business Plan
• What Lenders and Investors Look for in a
Business Plan
• Making the Business Plan Presentation
Concluding remarks
• Business Plan Format
4. The Business 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.
5. A Plan Must Pass Three Tests
• The 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 - evaluates:
• a company’s position relative to its customers.
• 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.
6. Why Take the Time to Build a
Business Plan?
• Although building a plan does not
guarantee success, it does increase
your chances of succeeding in
business.
• A plan is like a road map that serves
as a guide on a journey through
unfamiliar, harsh, and dangerous
territory. Don’t attempt the trip
without a map!
7. Strategic Guide
• Where Do You Want To Go?
• How Are You Going to Get There?
• What Market Niches?
• How Much is it Going to Cost?
• Greatest Profit Opportunity?
11. Exit Strategies
• Selling the Business
• Transferring the Business to a Family Member
• Taking the Company Public
• Being Acquired by a Larger Company
12. Funding Sources:
• Savings
• Friends and Family
• Financial Institutions / Banks
• Angel Investors
• Venture Capital
13. Business Plan Content
• The Cover
• Executive Summary
• Company Description
• Product/Services Description
• Industry Overview
• Market Analysis
• Competitors
14. Business Plan Content
• Customers
• Marketing and Sales Plans
• Development
• Operations
• Management
16. Cover Page
• Should contain
• COMPANY NAME
• TAG LINE
• CONTACT PERSON
• ADDRESS
• PHONE
• DISCLAIMER
• COPY #
17. Executive Summary
• A mini-business plan in one or two pages
• Highlights the most important points of your
business plan
• It is NOT an introduction to the plan
• It must grab your reader, and entice him/her to
read further
18. Executive Summary
• Identify the company, its background, structure and
location
• Describe what the company does, and the market it
serves
• Describe the market potential for the company’s
products and services, market trends, etc.
19. Executive Summary
• Outline the backgrounds and experience of the
top management team
• Describe the funding required, the purposes for
which it will be used, the collateral available (if for
a lender), and the expected outcomes
20. Company Overview
• Brief Company Introduction
– Mission statement
– Location, size, history
– Market and products
– Overview of company capabilities
– Objectives
21. Products/Services
• Products / Services
– What does it do?
– Uniqueness
– Competitive Advantage
• Technology
– Brief description
– Applications
• Commercialization Status
– Brief overview
22. Industry Overview
• Set The Stage
• Industry Definition and Description
– Major players within the industry
– Factors driving dynamics
– New products and developments
• Legislation and Policies Driving the Industry
• Historical and Future Trends
23. Market Analysis
• Market Definition
– Primary Market
– Secondary Markets
• Market Size and Trends
– Current total revenues
– Predicted annual growth rate
24. Competitors
• Direct Competitors
– Who are they?
– Size and product breadth
– Revenues and profitability
– Strengths and weaknesses
– Market shares
• Indirect Competitors
25. Customers
• Customer Characteristics
– Who are they?
– Why do they buy?
– Need satisfied by the product/service
– How is the need currently filled?
– What are the alternatives?
– Who makes the decision to buy?
– How frequently do they purchase?
26. Marketing and Sales Plans
• Statement of Opportunity
• Marketing and Sales Objectives
• Existing Customers
• Potential Customers
27. Marketing Strategies
• Product/Service Strategy
• Pricing Strategy
• Distribution Strategy
• Advertising and Promotion Strategy
• Marketing and Sales Forecasts
28. Marketing and Sales Plans
• Marketing Programs
– Direct Mail
– Trade Shows
– Advertising
– Internet
– Publicity/Public Relations
– Marketing Budget
• Pricing
– Basis for targeted price point
– Margins and profitability by volume levels
29. Marketing and Sales Plans
• Sales Plan
– Sales force structure – (direct or reps)
– Sales expectations/quotas
– Margins given to intermediaries
– Service and warranties
– Sales Budget
– Organizational chart indicating planned growth
30. Development
• R & D Plan
– Objectives
– Milestones and current status
– Difficulties and risks
– Staffing
– R & D Budget and assumptions
34. Personnel
• Human Resource Plan
– Staffing Objectives
– Organizational Structure
– 3-5 year growth plan
– Budget
35. Summary of Financials
• Financial Objectives
– Time to Cash Flow Positive
– Time to profitability
• Financial Assumptions
• Capital Requirements
• Exit Scenario
38. Appendices
• Resumes of Key Management
• Patent Information
• Customer List
• Testimonials
• Supplemental Financial Spreadsheets
• References
39. Lecture Review
• Why Develop a Business Plan?
• The Elements of a Business Plan
• What Lenders and Investors Look for in a Business
Plan
• Business Plan Format