BUSINESS PLAN

The Business Plan: Creating and Starting the Venture

Business Plan

A written document describing all relevant internal and external elements and strategies for starting a new venture.

Who reads the plan?

n  Employees

n  Investors

n  Bankers

n  Venture capitalists

n  Suppliers

n  Customers

n  Advisors

n  Consultants

Business Plan (cont.)

Aspects in business plan:

n  Financial benefit, i.e. the benefit for its own business.

n  Macro economic benefit.

n  Social benefit, i.e. the benefit for its local environment.

Factors affecting the intensity of study:

n  The amount of fund invested.

n  The uncertainty level of the business.

n  The complexity of elements affecting the business.

Business plan becomes important since:

n  It helps determine the viability of the venture in a designated market.

n  It provides guidance to the entrepreneur in organizing his or her planning activities.

n  It serves as an important toll in helping to obtain financing.

Information Needs

n  Market Information

n  Operation Information needs

¨  Location

¨  Manufacturing operations

¨  Raw materials

¨  Equipment labor skill

¨  Space

¨  Overhead

Financial Information Needs

n  Budget preparation

¨  Expenditures

n  capital expenditures

n  Direct operating expenses

n  Cash expenditures for non-expense items

¨  Revenues from sales

Writing the Business Plan

n  Executive Summary

¨  What is the business concept or model?

¨  How is this business concept or model unique?

¨  Who are the individuals starting this business?

¨  How will they make money and how much?

n  Environmental and Industry Analysis

n  Description of Venture

n  Production/Operation Plan

Operations Plan

n  Marketing Plan

n  Organizational Plan

n  Assessment of Risk

n  Financial Plan

n  Appendix

Using and Implementing the Business Plan

n  Measuring Plan Progress

¨  Inventory control

¨  Production control

¨  Quality control

¨  Sales control

¨  Disbursement

¨  Web site control

n  Updating the Plan

Why Some Business Plan Fail

n  Goals set by the entrepreneur are unreasonable

n  Goals are not measurable

n  The entrepreneur has not made a total commitment to the business or to the family

n  The entrepreneur has no experience in the planned business

n  The entrepreneur has no sense of potential threats or weaknesses to the business

n  No customer need was established for the proposed product or service