Part 1

Business Plan Preparation for New Ventures 1

1. To define a business plan and demonstrate its value
2. To explore the planning pitfalls that plague many new ventures
3. To describe the benefits of a business plan
4. To set forth the viewpoints of those who read a business plan
5. To emphasize the importance of coordinating the business plan segments
6. To review key recommendations by venture capital experts regarding a plan
7. To present a complete outline of an effective business plan
8. To present some helpful hints for writing an effective business plan
9. To highlight points to remember in the presentation of a business plan

Business Plan Preparation for New Ventures 2

Plan is a detailed proposal for doing or achieving something
Plan is a product of planning

Business Plan Preparation for New Ventures 3

Planning is the fundamental management function, which
decided deciding beforehand.

Business Plan Preparation for New Ventures 4

Helps is improving future performance
Minimizes risk and uncertainty
Facilitates co-
co-ordination of activities
States in advance what should be done in future
Uncovers future opportunities and threats
Sets out standards for controlling

Business Plan Preparation for New Ventures 5

Strategic
Operational
Tactical
Contingency

Business Plan Preparation for New Ventures 6

Budgetary
Marketing
Production
Maintenance
Business

Business Plan Preparation for New Ventures 7

A fundamental tool for start-
start-ups

Business Plan Preparation for New Ventures 8

A written document that details the proposed venture:
Describes the current status, expected needs, and projected
results of the new business.
Covers the project, marketing, research and development,
manufacturing, management, critical risks, financing,
and milestones or a timetable.
Demonstrates a clear picture of what that venture is, where
it is projected to go, and how the entrepreneur proposes it
will get there—
there—a road map for a successful enterprise.

Business Plan Preparation for New Ventures 9

Pitfall 1: No Realistic Goals
Pitfall 2: Failure to Anticipate Roadblocks
Pitfall 3: No Commitment or Dedication
Pitfall 4: Lack of Demonstrated Experience
(Business or Technical)
Pitfall 5: No Market Niche (Segment)

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For the Entrepreneur:
The time, effort, research, and discipline required to create
a formal business plan forces the entrepreneur to view
operating strategies and expected results critically and
objectively.
objectively.

For Outside Evaluators:

The business plan provides a tool for use in
communications with outside financial sources.

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Specifically for the Financial Sources:
Details the market potential and plans for securing a
share of that market.
Shows how the venture’s intends to service debt
or provide an adequate return on equity.
Identifies critical risks and crucial events with
a discussion of contingency plans.
Contains the necessary information for a thorough
business and financial evaluation.

Business Plan Preparation for New Ventures 12

.

Business Plan Preparation for New Ventures 13

Entrepreneurs need to understand 3 viewpoints when
preparing the plan.
Entrepreneur’s
Marketer’s
Financer’s

Business Plan Preparation for New Ventures 14

The Five-
Five-Minute Reading
1. Determine the characteristics of the venture and its
industry.
2. Determine the financial structure of the plan (amount of
debt or equity investment required).
3. Read the latest balance sheet (to determine liquidity, net
worth, and debt/equity).
debt/equity).

Business Plan Preparation for New Ventures 15

The Five-
Five-Minute Reading…
4. Determine the quality of entrepreneurs in the venture
(sometimes the most important step).
5. Establish the unique feature in this venture (find out
what is different).
6. Read the entire plan over lightly (this is when the entire
package is paged through for a casual look at graphs,
charts, exhibits, and other plan components).

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Appearance
Plastic spiral binding, holding together a pair of cover
sheets of a single color

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Length
No more than 50 pages – 40-
40-page ideal

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The Cover
Cover to bear name of the company, address and
phone numbers and the month and year in which
issued.

The Title Page

Inside the cover page, cover information repeated with
“copy number” in an upper or lower corner.

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The executive summary
Two or three pages

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The table of contents
List of business plan’s sections with page numbers

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Keep the plan respectably short
Organize and package the plan appropriately
Orient the plan toward the future
Avoid exaggeration
Highlight critical risks
Give evidence of an effective entrepreneurial team
Do not over-
over-diversify
Identify the target market
Keep the plan written in the third person
Capture the reader’s interest
Business Plan Preparation for New Ventures 22
Business Plan Preparation for New Ventures 23
Is your plan organized so key facts leap out at the reader?
Is your product/service and business mission clear and
simple?
Are you focused on the right things?
Who is your customer?
Why will customers buy? How much better is your
product/service?

Business Plan Preparation for New Ventures 24

Do you have a competitive advantage?
Do you have a favorable cost structure?
Can the management team build a business?
How much money do you need?
How does your investor get a cash return?

Business Plan Preparation for New Ventures 25

.

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