Term paper

On
Business Planning Process in a New Venture Development

Submitted to Submitted by
Dr. Mohammad Solaiman Md. Mosaddek Ul Islam
Associate Professor ID no: 21010702
Dept. of Marketing Dept. of Marketing
Comilla University. Comilla University.

COMILLA UNIVERSITY

Kotbari, Cumilla-3506

Bangladesh

Date of submission: 28 Nov 2021

 TABLE OF CONTENT

Serial No. Name of Content Page No.

01 Letter of Transmittal 3
02 Acknowledgement 4
03 Abstract 5
04 Introduction 6
05 Background 7-8
06 Problem Discussion 9-10
07 The Entrepreneur 11-12
08 The Environment 13
09 The Process 14-15
10 Idea Generation 16-17
11 Idea Modification 18
12 Idea Execution 19
13 Control 20

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 LETTER OF TRASMITTAL

28th November, 2021

To
Dr. Mohammad Solaiman
Associate Professor,
Department of Marketing
Comilla University

Subject: Term paper on Business Planning Process in a New Venture Development.

Dear Sir,

It is my pleasure to submit the Term paper on Business Planning Process in a New Venture
Development. It was a great opportunity to me to acquire knowledge and experience in respect of
the report “Business Planning Process in a New Venture Development” have concentrated my
best effort to achieve the objectives of the study and hope that my endeavor will serve the
purpose. I will be grateful and oblige if you accept my report and evaluate it with your sagacious
judgment.

Yours Sincerely,

………………………..
(Md. Mosaddek Ul Islam)
ID no: 21010702
Dept. of Marketing
Comilla University

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 ACKNOWLEDGEMENT
I give thanks to God for giving us the strength and knowledge in writing this term paper. Also, I
would like to express my sincere gratitude to our families who supported me during my entire
education, especially my dad, mom and brothers. Moreover, special thanks go to Dr. Mohammad
Solaiman for his immense tutoring. I would also like to express appreciation to the CEOs and
founders of the companies who showed interest and dedicated their time to be interviewed.

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 ABSTRACT
Problem: The development of new ventures has been an issue of keen interest to the society.
This is due to the fact that it enhances the socio-economic development of the society by creating
jobs and also filling the gaps in the market. However, it is of interest to note that most people do
not follow a business planning process when they are starting up a new venture. This may be due
to the fact that they do not have any knowledge in a business planning process at the period of
business initiation.

Purpose: The aim of this thesis is to give an individual or an organization a clear direction of a
business planning process in a new venture development.

Method: A qualitative research method with a deductive approach was used to conduct this
research. A primary and secondary data was collected from 4 organizations and were used to find
out the possible steps of business planning process.

Frame of Reference: The theoretical spheres that were utilized in this thesis consisted of
business planning process from authors that had a sequential approach to business planning for a
new venture development.

Conclusion: The authors derived a model for business planning process in a new venture
development that can be a recommendation to individuals or organizations starting up a new
business because it provides a step by step direction in business planning to stay competitive in
the market.

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 INTRODUCTION
This chapter deals with the area of our investigation which in turn leads the reader into a short
background, followed by the problem discussion presenting arguments in new venture
development and ending with the purpose, perspective, delimitation and definitions.

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 BACKGROUND
New venture development involves various activities in creating a business that can be
competitive in the market. It is the way most individuals come up with an idea and develop it by
generating a product or service. The development of new ventures has been an issue of keen
interest to the society. This is due to the fact that it enhances the socio-economic development of
the society by creating jobs and also filling the gaps in the market. Barringer and Ireland
proposed three issues that helps the society as new ventures are established. These are
innovation, globalization and job creation.

Looking at the importance of developing new ventures, different scholars and institutions have
proposed ways of its development from different angles. Moreover, new ventures have been
established competitively without any external influence by many entrepreneurs.

An entrepreneur, according to Wickham, defined it as a manager, that is, a person carrying out a
particular activity; an individual that is, a person possessing a personality, personal
characteristics and psychology and an agent of economic change, that is, a person adding value
to the society.

Most people tend to start their businesses as Kishel and Kishel mentioned as a stimulating and
prospective action that is worthwhile. Starting a new venture involves the eagerness of the
individual to have a focus of objectives. An individual explained by Fowler, Fowler and
Thompson, as “A single human being as distinct from a family or group”. Also, Sarasvathy
ponder on the issue of a venture as it depends on the intensity of the venture formation
experience, the individual’s past knowledge, culture and other distinctive attributes he acquires.

According to Timmons the creation of a new venture deals with aspects such as the opportunity,
team and resources which are seen to be in a corresponding process. These variables which are
opportunity, team and resources are vital factors in the development of a new venture.

Although there has been numerous ways and proposals of looking at venture creation, there has
also been various failures and even the few ones that manage to run do not become successful in

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the long run. Gilkerson and Paauwe research on business pitfalls shows that most businesses fail
because of poor choice of business opportunity.

Gartner suggest that entrepreneurship is not about who you are but what you do. This has
triggered the interest of looking at business planning process in new venture development in this
paper. In whatever way new ventures are developed, it is equally important to know what
variables or considerations that makes the process feasible or practical and this is what the
authors will be talking about in this thesis. Moreover, the idea of the business planning process is
discussed in the problem discussion section below.

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 PROBLEM DISCUSSION
Having a good planning process gives you good steps of having a niche in the market. The
advice entrepreneurs need does not concern only where they should start it but how to do it. With
this, it provides process view of entrepreneurship. Different authors describe the business
planning process differently but with the same idea. In this case, business planning is about
finding, describing and refining the competitive advantage of your operation. Profit also
describes the planning process as a road map for continuous improvement that describes your
business strengths and opportunities, sets goals for the future and defines the steps needed to
reach those goals. In this paper we would like to define business planning process as a process
that gives one a clear direction and a defined steps of future decision implementation that enables
goals or task to be achieved competitively. A new business does not go from non-existence to
existence in one step as a result from one decision or one act. Entrepreneurs have to do a number
of activities when creating a business and these things would be performed sequentially. Creating
a road map for your business may be a key to growth and success but many entrepreneurs do not
have a good planning process, even if they have the knowledge to develop one. It is of interest to
note that most people do not follow a business planning process when they are starting a new
venture. This may be due to the fact that they do not have any knowledge in a business planning
process at the period of business initiation. Moreover, the few that use it do not have a well-
planned direction towards implementation of goals. This problem makes it difficult for many
individuals to startup ventures successfully if they do not fail. Harper noted that trial and error
methods have been unfavorable for many novices because they do not hesitate to elaborate and
position themselves well in the market. Profit suggest that a good planning process helps one to
step back and analyze issues of the business and refine the goals that the entrepreneur want to
accomplish. Also, the process helps to determine how you are going to achieve those goals that
you have refined .Timmons also clarifies that it is important to size up quickly whether potential
business exist and decide how much time and effort to invest because some opportunities are
ideas that do not lead to any business or success. This clarifies that it is important to identify

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your resource constrains and consider your potential starting a new venture. A good planning
method will help one to test ideas and see the flaws in in his business to avoid the waste of
resources and opportunity. Moreover, confidence is built by one who undergoes the planning
process because opportunities are seen clearly and helps one to take the right steps forward. In
addition, communication is built well between stakeholders and roles are also clarified.
Stakeholders must believe that one is right in the assessment of the potential of the venture
opportunity to invest resources in it. “In fact, for every 100 ideas presented to investors in the
form of a business or proposal of some kind, usually just I or 2 or 3 get funded. Over 80% of
those rejections occur in the few hours; another 10 to 80 get rejected after the business plan has
been read carefully”.

It could be realized that the high pace in which new businesses fails indicates that, mistakes
cannot be tolerated in this competitive business world. Considering the above, our investigation
will be on the fact of planning a business process however, it is equally essential to consider the
question:

1. What steps can one follow when planning a new business?

Purpose

The aim of this thesis is to give an individual or an organization a clear direction of a business
planning process in a new venture development.

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 THE ENTREPRENEUR
Entrepreneur is driven by personality profile, need for achievement, autonomy, risk, motive of
establishment and other triggering factors. Each of these drives of the entrepreneur has its own
variables that has effects on the planning process. Below are sub variables and description of
what makes the entrepreneur.

Personality profile

Age at start: This includes its industrial experience, education, personal, maturity and networks.

Technical competence: Formal and informal technical education and training.

Economic/financial education: Formal and informal economic/financial education and training.

Knowledge about starting a new business: It involves previous knowledge in starting a new
business.

Leadership ability: Previous experience from profit and non-profit organization.

Need for achievement

Vitality: Devotion for action to do things.

Contact ability: This describes the ability to create, develop and maintain contact with the
organization and business.

Behavior: Ability to create confidence.

Intellectual capacity: Imagination and creative thinking.

Special gifts: Special competence and industrial competence.

Autonomy

Available time: The time the entrepreneur can work with the establishment of the new venture.

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Family relations: Attitudes of the family, their support and lack of support.

Partners: Potential partners who assist the entrepreneur during the establishment.

Conditions of employment: Regulations which control the relations between employers and
employees.

Financial autonomy: Resources of financial nature which can be used for the establishment.

Risk

Financial risk: The financial responsibilities that the entrepreneurial and his or her family has
taken in connection with the new venture establishment.

Career risk: Interrupted carrier and difficulties in taking up the former carrier.

Family risk: The effect of new venture on the family.

Psychological risk: The effects on the new venture on the psychological health of the
entrepreneur.

Motive for establishment

Positive motives: The will to manage an enterprise to earn money to realize a business idea to
have fun.

Negative motives: No other alternatives.

Other motives: Altruistic motives.

Triggering factors

The entrepreneur may be having the idea of establishing the business some time ago but the
startup may have delayed due to some reasons. Moreover, factors such as unemployment, change
of organization at work, a strong emotional experience, etc. may trigger the establishment of a
venture.

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 THE ENVIRONMENT
The environment of the entrepreneur is made up of role models, financial resources, other
resources, and market and society attitude. Below are the sub variables and description of the
environment one may encounter in a planning process.

Role models

Close relatives: Through this the entrepreneur is born into enterprising.

Other relatives: Gives knowledge of the conditions of venture development.

Other business men/women: Can act as advisors and mentors.

Colleagues: They stimulate the idea of the business.

Small business owners: Give knowledge of enterprising.

Financial resources

Own financing: Own capital and assets.

Individual financiers: Relatives who participate in the financing of the new venture.

Financial institutions: This includes banks, government and private investors who will be
involved in leasing, factoring and insurance.

Other resources

Service: Consulting services in accounting, technology, etc.

Raw materials: Raw materials, components needed for the production.

Labor: Workers employed by the entrepreneur. Premises, machinery, and equipment: Rented or
acquired production facilities.

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 THE PROCESS

The idea phase

The entrepreneur think of starting a new business for the first time in this phase. It basically start
the creation of a new business. Since the idea is not well developed the entrepreneur does not
start to test or examine the idea closer at this stage.

The test and persuasion phase

This is where the entrepreneur tests its thoughts about being a business owner with people in
surroundings. The family, relatives, friends, other individuals and organizations further away
from one close surroundings are approached at first to test the idea. The more positive response
one receives from close relatives and friends, the more one is persuaded to start. The process
may stop temporarily if it is negative. The individual goes though some learning process in book
keeping and law.

The preparation phase

At this stage the entrepreneur has to do more work than the first two stages in other to bring its
idea to light. Problem solving is one important the entrepreneur get involve with. It concerns
simple calculations, budgets analysis of the market situation, the production process,
administration, etc. The entrepreneur contacts authorities and ask consultants for advice. The
phase is relatively short in time compared with the other phases.

The startup phase

The startup phase does not imply that a new venture is created. There may be in balance in this
stage with ideas. The startup is a displacement from a comfortable situation to a more odd and
uncomfortable one. It entails critical events for the entrepreneur. There may be internal or

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external positive or negative responses in the entrepreneur endeavors. One need to put a lot of
pressure in order to get out from some situations. The startup phase starts from a definite point
such as acceptance of an offer, renting an office, advertising in the newspaper, etc.

The ongoing business phase

At this phase, taking initiatives, role models and putting ideas to action are necessary but not
sufficient conditions for the startup of a new venture. The entrepreneur has to have access for
resources such as labor, raw materials, capital, premises, equipment and other necessities for the
planned enterprise. Activities such as getting a loan, looking for new markets, long hours spend
in administration, customer and supplier contacts are very common.

To sum up, the planning process shows a sequential approach where it relates the entrepreneur,
the environment and the process together.

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 IDEA GENERATION

Identify Goals

This is the first stage whereby an individual or an existing organization establishing a new
venture has to come up with a decisive idea in order to generate the venture. To do this, an
identification of a specific goal has to be defined and thereafter followed.

Pondering over this issue of identifying goal is a vital aspect when it comes to generating a new
venture. In this case, it is the first stage in the business planning where the authors think it is best
to know first before any other processes. With this, it can be said that the individual or
organization establishing this venture needs to write the plan by themselves as a way of setting
specific goals for this venture. In this case, more emphasis should be laid on the fact that the
specific goal for the venture should be exact, measurable, attainable, rewarding and timely.

Shorten planning process

In this second stage of the business planning process, it relates how the individual or the
organization has to cut down the planning process in a shorter perspective instead of looking at it
in a longer perspective that mentioned the idea of limiting the goals for the venture as it has to be
seen in a short period of time. This is what the authors agree on as a planning process whereby
the time frame for the process should be postulated on a minimal outlook. Furthermore, it is a
way to recognize the achievements that the new venture will bring in the future. For instance,
planning for a new venture and proposing the length of the venture to be say, 6 years, is not a
good timing as the individual or the organization might not be able to pinpoint what the venture
will be offering. In addition, as the market keeps on changing, the authors of this paper
recommend the idea of shortening the business planning process for say, 3 years, as to determine

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success of the new venture. This boils down to the next stage where it talks about checking the
metrics for the venture.

Mind your metrics

This is a stage where it is also an important aspect to note the measures to put in place in the
planning process. This is basically the way that establishing a new venture must take into
consideration the financial terms as it will allow for the smooth running of the new venture. In
this case, it is a way that the individual or an existing organization can reevaluate their
information got from past organizations or individuals who have already started their businesses.
Furthermore, this is a stage denoting the preparation phase of the planning process where more
evaluation of the planning process is considered. Examples of such preparation parts are the
budget analysis of the market, processes in terms of production, and other factors that contributes
to the preparation of the venture. After re-examining the metrics for the venture, another stage of
the planning process, which is the testing phase, is taken into consideration.

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 IDEA MODIFICATION

Testing phase

With this stage, it is more of testing the venture as a way of undertaking the entire idea of the
venture with certain focus groups to make out what needs to be adjusted in the venture pondered
on the issue of experimenting the idea of the venture with the environment for a positive and a
negative response. This is deemed to be an important aspect as the authors of this research
consider the idea of the testing phase as a way to know the strength of the venture. This leads the
discussion of this planning process into the next stage of reviewing.

Review

In this stage, more emphasis is laid on this part as it shows the negative and positive strengths of
the venture as Stan et al. (2003) pointed out that there needs to be an assessment of the business
and also the surroundings the business operates. Furthermore, the individual or the organization
establishing this venture needs to keep in mind to have a review after testing the idea of the
venture with the said focus group to make adjustments.

In addition, the idea of reviewing is an important aspect for an individual planning a venture
needs to evaluate the performance of the business. With this, the individual needs to consider the
positive and negative features of the idea. This is what the authors reckon that, reviewing the
idea of the venture calls for checking the accomplishment of the venture. The next step talks
about the necessary actions that needs to be undertaken after reviewing the idea for the venture.

Decide on actions

This is a stage that deals with how the individual choose certain prevailing actions based upon
the analysis of the venture, whether it will offer the best value. This is the issue on business
planning process as deciding on actions as it helps the plan to proceed in its course. In this case,
the authors believe to meet the terms of this stage all because it is a stage where most crucial
actions are undertaken to suit the venture.

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 IDEA EXECUTION

Startup phase

This last but one stage talks about the startup of the idea for the venture as a result of series of
analysis on the negative and positive aspects of this venture. In this case, it helps the individual
to message out the venture idea publicly and thereby offer what constitutes the venture.
Furthermore, since it is the stage where individual or organizations start up shows that the
venture has attained grounds but in a different point of view, it is on the idea of generating
critical events for the venture. As a matter of fact, it can be that it is the stage for establishing the
idea for the venture publicly in the newspaper, renting an administrative office, etc.

Implement strategies (ongoing phase)

This is believed to be the last stage in the derived model by the authors as it talks about
implementing strategies for the venture which has already cropped up. In this case, it deals with
the way the individual or the organization must implement strategic actions to suit the venture
and also other actors involved in this venture. With this, individuals establishing new ventures as
communicating of crucial actions for a productive end. Moreover, the implementation of these
strategies for the venture must be enacted in full action as the venture is in course. In this case,
the authors agree to the fact that it is the last stage for the business planning process as the
venture is still running. With this, it takes the business planning process into a new different level
of running a new venture with which the authors believe it is another area for further research.
Pondering over the derived model for business planning process of new venture development, it
follows a sequential approach. However, due to aspects like the entrepreneur capabilities and
competences and the environmental factors, the steps in the business planning process may not
follow each other or may go back and forth but the idea of this process still holds. For instance,
the issue of the entrepreneur capabilities and competences could be that, he or she believes in
him/herself as to start his/her business by hiring an office, purchasing miscellaneous materials,
etc. without first and foremost, looking at the market and the competition it entails.

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 CONTROL
Controls - Discusses the benchmarks a company will use to chart its progress against its
implementation schedule.

Marketing organization chart - Outlines the structure of a company's marketing team, specifying
which person is responsible for which marketing activity.

Contingency planning - Explains how a company will handle unexpected events.

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