MG305 Tutorial Week 11

1. What do you believe the difference is between a ‘regular’ business plan

and a ‘sustainable’ business plan?
A sustainable business plan must include sections on greenhouse gases, energy
use, clean power and other emissions-reducing strategies. Quite unlike a
conventional business plan, a sustainable business plan assumes that the
business and biosphere are inter-connected. The goal is to pick the least
burdensome environmental and social outputs when designing products and
services.

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2. What are the different meanings of sustainability in business planning?
Is there a preferred definition in the twenty-first century?

The meaning o f sustainable business planning is basically that the industrial

system (i.e. business, eco-region, or economy) are not separate fro m the
biosphere and that an entrepreneurial co mpany is a particular case of an
ecosystem.

There are many positive outcomes from structuring a sustainable business plan.
There are untapped resource productivity improvements that can be made.
Competitiveness has been re-interpreted in the new age. New technologies
make sustainable development economically viable. Such an approach shows
that the entrepreneur understands the benefits of valuing social and natural
capital. Finally, and most importantly, there is mounting evidence that going
sustainable may not harm economic growth significantly. In fact, it could even
lead to higher economic growth.

3. What are the three major viewpoints to be considered when developing a

business plan? Describe how they can conflict.

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 o The first viewpoint is the entrepreneur’s since he or she is the one
developing the venture and clearly has the most in-depth knowledge of
the technology or creativity involved. This is the most common
viewpoint in business plans and it is essential.

o More important than high technology or creative flair is the

marketability of a new venture. Referred to as “market driven,” this
type of enterprise convincingly demonstrates the benefits to users, the
particular group of customers it is aiming for, and the existence of a
substantial market. This viewpoint, that of the marketplace, is the
second critical emphasis with which a business plan must be written.

o The investor’s point of view is concentrated on the financial forecast.

Sound financial projections are necessary if investors are to evaluate
the worth of their investment.

4.Describe the five-minute reading process that venture capitalists follow

when reading a business plan.

 Determine the characteristics of the venture and its industry

 Determine the financial structure of the plan (amount of debt or equity
investment required)
 Read the latest balance sheet (to determine liquidity, net worth and
debt/equity)
 Determine the quality of entrepreneurs in the venture (sometimes the most
important step)
 Establish the unique feature in this venture (find out what is different)
 Read the entire plan over lightly (this is where the entire package is paged
through for a casual look at graphs, charts, exhibits, etc.)

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5. What are some of the components to consider in the proper packaging of
a plan?
(1) Appearancethe binding and printing must not be sloppy, nor should
the presentation be too lavish. A plastic spiral binding holding together
a pair of cover sheets of a single color provides both a neat appearance
and sufficient strength to withstand handling by a number of people
without damage.
(2) Lengtha business plan should be no more than 40 pages long.
Adherence to this length forces entrepreneurs to sharpen their ideas
and results in a document likely to hold investor’s attention.
(3) The cover and the title pagethe cover should bear the name of the
company, its address and phone number, and the month and year in
which the plan is issued. An interested investor wants to be able to
contact a company easily and to request further information or express
an interest either in the company or in some aspect of the plan.
Inside the front cover should be a well-designed title page on which
the cover information is repeated and in an upper and lower corner, the
legend “copy number” should be provided. Besides helping
entrepreneurs keep track of plans in circulation, holding down the
number of copies outstanding (usually to no more than 20) has a
psychological advantage. After all, no investor likes to think that the
prospective investment is shopworn.
(4) The executive summarythe two pages immediately following the
title page should concisely explain the company’s current status, its
products or services, the benefits to customers, the financial forecasts,
the venture’s objectives in three to seven years, the amount of
financing needed, and how investors will benefit. This is a tall order
for a two-page summary, but it will either sell investors on reading the
rest of the plan or convince them to forget the whole thing.
(5) The table of contentsafter the executive summary, include a well-
designed table of contents. List each of the business plan’s sections
and mark the pages for each section.

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6. Identify five guidelines that you would like to use when preparing a
business plan.
(1) Keep the plan respectably short. Readers of business plans are
important people who refuse to waste time. Therefore, entrepreneurs should
explain the venture not only carefully and clearly, but concisely as well.
(2) Organize and package the plan appropriately. A table of contents, an
executive summary, an appendix, exhibits, graphs, proper grammar, a
logical arrangement of segments, and overall neatness are critical elements
in the effective presentation of a business plan.
(3) Orient the plan toward the future. Entrepreneurs should attempt to
create an air of excitement in the plan by developing trends and forecasts
that describe what the venture intends to do and what the opportunities are
for the use of the product or service.
(4) Avoid exaggeration. Sales potentials, revenue estimates, and the
venture’s growth should not be inflated. Many times a best case, worst case,
and probable case scenario should be developed for the plan.
Documentation and research are vital to the credibility of the plan.
(5) Highlight critical risks. The critical risks segment of the business plan
is important in that it demonstrates the entrepreneur’s ability to analyze
potential problems and develop alternative courses of action.

Also:
Give evidence of an effective entrepreneurial team: Identify the skills of
each key team member and demonstrate how all persons can effectively
work together

Do not over-diversify: Focus on one opportunity

Identify the target market: Substantiate the marketability of the venture’s

product, backed up by credible market research

Keep the plan written in the third person: Write objectively

Capture the reader’s interest: Create a desire for the reader to read more of the
plan

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7. Briefly describe each of the major segments to be covered in a business
plan.
- Executive summary: a snapshot of the complete plan. Many people who
read business plans (bankers, venture capitalists, investors) like to see a
summary of the plan that features its most important parts. Such a summary
gives a brief overview of what is to follow and helps put all of the
information into perspective and should be no longer than three pages.
- Business description: name of venture, industry background and thorough
description.
The name of the venture should be identified, with any special
significance related
(e.g. family name, technical name, etc.). The industry background
should also be presented. The new venture should be thoroughly
described along with its proposed potential. Also, the potential
advantages the new venture possesses over the competition should be
discussed at length.
- Sustainability: concise overview of the company’s commitment to the
environment, economy and society.
- Marketing: convincing argument that a market exists, market niche and
market share, competitive analysis, marketing strategy, pricing policy. In
this segment of the report the entrepreneur must convince investors that
there is a market, that sales projections can be achieved and that the
competition can be beaten.
- Operations: labour availability, wage rate, proximity to suppliers and
customers, community support, facilities required, transportation costs

- Sustainable development measures: firm’s economic contributions to

sustainability; impact on major stakeholder groups; triple bottom line
indicators.
- Management: key personnel, their positions and responsibilities and the
career experiences. This segment should identify the key personnel, their
positions and responsibilities, and the career experiences that qualify them
for those particular roles. Complete resumes should be presented for each
member of the management team.
- Financial: basic financial statements that demonstrate the potential
viability of the undertaking.
- Critical risks: potential risks such as unfavourable trends in the industry,
design or manufacturing costs, regulatory risks, delays, inaccurate
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 projections, industry slumps
- Harvest strategy: orderly transition of the venture as it grows and develops;
a plan for succession of your business is essential.
- Milestone schedule: timetable for activities
- Appendix and/or bibliography: additional documentation. The final
segment is not mandatory, but it allows for additional documentation that is
not appropriate in the main parts of the plan. Diagrams, blueprints, financial
data, vitae of management team members, or bibliographical information
that supports the other segments of the plan are examples of material that
can be included.

8. Why is the summary segment of a business plan written last? Why not
first?
The summary should be written only after the entire business plan has been
completed. In this way, particular phases or descriptions from each segment can
be identified for inclusion in
the summary. Since the summary is the first, and sometimes the only part
of a plan that is read, it must present the quality of the entire report.

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 Explain your metrics.
 Motivate the audience.