Entrepreneurship

Writing an Effective Business

Plan: Crafting a Roadmap
to Success
Small Business vs. High-Growth Ventures
Small Business High-Growth
Venture
Preferred Funding Owner’s Own Other People’s
Source Money Money
When Firm’s In Cut Costs Sell More
Trouble
What’s More Sales Marketing
Important
Personal Control Retain Involve Key
Preference Autonomy Others
Focus Efficiency Effectiveness
Metastrategy Imitation Novelty7-2
 Boundary Resources
Creating a place for your business – The money, product knowledge, etc,
in location and in people’s minds that make up the business

Your Small Business

Exchange
Intention Moving resources/products/
The desire to start a business services in exchange for money

The BRIE Model

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“There is real magic in enthusiasm. It
spells the difference between
mediocrity and accomplishment.”
--Norman Vincent Peale, 1961

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 Business Plan
• A formal, written expression of the
entrepreneur’s vision for converting
ideas into a profitable, going business
• It is a document describing all relevant
internal and external elements and
strategies for starting a new venture.
• The entry card for serious
consideration by venture capitalists,
banks, and other sources of funding

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 A Living Document
• A business plan changes often as a
new business develops.
• Do just enough business planning to
get the new company started.
• Refine the plan with information
gathered from running the new
venture.

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 Model of Successful
Business Planning

Prepare a Continue to
Start the Refine the
relatively grow the
business business plan
simple plan business

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Business Plan Components
• What is the basic idea?
• Why is the new product appealing—
and to whom?
• How will the idea be realized?
• Who are the entrepreneurs?
• How much funding is needed? What
type of funding? How will it be used?
How will you realize a return?

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Who reads it???

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 A Successful Plan
• A serious document prepared by
serious people
• Orderly
• Succinct
• Persuasive

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 Executive Summary
• Your elevator pitch
• Provides a brief, clear, and
persuasive overview of the
new venture
• Target 2 to 3 pages

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 Business Plan Sections
• Background and • Financial
purpose information
• Marketing • Risk factors
• Competition • Harvest or exit
• Development, • Scheduling and
production, and milestones
location • Appendices
• Management

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 Background, Product, and
Purpose
• What is the nature of the idea
driving your company and how did it
arise?
• What does the product have to
offer?
• What is the basic nature of the
company?
• What is the company’s mission?

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 Market Analysis
• What have you done to identify the
market?
• How large is the market?
• How will products or services be
promoted?
• What do you know about competing
products and companies?
• How will the product or service be
priced?
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Market information

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Development, Production, and
Location
• Location
• Manufacturing operations
• Raw materials
• Equipments
• Labour skills
• Overhead

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 Management Team
• Do team members have the
experience, expertise, skills, and
personal characteristics needed?
• Do team members having good
working relationships?

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Financial Plans and
Projections
• Proforma balance
sheet
• Proforma income
statement
• Cash flow statement
• Break-even analysis

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 Critical Risks
• Price cutting by competitors
• Unforeseen industry trends
• Sales projections not achieved
• Costs exceed estimates
• Schedules not met
• Difficulties raising financing
• Unforeseen trends

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 Harvest and Exit
• Management
succession
• Exit strategies

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Scheduling and Milestones
• Formal • Product displays
incorporation • Agreements
• Completion of • Moving into
design production
• Completion of • Receipt of orders
prototypes • First sales
• Hiring of initial • Profitability
personnel

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 The Intangibles
• The extra “something”
• Pay attention to organization, clarity,
word choice, and style
• Have good writers read your plan
• Revise according to their suggestions

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 Seven Deadly Sins
• Plan is poorly prepared
• Plan looks too slick
• Executive summary is too long
• Development stage of product is unclear
• Fails to answer “Why would anyone ever
want to buy one?”
• Doesn’t state management qualifications
• Financial projections are wishful thinking

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 The Presentation
• Remember: This is important!
• Prepare, prepare, prepare
• Choose content carefully
• Persuade, don’t overwhelm
• Show enthusiasm tempered with reality
• Rehearse
• Don’t overlook the basics
• Respond positively to questions

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