l2 business plan

8/2/2019 L2 Business Plan

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19 March 2012 1

DACA 4142

Technopreneurship

Lecture 2

Developing An Effective Business

Plan


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Pitfalls to Avoid in Planning

Pitfall 1: No Realistic Goals

Pitfall 2: Failure to Anticipate

Roadblocks Pitfall 3: No Commitment or

Dedication

Pitfall 4: Lack of DemonstratedExperience(Business or Technical)

Pitfall 5: No Market Niche (Segment)


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The Seven Pitfalls for a NewVenture Business Plans

Source: Baron & Shane (2005)


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What is a Business Plan?

A business plan is the written document that details theproposed venture.

It must describe current status, expected needs, andprojected results of the new business.

Every aspect of the venture needs to be covered: theproject, marketing, research and development,manufacturing, management, critical risks, financing, andmilestones or a timetable.

A description of all of these facets of the proposed venture is

necessary to demonstrate a clear picture of what thatventure is, where it is projected to go, and how the

entrepreneur proposes it will get there.


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Why Write a BusinessPlan?

It is truly difficult to arrivesomewhere unless you know where

you want to go.

The business plan is the

entrepreneurs roadmap for asuccessful enterprise.


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IMPORTANT TIP!

The clearer the links between the goalssought and the means for accomplishingthem, the more impressive (and

persuasive) the plan will be.

Entrepreneurs do not write a business

plan solely to persuade others to invest intheir new ventures. The business planwill also provide entrepreneurs a clearerunderstanding of the best ways of

proceeding their business.


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Model of Business PlanningUsed by Many Entrepreneurs

Source: Baron & Shane (2005)


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Benefits of a Business Plan

Specifically for the entrepreneur:

The time, effort, research, and disciplineneeded to put together a formal business plan

force the entrepreneur to view the venturecritically and objectively.

The competitive, economic, and financialanalysis included in the business plan subjectthe entrepreneur to close scrutiny of his or herassumptions about the ventures success.


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19 March 2012 9

Benefits of a Business Plan,cont.

Since all aspects of the business venture must beaddressed in the plan, the entrepreneur develops andexamines operating strategies and expected results foroutside evaluators.

The business plan quantifies objectives, providingmeasurable benchmarks for comparing forecasts withactual results.

The completed business plan provides the entrepreneurwith a communication tool for outside financial sourcesas well as an operational tool for guiding the venturetowards success.


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Benefits of the Business Plan

Specifically for the financial sources:

Details of the market potential and plans for securing ashare of that market.

The ventures ability to service debt or provide an adequatereturn on equity.

Identifies critical risks and crucial events with a discussionof contingency plans.

A clear, concise document that contains the necessaryinformation for a thorough business and financialevaluation.


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Developing a Well-Conceived Business Plan


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Components of a BusinessPlan: Basic Requirement

What is the basic idea for the newproduct or service?

Why is this new product useful orappealing - and to whom?

How will the idea for the new venture berealized - what is the overall plan forproducing the product, for marketing it,for dealing with existing and futurecompetition?


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Components of a BusinessPlan: Basic Requirement

Who are the entrepreneurs - do they havethe required knowledge, experience, andskills to develop this idea and to run a new

company? Ifthe plan is designed to raise money;

how much funding is needed?

what type of financing is needed? howwill it be used? And

howwill both the entrepreneurs and otherpersons realize a return on their investment?


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The Five-Minute Reading

Step 1: Determine the characteristics of the venture and itsindustry

Step 2: Determine the financial structure of the plan(amount of debt or equity investment required)

Step 3: Read the latest balance sheet (to determineliquidity, net worth, and debt/equity)

Step 4: Determine the quality of entrepreneurs in theventure (sometimes the most important step)

Step 5: Establish the unique feature in this venture (findout what is different)

Step 6: Read the entire plan over lightly (this is when theentire package is paged through for a casual look atgraphs, charts, exhibits, and other plan components)


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Putting the PackageTogether

Appearance

Length

The cover and title page

The executive summary

The table of contents*the business plan must look professional


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Guidelines to Remember

Keep the PlanRespectably Short

Organize and Packagethe Plan Appropriately

Orient the Plan Towardthe Future

Avoid Exaggeration

Highlight Critical Risks

Give Evidence of anEffective EntrepreneurialTeam

Do Not Over Diversify

Identify the TargetMarket

Keep the Plan Written inthe Third Person

Capture the ReadersInterest


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Elements of aBusiness Plan


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Complete Outline of a Business Plan

Section I: Executive Summary (2 - 3 pages)

(should be short, clear, and a persuasiveoverview of what the new venture is all about)

Section II: Business Description

A. General description of business

B. Industry background

C. Goals and potential of the businessand milestones (if any)

D. Uniqueness of product or service


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Complete Outline of a Business Plan,cont.

Section III: MarketingA. Research and analysis

1. Target market (customers) identified2. Market size and trends

3. Competition4. Estimated market share

B. Marketing plan (4 Ps Product, Price, Place, Promotion)1. Market strategy sales and

distribution2. Pricing3. Advertising and promotions


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Section IV: OperationsA. Identify location

1. Advantages

2. Zoning

B. Proximity to supplies

C. Access to transportation


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Section V: ManagementA. Management team key personnel

B. Legal structure stock agreements,

employment agreements, ownership

C. Board of directors, advisors,consultants


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Section VI: FinancialA. Financial forecast

1. Proforma Income Statement (Revenue

& expenses)

2. Cash flow (Managing cash)

3. Proforma Balance Sheet (Fixed assets,

current assets, liabilities & equities)

4. Break-even analysis


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Section VII: StrategiesA. Potential ProblemsB. Obstacles and risksC. Alternative courses of action (TOWS Matrix or

SWOT ANALYSIS)

Section VIII: Recommendation

Section VIIII: Appendix or Bibliography
http://../TOWS.dochttp://../TOWS.doc


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Presentation of the BusinessPlan

Know the outline thoroughly

Rehearse the presentation

Be familiar with any equipment

Be Confident (Have Faith)!


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Business Plan

Assessment:Complete

Evaluation ofEachComponent


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END OF LECTURE

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