Crafting

Crafting aa
Winning
Winning
Business
Business Plan
Plan

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

The Business Plan:

Two Essential Functions

Business plan a written summary of:

An entrepreneurs proposed business venture
Its operational and financial details
Its marketing opportunities and strategy
Its managers skills and abilities

It serves two essential functions:

Guiding the company by charting its future course and
defining its strategy for following it
Attracting lenders and investors who will provide needed
capital

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

Purposes of a Business
Plan
Development tool for organizational founders
Vision and mission clarification
Planning and evaluation guidelines
Tool for securing financial resources
Tool for guiding growth

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

Why Take the Time to

Build a Business Plan?
Although building a plan does not
guarantee success, it does increase
your chances of succeeding in
business.
A plan is like a road map that
serves as a guide on a journey
through unfamiliar, harsh, and
dangerous territory. Dont
attempt the trip without a map!

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

Key Elements of a Business Plan

Executive Summary
Mission Statement
Company History
Business and Industry Profile
Business Strategy
Description of Products/Services

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

Key Elements of a Business Plan

(continued)

Marketing Strategy
Competitor Analysis
Description of Management
Team
Plan of Operation
Forecasted Financial
Statements
Loan or Investment Proposal

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

Technology and Operations

Strategies for Entrepreneurs
Resources

Products
Production-Operations
Management
Strategies

Production Process
Strategies

Capacity Strategies

Layout Strategies

Work Design
Strategies

Location Strategies

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

Production Process
Strategies
Three Possible Choices:

Chapter 10: Business Plan

The process-focused strategy

The product-focused strategy

The repetitive-focused strategy

Copyright 2002 Prentice Hall Publishing Company

Layout Strategies
Six Potential Layout Strategies:

Chapter 10: Business Plan

The fixed position

The process-oriented layout

The office layout

The retail-service layout

The warehouse layout

The product-oriented layout

Copyright 2002 Prentice Hall Publishing Company

Guidelines for Preparing

a Business Plan

Remember: No one can create your plan for you.

Potential lenders want to see financial
projections, but they are more interested in the
strategies for reaching those projections.
Show how you plan to set your business apart
from competitors; don't fall into the me too
trap.
Identify your target market, and offer evidence
that customers for your product or service exist.

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Copyright 2002 Prentice Hall Publishing Company

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Tips on Preparing
a Business Plan
(continued)

Make sure your plan has an attractive cover.

(First impressions are crucial.)
Rid your plan of all spelling and grammatical
errors.
Make your plan visually appealing.
Include a table of contents to allow readers to
navigate your plan easily.
Make it interesting.

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

11

Tips on Preparing
a Business Plan
(continued)

Your plan must prove that the business will make

money (not necessarily immediately, but
eventually).
Use spreadsheets to generate financial forecasts.
Always include cash flow projections.
Keep your plan crisp between 25 and 50
pages long.
Tell the truth always.

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

12

Features vs. Benefits

Feature a descriptive fact about a
product or service (an ergonomically
designed, more comfortable handle).
Benefit what a customer gains from the
product or service feature (fewer
problems with carpal tunnel syndrome
and increased productivity).

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

13

A Plan Must Pass Three Tests

The Reality Test - proving that:

a market really does exist for your product or service.
you can actually build or provide it for the cost estimates
in the plan.
The Competitive Test - evaluates:
a companys position relative to its customers.
managements ability to create a company that will gain
an edge over its rivals.
The Value Test proving that:
a venture offers investors or lenders an attractive rate of
return or a high probability of repayment.

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

14

Presenting the Plan

Demonstrate enthusiasm, but dont be

overemotional.
Know your audience thoroughly.
Hook investors quickly with an up-front
explanation of the venture, its opportunities, and
its benefits to them.
Hit the highlights; focus on the details later.
Keep your presentation simple 2 or 3 major
points.

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

15

Presenting the Plan

(continued)

Avoid overloading your audience with

technological jargon.
Use visual aids.
Close by reinforcing the nature of the
opportunity.
Be prepared (with details) for potential
investors questions.
Follow up with every investor to whom you
make your presentation.

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

16

The 5 Cs of Credit

Chapter 10: Business Plan

Capital

Capacity

Collateral

Character

Conditions

Copyright 2002 Prentice Hall Publishing Company

17

Business Planning
(Recap)
What the Business Plan Should Include:
Executive

Summary

Analysis

of Opportunity

Analysis

of Context

Description
Financial

Data and Projections

Supporting
Chapter 10: Business Plan

of Business
Documentation

Copyright 2002 Prentice Hall Publishing Company

18

Writing a Successful
Business Plan
10 Characteristics:
1. Clear, realistic financial projections
2. Detailed market research
3. Detailed competitor research
4. Descriptions of key decision makers
5. Thorough summary
6. Proof of vision
7. Good formatting and clear writing
8. Brief and concise
9. Writing that demonstrates the importance of the bottom line
10. A plan that captures you

Chapter 10: Business Plan

Copyright 2002 Prentice Hall Publishing Company

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