Part III

Developing the
Entrepreneurial Plan

CHAPTER 12

Entrepreneurial
Ventures Business
Plan

PowerPoint Presentation by Charlie Cook

The University of West Alabama
 Introduction
There are many ways to look at a problem. Thinking of
solutions often opens up new opportunities. A problem that
is shared by many people can be a business opportunity.
Recognizing a business opportunity is one characteristic of
entrepreneurial thinking. like each of us, entrepreneurs are
constantly making decisions. They minimize the risk of
making a bad decision by using their advisers. They also
follow a decision-making process to ensure they are
considering all their options:
They identify all their options.
Then research the options.
They evaluate the research.
They make a decision.
The Importance of Planning
Planning is essential to the success of any
undertaking. Critical factors that must be
addressed when planning are:
Realistic goals. These must be specific, measurable,
and set within time parameters
Commitment. The venture must be supported by all
involvedfamily, partners, employees, team
members.
Milestones. Subgoals must be set for continual and
timely evaluation of progress.
Flexibility. Obstacles must be anticipated, and
alternative strategies must be formulated.
 Pitfalls to Avoid in Planning
Pitfall 1: No Realistic Goals (One way to avoid is
to set up a timetable with specific steps to be
accomplished during a specific period)
Pitfall 2: Failure to Anticipate Roadblocks (No
possible weakness in the plan and no
contingency or alternative plans)
Pitfall 3: No Commitment or Dedication (Too
many entrepreneur appear to lack real
commitment to their ventures, to avoid this
pitfalls to act quickly and to be sure to follow up
all professional appointments)
 Con..
Pitfall 4: Lack of Demonstrated Experience
(Business or Technical) Many beginners
attempt to promote idea they really have no true
knowledge and lack of understanding of the
industry in which the venture fits.
Pitfall 5: No Market Niche (Segment) Many
entrepreneurs propose an idea without
establishing who the potential customers will be
just because the entrepreneur likes the product
and service does not mean other will buy it.
 What is a Business Plan?
A business plan is a written document prepared by
the entrepreneur that describes all the relevant
internal and external elements and strategies for
starting a new venture.

A written statement describing your organisation,

why it is needed, what organisational activities,
services, facilities and programmes are proposed,
how these will be managed, what outcomes and
achievements will be made and how these will be
financed; in particular it will show where the money
will be sourced from and how and when it will be
spent.
 Reasons for Writing a Business Plan

1. To sell yourself on the business

2. To obtain bank financing
3. To obtain investment funds
4. To obtain initial contracts
5. To attract key employees
6. To motivate and focus your management team
 Business Plan Functions
1. Guiding the company by
charting its future course
and defining its strategy for
following it.
2. Attracting lenders and
investors who will provide
needed capital.

4-8
 A Plan Must Pass Three Tests
1. 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.?
2. The Competitive Test evaluates:
A companys position relative to its competitors.?
Managements ability to create a company that will
gain an edge over its rivals.?
3. The Value Test proving that:
A business enterprise offers investors an attractive
rate of return.?
4-9
 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!

4 - 10
Benefits of a Business Plan
For the Entrepreneur:
The time, effort, research, and discipline required to
create a formal business plan forces the entrepreneur
to view operating strategies and expected results
critically and objectively.
For Outside Evaluators:
The business plan provides a tool for use in
communications with outside financial sources.

1211
Benefits of the Business Plan (contd)
Specifically for the Financial Sources:
Details the market potential and plans for securing a
share of that market.
Shows how the ventures intends to service debt or
provide an adequate return on equity.
Identifies critical risks and crucial events with a
discussion of contingency plans.
Contains the necessary information for a thorough
business and financial evaluation.

1212
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; dont fall into the me too
trap.
Identify your target market and offer evidence
that customers for your product or service exist.

4 - 13
 Tips on Preparing a Business Plan
Make sure your plan has an attractive cover. (First
impressions are crucial.)
Rid your plan of all spelling and grammatical errors.
Include a table of contents to allow readers to navigate
your plan easily.
Make it interesting.
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 between 25 and 40 pages long.

Tell the truth always.
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Putting the Package Together
1.Appearance ( 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 the handling of number of
people without damage.
2.Length ( A business plan should not be more
than 40-50 pages along)
3.The cover and title page (the cover should bear
the name of the company, its address and phone
numbers and the month and year in which the
plan issued.)
Con..
4.The executive summary (two and three pages
immediately following the title page should
concisely explain the companys current status,
its product or service, the benefits to customers,
the financial forecast and how investors will
benefit.)
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, proper
grammar, correct typing and a cover page.)
Guidelines to Remember
1.Keep the plan respectably short (the plan should be no more
than 50 pages long)
2.Organize and package the plan appropriately ( A table of
contents , an executive summary , graphs , proper grammar
and logical arrangements of segments.)
3.Orient the plan toward the future (Entrepreneur should create
in the plan by developing trends and forecasting that describes
what the venture intends to do and what opportunities for the
use of the product or service.)
4.Avoid exaggeration ( sales potentials, revenue estimates and
the ventures potential growth should not be inflated.)
5.Highlight critical risks ( the business plan is important in that it
demonstrates the entrepreneurs ability to analyze potential
problems and develop alternative course of action.)
Con..
6.Give evidence of an effective entrepreneurial team ( business
plan should clearly identify the skills of each key person as
well as demonstrate how all such people can effectively work
together as a team in managing venture.)
7.Do not over-diversify (focus the attention of the plan is one
main opportunity for the venture.)
8.Identify the target market( market research has to be included
to demonstrate how this market segment has been identified.)
9.Keep the plan written in the third person ( rather than
continually stating I we us the entrepreneur should
phrase everything as he she Them avoid personalizing
the plan and keep the writing objective.
10.Capture the readers interest ( use the title page and executive
summary as key tools for capturing the readers attention and
creating a desire to read more.
 Questions to Be Answered
Is your plan organized so key facts leap out at the reader?
Is your product/service and business mission clear and
simple?
Are you focused on the right things?
Who is your customer?
Why will customers buy? How much better is your
product/service?
Do you have a competitive advantage?
Do you have a favorable cost structure?
Can the management team build a business?
How much money do you need?
How does your investor get a cash return? 1219
Updating the Business Plan

Financial
Changes

Additional Changes in
Financing the Market
Reasons to
Update the
Launch of a New Plan New
Product or Management
Service Team

Reflect the New

Reality
Sample of business Plan
Key Elements of a Business Plan

Title Page and Table of Contents

Executive Summary
The
Business

Vision and Mission Statement

Plan

Company History
Business and Industry Profile
Business Strategy
Description of Products/Services

4 - 22
Key Elements of a Business Plan
(continued)

Marketing Strategy The

Business
Plan

Document market claims

Show customer interest
Competitor Analysis
Description of Management Team
Plan of Operation
Projected Financial Statements Our
Business
Plan

Loan or Investment Proposal

4 - 23
Example of Business plan: Internet-caf

1. Introduction
1.1 Objectives
1.2 Keys to succes
1.3 Missions
1.4 Risks
2. Company
2.1 Company ownership
2.2 Start-Up Summary
2.3 Company locations and facilities
3. Services
Con..
3.1 Competitive Comparison
3.2 Service description
3.3 Fulfillment
3.4 Technology
3.5 Future Services
4. Market Analysis
4.1 Target market segment strategy
4.2 Market needs
4.3 Market segmentation
Con..
5. Strategy and Implementation summary
5.1 Attracting customers
5.2 SWOT analysis
5.3 Sales strategy
6. Management summary
6.1Personnel plan
7. Financial plan
7.1 Start-up funding
7.2 Projected profit and loss
7.3 Break-even analysis
1. Introduction
This is the business plan of Mohamed Abdulahi Haji
created to help starting an internet-caf. This business
plan is part of our project for our University. In order to
finish this project successfully we have informed our
contact person with all the questions we had.
At first the task was to create a business plan for a local
school in Somalia; however this school already seemed to
be present. So to make our business plan useful we asked
what other help we could give to the village of Afgoye
The task which we got appointed was to create a business
plan for an internet-caf. In this business plan we have
tried to make a plan to realize the internet-caf and keep
it running while making some profit. Furthermore this
business plan will show how the internet-caf itself will
be built and realized. And what the expected costs and
upkeep costs will be.
1.1 Objectives
As mentioned before, the location we are aiming at
is Afgoye. Building an Internet caf for a local
school, as extra income to keep up with the costs
of the school and to have the ability to maintain
it. In order to provide the school with the
neccesary financial support the objective is to
make the internet-caf a continuing running
internet-caf.
Our own goals are to make a Business plan for this
internet caf, in order to help the local
population, and increase their knowledge with
computers, the internet and also to connect to the
world wide web.
1.2 Keys to succes

We believe that this internet caf will be a great

succes because there are very few internet cafs
(exact number remains unknown) in the area and
therefore the school will have its own monopoly.
Also, because there are quite some villages in the
area, the potential demand will be high.
1.3 Missions

The mission of our internet-caf is to make the

internet available to a greater population. In such a
way that the Afgoyian population will have access
to all the sources which can be found on the
internet. Also the internet caf should be a place
where one can relax and play some games.
Thereby the caf is supposed to be a place where
people of all ages will come to enjoy the exclusive,
fashionable, educational, and innovative
environment that the internet-caf provides.
1.4 Risks
The main risks in establishing any business at all is
always the demand. Will there be enough demand
for my product, will there be enough interest in it?
Won't we go bankrupt due to lack of interest? These
risks are also present in the soon to come internet
caf, the population may not be interested in
spending money to go online.

Insufficient demand for the services provided by

Internet.
The popularity of the Internet stops to grow.
The opening of new cafs in the same area which
offers the exact services that Internet caf provides.
2 Company
The internet-caf which will be realized will offer
the community of Afgoye easy and affordable
access to the internet. The internet-caf will
appeal to individuals of all ages and
backgrounds. The instructional internet classes,
and the staff that the internet-caf provides, will
appeal to the audience that does not associate
themselves with the computer age.
This educational aspect will attract younger and
elderly members of the community who are
rapidly gaining interest in the unique resources
that online communications have to offer.
2.1 Company Ownership

internet Caf will be privately owned by

Mohamed Abdulahi Haji , the founder and
CEO, and Abdulahi Haji , a second shareholder.
 Start-up Exp
Expense
10 computer $400.- each $4,000

1 commercial printer
Details: $100.
1 commercial scanner $50.

Electricity+ water $50.

11 chairs $ $10.- each $110.

11 Table stands $20 each $220
2 air-conditioner $900

10 Toner Boxes $20 each $200

10 Reams of paper $10 each $100

Labor for fixing the computers and $300

furniture

Modem + router3 $170

2.3 Company Locations and Facilities
The site where the internet-caf will be located was
already decided before the making of this
business plan. The location will be close to the
school in Afgoye. This building is already present
however there is no electricity and internet
running yet. To prevent more unneccesary cost
we will be making use of this facility.
3. Services

Firstly the internet-caf will grant the customers

access to the internet and world wide web.
Besides that, the internet-caf will provide the
opportunity to use the scanner, printer and will
provide basic computer classes.
3.1 Competitive comparison

The internet-caf which will be located near the

school of Afgoye will not be the first internet-caf
to settle in Afgoye. We expect that there are more
internet-cafs in Afgoye however we do not think
many cafs will be present.
3.2 Service Description
The internet-caf will provide its customers with full
access to the Internet and common computer
software and hardware. Some of the Internet and
computing services available to the future internet-
caf customers are listed below:
- Access to Internet Explorer browser or other
browsers.
Access to printing.
Access to popular software applications
Next to these computer services, the internet-caf will
provide the possibility to attain computer courses.
During these courses the costumer can learn how to
use a computer and learn some possibilities,
including web surfing.
3.3 Fulfilment

The internet-caf will obtain its computer

hardware from local stores which can be found in
or in the neighbourhood of afgoye. The
installation of the internet will also be provided
by the local resources. Electricity shall be
installed by one of the major providers of
electricity.
 3.4 Technology

Internet Caf will invest in high-speed computers

to provide its customers with a fast and efficient
connection to the Internet. The computers will be
reliable and fun to work and will continue to
upgrade and modify the systems to stay with
current technologies.
These applications will mainly be the mainly used
ones which everyone will be familiar with such
as face book, twitter, nimbus and Gmail.
3.5 Future services
In the future the internet-caf will be able to expand or
improve its services. When expanding the needed
amount of hardware should be purchased however
what should be kept in mind is how far the
internetcaf will be able to expand. The location may
not be big enough to provide an excessive expansion
of hardware.
The improvement of service however could be made
possible by providingthe customer with additional
services. A drink and food machine could be
purchased for satisfying the customer, which would
attract more customers and which could make the
current customers stay longer.
4. Market Analysis

The main goal of any business is to make a profit

by providing services, that usually are not
present in the designated area. Somalia is a
Underdeveloping country, that can benefit
greatly from international contacts and acces to
the World Wide Web. To achieve this however,
certain requirements have to be met, what is the
average price, how can a profit be achieved, and
what does the market want?
4.1 Target market segment strategy

Our main intentions are to connect people to the

internet, increase their knowledge by having
acces to sources from all over the world, and to
increase their social setting, by a new way of
communicating.
People will come to this internet caf to check their
email, socialize with their friends, and gather
information not found elsewhere. The majority of
these individuals are students and business
people.
4.2 Market Needs

Afgoye foremost needs an internet caf since there

is a small amount of internet caf's present in the
hawa-Taako area. So there is a high demand for
an internet caf where people can come to, check
their email and search the web for information.
Also, this caf is designed to be an additional
source of income for a local school, which is a
need for the school itself.
The customers at the internet caf will also enjoy
the freedom of accesing different programs like
face book and twitter and other applications.
4.3 Market segmentation

Since our internet caf is situated in a mayor city in

Somalia, we expect the population to increase
and decrease with the same speed. Therefor we
can state and use the population to predict the
amount of customers that would be suitable for
our market, by looking at the average growth
and applying this to the market, we can predict
how many customers we will get.
5. Strategy and Implementation Summary
Internet caf position itself as a stylish coffee
house and Internet service provider. It will serve
high-quality coffee and specialty beverages at
competitive prices. Due to the number of cafs, it
is important that internet caf sets fair prices for
its products. These strategies are mean to become
aware of the possible improvements and
decrease.
5.1 Attracting customers
To attract the intended customers the internet-caf can use
different types of advertising to reach each target group.
For the teenagers for example some posters could be
made. These posters could be placed around places
where the adolescents would mainly be present. Places
like game-halls and sports clubs would be perfect for
advertising. Another way of attracting the customer is to
advertise in the local newspaper.
By advertising in the local newspaper the households
would get notice of the new internet-caf. This would
result in attracting the parents of the adolescents and the
middle-aged inhabitants of Afgoye. These ways of
advertising will be stopped after two years. This is
because over such a period of time most inhabitants will
have noticed the internetcaf and/or heard about it.
5.2 SWOT analysis

This section will focus on the SWOT analysis. The

SWOT analysis is a strategic planning method
used to evaluate the Strengths, Weaknesses,
Opportunities, and Threats involved in a project
or in a business venture. SWOT is an
abbreviation for: Strength, Weakness,
Opportunity and Threats.
Strength
The strength that the internet-caf will have is its
dominant position in the local internet availability. In
Afgoye the access to internet is very limited however
there are some internet-cafs which surely will make
competing favourably.This condition should have a
positive effect on the success of the school's internet-
caf.
Secondly, the internet-caf should have strength in
staying up-to-date with the latest computer software.
By keeping the hardware updated with the needed
software the customers will enjoy working with the
computers present. Staying updated with the newest
software is also a cheap cheap 'investment' which
again would benefit to the success of the internet-
caf.
Weakness
Besides the strengths each company/business has
its weaknesses.Weakness can lead to a decrease
of a company's success and development. The
weakness of an internet-caf in general and also
the school's internet-caf is keeping up with the
latest hard-ware technology.
Staying updated with the latest hardware is not
only an expensive investment it is an investment
which does not sincerely pays off its prices
immediately.
Over a period of years such an investment should
be needed however it remains expensive.
Opportunities
As any other organisation an internet-caf has its
opportunities. Having certain opportunities offers an
organisation a possibility to expand their turnover. An
opportunity of an internet-caf is that the global
population which is requiering acces to the world wide is
slowly increasing.
This increase of internet users should offer the internet-caf
a chance to expand the business. Another opportunity
from which the internet-caf might benefit is the
possibility of a rising demand in the market. This raise
would be the outcome of the growing popularity under
the inhabitants. Once one is familiar with the world wide
web one may introduce his or her social environment to
the internet. Thereby the popularity of the internet will
keep on growing and finally this will reflect in an
increasing number of customers for the internet-caf.
Threats
The internet-caf will be one of a few located in the city of
Afgoye. However the internet-caf will face certain
threats which can cause a slight decrease in its popularity
in the market. One of the threats the caf will face is the
continious reducing price of the availability of internet
itself. Because of the lowering price the internet will
become available to a greater population. When this
situation occurs more and more people will have an
internet connection at their own house. Thiswill make the
excistence of an internet-caf redundant.
An other threat which may threaten the internet-caf is the
increase of internet-cafs at a local scale. When the
consumers get the opportunity to choose from a variety
of offers the amount of customers will propably decrease.
5.3 Sales strategy

If an employee does not possess basic computer

skills when they are hired, they are trained by
our full-time technician. Our full-time technician
is also available for customers in need of
assistance. Cafs commitment to friendly,
helpful service is one of the key factors that
distinguishes itself from other cyber cafs.
6. Management summary

The internet Caf is owned and operated by Mr.

Mohamed Abdulahi Haji. The company, being
small in nature, requires a simple organizational
structure. Implementation of this organizational
form calls for the owner, Mr. Mohamed, to make
all of the major management decisions in
addition to monitoring all other business
activities.
6.1 Personnel plan
The internet-caf requires just a handful of
employees in order to function. In total the
internet-caf will count a staff of a least four
persons. These four can be divided in two
groups. At first there are two teachers which will
be spending their time teaching customers and
children how to manage handling a computer.
Besides these two teaching employees there is
another group of two employers, these two
employers will fulfill the role of supporting staff.
Their job is mainly to support customers with
any problems and next to that they will appoint
customers computers.
Personnel plan

Staff Monthly salary

Teacher 1 $200

Teacher 2 $200

Supporting staff member 1 $150

Supporting staff member 1 $150

Total $700
7. Financial plan

The following sections lay out the details of the

financial plan for the future years.
7.1 Start-up funding
This business plan is prepared to obtain financing
in the amount of USD61,539. The supplemental
financing is required to begin work on site
preparation and modifications, equipment
purchases, and to cover expenses in the first year
of operations.
7.2 Projected profit and loss
Profit and Loss Year 1 Year 2 Year 3

Sales
Estimated customers 5000 5088 5178

Hourly fee $1.5 1.5 1.5

Total Sales $22464 $22896 $23301

Expenses 5245 54115 4521

Teacher+furniture 9500 54652 47152

Electronic 12235 1254
Total expenes $30,063.67 $11,093.67 $11,058.67
Total Sales-Total -$7,599.67 $11,802.33 $12,242.33
expenes
=Profit
Conclusion

There are no guarantees for success.

Creating a business plan will be valuable
primarily because of the process itself.
The business planning process may provide
insight to increase the chances for success.
The business plan: Entrepreneurs benefit;
lenders and investors demand it!

4 - 59
Case Study: Its Juts A Matter OF time
Pedro Santini Has been A computer analyst for five years. In his
spare time he has developed a word processing software program
that is more comprehensive and powerful than any on the market.
Since he does not have a great deal of money, Pedro believes the
first step in producing and Marketing this product should be to get
the necessary venture capital.
The software Program has been written and trial-tested by pedro
and handful of friends to whom he gave the material. Two of these
friends are full-time typist who told him that the program is faster
and easier to use than anything on the market. Pedro believes that
these kinds of testimonials point out the profit potential of the
product. However, he still needs to get financial Support.
One of pedro friends has suggested a meeting with a venture
capitalist. These guys have all sorts of money to lend for new
ventures, Pedro friend told. All you have to do is explain your ideas
and sell them on giving you the money. They are always looking to
back a profitable idea and yours is certain to be one of the best they
have seen in along time. 4 - 60
Case Study: Its Juts A Matter OF time

Pedro Agrees with his friend but believes he should not discuss the
matter with a venture capitalist until he has thought through
answer to the various types of questions likely to be asked. In
particular, pedro believes he should be able to provide the venture
capitalist with projected sales for the first three years and be able to
explain the types of expenses that would be incurred. Once he has
done this Pedro feels he will be ready to talk to the individual.
Right now he told his friend, Its Just a matter of time. I,d think that
within seven to ten days I will be ready to present my ideas and
discuss financial needs.
1. In addition to financial questions, what others questions is the
venture capitalist likely to ask Pedro?
2. Would a business Plan be of any value to Pedro? Why or why
not?
3. How would you recommend Pedro get ready for his meeting
with the venture capitalist? Be complete in your answer.
4 - 61