Feasibility and Business Planning2.2 The Business Plan

What you will learn . . .

• The Business Plan: Your Road Map to Entrepreneurial Success

• The Parts of the Business Plan

• Common Mistakes in Preparing Business Plans

• Sources of Business Plan Information

• Packaging and Presenting the Business Plan

The Business Plan: Your Road Map to Entrepreneurial Success

• Business Plan – a document that describes a new business and a strategy to launch that business.

• May reveal problems

• Helps ensure that you plan for all aspects of operations

• Investors, bankers, potential management and strategic partners

The Parts of the Business Plan

• May differ in order and name

• MUST include a financials section

The Parts of the Business Plan

• Executive Summary• Management Team

Plan• Company Description• Product and Service

Plan• Vision and Mission

Statements• Industry Overview• Market Analysis

• Competitive Analysis• Marketing Plan• Operational Plan• Organizational Plan• Financial Plan• Growth Plan• Contingency Plan• Cover Page, Title Page,

Table of Contents and Supporting Documents

Executive Summary

• A brief recounting of the key points contained in a business plan.

• No more than two pages

• Include the most important info from each section

• Start with a story explaining why it will be a success

• May be the only part read

Management Team Plan

• Qualification of you and your partners

• Discuss plan to fill any gaps– Partnerships– Advisory boards– Consultants

Company Description

• Outlines the company’s background information and basic concept

• Size

• Scope

• Type of business

• Why you think it will succeed

Product and Service Plan

• Present the product or service you are offering

• Clear and compelling concept statement

• Unique features and possible spin-offs

• Spin-offs – additional products or services that might exist later

Vision and Mission Statements

• The guiding principles by which the company functions.

• Vision statement – the scope and purpose of a company and relfects its values and beliefs– “To bring happiness to millions.”

- Walt Disney

– “To open the world of sports to neighborhood residents.”

Vision and Mission Statements, cont.

• The specific aspirations of a company, the major goals for which it strives– “To provide equipment to 100 customers

by the end of the first year.”

Industry Overview

• Research into the industry

• Trends and growth within the industry

Market Analysis

• The more you understand your customers, the better your chances of success.

• Customer profile (use primary and secondary sources)

• Determines marketing and sales strategies• Analyzes customers and competition• Contains geographic, economic, and demo

data about the site for the business

Competitive Analysis

• Demonstrates the advantage(s) the business has over competitors

• Talk to customers, vendors, suppliers and employees

• Websites

• Visits

Marketing Plan

• How customers will be aware of the products or services

• Includes market niche, pricing, company image, marketing tactics, media plan and marketing budget

Operational Plan

• All of the processes in the business that result in the production and delivery of the product or service.

• Distribution channel – how you will deliver the product or service to the customer.

• Direct channel – you deliver directly to the customer.

• Indirect channel – sell products to a wholesaler.

Organizational Plan

• The people aspects

• The legal form of business

• The management philosophy

• The role and compensation of management personnel and important employment policies.

Financial Plan

• Forecasts for the future of the business

• Explains the assumptions made when the forecast figures were calculated

• Proves the business will be financially healthy

Growth Plan

• How the business will expand in the future

Contingency Plan

• The probable risks– Changing economic conditions– Lower-than-expected sales

• How to minimize the risks

Cover Page

• Company name

• Address

• Phone number

• Web site address

• Company logo

Title Page

• Company name

• Names, titles and addresses of owners

• Date the business plan was issued

• Name of the preparer

Table of Contents & Supporting Documents

• Table of Contents– Headings and page numbers

• Supporting Documents– items– Exhibits– Documentation relevant to the business

Common Mistakes in Preparing Business Plans

• Projected exaggerated growth levels

• Trying to be a Jack-of-All-Trades

• Claiming performance that exceeds industry averages

• Underestimating the need for capital

Sources of Business Plan Information

• Small Business Administration (SBA)

• Service Crops fo Retired Executives (SCORE)

• Small Business Development Centers (SBDCs)

• Chambers of Commerce

• Trade Associations

Packaging and Presenting the Plan

• Bind – spiral works• Index tabs to separate sections• Easy-to-read 12-pt. font• Bold subheadings and bullets• Logo at the top of each page• Number each copy• Statement of confidentiality for ready to sign• A statement on the cover prohibiting copying

of the plan