Abdm4223 lecture week 7 150612

Preparing Preparing a a

Business PlanBusiness Plan

Preparing Preparing a a

Business PlanBusiness Plan

ABDM4233 ENTREPRENEURSHIPABDM4233 ENTREPRENEURSHIP

byStephen OngStephen Ong

Principal Lecturer (Specialist)Principal Lecturer (Specialist)Visiting Professor, Shenzhen UniversityVisiting Professor, Shenzhen University

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Business PrototypingBusiness Prototyping

Entrepreneurs Entrepreneurs test their business test their business modelsmodels on a small scale before on a small scale before committing serious resources to committing serious resources to launch a business that might not work. launch a business that might not work.

Recognizes that a Recognizes that a business idea is a business idea is a hypothesis that needs to be tested hypothesis that needs to be tested before taking it full scale. before taking it full scale.

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Industry and Industry and Market FeasibilityMarket Feasibility

Product or ServiceFeasibility

FinancialFinancialFeasibilityFeasibility

Elements of a Feasibility AnalysisElements of a Feasibility Analysis

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Industry and Market Feasibility

Product or ServiceProduct or ServiceFeasibilityFeasibility

FinancialFinancialFeasibilityFeasibility


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Five Forces ModelFive Forces Model

Industry Competitors

Rivalry among existing firms

Buyers

Bargaining PowerBargaining Powerof Buyersof Buyers

Suppliers

Bargaining PowerBargaining Powerof Suppliersof Suppliers

Substitutes

PotentialEntrants

Threat ofThreat ofNew EntrantsNew Entrants

Threat of SubstituteThreat of SubstituteProducts or ServicesProducts or Services

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Five Forces MatrixFive Forces Matrix

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Industry and Industry and Market FeasibilityMarket Feasibility

Product or ServiceProduct or Service FeasibilityFeasibility

FinancialFeasibility


What Is a Business Plan?What Is a Business Plan?

Business PlanBusiness Plan A business plan is a written narrative, typically 25 to 35 A business plan is a written narrative, typically 25 to 35

pages long, that describes what a new business plans to pages long, that describes what a new business plans to accomplish.accomplish.

Dual-Use DocumentDual-Use Document For most new ventures, the business plan is a dual-For most new ventures, the business plan is a dual-

purpose document used both inside and outside the purpose document used both inside and outside the firm.firm.

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Who Reads the Business Plan—And Who Reads the Business Plan—And What Are They Looking For?What Are They Looking For?

There are two primary audiences for a firm’s business plan

Audience What They are Looking For

A Firm’s Employees

Investors and other external stakeholders

A clearly written business plan helps the employees of a firm operate in sync and move

forward in a consistent and purposeful manner.

A firm’s business plan must make the case that the firm is a good use of an investor’s funds or the

attention of others.

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Guidelines for Writing a Business PlanGuidelines for Writing a Business Plan1 of 51 of 5

Structure of the Business PlanStructure of the Business Plan To make the best impression a business plan should To make the best impression a business plan should

follow a conventional structure, such as the outline for follow a conventional structure, such as the outline for the business plan shown in the chapter.the business plan shown in the chapter.

Although some entrepreneurs want to demonstrate Although some entrepreneurs want to demonstrate creativity, departing from the basic structure of the creativity, departing from the basic structure of the conventional business plan is usually a mistake. conventional business plan is usually a mistake.

Typically, investors are busy people and want a plan Typically, investors are busy people and want a plan where they can easily find critical information.where they can easily find critical information.

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Structure of the Business Plan (continued)Structure of the Business Plan (continued) Software PackagesSoftware Packages

There are many software packages available that employ an There are many software packages available that employ an interactive, menu-driven approach to assist in the writing of a interactive, menu-driven approach to assist in the writing of a business plan. business plan.

Some of these programs are very helpful. However, Some of these programs are very helpful. However, entrepreneurs should avoid a boilerplate plan that looks as entrepreneurs should avoid a boilerplate plan that looks as though it came from a “canned” source.though it came from a “canned” source.

Sense of ExcitementSense of Excitement Along with facts and figures, a business plan needs to project a Along with facts and figures, a business plan needs to project a

sense of anticipation and excitement about the possibilities that sense of anticipation and excitement about the possibilities that surround a new venture.surround a new venture.

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Content of the Business PlanContent of the Business Plan The business plan should give clear and concise The business plan should give clear and concise

information on all the important aspects of the information on all the important aspects of the proposed venture. proposed venture.

It must be long enough to provide sufficient It must be long enough to provide sufficient information yet short enough to maintain reader information yet short enough to maintain reader interest. interest.

For most plans, 25 to 35 pages is sufficient.For most plans, 25 to 35 pages is sufficient. Types of Business PlansTypes of Business Plans

There are three types of business plans, which are There are three types of business plans, which are shown on the next slide.shown on the next slide.

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Types of Business Plans

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Recognizing the Elements of the Plan May ChangeRecognizing the Elements of the Plan May Change It’s important to recognize that the plan will usually It’s important to recognize that the plan will usually

change while written.change while written. New insights invariably emerge when an entrepreneur New insights invariably emerge when an entrepreneur

or a team of entrepreneurs immerse themselves in or a team of entrepreneurs immerse themselves in writing the plan and start getting feedback from others.writing the plan and start getting feedback from others.

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The Business PlanThe Business Plan

A written summary of:A written summary of: An entrepreneur’s proposed business An entrepreneur’s proposed business

ventureventure The operational and financial detailsThe operational and financial details The marketing opportunities and strategyThe marketing opportunities and strategy The managers’ skills and abilities. The managers’ skills and abilities.

A business plan is the best insurance against A business plan is the best insurance against launching a business destined to fail or launching a business destined to fail or mismanaging a potentially successful company. mismanaging a potentially successful company.

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The Business Plan:The Business Plan:Two Essential FunctionsTwo Essential Functions

1.1. Guiding the company by Guiding the company by charting its future course charting its future course and defining its strategy and defining its strategy for following it.for following it.

2.2. Attracting lenders and Attracting lenders and investors who will provide investors who will provide needed capital.needed capital.

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A Plan Must Pass Three TestsA Plan Must Pass Three Tests

1. 1. The Reality Test The Reality Test – proving that :– proving that : A market really does exist for your product or A market really does exist for your product or

service. service. You can actually build or provide it for the cost You can actually build or provide it for the cost

estimates in the plan.estimates in the plan.

2. 2. The Competitive Test The Competitive Test – evaluates: – evaluates: A company’s position relative to its competitors.A company’s position relative to its competitors. Management’s ability to create a company that Management’s ability to create a company that

will gain an edge over its rivals.will gain an edge over its rivals.

3. 3. The Value Test The Value Test – proving that:– proving that: A venture offers investors or lenders an attractive A venture offers investors or lenders an attractive

rate of return or a high probability of repayment.rate of return or a high probability of repayment.

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Why Take the Time to Why Take the Time to Build a Business Plan?Build a Business Plan?

Although building a plan does not Although building a plan does not guarantee success, it does increase your guarantee success, it does increase your chances of succeeding in business.chances of succeeding in business.

A plan is like a road map that serves as a A plan is like a road map that serves as a guide on a journey through unfamiliar, guide on a journey through unfamiliar, harsh, and dangerous territory. Don’t harsh, and dangerous territory. Don’t attempt the trip without a map!attempt the trip without a map!

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Key Elements of a Business PlanKey Elements of a Business Plan

Title Page and Table of ContentsTitle Page and Table of Contents Executive SummaryExecutive Summary Vision and Mission StatementVision and Mission Statement Company HistoryCompany History Business and Industry ProfileBusiness and Industry Profile

OurBusinessPlan

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FIGURE 4.3

Mission, Goalsand Objectives

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Title Page and Table of ContentsTitle Page and Table of Contents Executive SummaryExecutive Summary Mission StatementMission Statement Company HistoryCompany History Business and Industry ProfileBusiness and Industry Profile Business StrategyBusiness Strategy Description of Products/ServicesDescription of Products/Services

TheBusinessPlan

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Features vs. BenefitsFeatures vs. Benefits

Feature Feature – a descriptive fact about a – a descriptive fact about a product or service:product or service:

“an ergonomically designed, “an ergonomically designed, more comfortable handle” more comfortable handle”

Benefit Benefit – what a customer gains from – what a customer gains from the product or service feature:the product or service feature:

“fewer problems with carpal “fewer problems with carpal tunnel syndrome and tunnel syndrome and increased productivity” increased productivity”

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Marketing StrategyMarketing Strategy Document market claimsDocument market claims Show customer interestShow customer interest

Competitor AnalysisCompetitor Analysis Description of Management TeamDescription of Management Team Plan of OperationPlan of Operation Projected Financial StatementsProjected Financial Statements Loan or Investment ProposalLoan or Investment Proposal

(continued)(continued)

OurBusinessPlan

TheBusinessPlan

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Guidelines for PreparingGuidelines for Preparinga Business Plana Business Plan

Remember: No one can create your plan Remember: No one can create your plan forfor you.you.

Potential lenders want to see financial Potential lenders want to see financial projections, but they are more interested in the projections, but they are more interested in the strategiesstrategies for reaching those projections. for reaching those projections.

Show how you plan to set your business apart Show how you plan to set your business apart from competitors; don’t fall into the “me too” from competitors; don’t fall into the “me too” trap.trap.

Identify your target market and offer evidence Identify your target market and offer evidence that customers for your product or service that customers for your product or service exist. exist.

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Tips on PreparingTips on Preparinga Business Plana Business Plan

Make sure your plan has an attractive Make sure your plan has an attractive cover. (First impressions are crucial.)cover. (First impressions are crucial.)

Rid your plan of all spelling and Rid your plan of all spelling and grammatical errors. grammatical errors.

Make your plan visually appealing. Make your plan visually appealing. Include a table of contents to allow Include a table of contents to allow

readers to navigate your plan easily. readers to navigate your plan easily. Make it interesting. Make it interesting.

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Tips on PreparingTips on Preparinga Business Plana Business Plan

Your plan must prove that the business will Your plan must prove that the business will make money (not necessarily immediately, make money (not necessarily immediately, but eventually).but eventually).

Use spreadsheets to generate financial Use spreadsheets to generate financial forecasts.forecasts.

AlwaysAlways include cash flow projections. include cash flow projections. Keep your plan “crisp” – between 25 and 40 Keep your plan “crisp” – between 25 and 40

pages long.pages long. Tell the truth – Tell the truth – alwaysalways. .


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The “5 Cs” of CreditThe “5 Cs” of Credit

CapitalCapital CapacityCapacity CollateralCollateral CharacterCharacter ConditionsConditions

Outline of Business PlanOutline of Business Plan

Outline of Business PlanOutline of Business Plan A suggested outline of a business plan is A suggested outline of a business plan is

shown on the next several slides. shown on the next several slides. Most business plans do not include all the Most business plans do not include all the

elements introduced in the sample plan; we elements introduced in the sample plan; we include them here for the purpose of include them here for the purpose of completeness. completeness.

Each entrepreneur must decide which Each entrepreneur must decide which elements to include in his or her plan. elements to include in his or her plan.

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Section 1: Executive SummarySection 1: Executive Summary1 of 21 of 2

Executive SummaryExecutive Summary The executive summary is a short The executive summary is a short

overview of the entire business plan overview of the entire business plan It provides a busy reader with everything It provides a busy reader with everything

that needs to be known about the new that needs to be known about the new venture’s distinctive nature.venture’s distinctive nature.

An executive summary shouldn’t exceed An executive summary shouldn’t exceed two single-spaced pages.two single-spaced pages.

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Executive Summary

Key Insights

• In many instances an investor will ask for a copy of a firm’s executive summary and will ask for a copy of the entire plan only if the executive summary is sufficiently convincing.• The executive summary, then, is arguably the most important section of a business plan.

Section 1: Executive SummarySection 1: Executive Summary2 of 22 of 2

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Section 2: Industry AnalysisSection 2: Industry Analysis1 of 21 of 2

Industry AnalysisIndustry Analysis This section should begin by describing the industry the This section should begin by describing the industry the

business will enter in terms of its size, growth rate, and business will enter in terms of its size, growth rate, and sales projections.sales projections.

Items to include in this section:Items to include in this section: Industry size, growth rate, and sales projectionsIndustry size, growth rate, and sales projections Industry structureIndustry structure Nature of participantsNature of participants Key success factorsKey success factors Industry trendsIndustry trends Long-term prospectsLong-term prospects

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Industry Analysis

Key Insights

• Before a business selects a target market it should have a good grasp of its industry—including where its promising areas are and where its points of vulnerability are.• The industry that a company participates in largely defines the playing field that a firm will participate in.

Section 2: Industry AnalysisSection 2: Industry Analysis2 of 22 of 2

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Section 3: Company DescriptionSection 3: Company Description1 of 21 of 2

Company DescriptionCompany Description This section begins with a general description of the This section begins with a general description of the

company.company. Items to include in this section:Items to include in this section:

Company descriptionCompany description Company historyCompany history Mission statementMission statement Products and servicesProducts and services Current statusCurrent status Legal status and ownershipLegal status and ownership Key partnerships (if any)Key partnerships (if any)

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Company Description

Key Insights

• While at first glance this section may seem less important than the others, it is extremely important.• It demonstrates to your reader that you know how to translate an idea into a business.

Section 3: Company DescriptionSection 3: Company Description2 of 22 of 2

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Section 4: Market AnalysisSection 4: Market Analysis1 of 21 of 2

Market AnalysisMarket Analysis The market analysis breaks the industry into segments The market analysis breaks the industry into segments

and zeros in on the specific segment (or target market) and zeros in on the specific segment (or target market) to which the firm will try to appeal.to which the firm will try to appeal.

Items to include in this section:Items to include in this section: Market segmentation and target market selectionMarket segmentation and target market selection Buyer behaviorBuyer behavior Competitor analysisCompetitor analysis

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Market Analysis

Key Insights

• Most start-ups do not service their entire industry. Instead, they focus on servicing a specific (target) market within the industry.• It’s important to include a section in the market analysis that deals with the behavior of the consumers in the market. The more a start-up knows about the consumers in its target market, the more it can tailor its products or services appropriately.

Section 4: Market AnalysisSection 4: Market Analysis2 of 22 of 2

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Section 5: The Economics of the BusinessSection 5: The Economics of the Business1 of 21 of 2

The Economics of the BusinessThe Economics of the Business This section addresses the basic logic of how profits are This section addresses the basic logic of how profits are

earned in the business and how many units of a earned in the business and how many units of a business’s profits must be sold for the business to business’s profits must be sold for the business to “break even” and then start earning a profit.“break even” and then start earning a profit.

Items to include in this section:Items to include in this section: Revenue drivers and profit marginsRevenue drivers and profit margins Fixed and variable costsFixed and variable costs Operating leverage and its implicationsOperating leverage and its implications Start-up costsStart-up costs Break-even chart and calculationsBreak-even chart and calculations

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The Economics of the Business

Key Insights

• Two companies in the same industry may make profits in different ways. One may be a high-margin, low -volume business, while the other may be a low-margin, high-volume business. It’s important to check to make sure the approach you select is sound.• Computing a break-even analysis is an extremely useful exercise for any proposed or existing business.

Section 5: The Economics of the BusinessSection 5: The Economics of the Business2 of 22 of 2

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Section 6: Marketing PlanSection 6: Marketing Plan1 of 21 of 2

Marketing PlanMarketing Plan The marketing plan focuses on how the business will The marketing plan focuses on how the business will

market and sell its product or service.market and sell its product or service. Items to include in this section:Items to include in this section:

Overall marketing strategyOverall marketing strategy Product, price, promotions, and distributionProduct, price, promotions, and distribution Sales process (or Cycle)Sales process (or Cycle) Sales tacticsSales tactics

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Marketing Plan

Key Insights

• The best way to describe a start-up’s marketing plan is to start by articulating its marketing strategy, positioning, and points of differentiation, and then talk about how these overall aspects of the plan will be supported by price, promotional mix, and distribution strategy.• It’s also important to discuss the company sales process.

Section 6: Marketing PlanSection 6: Marketing Plan2 of 22 of 2

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Section 7: Design and Development PlanSection 7: Design and Development Plan1 of 21 of 2

Design and Development PlanDesign and Development Plan If you’re developing a completely new product or If you’re developing a completely new product or

service, you need to include a section in your business service, you need to include a section in your business plan that focuses on the status of your development plan that focuses on the status of your development efforts.efforts.

Items to include in this section:Items to include in this section: Development status and tasksDevelopment status and tasks Challenges and risksChallenges and risks Projected development costsProjected development costs Proprietary issues (patents, trademarks, copyrights, licenses, Proprietary issues (patents, trademarks, copyrights, licenses,

brand names)brand names)

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Design and Development Plan

Key Insights

• Many seemingly promising start-ups never get off the ground because their product development efforts stall or the actual development of the product or service turns out to be more difficult than thought.• As a result, this is a very important section for businesses developing a completely new product or service.

Section 7: Design and Development PlanSection 7: Design and Development Plan2 of 22 of 2

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Section 8: Operations PlanSection 8: Operations Plan1 of 21 of 2

Operations PlanOperations Plan Outlines how your business will be run and how your Outlines how your business will be run and how your

product or service will be produced.product or service will be produced. A useful way to illustrate how your business will be run A useful way to illustrate how your business will be run

is to describe it in terms of “back stage” (unseen to the is to describe it in terms of “back stage” (unseen to the customer) and “front stage” (seen by the customer) customer) and “front stage” (seen by the customer) activities.activities.

Items to include in this section:Items to include in this section: General approach to operationsGeneral approach to operations Business locationBusiness location Facilities and equipmentFacilities and equipment

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Section 8: Operations PlanSection 8: Operations Plan2 of 22 of 2

Operations Plan

Key Insights

• Your have to strike a careful balance between adequately describing this topic and providing too much detail.• As a result, it is best to keep this section short and crisp.

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Section 9: Management Team and Section 9: Management Team and Company StructureCompany Structure

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Management Team and Company StructureManagement Team and Company Structure The management team of a new venture typically The management team of a new venture typically

consists of the founder or founders and a handful of key consists of the founder or founders and a handful of key management personnel.management personnel.

Items to include in this section:Items to include in this section: Management teamManagement team Board of directorsBoard of directors Board of advisersBoard of advisers Company structureCompany structure

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Section 9: Management Team and Section 9: Management Team and Company StructureCompany Structure

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Management Team and Company Structure

Key Insights

• This is a critical section of a business plan.• Many investors and others who read the business plan look first at the executive summary and then go directly to the management team section to assess the strength of the people starting the firm.

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Section 10: Overall ScheduleSection 10: Overall Schedule1 of 21 of 2

Overall ScheduleOverall Schedule A schedule should be prepared that shows the major A schedule should be prepared that shows the major

events required to launch the business.events required to launch the business. The schedule should be in the format of milestones The schedule should be in the format of milestones

critical to the business’s success.critical to the business’s success. Examples of milestones:Examples of milestones:

Incorporating the ventureIncorporating the venture Completion of prototypesCompletion of prototypes Rental of facilitiesRental of facilities Obtaining critical financingObtaining critical financing Starting productionStarting production Obtaining the first saleObtaining the first sale

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Section 10: Overall ScheduleSection 10: Overall Schedule2 of 22 of 2

Overall Schedule

Key Insight

• An effectively prepared and presented schedule can be extremely helpful in convincing potential investors that the management team is aware of what needs to take place to launch the venture and has a plan in place to get there.

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Section 11: Financial ProjectionsSection 11: Financial Projections1 of 21 of 2

Financial ProjectionsFinancial Projections The final section of a business plan presents a firm’s The final section of a business plan presents a firm’s

pro forma (or projected) financial projections. pro forma (or projected) financial projections. Items to include in this section:Items to include in this section:

Sources and uses of funds statementSources and uses of funds statement Assumptions sheetAssumptions sheet Pro forma income statementsPro forma income statements Pro forma balance sheetsPro forma balance sheets Pro forma cash flowsPro forma cash flows Ratio analysisRatio analysis

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Section 11: Financial ProjectionsSection 11: Financial Projections2 of 22 of 2

Financial Projections

Key Insights

• Having completed the earlier sections of the plan, its easy to see why the financial projections come last.• They take the plans you’ve developed and express them in financial terms.

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Presenting the Business Plan to InvestorsPresenting the Business Plan to Investors1 of 21 of 2

The Oral PresentationThe Oral Presentation The first rule in making an oral presentation is to The first rule in making an oral presentation is to

follow directions. If you’re told you have 15 minutes, follow directions. If you’re told you have 15 minutes, don’t talk for more than the allotted time.don’t talk for more than the allotted time.

The presentation should be smooth and well-rehearsed.The presentation should be smooth and well-rehearsed. The slides should be sharp and not cluttered.The slides should be sharp and not cluttered.

Questions and Feedback to Expect from InvestorsQuestions and Feedback to Expect from Investors The smart entrepreneur has a good idea of the The smart entrepreneur has a good idea of the

questions that will be asked, and will be prepared for questions that will be asked, and will be prepared for those queries.those queries.

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Presenting the Business Plan to InvestorsPresenting the Business Plan to Investors2 of 22 of 2

Twelve PowerPoint Slides to Include in an Investor Presentation

1. Title Slide2. Problem3. Solution4. Opportunity & Target Market5. Technology 6. Competition

7. Marketing & Sales8. Management Team9. Financial projections10. Current status11. Financing

sought12. Summary

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Presenting the PlanPresenting the Plan

Demonstrate enthusiasm, but don’t be Demonstrate enthusiasm, but don’t be overemotional.overemotional.

Know your audience thoroughly. Know your audience thoroughly. ““Hook” investors quickly with an up-Hook” investors quickly with an up-

front explanation of the venture, its front explanation of the venture, its opportunities, and its benefits to them.opportunities, and its benefits to them.

Hit the highlights; focus on Hit the highlights; focus on the details later.the details later.

Keep your presentationKeep your presentationsimple – 2 or 3 major points. simple – 2 or 3 major points.

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Presenting the PlanPresenting the Plan

Avoid overloading your audience with Avoid overloading your audience with technological jargon.technological jargon.

Use visual aids.Use visual aids. Close by reinforcing the nature of the Close by reinforcing the nature of the

opportunity. opportunity. Be prepared (with details) for potential Be prepared (with details) for potential

investors’ questions.investors’ questions. Follow up with every investor to whom Follow up with every investor to whom

you make your presentation.you make your presentation.


FINANCIAL FINANCIAL

MILESTONEMILESTONESS

BUSINESBUSINESS MODELS MODEL

The 360° CUBE PitchThe 360° CUBE Pitch

Six Posters in a 6 minute Investor Pitch

SOCIAL SOCIAL PROBLEMPROBLEM

VISION & VISION & MISSIONMISSION

MARKETINMARKETING & SALESG & SALES

OPERATIONS OPERATIONS TEAM & KEY TEAM & KEY PARTNERSPARTNERS

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ConclusionConclusion

There are no guarantees for success.There are no guarantees for success. Creating a business plan will be valuable Creating a business plan will be valuable

primarily because of the process itself.primarily because of the process itself. The business planning process may The business planning process may

provide insight to increase the chances provide insight to increase the chances for success.for success.

The business plan: Entrepreneurs The business plan: Entrepreneurs benefit; lenders and investors demand it!benefit; lenders and investors demand it!

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Social Enterprise Business Social Enterprise Business PlanPlan

APPENDIX IIAPPENDIX II

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Purpose of a business planPurpose of a business plan

If the business model is a blueprint, the If the business model is a blueprint, the plan provides the detailplan provides the detail

A business plan communicates to key A business plan communicates to key stakeholders, and can be widely stakeholders, and can be widely disseminateddisseminated

It summarizes how objectives will be metIt summarizes how objectives will be met As an action plan, requires the As an action plan, requires the

entrepreneur to executeentrepreneur to execute

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Internal and external audiences Internal and external audiences for the business planfor the business plan

ExternalExternal FundersFunders GovernmentGovernment CommunityCommunity

InternalInternal The social entrepreneurThe social entrepreneur Actual and potential staff and volunteersActual and potential staff and volunteers Board membersBoard members

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Business plan contentsBusiness plan contents

1.1. Business plan summaryBusiness plan summary2.2. Description of the enterpriseDescription of the enterprise3.3. The teamThe team4.4. The market and industryThe market and industry5.5. Marketing and fundraisingMarketing and fundraising6.6. The financial planThe financial plan7.7. Goals, and objectives, with a timelineGoals, and objectives, with a timeline8.8. Risk assessmentRisk assessment9.9. Supporting documentsSupporting documents

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1. Business plan summary1. Business plan summary

One page only, answering key questions:One page only, answering key questions: What is the venture?What is the venture? Why is it new and important?Why is it new and important? Who will benefit from it, and how?Who will benefit from it, and how? How (in general terms) will the idea be executed?How (in general terms) will the idea be executed? Who is the social entrepreneur, and what unique Who is the social entrepreneur, and what unique

skill, service, or background does he or she (or skill, service, or background does he or she (or they) bring to the venture?they) bring to the venture?

What kind of support for the enterprise is What kind of support for the enterprise is needed, and how much of it?needed, and how much of it?

What will constitute success?What will constitute success? The summary is usually written lastThe summary is usually written last

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2. Description of the 2. Description of the enterpriseenterprise

The idea, and why it is an authentic The idea, and why it is an authentic opportunityopportunity

The mission statementThe mission statement Definition of value, and how it is to be Definition of value, and how it is to be

measured measured Key innovations or adaptationsKey innovations or adaptations Competitive advantageCompetitive advantage The social enterprise’s legal structure The social enterprise’s legal structure Current status of enterpriseCurrent status of enterprise

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3. The team3. The team

ManagementManagement BoardBoard AdvisorsAdvisors Early donorsEarly donors

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4. The market and industry4. The market and industry

Industry descriptionIndustry description Target marketTarget market Expected position and share in target Expected position and share in target

marketmarket

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5. Marketing and fundraising5. Marketing and fundraising

Fundraising targets and strategiesFundraising targets and strategies Personal relationshipsPersonal relationships Direct mailDirect mail MediaMedia Virtual meansVirtual means

Grant-writing plansGrant-writing plans Pricing plansPricing plans For-profit activitiesFor-profit activities MarketingMarketing

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6. The financial plan6. The financial plan

Financial needs for 3-5 yearsFinancial needs for 3-5 years Financial projectionsFinancial projections Income statementsIncome statements Cash-flow projectionsCash-flow projections Balance sheetsBalance sheets

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7. Goals and objectives, with a 7. Goals and objectives, with a timelinetimeline

Definition of successDefinition of success Intermediate goals and success Intermediate goals and success

measuresmeasures Evidence that goals can be achievedEvidence that goals can be achieved

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7. Goals and objectives, with a 7. Goals and objectives, with a timeline (continued)timeline (continued)

TimelineTimeline Start of the enterpriseStart of the enterprise IncorporationIncorporation Acquiring staff, space, and equipmentAcquiring staff, space, and equipment Delivering servicesDelivering services Projected cash flowProjected cash flow Growth milestonesGrowth milestones Attaining key goalsAttaining key goals

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8. Risk assessment8. Risk assessment

Financial riskFinancial risk Legal riskLegal risk Talent riskTalent risk Environmental riskEnvironmental risk Other risksOther risks

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9. Supporting documents, in an 9. Supporting documents, in an appendixappendix

Résumés for the key participants in the Résumés for the key participants in the enterpriseenterprise

Data sources cited in the planData sources cited in the plan References for literature cited in the References for literature cited in the

plan, if anyplan, if any

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Pitfalls in assembling business Pitfalls in assembling business plansplans

Failing to communicate realistic goalsFailing to communicate realistic goals Failing to anticipate problemsFailing to anticipate problems Lack of commitment or dedication to Lack of commitment or dedication to

the venturethe venture Lack of experienceLack of experience Failure to demonstrate market nicheFailure to demonstrate market niche

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Other pitfalls in presenting Other pitfalls in presenting business plansbusiness plans

Too sloppy or too slickToo sloppy or too slick Doesn’t get to the point quickly enoughDoesn’t get to the point quickly enough Financial projections are unrealisticFinancial projections are unrealistic Unclear what stage the venture isUnclear what stage the venture is Leaders’ qualifications are not clearLeaders’ qualifications are not clear

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Information on leader/founder(s) Information on leader/founder(s) to include in the business planto include in the business plan

The plan should present their …The plan should present their … background, education, work experience, background, education, work experience,

accomplishments, reputation, experience, accomplishments, reputation, experience, and skillsand skills

Their own realistic assessment of Their own realistic assessment of chances for successchances for success

How they will build a teamHow they will build a team Their motivations, toughness, and Their motivations, toughness, and

personal drivepersonal drive

Further ReadingFurther Reading Scarborough, Norman, M. 2011. Scarborough, Norman, M. 2011. Essentials of Essentials of

Entrepreneurship and Small Business Management.Entrepreneurship and Small Business Management. 66thth edition. Pearson. edition. Pearson.

Brooks, Arthur C. (2006) Social Entrepreneurship : A Brooks, Arthur C. (2006) Social Entrepreneurship : A Modern Approach to Social Value Creation. Pearson Modern Approach to Social Value Creation. Pearson

Barringer, Bruce R. & Ireland, R. Duane, 2011 Barringer, Bruce R. & Ireland, R. Duane, 2011 Entrepreneurship – Successfully launching new Entrepreneurship – Successfully launching new ventures ventures 44thth edition, Pearson. edition, Pearson.

Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011. Schaper, M., Volery, T., Weber, P. & Lewis, K. 2011. Entrepreneurship and Small Business.Entrepreneurship and Small Business. 3 3rdrd Asia Asia Pacific edition. John Wiley.Pacific edition. John Wiley.