Barringer e4 Ppt 04GE

7/21/2019 Barringer e4 Ppt 04GE

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Copyright 2012 Pearson Education

Chapter 4

Writing a Business

Plan

Bruce R. Barringer

R. Duane Ireland

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Chapter Objectives1 of 3

1. Eplain the purpose of a business plan.

!. Describe the t"o pri#ar$ reasons for "riting a

business plan.

3. Describe "ho reads a business plan and "hat the$%reloo&ing for.

4. Eplain the difference bet"een a su##ar$ business

plan' a full business plan' and an operational business

plan.(. Eplain "h$ the eecutive su##ar$ #a$ be the #ost

i#portant section of a business plan.

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Chapter Objectives! of 3

). Describe a #ilestone and ho" #ilestones are used in

business plans.

*. Eplain "h$ it%s i#portant to include separate

sections on a fir#%s industr$ and its target #ar&et in abusiness plan.

+. Eplain "h$ the ,-anage#ent ea# and Co#pan$

/tructure0 section of a business plan is particularl$

i#portant.

. Describe the purposes of a ,sources and uses of

funds0 state#ent and an ,assu#ptions sheet.0

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Chapter Objectives3 of 3

12. Detail the parts of an oral presentation of a business

plan.

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hat Is a Business lan5

6 Business lan7 8 business plan is a "ritten narrative' t$picall$ !( to 3(

pages long' that describes "hat a ne" business plans toacco#plish.

6 Dual9:se Docu#ent7 ;or #ost ne" ventures' the business plan is a dual9purpose

docu#ent used both inside and outside the fir#.

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ho Reads the Business lan


7/37Copyright 2012 Pearson Education

>uidelines for riting a Business lan1 of (

6 /tructure of the Business lan

7 o #a&e the best i#pression a business plan should follo"

a conventional structure' such as the outline for the

business plan sho"n in the chapter.7 8lthough so#e entrepreneurs "ant to de#onstrate

creativit$' departing fro# the basic structure of the

conventional business plan is usuall$ a #ista&e.

7 $picall$' investors are bus$ people and "ant a plan "herethe$ can easil$ find critical infor#ation.

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>uidelines for riting a Business lan! of (

6 /tructure of the Business lan ?continued@

7 /oft"are ac&ages

6 here are #an$ soft"are pac&ages available that e#plo$ an

interactive' #enu9driven approach to assist in the "riting of a

business plan.

6 /o#e of these progra#s are ver$ helpful. Ao"ever' entrepreneurs

should avoid a boilerplate plan that loo&s as though it ca#e fro# a

,canned0 source.

7 /ense of Ecite#ent6 8long "ith facts and figures' a business plan needs to project a

sense of anticipation and ecite#ent about the possibilities that

surround a ne" venture.

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6 Content of the Business lan

7 he business plan should give clear and concise

infor#ation on all the i#portant aspects of the proposed

venture.7 It #ust be long enough to provide sufficient infor#ation

$et short enough to #aintain reader interest.

7 ;or #ost plans' !( to 3( pages is sufficient.

6 $pes of Business lans7 here are three t$pes of business plans' "hich are sho"n

on the net slide.

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$pes of Business lans

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>uidelines for riting a Business lan( of (

6 Recogniing the Ele#ents of the lan -a$ Change

7 It%s i#portant to recognie that the plan "ill usuall$ change

"hile "ritten.

7e" insights invariabl$ e#erge "hen an entrepreneur or atea# of entrepreneurs i##erse the#selves in "riting the

plan and start getting feedbac& fro# others.

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Outline of Business lan

6 Outline of Business lan

7 8 suggested outline of a business plan is sho"n on the net

several slides.

7 -ost business plans do not include all the ele#ents

introduced in the sa#ple plan "e include the# here for the

purpose of co#pleteness.

7 Each entrepreneur #ust decide "hich ele#ents to include

in his or her plan.

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/ection 1 Eecutive /u##ar$1 of !

6 Eecutive /u##ar$7 he eecutive su##ar$ is a short overvie" of the entire

business plan

7 It provides a bus$ reader "ith ever$thing that needs to be&no"n about the ne" venture%s distinctive nature.

7 8n eecutive su##ar$ shouldn%t eceed t"o single9spacedpages.

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Eecutive /u##ar$

Fe$ Insights

In #an$ instances an investor "ill

as& for a cop$ of a fir#%s eecutive

su##ar$ and "ill as& for a cop$ of the entire plan onl$ if the eecutive

su##ar$ is sufficientl$ convincing.

he eecutive su##ar$' then' is

arguabl$ the #ost i#portantsection of a business plan.

/ection 1 Eecutive /u##ar$! of !

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/ection ! Industr$ 8nal$sis1 of !

6 Industr$ 8nal$sis7 his section should begin b$ describing the industr$ the

business "ill enter in ter#s of its sie' gro"th rate' andsales projections.

7 Ite#s to include in this section6 Industr$ sie' gro"th rate' and sales projections

6 Industr$ structure

6 ature of participants

6 Fe$ success factors6 Industr$ trends

6 =ong9ter# prospects

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Industr$ 8nal$sis

Fe$ Insights

Before a business selects a target

#ar&et it should have a good grasp

of its industr$


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/ection 3 Co#pan$ Description1 of !

6 Co#pan$ Description7 his section begins "ith a general description of the

co#pan$.

7 Ite#s to include in this section6 Co#pan$ description

6 Co#pan$ histor$

6 -ission state#ent

6 roducts and services

6 Current status6 =egal status and o"nership

6 Fe$ partnerships ?if an$@

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Co#pan$ Description

Fe$ Insights

hile at first glance this section

#a$ see# less i#portant than the

others' it is etre#el$ i#portant.

It de#onstrates to $our reader that

$ou &no" ho" to translate an idea

into a business.

/ection 3 Co#pan$ Description! of !

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/ection 4 -ar&et 8nal$sis1 of !

6 -ar&et 8nal$sis7 he #ar&et anal$sis brea&s the industr$ into seg#ents and

eros in on the specific seg#ent ?or target #ar&et@ to "hichthe fir# "ill tr$ to appeal.

7 Ite#s to include in this section6 -ar&et seg#entation and target #ar&et selection

6 Bu$er behavior

6 Co#petitor anal$sis

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-ar&et 8nal$sis

Fe$ Insights

-ost start9ups do not service their

entire industr$. Instead' the$ focus

on servicing a specific ?target@

#ar&et "ithin the industr$.

It%s i#portant to include a section in

the #ar&et anal$sis that deals "ith

the behavior of the consu#ers in the

#ar&et. he #ore a start9up &no"s about the consu#ers in its target

#ar&et' the #ore it can tailor its

products or services appropriatel$.

/ection 4 -ar&et 8nal$sis! of !

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/ection ( he Econo#ics of the Business1 of !

6 he Econo#ics of the Business7 his section addresses the basic logic of ho" profits are

earned in the business and ho" #an$ units of a business%sprofits #ust be sold for the business to ,brea& even0 and

then start earning a profit.7 Ite#s to include in this section

6 Revenue drivers and profit #argins

6 ;ied and variable costs

6 Operating leverage and its i#plications6 /tart9up costs

6 Brea&9even chart and calculations

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he Econo#ics of theBusiness

Fe$ Insights

"o co#panies in the sa#e industr$

#a$ #a&e profits in different "a$s.

One #a$ be a high9#argin' lo"

9volu#e business' "hile the other

#a$ be a lo"9#argin' high9volu#e

business. It%s i#portant to chec& to

#a&e sure the approach $ou select

is sound.Co#puting a brea&9even anal$sis

is an etre#el$ useful eercise for

an$ proposed or eisting business.

/ection ( he Econo#ics of the Business! of !

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/ection ) -ar&eting lan1 of !

6 -ar&eting lan7 he #ar&eting plan focuses on ho" the business "ill

#ar&et and sell its product or service.

7 Ite#s to include in this section6 Overall #ar&eting strateg$

6 roduct' price' pro#otions' and distribution

6 /ales process ?or C$cle@

6 /ales tactics

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-ar&eting lan

Fe$ Insights

he best "a$ to describe a start9up%s

#ar&eting plan is to start b$

articulating its #ar&eting strateg$'

positioning' and points of

differentiation' and then tal& about

ho" these overall aspects of the

plan "ill be supported b$ price'

pro#otional #i' and distribution strateg$.

It%s also i#portant to discuss the

co#pan$ sales process.

/ection ) -ar&eting lan! of !

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/ection * Design and Develop#ent lan1 of !

6 Design and Develop#ent lan7 If $ou%re developing a co#pletel$ ne" product or service'

$ou need to include a section in $our business plan thatfocuses on the status of $our develop#ent efforts.

7 Ite#s to include in this section6 Develop#ent status and tas&s

6 Challenges and ris&s

6 rojected develop#ent costs

6 roprietar$ issues ?patents' trade#ar&s' cop$rights' licenses' brandna#es@

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Design and Develop#entlan

Fe$ Insights

-an$ see#ingl$ pro#ising start9ups

never get off the ground because

their product develop#ent efforts

stall or the actual develop#ent of

the product or service turns out to

be #ore difficult than thought.

8s a result' this is a ver$ i#portant

section for businesses developing a co#pletel$ ne" product or service.

/ection * Design and Develop#ent lan! of !

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/ection + Operations lan1 of !

6 Operations lan7 Outlines ho" $our business "ill be run and ho" $our

product or service "ill be produced.

7 8 useful "a$ to illustrate ho" $our business "ill be run isto describe it in ter#s of ,bac& stage0 ?unseen to thecusto#er@ and ,front stage0 ?seen b$ the custo#er@activities.

7 Ite#s to include in this section

6 >eneral approach to operations6 Business location

6 ;acilities and eGuip#ent

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/ection + Operations lan! of !

Operations lan

Fe$ Insights

Hour have to stri&e a careful balance

bet"een adeGuatel$ describing this

topic and providing too #uch

detail.

8s a result' it is best to &eep this

section short and crisp.

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/ection -anage#ent ea# and Co#pan$

/tructure1 of !

6 -anage#ent ea# and Co#pan$ /tructure7 he #anage#ent tea# of a ne" venture t$picall$ consists

of the founder or founders and a handful of &e$#anage#ent personnel.

7 Ite#s to include in this section6 -anage#ent tea#

6 Board of directors

6 Board of advisers

6 Co#pan$ structure

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/ection -anage#ent ea# and Co#pan$

/tructure! of !

-anage#ent ea# andCo#pan$ /tructure

Fe$ Insights

his is a critical section of a

business plan.

-an$ investors and others "ho

read the business plan loo& first at

the eecutive su##ar$ and then go

directl$ to the #anage#ent tea#

section to assess the strength of the

people starting the fir#.

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/ection 12 Overall /chedule1 of !

6 Overall /chedule7 8 schedule should be prepared that sho"s the #ajor events

reGuired to launch the business.

7 he schedule should be in the for#at of #ilestones criticalto the business%s success.

7 Ea#ples of #ilestones6 Incorporating the venture

6 Co#pletion of protot$pes

6 Rental of facilities6 Obtaining critical financing

6 /tarting production

6 Obtaining the first sale

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/ection 12 Overall /chedule! of !

Overall /chedule

Fe$ Insight

8n effectivel$ prepared and

presented schedule can be

etre#el$ helpful in convincing

potential investors that the

#anage#ent tea# is a"are of

"hat needs to ta&e place to launch

the venture and has a plan in

place to get there.

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/ection 11 ;inancial rojections1 of !

6 ;inancial rojections7 he final section of a business plan presents a fir#%s pro

for#a ?or projected@ financial projections.

7 Ite#s to include in this section6 /ources and uses of funds state#ent

6 8ssu#ptions sheet

6 ro for#a inco#e state#ents

6 ro for#a balance sheets

6 ro for#a cash flo"s6 Ratio anal$sis

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/ection 11 ;inancial rojections! of !

;inancial rojections

Fe$ Insights

Aaving co#pleted the earlier

sections of the plan' its eas$ to see

"h$ the financial projections co#e

last.

he$ ta&e the plans $ou%ve

developed and epress the# in

financial ter#s.

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resenting the Business lan to Investors1 of !

6 he Oral resentation7 he first rule in #a&ing an oral presentation is to follo"

directions. If $ou%re told $ou have 1( #inutes' don%t tal&

for #ore than the allotted ti#e.

7 he presentation should be s#ooth and "ell9rehearsed.

7 he slides should be sharp and not cluttered.

6 uestions and ;eedbac& to Epect fro# Investors

7 he s#art entrepreneur has a good idea of the Guestionsthat "ill be as&ed' and "ill be prepared for those Gueries.

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resenting the Business lan to Investors! of !

"elve o"eroint /lides to Include in an Investor resentation

1. itle /lide

!. roble#

3. /olution

4. Opportunit$ and target #ar&et

(. echnolog$

). Co#petition

*. -ar&eting and sales

+. -anage#ent tea#

. ;inancial projections

12. Current status

11. ;inancing sought

1!. /u##ar$

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!"" rights reser#ed$ %o part o& this pu'"ication (ay 'ereproduced) stored in a retrie#a" syste() or trans(itted) in

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,tates o& !(erica$


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