L3 - Introduction to Developing a Business Plan

7/28/2019 L3 - Introduction to Developing a Business Plan

1/22

Lecture 3

Introduction to

Developing a

Business Plan

Copyright 2012 Pearson Education, Inc. publishing as Prentice Hall 4-1


2/22

BUSINESS

PLAN

WritingBusinessPlan


3/22

Chapter Objectives1 of 3

1. Explain the purpose of a business plan.

2. Describe the two primary reasons for writing a

business plan.

3. Describe who reads a business plan and whattheyre looking for.

4. Explain why the executive summary may be the

most important section of a business plan.

5. Presentation of Business Plan



4/22

4

Pitfalls to Avoid in Planning

Pitfall 1: No Realistic Goals

Pitfall 2: Failure to Anticipate Roadblocks

Pitfall 3: No Commitment or Dedication Pitfall 4: Lack of Demonstrated

Experience (Business or Technical)

Pitfall 5: No Market Niche (Segment)

IPTK - UTeM


5/22



6/22

6

The Seven Pitfalls for a New

Venture Business Plans

Source: Baron & Shane (2005)IPTK - UTeM


7/22

What Is a Business Plan?

Business Plan

A business plan is a written narrative, typically 25 to 35pages long, that describes what a new business plans toaccomplish.

Dual-Use Document

For most new ventures, the business plan is a dual-purposedocument used both inside and outside the firm.

Internal and External users.



8/22

8

What is a Business Plan?

A business plan is the written document that details theproposed venture.

It must describe current status, expected needs, andprojected results of the new business.

Every aspect of the venture needs to be covered: theproject, marketing, research and development,manufacturing, management, critical risks, financing,and milestones or a timetable.

A description of all of these facets of the proposedventure is necessary to demonstrate a clear picture ofwhat that venture is, where it is projected to go, and

how the entrepreneur proposes it will get there.

IPTK - UTeM


9/22

Add Info

Is a written document that serves as a

blueprint and guide for a proposedbusiness project that one intends to

undertakes.

Information in BP to predict variability,

forecast success and propose

strategies for the project.


10/22

Reasons and Purposes

Entrepreneur to view and evaluate the

proposed business venture in objective,

critical and practical manner.

To analyze and evaluate the viability of a

proposed venture.

Convince relevant parties of the

investment potential for the project.

Guidelines for managing the business.


11/22

Reasons and Purposes (Add

Info) Arrange their thought in a logical and

structural order.

Business framework by defining activities,

responsibilities and objectives to beachieved.

Stimulate reality and anticipate pitfalls.

Develop strategies to meet objectives. Action plan or guideline.

Identify constraints that may face.


12/22

Importance of BP

Increase Opportunity for Success

Develop Mission Business

Determine Main Competitor/s

Determine Right Way of Managing

Business

Increase Stakeholder Confidence Determine Barrier in Business

As a performance Tool


13/22

Who needs BP? Management Team

Shareholder

Banker or Creditor

Customer

Supplier Employees


14/22

Who Reads the Business PlanAnd What

Are They Looking For?

There are two primary audiences for a firms business plan

Audience What They are Looking For

A Firms

Employees

Investors andother 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 firms business plan must make the case that the

firm is a good use of an investors funds or the

attention of others.



15/22

Guidelines for Writing a Business Plan1 of 5

Structure of the Business Plan

To make the best impression a business plan should follow

a conventional structure, such as the outline for the

business plan shown in the chapter. Although some entrepreneurs want to demonstrate

creativity, departing from the basic structure of the

conventional business plan is usually a mistake.

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



16/22

Business Plan Template



17/22

17

Model of Business Planning

Used by Many Entrepreneurs

Source: Baron & Shane (2005)IPTK - UTeM


18/22

Section 1: Executive Summary1 of 2

Executive Summary

The executive summary is a short overview of the entirebusiness plan

It provides a busy reader with everything that needs to be

known about the new ventures distinctive nature.

An executive summary shouldnt exceed two single-spacedpages.



19/22

Executive Summary

Key Insights

In many instances an investor will

ask for a copy of a firms executive

summary and will ask for a copy ofthe entire plan only if the executive

summary is sufficiently convincing.

The executive summary, then, is

arguably the most importantsection of a business plan.

Section 1: Executive Summary2 of 2



20/22

Presenting the Business Plan to Investors1 of 2

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

directions. If youre told you have 15 minutes, dont talk

for more than the allotted time.

The presentation should be smooth and well-rehearsed.

The slides should be sharp and not cluttered.

Questions and Feedback to Expect from Investors

The smart entrepreneur has a good idea of the questionsthat will be asked, and will be prepared for those queries.



21/22

Presenting the Business Plan to Investors2 of 2

Twelve PowerPoint Slides to Include in an Investor Presentation

1. Title Slide

2. Problem

3. Solution

4. Opportunity and target market

5. Technology

6. Competition

7. Marketing and sales

8. Management team

9. Financial projections

10. Current status

11. Financing sought

12. Summary



22/22

Tutorial

Using the Business Plan Template, write

your business plan assignment and

consult your tutor during tutorial.


Documents

L3 - Introduction to Developing a Business Plan