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Overview of a Business Plan

Overview of a Business Plan. Dr. Stan Abraham MHR 423 Spring 2010. Purposes of a Business Plan. To get an investment (equity financing) from a third party To get a bank loan To determine what you have to do to launch and grow the business Forms your monthly operational budget

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Overview of a Business Plan

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  1. Overview of a Business Plan Dr. Stan Abraham MHR 423 Spring 2010

  2. Purposes of a Business Plan • To get an investment (equity financing) from a third party • To get a bank loan • To determine what you have to do to launch and grow the business • Forms your monthly operational budget • Provides specific objectives to achieve • Enables you to share the plan with key managers, employees, and prospective advisors • To find out whether the business is worth starting at all

  3. What Investors Expect to See • An exciting, innovative business concept • A proprietary product or some other competitive advantage • A sound revenue model (reflecting real demand) • Good return on investment • The investment deal • An exit strategy

  4. What Do Investors Really Invest In? • People • People • People

  5. What Makes a Good Plan? • Is the business concept sound? • Can the company compete? • Will it make money? • Can it be understood? • Is it realistic? • Can we trust the entrepreneur to make it happen? • Will s/he be unfazed by failure? • Can s/he inspire and lead a team? • Does it inspire confidence?

  6. Main Sections of a Plan (Ext.) • What is the business concept? • What makes you think people will buy the product/service? • Who are your competitors and can you compete with them? • How much do you know about your customers? (Who is your target?) • What else might affect your business?

  7. Main Sections of a Plan (Int.) • Who owns the company and who are the key managers? • What experience do they have? • How will you organize? What staff will you need? Who will do what? • What is your market-entry strategy and marketing plan? • What is your operations/production plan? • How will you develop your next-generation product? How will you keep on competing?

  8. Main Sections of a Plan (Fin.) • What are your financial assumptions and projections? • How much capital will you need? • When will you break even? • What must you do before you can achieve your first revenues? • What are the chief risks your business will face? • And how will you cope with them? • What is the investment deal or loan required?

  9. Why Is It Hard to Prepare? • A lot of information to research • Hard to make a case why the business will succeed • Hard to write clearly so that an outsider will understand it easily • Hard to do it quickly • Everything has to mesh together consistently • Figures have to be realistic • Have to get a team together before going for financing

  10. Keep It Short and Simple • No fancy colors • Simple formatting and fonts • Use consistent headings and subheadings • Come to the point – shorter is better • Round off dollar figures to nearest 100 or 1,000 • No decimals ever (these are all estimates) • No dollar signs (in projections) • Put important but secondary information in appendices (e.g., resumes, brochures)

  11. Edit,Edit,Edit • Write your first draft of any section quickly • Be prepared to spend at least as long, if not longer, editing and revising it • It’s when the real thinking gets done • Everyone in the group should be involved in revising and editing sections • Develop a way to do this smoothly with as little wasted time as possible • Email is an effective solution

  12. Any Questions?

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