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ENTREPRENEURSHIP

ENTREPRENEURSHIP . Lecture No : 15 Resource Person: Malik Jawad Saboor Assistant Professor Department of Management Sciences COMSATS Institute of Information Technology Islamabad. Previous Lecture Review. Conducting a Feasibility Analysis The Feasibility Study

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ENTREPRENEURSHIP

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  1. ENTREPRENEURSHIP Lecture No: 15 Resource Person: Malik JawadSaboor Assistant Professor Department of Management Sciences COMSATS Institute of Information Technology Islamabad.

  2. Previous Lecture Review • Conducting a Feasibility Analysis • The Feasibility Study • Five Forces Model • Product or Service Feasibility Analysis • Financial Feasibility Analysis

  3. Objectives Why Develop a Business Plan? The Elements of a Business Plan What Lenders and Investors Look for in a Business Plan Making the Business Plan Presentation Concluding remarks Business Plan Format

  4. The Business Plan • A written summary of: • an entrepreneur’s proposed business venture • its operational and financial details • its marketing opportunities and strategy • its managers’ skills and abilities.

  5. A Plan Must Pass Three Tests • The Reality Test - proving that : • a market really does exist for your product or service. • you can actually build or provide it for the cost estimates in the plan. • The Competitive Test - evaluates: • a company’s position relative to its customers. • management’s ability to create a company that will gain an edge over its rivals. • The Value Test – proving that: • a venture offers investors or lenders an attractive rate of return or a high probability of repayment.

  6. Why Take the Time to Build a Business Plan? • Although building a plan does not guarantee success, it does increase your chances of succeeding in business. • A plan is like a road map that serves as a guide on a journey through unfamiliar, harsh, and dangerous territory. Don’t attempt the trip without a map!

  7. Strategic Guide • Where Do You Want To Go? • How Are You Going to Get There? • What Market Niches? • How Much is it Going to Cost? • Greatest Profit Opportunity?

  8. Lender Expectations • Good Business Track Record • Ability to Repay • Collateral

  9. Investor Expectations • Competitive Advantage • Huge Market • Strong Management Team • Strong Marketing and Sales Plan • Obscene Return • Exit Strategy

  10. Entrepreneurs Start Businesses: • To Capitalize on an Invention • To Pursue a Passion • To Be Their Own Boss • To Get Rich

  11. Exit Strategies • Selling the Business • Transferring the Business to a Family Member • Taking the Company Public • Being Acquired by a Larger Company

  12. Funding Sources: • Savings • Friends and Family • Financial Institutions / Banks • Angel Investors • Venture Capital

  13. Business Plan Content • The Cover • Executive Summary • Company Description • Product/Services Description • Industry Overview • Market Analysis • Competitors

  14. Business Plan Content • Customers • Marketing and Sales Plans • Development • Operations • Management

  15. Business Plan Content • Personnel • Financial Summary • Financials • Offering • Appendices

  16. Cover Page • Should contain • COMPANY NAME • TAG LINE • CONTACT PERSON • ADDRESS • PHONE • DISCLAIMER • COPY #

  17. Executive Summary • A mini-business plan in one or two pages • Highlights the most important points of your business plan • It is NOT an introduction to the plan • It must grab your reader, and entice him/her to read further

  18. Executive Summary • Identify the company, its background, structure and location • Describe what the company does, and the market it serves • Describe the market potential for the company’s products and services, market trends, etc.

  19. Executive Summary • Outline the backgrounds and experience of the top management team • Describe the funding required, the purposes for which it will be used, the collateral available (if for a lender), and the expected outcomes

  20. Company Overview • Brief Company Introduction • Mission statement • Location, size, history • Market and products • Overview of company capabilities • Objectives

  21. Products/Services • Products / Services • What does it do? • Uniqueness • Competitive Advantage • Technology • Brief description • Applications • Commercialization Status • Brief overview

  22. Industry Overview • Set The Stage • Industry Definition and Description • Major players within the industry • Factors driving dynamics • New products and developments • Legislation and Policies Driving the Industry • Historical and Future Trends

  23. Market Analysis • Market Definition • Primary Market • Secondary Markets • Market Size and Trends • Current total revenues • Predicted annual growth rate

  24. Competitors • Direct Competitors • Who are they? • Size and product breadth • Revenues and profitability • Strengths and weaknesses • Market shares • Indirect Competitors

  25. Customers • Customer Characteristics • Who are they? • Why do they buy? • Need satisfied by the product/service • How is the need currently filled? • What are the alternatives? • Who makes the decision to buy? • How frequently do they purchase?

  26. Marketing and Sales Plans • Statement of Opportunity • Marketing and Sales Objectives • Existing Customers • Potential Customers

  27. Marketing Strategies • Product/Service Strategy • Pricing Strategy • Distribution Strategy • Advertising and Promotion Strategy • Sales Strategy • Marketing and Sales Forecasts

  28. Marketing and Sales Plans • Marketing Programs • Direct Mail • Trade Shows • Advertising • Internet • Publicity/Public Relations • Marketing Budget • Pricing • Basis for targeted price point • Margins and profitability by volume levels

  29. Marketing and Sales Plans • Sales Plan • Sales force structure – (direct or reps) • Sales expectations/quotas • Margins given to intermediaries • Service and warranties • Sales Budget • Organizational chart indicating planned growth

  30. Development • R & D Plan • Objectives • Milestones and current status • Difficulties and risks • Staffing • R & D Budget and assumptions

  31. Operations • Manufacturing/Production Plan • Objectives • Facilities • Staffing • Subcontractors • Quality Control • Budget / Operating Expenses

  32. Management • Company Organization • Management Team • Administrative Expenses

  33. Management Team • President • VP Finance • VP Sales • VP Marketing • VP Manufacturing • Board of Advisors

  34. Personnel • Human Resource Plan • Staffing Objectives • Organizational Structure • 3-5 year growth plan • Budget

  35. Summary of Financials • Financial Objectives • Time to Cash Flow Positive • Time to profitability • Financial Assumptions • Capital Requirements • Exit Scenario

  36. Financials • Pro-forma Cash Flow Projections • Pro-forma Profit & Loss Statements • Pro-forma Balance Sheet

  37. Offering • Investment Requirements • Pro-forma Valuation of Business • Offer

  38. Appendices • Resumes of Key Management • Patent Information • Customer List • Testimonials • Supplemental Financial Spreadsheets • References

  39. Lecture Review Why Develop a Business Plan? The Elements of a Business Plan What Lenders and Investors Look for in a Business Plan Business Plan Format

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