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Preparing a Business Plan

Preparing a Business Plan. Allen Bolton & Stephanie Meadows February 27, 2007. Why create a business plan. Communicates strategic direction Communicates objectives Provides for common agreement and buy-in Benchmark to measure performance Shares budget requirements.

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Preparing a Business Plan

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  1. Preparing a Business Plan Allen Bolton & Stephanie Meadows February 27, 2007

  2. Why create a business plan • Communicates strategic direction • Communicates objectives • Provides for common agreement and buy-in • Benchmark to measure performance • Shares budget requirements

  3. Why create a business plan in academia • Considering a new department, division or center (will need BOT approval too) • Considering a new clinical service line or research shared facility • Considering a spin-off company • High-dollar faculty recruits • New facilities • Developing a new research or training program

  4. Before you begin writing • Define target audience • Determine content and level of detail • Map out the plan’s structure • Identify main issues to be addressed

  5. Key elements to a business plan • Executive Summary (write this section last) • Vision/Mission statement • Goals and objectives • Description of products and or services • Market analysis • Operational plan (organizational structure) • Financial plan • Business Risk

  6. Executive Summary (write this last) • Clear definition of the “business” • Assessment of markets • State competitive advantages • Introduce leadership team and roles • Financial strengths and use of funds • Make it enthusiastic, professional, complete, and concise

  7. Mission Statement • Clearly state your long-term mission • Try to use words that will help direct growth but be as concise as possible. • Explain your reason for being and your guiding principles.

  8. Goals and Objectives • Goals are destinations – where you want to be • Objectives are progress markers on the way to goal achievement • List 3-5 year goals • State specific, measurable objectives for achieving your goals • List market-share objectives • List revenue/profitability objectives

  9. Products and or Services • Describe in depth your products or services (technical specifications, drawings, photos, brochures, and other bulky items belong in Appendices) • State factors that will give you competitive advantages or disadvantages • Examples include level of quality or unique or proprietary features.

  10. Marketing Analysis • Do your market research • Summarize your primary target market • Include geographic location, demographics, target market needs and how these needs are currently being meet. • Highlight trends • Emphasize growth trends, trends in consumer preferences, and trends in product development.

  11. Marketing Analysis • Growth potential and opportunities • Barriers to entry and how you will overcome any barriers • Examples include high capital cost, high production cost, high marketing cost • Marketing strategies and sales plans • The 4P’s – product, price, place and promotion

  12. Operational Plan • List key management by name • Use a simple organizational chart to illustrate the structure. • Include previous accomplishments to show that these are people with a record of success. • Summarize number of years of experience in this field.

  13. Financial Plan • Outline a high-level financial plan that defines your financial model and key assumptions. • The plan should include expected annual revenues and profits for the next three years. • All detailed schedules such as P&L projections, cash flow projections, balance sheet and ratio analysis should be included appendix. • Comment on expected direct and indirect return on investment.

  14. Common omissions in budget preparation • Including salaries but omitting fringe benefit cost • Excluding a factor for annual merit increase or a CPI increase for expense • Failure to factor in contra revenues examples are taxes on revenue, refunds, bad debt or contract adjustments • Underestimating travel expense • Related marketing or promotional items for conferences or events (examples t-shirts, bags, coffee mugs) • Current pricing for services needed (pharmacy, labs, testing)

  15. Resource Requirements • List requirements for the following resources: • Personnel • Technology • Finances • Promotion • Products • Services • Facilities

  16. Risks and Rewards • Summarize the risks of the proposed project and how they will be addressed. • Estimate expected rewards, particularly if you are seeking funding.

  17. Key Issues • Near term • Identify key decisions and issues that need immediate or near-term resolution. • State consequences of decision postponement. • Long term • Identify issues needing long-term resolution. • State consequences of decision postponement. • If you are seeking funding, be specific about any issues that require financial resources for resolution.

  18. Final Tips • Avoid unnecessary jargon • Economize on words • Use short crisp sentences and bullet points • Concentrate on relevant and significant issues • Relegate detail to appendices • Write executive summary last • When in doubt, write a business plan… it will usually distinguish your program/project in academia

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