Chapter_11 - Chapter 11 Putting the Business Plan to Use...

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Copyright Atomic Dog Publishing, 2006 Chapter 11 Putting the Business Plan to Use
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Copyright Atomic Dog Publishing, 2006 11-1 Introduction Business plans help entrepreneurs stay on track toward their business goals. Entrepreneurs with a business plan are far more likely to remain focused and on the road to success than are those that haven’t invested the time to create a plan. It is also a marketing document. It has other uses besides serving as a road map and helping acquire a bank loan.
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Copyright Atomic Dog Publishing, 2006 11-2 Seeking Capital Various sources of capital are available to the entrepreneur, include lending institutions and equity investors. Each of these capital sources will expect the new venture to provide a business plan.
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Copyright Atomic Dog Publishing, 2006 11-2a Lending Institutions They are formally operated and tend to require formal documentation as part of the loan origination process. Difficult for entrepreneurs to actually succeed in convincing the bank to give them a loan. - To understand the expectations that a bank places on the entrepreneur seeking a loan, it is helpful to understand the structure of the loan origination process. - Loan officers who meet with and discuss loan options with the entrepreneur are not the decision makers. - Most loan officers have a specific low-credit limit for which they can make a decision on their own.
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Copyright Atomic Dog Publishing, 2006 11-2a Lending Institutions (cont.) A bank has no resources of its own. The loan officer must be convinced that his or her career will be advanced by securing a loan for the new venture. Presentations to the banker should include: A professional business plan The entrepreneur’s résumé, and résumés of all other executive officers A completed loan package Venture collateral material A brief executive summary of the venture
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Copyright Atomic Dog Publishing, 2006 11-2b Angel Investors Typically wealthy individuals who allocate a small part of their net worth to investments in high risk/high reward early-stage businesses or businesses that are more mature but have smaller capital needs than more traditional venture capital deals They are far less formal than a lending institution and require different documentation An entrepreneur may seek angel investors for loans or equity investments In most cases, the entrepreneur should approach an angel investor through a referral
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This note was uploaded on 10/02/2010 for the course ENTR ENTR 3310 taught by Professor A.lish during the Fall '09 term at University of Houston-Victoria.

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Chapter_11 - Chapter 11 Putting the Business Plan to Use...

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