CRAFING_A_WINNING_BUS_PLAN_CH_6_EFF

CRAFING_A_WINNING_BUS_PLAN_CH_6_EFF - Crafting a Winning...

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Unformatted text preview: Crafting a Winning Business Plan Chapter 6: Business Plan Chapter 6: Business Plan A Business Plan Is… a systematic evaluation of a venture’s chances for success. a way to determine the risks facing a venture. a game plan for managing a business successfully. a tool for comparing actual and target results. an important tool for attracting capital. Chapter 6: Business Plan Chapter 6: Business Plan A 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. Chapter 6: Business Plan Chapter 6: Business Plan A Business Plan: Two Essential Functions 1. Guiding the company by charting its future course and defining its strategy for following it. 2. Attracting lenders and investors who will provide needed capital. Chapter 6: Business Plan Chapter 6: Business Plan A Business Plan A plan is a reflection of its creator. Sometimes the primary benefit of preparing a plan is the realization that a business idea just won’t work! The real value in preparing a plan is not as much in the plan itself as it is in the process of creating it. Chapter 6: Business Plan Chapter 6: Business Plan 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! Chapter 6: Business Plan Chapter 6: Business Plan Covering the Bases in a Business Plan Key people Promising opportunity Business context Risks and rewards Chapter 6: Business Plan Chapter 6: Business Plan Key Elements of a Business Plan Executive summary Mission statement Company history Business and industry profile Business strategy Description of products/services Chapter 6: Business Plan Chapter 6: Business Plan Features vs. Benefits Feature – a descriptive fact about a product or service (“an ergonomically designed, more comfortable handle”). Benefit – what a customer gains from the product or service feature (“fewer problems with carpal tunnel syndrome and increased productivity”). Chapter 6: Business Plan Chapter 6: Business Plan Key Elements of a Business Plan Chapter 6: Business Plan Chapter 6: Business Plan Marketing strategy (Continued) Marketing Strategy Prove that a market exists Show customer interest Document market claims with research Chapter 6: Business Plan Chapter 6: Business Plan Business prototyping Describe target customers Advertising and promotion Market size and trends Location analysis Pricing Distribution Key Elements of a Business Plan Marketing strategy Competitor analysis Owners’ and managers’ résumés Plan of operation Financial forecasts Chapter 6: Business Plan Chapter 6: Business Plan (Continued) Financial Forecasts Projected financial statements Monthly for one year Quarterly for next two Income statement Balance sheet Cash Flow Capital expenditures Chapter 6: Business Plan Chapter 6: Business Plan Financial Forecasts (Continued) Three forecasts Pessimistic Most Likely Optimistic Realistic! Include assumptions on which forecasts are based Chapter 6: Business Plan Chapter 6: Business Plan Key Elements of a Business Plan Marketing strategy Competitor analysis Owners’ and managers’ résumés Plan of operation Financial forecasts Request for funds Chapter 6: Business Plan Chapter 6: Business Plan (Continued) Tips on Preparing a Business Plan Rid your plan of all spelling and grammatical errors. Make your plan visually appealing. Leave ample “white space” in margins. Make sure your plan has an attractive cover. (First impressions are crucial.) Include a table of contents to allow readers to navigate your plan easily. Chapter 6: Business Plan Chapter 6: Business Plan Tips on Preparing a Business Plan Chapter 6: Business Plan Chapter 6: Business Plan (Continued) Write in a conversational style and use “bullets.” Support claims with facts and avoid generalizations. Avoid overusing industry jargon. Make it interesting! Use spreadsheets to generate financial forecasts. Tips on Preparing a Business Plan Chapter 6: Business Plan Chapter 6: Business Plan (Continued) Always include cash flow projections. Keep your plan “crisp” – between 25 and 50 pages long. Tell the truth – always. Your 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. Chapter 6: Business Plan Chapter 6: Business Plan Presenting the Plan Prepare! Demonstrate enthusiasm, but don’t be overemotional. Start by communicating the dynamic opportunity your business idea offers. “Hook” investors quickly with an up­ front explanation of the venture, its opportunities, and its benefits to them. Chapter 6: Business Plan Chapter 6: Business Plan Presenting the Plan (Continued) Use visual aids. Hit the highlights; focus on the details later. Keep your presentation “crisp” – 2 or 3 major points. Avoid overloading your audience with technological jargon. Chapter 6: Business Plan Chapter 6: Business Plan Presenting the Plan (Continued) Answer every lender or investor’s question: “What’s in it for me?” Close by reinforcing the nature of the opportunity. Be prepared (with details) for questions investors are likely to ask. Chapter 6: Business Plan Chapter 6: Business Plan Presenting the Plan (Continued) Learn to read the pattern of investors’ questions and address the issues that concern them. Follow up with every investor to whom you make your presentation. Chapter 6: Business Plan Chapter 6: Business Plan The "5 Cs" of Credit Capacity Collateral Character Chapter 6: Business Plan Chapter 6: Business Plan Capital Conditions ...
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