2 It provides guidance to the entrepreneur in organizing his or her planning

2 it provides guidance to the entrepreneur in

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2. It provides guidance to the entrepreneur in organizing his or her planning activities. 3. It serves as an important tool in helping to obtain financing. Potential investors are very particular about what should be included in the business plan. Even if some of the information is based on assumptions, the thinking process required to complete the plan is a valuable experience for the entrepreneur since it forces him or her to assess such things as cash flow and cash requirements. In addition, the thinking process takes the entrepreneur into the future, leading him or her to consider important issues that could impede the road to success. The process also provides a self-assessment by the entrepreneur. Usually, he or she feels that the new venture is assured of success. However, the planning process forces the entrepreneur to bring objectivity to the idea and to reflect on such questions as: "Does the idea make sense? Will it work? Who is my customer? Does it satisfy
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F0092 The Business Plan *Property of STI Page 5 of 19 How do Potential Lenders and Investors Evaluate the Plan Page 3 of 13 Technopreneurship The Business Plan * Property of STI Page 3 of 13 o It is conceivable that the entrepreneur will prepare a first draft of the business plan from his or her own personal viewpoint without consideration of the constituencies that will ultimately read and evaluate the plan's feasibility o Customers may also want to review the plan before buying a product that may require significant long-term commitment, such as a high-technology telecommunications system o Another group that may evaluate the plan is the potential suppliers of capital. These lenders or investors will likely vary in terms of their needs and requirements in the business plan o Investors, particularly venture capitalists, have different needs since they are providing large sums of capital for ownership (equity) and the expected cashing out within five to seven years How do Potential Lenders and Investors Evaluate the Plan customer needs? What kind of protection can I get against imitation by competitors? Can I manage such a business? Whom will I compete with?" This self-evaluation is similar to role playing, requiring the entrepreneur to think through various scenarios and consider obstacles that might prevent the venture from succeeding. The process allows the entrepreneur to plan ways to avoid such obstacles. It may even be possible that, after preparing the business plan, the entrepreneur will realize the obstacles cannot be avoided or overcome. Hence, the venture may be terminated while still on paper. Although this certainly is not the most desirable conclusion, it would be much better to terminate the business endeavor before investing further time and money.
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