entrepreneurship writing an effective business plan: crafting a roadmap to success ch. 7

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Entrepreneurship Writing an Effective Business Plan: Crafting a Roadmap to Success Ch. 7 Slide 2 There is real magic in enthusiasm. It spells the difference between mediocrity and accomplishment. --Norman Vincent Peale, 1961 Slide 3 Business Plan A formal, written expression of the entrepreneurs vision for converting ideas into a profitable, going business The entry card for serious consideration by venture capitalists, banks, and other sources of funding Slide 4 A Living Document A business plan changes often as a new business develops. Do just enough business planning to get the new company started. Refine the plan with information gathered from running the new venture. Slide 5 Importance of a living, changing business plan Slide 6 Prepare a relatively simple plan Start the business Refine the business plan Continue to grow the business Model of Successful Business Planning Slide 7 Business Plan Components What is the basic idea? Why is the new product appealingand to whom? How will the idea be realized? Who are the entrepreneurs? How much funding is needed? What type of funding? How will it be used? How will you realize a return? Slide 8 A Successful Plan A serious document prepared by serious people Orderly Succinct Persuasive Slide 9 Executive Summary Your elevator pitch Provides a brief, clear, and persuasive overview of the new venture Target 2 to 3 pages Slide 10 Business Plan Sections Background and purpose Marketing Competition Development, production, and location Management Financial information Risk factors Harvest or exit Scheduling and milestones Appendices Slide 11 Background, Product, and Purpose What is the nature of the idea driving your company and how did it arise? What does the product have to offer? What is the basic nature of the company? What is the companys mission? Slide 12 Market Analysis What have you done to identify the market? How large is the market? How will products or services be promoted? What do you know about competing products and companies? How will the product or service be priced? Slide 13 Development, Production, and Location Where are the products or services in the development process? What are the projected costs and timetable for making the product or delivering the service? What steps have been taken to assure quality and safety? Slide 14 Management Team Do team members have the experience, expertise, skills, and personal characteristics needed? Do team members having good working relationships? Slide 15 Financial Plans and Projections Proforma balance sheet Proforma income statement Cash flow statement Break-even analysis Slide 16 Critical Risks Price cutting by competitors Unforeseen industry trends Sales projections not achieved Costs exceed estimates Schedules not met Difficulties raising financing Unforeseen trends Slide 17 Harvest and Exit Management succession Exit strategies Slide 18 Scheduling and Milestones Formal incorporation Completion of design Completion of prototypes Hiring of initial personnel Product displays Agreements Moving into production Receipt of orders First sales Profitability Slide 19 The Intangibles The extra something Pay attention to organization, clarity, word choice, and style Have good writers read your plan Revise according to their suggestions Slide 20 Seven Deadly Sins Plan is poorly prepared Plan looks too slick Executive summary is too long Development stage of product is unclear Fails to answer Why would anyone ever want to buy one? Doesnt state management qualifications Financial projections are wishful thinking Slide 21 The Presentation Remember: This is important! Prepare, prepare, prepare Choose content carefully Persuade, dont overwhelm Show enthusiasm tempered with reality Rehearse Dont overlook the basics Respond positively to questions