Chapter 8

Private placement memorandum

A specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments.

Vision statement

A very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of the firm.

Operational plan

Business plans designed to be used internally for management purposes.

Proof-of-concept Web site

Internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest.

Preselling

Involves introducing your product to potential customers and taking orders for later delivery.

Tagline

Memorable catchphrase that captures the key idea of a business, its service, product, or customer. also known as a slogan

The Most Common CriticalRisks in a Plan

Overstated numbers Numbers that are wrong Inadequate cushion Inadequate payback Narrative and financials do not fit No direct customer connection Uncertain sales Overlooked competition Experience deficits "What" problems Deadly aggravations

Key employee/partner plan

Provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

External legitimacy

The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family.

Risks

The parts of a business or business plan that expose the firm to any kind of loss—profits, sales, reputation, assets, customers, and so on.

Measures:

These are business goals given as measurable results, in terms of sales, market share, employment, locations, profits, growth, etc. It is typical to have multiple measures, and they are typically given in quantitative form. This section should reflect the Mission.

Method:

These are the activities which would make your business successful over the time period given in the Mission section.

Mission:

This also follows the approach described earlier focusing on competitive advantage and goals, with a definite time period in mind.

Mantra:

This follows the Vision/Tagline model discussed earlier in this chapter. Aim for 3-4 words, or 6 at most.

Start small and build up

Vision (10 words), Mission (20-50 words), Elevator Pitch (60-100 words), Executive summary (250-500 words), Business Plan (40 pages)

Internal understanding

extent to which employees, investors, and family members in the business know the business's purposes and operations

Pioneering business

firm whose product or service is new to the industry or is itself creating a new industry.

Mechanics:

gives several specific tasks the business needs to do to accomplish what is mentioned in the Method and Measures.

Informational plans

gives the basic overview of the firm and a detailed look at the financials. Also called a mini-plan

Screening plan

gives the basic overview of the firm and a detailed look at the financials. Also called a mini-plan

Mission Statement

A paragraph that describes the firm's goals and competitive advantages Talks in terms of how it will make a difference in for the customer or the industry

The Elevator Pitch

A 30-second action-oriented description of a business designed to sell the idea of the business to another Leads with the hook, follows up with purpose of the service, ends with where business is now What makes firm unique or superior?

Invention plan

A business plan that provides information to potential licensees. focuses on the details of an invention, including intellectual property rights.

Business plan

A document designed to detail the major characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm's present and future.

New entrant business

A firm whose product or service is established elsewhere, but is new to this market.

Executive summary

A one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. Typically put at the start of a business plan and is the most popular summary form for a business plan.

The key things an influential person looks for in you are:

Your passion for the business Your expertise about the business and the plan How professional you are in your work, How easy it would be to work with you.