Entrepreneurship
Fixed capital requirements
-This section may include a start-up budget showing the machinery, equipment, furnishings, renovations, and other capital expenditures required prior to operations commencing.
FIXED CAPITAL REQUIREMENTS
-What fixed assets, including equipment and machinery, must be purchased so your venture can conduct its business?
Start Up
-What is required to start up your business, including the purchases and activities that must occur before you make your first sale?
Start up
-When identifying capital requirements for start-up, a distinction should be made between fixed capital requirements and working capital requirements
OPERATIONS TIMELINE
Outlines several key questions: - When will you make the preparations, such as registering the business name and purchasing equipment, to start the venture? - When will you begin operations and make your first sales? - When will other milestone events occur such as moving operations to a larger facility, offering a new product line, hiring new key employees, and beginning to sell products internationally? - May include a graphical timeline showing when these milestone events have occurred and are expected to occur
Opportunities
Nothing lasts forever—things can change to impact the opportunity: tastes, preferences, technological innovation, competitive landscape
-What are your facility plans? -What constraints are you operating under that will restrict your capacity to produce and sell your product -What is the workflow plan for your operation? -What work will your company do and what work will you outsource?
Operational plan general questions
MAKING A PLAN TO APPEAL TO STAKEHOLDERS STAGE
involves further changes to the party plan to make it more appealing to both the invited guests and to make it a fun experience for the host. For example, the host might learn that some of the single guests would like to bring dates and others might need to be able to bring their children to be able to attend. The host might be able to accommodate those desires or needs in ways that will also make the party more fun for them—maybe by accepting some guests' offers to bring food or games, or maybe even hiring a babysitter to entertain and look after the children.
BUSINESS MODEL STAGE
the host might construct a menu of items to include with the meal along with a list of decorations to order, music to play, and costume themes to suggest to the guests. The mix of these kinds of elements chosen by the host will play a role in the success of the party.
BUSINESS MODEL CANVAS
❒ A visual chart with elements and nine building blocks describing a business or a product's value proposition, infrastructure, customers, and finances
BUSINESS PITCH
❒ the first communication instrument that provides an overview of the business in order to raise funds, usually created using the PPT, Keynote or Prezi presented either face- to face or on online meetings to possible investors, customers, partners, and co- founders.
Values
Defines how people behave and interact with each other.
MAKING THE BUSINESS PLAN REALISTIC STAGE
During this stage, the host will begin to realize that some plans are not feasible and that changes are needed. The required changesmight be substantial, like the need to postpone the entire party and ultimately start over in a few months, or less drastic, like the need to change the menu when an invited guest indicates that they can't eat food containing gluten. These changes are incorporated into the plan to make it realistic and feasible in the Making the Business Plan Realistic stage.
External Purposes
The business plan is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited.
T-eam R-esources I-dea M-arket
TRIM FRAMEWORK
PETER DRUCKER
Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window.
internal and external
Business plans are developed for both _________ purposes
EXECUTIVE SUMMARY
Can be longer than normal executive summaries, up to three pages
Common things: viability profit potential downside risk likely life-cycle time potential areas for dispute or improvement
Common things in the ideal (credibility principle)
TREND ANALYSIS
Consider whether this is the right place for this analysis: it may be better positioned in, for example, the Financial Plan section to provide context to the analysis of the critical success factors, or in the Marketing Plan to help the reader understand the basis for the sales projections
INTRODUCTION
- Describes the business concept - Indicates the purpose of the plan - Appeals to targeted readers
TRIM FRAMEWORK
A planning tool that pinpoints the kinds of people essential to form the founding team, the resources that are at hand and required the fine points of the idea and the possible market for the product or service.
LIST OF TABLES
Each table, figure, and appendix included in the plan must be referenced within the text of the plan so the relevance of each of these elements is clear.
Five Communications Principles:
Expectation, milestone, opportunities, context and business model
Context
Four key aspects describing context within which new venture is intended to function (internal and external environment)
TITLE PAGE EXECUTIVE SUMMARY TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES INTRODUCTION BUSINESS IDEA VISION MISSION VALUES MAJOR GOALS
GENERAL BUSINESS PLAN FORMAT includes?
Dinal stage
In finishing the business plan, this stage involves the host putting all of the final touches in place for the party in preparation for the arrival of the guests.
BUSINESS IDEA
May include description of history behind the idea and the evolution of the business concept if relevant
Values
Outlines the personal commitments members of the organization must make, and what they should consider to be important
Five Forces Model (Porter, 1985)
The industry analysis Commonly uses what model?
capital
The most common external purpose for a business plan is to raise.
Business model
This communication principle communicates that - Who pays, how much, and how often? - The activities the company must perform to produce its product, deliver it to its customers and earn revenue - And be able to defend assertions that the venture is attractive and sustainable and has a competitive edge
Expectations
This communication principle communicates that - you have identified and understood the key success factors and risks - the projected market is large and you expect good market penetration - you have a strategy for commercialization, profitability, and market domination - you can establish and protect a proprietary and competitive position
ESSENTIAL INITIAL RESEARCH STAGE
This stage of planning, the essential initial research, is a necessary first step to better understand the trends that will affect their business and the decisions they must make to lay the groundwork for, and to improve their potential for success
TEAM
Without the right team, nothing else matters. Communicate: - What do they know? - Who do they know? - How well are they known?
CLEAR PROJECT DESCRIPTION
an outline of the project as defined for the study to provide answers to stakeholders
BUSINESS BRIEF
describe completely the task/ purpose (to gain partnerships, sponsors and raise funds including the clear role of those involved; provide a background reflecting that the company and the product or service being represented has a positive record; explain fully what the target is; and time (time in preparation & clear timelines)
Where will your facility be located?
expressed as a set physical location expressed as a set of requirements and characteristics
FEASIBILITY STUDY
includes the description of product or service, accounting statements, details of functional areas, marketing research and policies, financial data, legal requirements and tax obligations
Human resource planning
is a process by which management ensures that it has the right number and kinds of people at the right places, and at the right times, who are capable of effectively and efficiently completing those tasks that will help the organization achieve its overall objectives. Human resource planning, then, translates the organization's objectives into terms of the workers needed to meet those objectives (Robbins, 1988).
BUSINESS PLANNING
is an important precursor to action in new ventures by helping firm founders to make decisions, to balance resource supply and demand, and to turn abstract goals into concrete operational steps
INITIAL BUSINESS PLAN DRAFT STAGE
is where the host rolls up his or her sleeves and begins to assemble make some of the food items, put up some of the decorations, send invitations, and generally get everything started for the party.
OPERATING REQUIREMENTS
material requirements; labor requirements; transportation and shipping required; marketing requirements; physical location; technology requirements; target dates (use of GANTT chart; must be practical and reasonable
COMPETITIVE LANDSCAPE
review of the SWOT
FINANCIAL PROJECTIONS
to be certain that the venture can generate ascendable profits that merit their approval
BUSINESS PITCH
❒ It has 10- 12 segments: Elevator Pitch, Problem, Opportunity, Solution, The Product, Business Model, Competition, The Key Highlight, Marketing and Sales, Management Team and Key Metrics, Current Status and Future Projections
BUSINESS BRIEF
❒ a document that offers an explanation why a particular model leads to success in a given scenario, written in a persuasive, active voice to encourage customers and make investments in the idea.
FEASIBILITY STUDY
❒ an assessment on the viability and sustainability of a proposed project or system, taking into account the legal, economic, technical, and scheduling concerns.
BUSINESS PITCH
❒ otherwise termed as Pitch Deck, Investor Pitch Deck or a Start- up Pitch Deck
VISION
- Generally outlines what the owner intends for the venture to be - Should inspire all members of the organization - Should help stakeholders aspire to achieve greater things through the venture because of the general direction provided through the vision statement
MISSION
- Should be very brief—a few sentences or a short paragraph - Indicates what your organization does and why it exists—may describe the business strategy and philosophy
Industry analysis
- consider whether this is the right place for this analysis: - it may be better placed in, for example, the Marketing Plan to - enhance the competitor analysis, or in the Financial Plan to provide context to the industry standard ratios in the - Investment Analysis sectionj
BUSINESS MODEL
-Brief and clear statement of how an idea actually becomes a business that creates value
SCENARIO INTEGRATION
-Claiming an insuperable lead or a proprietary market position is naïve. -Venture building is like chess: Anticipate several moves in advance View the future as a movie vs. snapshot
Fixed capital requirements
-If relevant you might include information showing the financing required; fixed capital is usually financed using longer-term loans.
The ideal
-If the main purpose is to enact a harvest, then the business plan must create a value-adding deal structure to attract investors.
MAKING PLAN APPEAL TO STAKEHOLDERS AND DESIRABLE TO THE ENTREPRENEUR
A business plan can be realistic without appealing to potential investors and other external stakeholders, like employees, suppliers, and needed business partners. It might also be realistic (and possibly appealing to stakeholders) without being desirable to the entrepreneur. During this stage the entrepreneur will keep the business plan realistic as they
ESSENTIAL INITIAL RESEARCH STAGE
A host hoping to make a good impression with their anticipated guests might analyze the situation at multiple levels to collect data on new alternatives for healthy ingredients, what ingredients have the best prices and are most readily available at certain times of year, the new trends in party appetizers, what food allergies the expected guests might have, possible party themes to consider, and so on.
liabilities of newness
According to hindle and mainprize, the ____ make communicating the expected future of new ventures difficult (more so than for existing businesses).
Milestone
Anchoring key events in the plan with specific financial and quantitative values
- Naming - Zoning, equipment prices, suppliers, etc. Location - Lease terms, leasehold improvements, signage, pay deposits, etc. - Getting business license, permits, etc. - Setting up banking arrangements - Setting up legal and accounting systems (or professionals) - Ordering equipment, locks and keys, furniture, etc. - Recruiting employees, set up payroll system, benefit programs, etc. - Training employees - Testing the products/services that will be offered - Testing the systems for supply, sales, delivery, and other functions - Deciding on graphics, logos, promotional methods, etc. - Ordering business cards, letter head, etc. - Setting up supplier agreements - Buying inventory, insurance, etc. - Revising business plan - And many more things, including, when possible, attracting purchased orders in advance of start-up through personalselling (by the owner, a paid sales force, independent representatives, or by selling through brokers wholesalers, catalog houses, retailers), a promotional campaign, or other means
As part of your business set-up, you need to determine what kinds of control systems you should have in place, establish necessary relationships with suppliers and prior to your start- up, and generally deal with a list of issues like the following. Many of your decisions related to the following should be described somewhere in your business plan
Hindle and Mainprize (2006)
As____ note, business plan writers must strive to communicate their expectations about the nature of an uncertain future.
ELABORATION
Break down individual tasks into their sub-parts so each step maximizes the upside and minimizes the downside: - sub-strategies - ad-hoc programs - specific tactical action plans
Team, elaboration, scenario integration, financial link and the deal
Business Plan Credibility Principles
EXECUTIVE SUMMARY CLEAR PROJECT DESCRIPTION COMPETITIVE LANDSCAPE OPERATING REQUIREMENTS FINANCIAL PROJECTIONS RECOMMENDATIONS AND FINDINGS
COMMON ELEMENTS OF A FEASIBILITY STUDY
RECOMMENDATIONS AND FINDINGS
a summary of previous feasibility study elements outlining the result of a business proposal
FINANCIAL LINK
Key assumptions related to market size, penetration rates, and timing issues of market context outlined in the business plan should link directly to the financial statements.
TITLE PAGE
Include nice, catchy, professional, appropriate graphics to make it appealing for targeted readers
TREND ANALYSIS
Includes an analysis of how the current and expected trends in the political, economic, social, technological, environmental, and legal (PESTEL) factors will impact the development of this business
INDUSTRY ANALYSIS
Includes an analysis of the industry in which this business will operate
Executive Summary
Includes information relevant to targeted readers as this is the place where they are most likely to form their first impressions of the business idea and decide whether they wish to read the rest of the plan
Financial link
Income and cash flow statements must be preceded by operational statements setting forth the primary planning assumptions about market sizes, sales, productivity, and basis for the revenue estimate.
VALUES
Indicates the important values that will guide everything the business will do
BUSINESS MODEL STAGE
Inherent in any business plan is a description of the business model chosen by the entrepreneur as the one that they feel will best ensure success.
Business plan
It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel. It also provides the most complete source of information for valuation of the business.
- Describes the major organizational goals - Ensures each goal is: - Specific, Measurable, Action-Oriented, Realistic, and Timely [SMART] - Realistic, Understandable, Measurable, - Believable, and Achievable [RUMBA] Perfectly aligns with everything in plan
MAJOR GOALS of a business plan format
-A standard format helps the reader understand that the entrepreneur has thought everything through, and that the returns justify the risk. -Binding the document ensures that readers can easily go through it without it falling apart. -Be 100% certain that: ✔️everything is completely integrated: the written part must say exactly the same thing as the financial part ✔️all financial statements are completely linked and valid (make sure all balance sheets validly balance) ✔️the document is well formatted (layout makes document easy to read and comprehend—including all diagrams, charts, statements, and other additions) ✔️everything is correct (there are NO spelling, grammar, sentence structure, referencing, or calculation errors) ✔️the document easy to read and comprehend because it is organized well with no unnecessary repetition ✔️all the necessary information is included to enable readers to understand everything in your document ✔️the terms you use in your plan are clear if you use a percentage figure, you indicate to what it refers, otherwise the figure is completely useless to a reader. ✔️if your plan includes an international element, which currencies the costs, revenues, prices, or other values are quoted in -credibility is both established and maintained
Many businesses must have a business plan to achieve their goals. The following are some basic guidelines for business plan development.
Values
Should help the reader understand the type of culture and operating environment this business intends to develop
Sole Proprietorship Partnership Limited Partnership Corporation Cooperativ
Somewhere in your business plan you must indicate what legal structure your venture will take. Your financial statements, risk management strategy, and other elements of your plan are affected by the type of legal structure you choose for your business: This is the business structure and other set up elements
Team Elaboration Scenario integration Financial link The ideal
The 5 credibility principles that hindle and mainprize outlined?
The first goes back to the Initial Business Plan Draft stage in case the initial business plan needs to be significantly changed before it is possible to adjust it so that it is realistic.
The Making Business Plan Realistic stage has two possible feedback loops. Whats the first one
Developing a High-Power Business Plan
The business plan development process described next has been extensively tested with entrepreneurship students and has proven to provide the guidance entrepreneurs need to develop a business plan appropriate for their needs; a high-power business plan
Internal purposes
The business plan is the road map for the development of the business because it - defines the vision for the company - establishes the company's strategy - describes how the strategy will be implemented - provides a framework for analysis of key issues - provides a plan for the development of the business - is a measurement and control tool - helps the entrepreneur to be realistic and to put theories to the test
MAKING THE BUSINESS PLAN REALISTIC STAGE
The first draft of a business plan will almost never be realistic. As the entrepreneur writes the plan, it will necessarily change as new information is gathered. Another factor that usually renders the first draft unrealistic is the difficulty in making certain that the written part— in the front part of the plan along with the operations, human resources, and marketing plans—tells the exact same story as the financial part does. This stage of work involves making the necessary adjustments to the plan to make it as realistic as possible
The second feedback loop circles back to the Business Model stage if the business developer need to rethink the business model.
The making business plan realistic stage has two possible feedback loops. Whats the second one
- What are your facility plans? - Where will your facility be located? - How large will your facility be and why must it be this size? - How much will it cost to buy or lease your facility? - What utility, parking, and other costs must you pay for this facility? - What expansion plans must be factored into the facility requirements? - What transportation and storage issues must be addressed by facility decisions? - What zoning and other legal issues must you deal with? - What will be the layout for your facility and how will this best accommodate customer and employee requirements? - What constraints are you operating under that will restrict your capacity to produce and sell your product? Given these constraints, what is your operating capacity (in terms of production, sales, etc.)? - What is the workflow plan for your operation? - What work will your company do and what work will you outsource?
The operations plan answers several questions. What are these?
1. ESSENTIAL INITIAL RESEARCH STAGE 2. BUSINESS MODEL STAGE 3. INITIAL BUSINESS PLAN DRAFT STAGE 4. MAKING THE BUSINESS PLAN REALISTIC STAGE 5. MAKING A PLAN TO APPEAL TO STAKEHOLDERS STAGE 6. FINISHING THE BUSINESS PLAN
There are six stages involved with developing a high-power business plan. These stages can be compared to a process for hosting a dinner for a few friends.
Context
This communication principle Communicate that - how the context will help or hinder the proposal - how the context may change & affect the business & the range of flexibility or response that is built into the venture - what management can or will do in the event the context turns unfavorable - what management can do to affect the context in a positive way
Opportunities
This communication principle Communicate these four aspects to distinguish the business concept, distinctive competencies, and sustainable advantages: - the new combination upon which venture is built - magnitude of the opportunity or market size - market growth trends - venture's value from the market (% of - market share proposed or market share value in dollars)
Milestones
This communication principle communicates that - your major plan objectives are in the form of financial targets - you have addressed the dual need for planning and flexibility - you understand the hazards of neglecting linkages between certain events - you understand the importance of quantitative values (rather than just chronological dates)
Expectation
Translation of your vision of the venture and how it will perform into a format compatible with the expectations of the readers
Executive summary
Write after remainder of plan is complete
Realistic, Understandable, Measurable, Believable, and Achievable
[RUMBA]
Specific, Measurable, Action-Oriented, Realistic, and Timely
[SMART]
Internally
____, entrepreneurs develop business plans to help put the pieces of their business together
EXECUTIVE SUMMARY
a brief narrative describing details of the project, product, service, plan, or business which stakeholders read with interest
The final stage
involves putting all of the important finishing touches on the business plan so that it will present well to potential investors and others. This involves making sure that the math and links between the written and financial parts are accurate. It also involves ensuring that all the needed corrections are made to the spelling, grammar, and formatting. The final set of goals should be written to appeal to the target readers and to reflect what the business plan says. An executive summary should be written and included as a final step.
INITIAL BUSINESS PLAN DRAFT STAGE
involves taking the knowledge and ideas developed during the first two stages and organizing them into a business plan format. Writing all of the operations, human resources, marketing, and financial plans as part of the first draft ensures that all of these parts can be appropriately and necessarily integrated
