Business plan prep ch1

• mission statement

A paragraph that describes the firm's goals and competitive advantages.

• proprietary technology

A product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark.

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.

• screening plan

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

• proof-of-concept Web site

An Internet-based type of busi- ness plan providing information or demonstration of a product or ser- vice designed to solicit information on customer interest.

• operational plan

Business plans designed to be used internally for management purposes.

• informational plans

Give potential customers or sup- pliers information about the com- pany and its product or service.

• preselling

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

• 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.

• internal understanding

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

Risk

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.

• tagline

(also known as a slogan) Memora- ble catchphrase that captures the key idea of a business, its service, product, or customer.

• research and development

(often abbreviated R&D)—The part of a business (and a business plan) that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm's market.

• elevator pitch

A 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another.

• invention plan

A business plan that provides in- formation to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.

• external legitimacy

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, manage- ment), and its financial outcomes with an emphasis on the firm's present and future.

• 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,

• pioneering business

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

• test marketing

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

• executive summary

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

• cover letter

A one-page document on business stationery (also called letterhead) that introduces the business plan and the business owner to the recip- ient and indicates why the recipient is being asked to read the plan.

LO4 Focus business plan sections to meet specific needs.

● A full business plan is often modified for special circumstances the firm faces, such as pioneering technology, new markets, established operations, or significant government involvement. ● Parts of a full business plan are often combined to create shorter plans for particular audiences such as investors, partners, or others.

LO5 Identify the major risks to business plan success.

● All business plans face risks; part of the role of the business plan is to explain how the firm will handle these risks. ● The risks come from numbers or assertions that are not adequately explained or supported.

LO6 Master presenting your business plan to others.

● Most business plans are presented to others using a seven- slide show. ● Listeners check presentations for the presenter's passion, expertise, professionalism, and potential as a colleague

LO1 Understand why and when to develop a business plan.

● Plans are done for external legitimacy and/or internal understanding. ● Plans are sometimes essential, and are often linked to improved firm survival. ● Different audiences seek different goals when reading business plans.

LO2 Know how to tell the business plan story.

● The business plan is a story you write about your firm. ● The story gets told in different ways and lengths, from vision statements, to mission statements, to elevator pitches, to executive summaries, to full business plans. ● The one-page business plan can be used to help organize the classic business plan.

LO3 Learn the major sections of the classic business plan.

● The full business plan gives the complete story of the firm and its major elements: the company's product/service, market, competition, marketing strategy, organization, key personnel, service providers, location, and financials. ● It is a maximum of 25 pages long, with up to 15 pages of supporting material. ● Plans for simple businesses can be shorter than those for innovative types of firms.