Chapter 8 - Business Plans

What's included in "Other" on the business plan Moral Fiber?

Cover Letter, table of contents, title page, graphics, etc.

Why have a business plan?

Creates Internal Understanding and External Legitimacy

What topics are included in the Moral Fiber of a business plan?

Executive Summary Company Description Industry Analysis Market Analysis Marketing Plan Organization Operations Plan Financial Projections Other

What is an operations plan?

How your business will turn a raw resource into a final product

What is the Business Plan Process?

Identify idea, Screen idea for feasibility, Write a business plan

What are the "Big 3" financial statements?

Income Statement Balance Sheet Cash Flow Statement

What is an Executive Summary?

What the creditors are actually going to read; they only dig into the report if they have questions. The most read part, the most widely distributed part; written after you finish the plan.

Can business plans be modified?

Yes, for special circumstances such as pioneering new tech, new markets, established operations, or significant government involvement, as well as abbreviated plans for investors, partners, etc. (vision statements --> elevator pitches --> executive summaries --> business plans)

vision statement

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

proof-of-concept website

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

data room

an online repository (e.g., Dropbox, Box, ShareVault) for the documentation that back ups and details the specifics of your business and business plan. the contents of the data room are very similar to those of the three-ring-binder personal edition of the plan held and used by the founder.

What slides should be included in a pitch deck?

introductory company purpose problem solution product why now market size business model competition team financials the ask and the deal closing

preselling

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

What is an Industry?

like competitors/like products and services

tagline

memorable catchphrase that captures the key idea of the business, its service, product, or customer (aka a slogan)

What are the major risks to business plan success?

overstated numbers numbers that are wrong inadequate cushion inadequate payback narrative and financials that do not fit no direct customer connection uncertain sales (esp. conversion rates) overlooked competition experience deficits "what" problems deadly aggravations

What does your audience look for when you pitch your plan?

passion, expertise, professionalism, and potential as a colleague

test marketing

selling your product or service in a limited area, for a limited time.

screening plan

(aka a mini-plan) gives the basic overview of the firm and a detailed look at the financials

What does a classic business plan look like?

18 pages total (8 text, 10 financial); Should always have a coversheet, be professionally printed

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

How to new businesses project annual revenue?

a Sales Forecast

operational plan

a business plan designed to be used internally for management purposes

informational plan

a business plan that gives potential customers or suppliers information about the company and its products or services

key employee/partner plan

a business plan that provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees

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, and its financial outcomes on the firm's present and future.

new entrant businesses

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

pioneering business

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 business 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. (problem, product, market, competitive advantages, business/team, financial summary)

cover letter

a one-page document on business stationery (aka letterhead) that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan.

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 a patent, copyright, trademark, or service mark.

signature block

a snippet of text (or text and images) typically inserted at the bottom of an email, that contains contact information for the sender of the email.

private placement memorandum (PPM)

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

What is a business plan?

a story you tell about your firm, which gets told in different ways and lengths.

working capital

the cash immediately available for the day-to-day expenses and operations of the firm

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.

internal understanding

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

pitch

the name given to the formal presentation of a slideshow summarizing your business plan given before judges or potential investors or partners

pitch deck

the name of a slideshow presentation that summarizes a business or more often a business plan

research and development (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

risks

the parts of a business or business plan that expose the firm to any kind of loss - profits, sales, reputation, assets, customers, etc.

What is a Market?

the people you're selling to

due diligence

the process of investigating a business to determine its value and potential for investment.