Lecture 4, 5 Summary

LECTURE 4 & 5 SUMMARY
THE FOUR PROCESSES
1. Recognize a Business Idea

2. Feasibility Analysis
3. Write a Business Plan
4. Launch the Business
TYPICAL PROBLEMS FOR A START-UP
1. Product/Service Development
a. Undistinguished product/service
b. Inadequate technical knowledge
2. Sales/Marketing
a. Low sales
b. Dependence on few customers
c. Marketing and distribution
3. General Management
a. Lack of Management Experience
b. Team in-fighting
c. Controlling growth
d. Administration
4. Human Resource Management
a. Recruitment/Selection
b. Employee development
5. Productions/Operations Management
a. Quality control
b. Resources
6. Economic Environment
a. Poor economy (external)
7. Obtaining Financing
a. Needed for growth
8. Internal Financial Matters
a. Inadequate working capital
b. Cash flow problems
FOUR TYPES OF FEASIBILITIES
1. Product/Service Feasibility
a. Product/Service Desirability
b. Product/Service Demand
c. Technical Feasibility
2. Industry/Target Market Feasibility
a. Industry Attractiveness
b. Target Market Information
3. Organizational Feasibility
a. Management Prowess
b. Resource Sufficiency
4. Financial Feasibility
a. Start-up Cash
b. Comparative Financial Performance
c. Overall Financial Attractiveness
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A BUSINESS PLAN
A written document prepared by the entrepreneur that describes all the internal and external elements
involved in starting the new venture.
WHY WRITE A BUSINESS PLAN
1. Provides a common direction to all aspects of the organization

2. Reduces uncertainty by focusing attention on what’s ahead
3. Minimizes waste and redundancy
a. Maximizes efficiency and effectiveness
4. Provides the framework for all managerial functions:
a. Leading, organizing, establishing goals and standards used in controlling
5. Internal reasons:
a. Forces the founding team to systematically think through every aspect of its new
venture
6. External reason:
a. Communicates the merits of a new venture to outsiders, such as investors and bankers
7. Plans identify goals – and the strategies (plans) needed to achieve those goals
8. Most company goals can be classified as either strategic or financial
a. Financial: related to company financial performance
b. Strategic: related to other aspects of the company’s performance
Types of Business Plans
1. Summary Business Plan

2. Full Business Plan
3. Operational Business Plan
SECTIONS OF A BUSINESS PLAN
1. Cover Page and Table of Contents

a. Company name, address, phone number
b. Contact info for lead entrepreneur
c. Confidential label at the bottom
d. Distinctive trademark (if any )placed prominently
e. A table of contents should follow a cover letter
2. Executive Summary
a. Short overview of entire business plan
b. It is the summary of the plan itself
c. Not more than 2 pages
d. Overview must be in section-by-section basis
e. Executive Summary should be written last
3. Industry Analysis
a. Describe the industry in which the firm intends to compete in
b. Must include data and statistics
c. Industry trends
d. Conclude with long-term prospects
4. Company Description
a. A general description of the company
b. A mission statement
c. Products and services section
d. Current status section
e. Legal status and ownership section
f. Any key partnerships must be mentioned
5. Market Analysis
a. Industry analysis of your respective industry
b. Identify specific target market by Market Segmentation
c. A competitor analysis
d. Annual sales projection
6. Economics of the Business
a. Identify major revenue drivers
b. Costing
i. Gross margins
ii. Contribution margins
iii. Fixed and Variable cost
iv. Start-up cost
c. Break-Even Analysis
7. Marketing Plan
a. Sales Process
b. Sales Tactics
8. Product/Service Design and Development Plan
a. Identifies status of development efforts
b. Prototype
c. Include ‘Challenges and Risks’
d. Patents, Trademarks, Copyrights etc. that must be/are secured
9. Operations Plan
a. Back-stage
b. Front-stage
c. Identify key experiences rather than details
d. Business locations
e. Facilities and equipment
10. Key Personnel and Staffing
a. Management Team and Company Structure
i. Brief profile of each member of management team starting with founder
b. List of Board of Directors and Advisors (if any)
c. Organizational chart of company structure
11. Overall Schedule
a. Timeline of major events
b. Typical milestones
i. Completion of prototype
ii. Rental of facilities
iii. Obtaining first sale
iv. Etc.
12. Financial Projections
a. A source and use of funds statement
b. Pro forma financial statements
i. Income statement
ii. Balance sheet
iii. Cash flow statement
c. Ratio analysis
i. Return on assets
ii. Return on sales
13. Appendix
a. Any material that does not fit into the body of the plan
b. Resumes of top management team
c. Photos, diagrams etc.
d. Market research projections

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LECTURE 4 & 5 SUMMARY

THE FOUR PROCESSES

1. Recognize a Business Idea

TYPICAL PROBLEMS FOR A START-UP

FOUR TYPES OF FEASIBILITIES

WHY WRITE A BUSINESS PLAN

1. Provides a common direction to all aspects of the organization

Types of Business Plans

1. Summary Business Plan

SECTIONS OF A BUSINESS PLAN

1. Cover Page and Table of Contents

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