m Entrepreneurshipby Robert D Hisrich,

Michael P Peters, Dean A Shepherd

 usiness Plan
m Dreams of glory
m Game plan
m Road map
 usiness Plan
m usiness plan is a written document
prepared by the entrepreneur that
describes all the relevant external and
internal elements involved in starting a
new venture
m It is often an integration of functional plans
such as marketing, finance, manufacturing
and human resources
 External elements
m New regulation
m Competition
m Changes in consumer needs
m New technology
 Internal elements
m Entrepreneur should have some control
over manufacturing, marketing and
personnel in the new venture
usiness plan answers 3 questions
m Where am I now?
m Where am I going?
m How will I get there?
m Plans provide guidance and structure to
management in a rapidly changing market
environment
m Plans could be short-
short-term or long
long--term
and vary in scope based on the nature of
the business and expected size of the stat-
stat-
up operation
 Who should write the plan?
m The business plan should be prepared by
the entrepreneur
m However, he may consult with other
sources in preparation. Lawyers,
accountants, marketing consultants, and
engineers are useful in preparation of the
plan
 Why business plan is
important?
m Serves as important tool in helping to
obtain financing
m Helps in determining the viability of the
venture in a designated market
m Offers guidance to the entrepreneur in
organizing his or her planned activities
 Who is interested in business
plan?
m Potential investors and lenders
m Customers and suppliers
Who is expected to read the plan can
often affect its actual content and focus.
Each of these groups reads the plan for
different purposes, the entrepreneur must
be prepared to address all their issues and
concerns
 3 important perspectives
m Entrepreneur perspective
m Marketing perspective
m Investor perspective
 Lenders focus on 4 Cs
m Character (credit history)
m Cash flow
m Collateral or tangible assets
m and equity contribution
 Investors focus on
m Entrepreneur¶s character
m Market and financial projections
 How to protect your business
idea?
m Sign
a compete or non-
non-disclosure
agreement
 Presenting the plan
m Why this is a good opportunity?
m How the opportunity will convert into reality
(overview of marketing program)
m Results of this effort (sales and profits)
m Recognized risks and how the
entrepreneur plans to address them.
 Information needs
m efore preparing a business plan, the
entrepreneur should do a quick feasibility
study of the business concept to see
whether there are any possible barriers to
success.
m Market information
m Operations information
m Financial information
 Market information
m Define the market. Helps u to project
market size and subsequent market
goals
1. Is the product most likely to be
purchased by men or women?
2. People of high income or low income?
3. Rural or urban customers?
4. Highly educated or less educated?
 Assessment of competitors
Product or service strategies
Pricing strategies
Distribution strategies
Promotion strategies
Strengths and weaknesses
 Operations information needs
m Location
Location-- company¶s location and its
accessibility to customers, suppliers, and
distributors
m Manufacturing operations-
operations- asic machine
and assembly operations need to be
identified, as well as whether any of these
operations would be subcontracted and by
whom
m Raw materials-
materials- raw materials needed and
supplier¶s names, addresses and costs should
be determined
m Equipment-- equipment needed should be listed,
Equipment
with its cost and whether it will be purchased or
leased
m Labor skills-
skills- each unique skill needed, the
number of personnel in each skill, pay rate, and
an assessment of where and how these skills
will be obtained should be determined
m Space
Space--The total amount of space needed
should be determined, including whether
the space will be owned or leased
m Overhead
Overhead-- Each item needed to support
manufacturing-- such as tools, supplies,
manufacturing supplies,---
---
 Financial information needs
m Prepare a budget that includes a list of all
possible expenditures and a list of revenue
sources including sales and any external
available funds. It also includes operating
expenses.
m Pro forma statements monthly wise or the
1st year. Quarterly or yearly wise for the
subsequent years
 Writing the business plan
m Introductory page
m Executive Summary
m Environmental and Industry Analysis
m Description of venture
m Production plan
m Operations plan
m Marketing plan
m Organizational plan
m Assessment of risk
m Financial plan
m Appendix
 Introductory page
m Name and address of the company
m Name of entrepreneur(s), phone, fax,
website..
m A paragraph describing the company and
the nature of business
m Amount of financing needed
m A statement of the confidentiality of the
report
 Executive Summary
m This is prepared after the total plan is written
m Should stimulate the interest of potential investor
m The investor uses the summary to determine if
the entire business plan is worth reading
m What is the business concept?
m How is it unique?
m Who are the individuals starting this business?
m How will they make money and how much?
 Introductory page sample
KC cleaning service, oak road, oston, www.cleaning.com
Co--owners: Kimberly, Christa
Co
Description of business: The business will provide cleaning service on a
contract basis to small and medium-
medium-sized businesses. Services include
cleaning of floors, carpets and windows, and regular sweeping, dusting and
washing. Contracts will be for one year and will specify the specific services
and scheduling for completion of services
Financing: Initial financing requested is $1million loan to be paid off six
years. This debt will cover office space, office equipment and supplies, two
leased vans, advertising, and selling costs

This report is confidential and is the property of the co-

co-owners listed above.
It is intended only for use by the persons to whom it is transmitted, and any
reproduction or divulgence of any of its contents without the prior written
consent of the company is prohibited
 Industry Analysis
m What are the major economic,
technological, legal and political trends in
a national level
m What are the total industry sales over the
past five years?
m What is anticipated growth in the industry?
m How many new firms have entered this
industry in the last 3 years?
m What are the new products launched in the
industry?
m Who are the nearest competitors?
m How will your business operation be better than
this?
m Are the sales of each of your major competitors
growing, declining or steady?
m Strengths and weaknesses of competitors
m Trends in your specific market area, ur customer
profile
 Describing the venture
m What are your reasons for going into
business?
m Why will you be successful in this venture?
m What are your products or services? Their
description
m Where will the business be located?
m Is the building new or old? Does it need
renovations? If yes, state costs
m Is the building leased or owned?
m What is the office equipment needed? Will
it be purchase or leased?
m Number of personnel needed
m How your background or experience will
help in successfully implementing the
venture
 Production & operations plan
m Will you be responsible for all or part of the
manufacturing operation?
m If some manufacturing is subcontracted,
who will be the subcontractors?
m Why were these subcontractors selected?
m What are the costs of the subcontracted
manufacturing?
 Contd.
m What will be the layout for manufacturing process?
m What equipment will be needed immediately for
manufacturing?
m What raw materials will be needed for manufacturing?
m Who are the suppliers of new materials and what are the
appropriate costs?
m What are the costs of manufacturing the product?
m What are the future capital equipment needs of the
venture?
 Contd.

m Inventory or storage of manufactured

products
m Shipping
m Inventory control procedures
m Flow of order of orders for goods/services
m Technology utilization
 Marketing Plan
m Describes market conditions
m Pricing
m Distribution
m Promotion
m Demand forecasts
m udget forecasts for promotion
 Organizational plan
m Describes the venture¶s form of
ownership, lines of authority and
responsibility of members of the venture
1. Proprietorship
2. Partnership
3. Corporation
 Assessment of risk
m Identifies potential hazards and alternative
strategies to meet business plan goals and
objectives
1. Indicate potential risks to the new venture
2. What might happen if these risks become
reality?
3. Strategy that will be employed to either
prevent, minimize, or respond to the risks
should they occur
4. If there are no potential risks, then the plan
should discuss why that is the case
 Financial Plan
m Determines the potential investment
commitment needed for the new venture
and indicates whether the business plan
is economically feasible
1. Summarize forecasted sales and the
appropriate expenses for at least the first
three years
2. Cash flow figures for three years
3. Projected balance sheet
 Appendix
m Letters from customers, distributors, or
sub contractors
m Secondary or primary data used to support
plan decisions
m Leases, contracts, or any other types of
agreements that have been initiated
m Price lists from suppliers
 Measuring plan progress
m Inventory control
m Production control
m Quality control
m Sales control
m Disbursements
 ±pdating the plan
m External factors
m Internal factors