© 2005 Mark T. Schenkel1 Mark T. Schenkel, Ph. D. The Business Plan Foundations of Entrepreneurship

© 2005 Mark T. Schenkel 1

Mark T. Schenkel, Ph. D.

The Business Plan

Foundations of Entrepreneurship


What is a Business Plan?• Business Plan- Document Describes

Internal/External Elements/Strategies For New Venture

• Plan (Road Map)

– Short-Term

– Long-Term

• Author = Entrepreneur

• Usually ~ 25 pages (minus appendices)


Business Plan Audiences (Uses)

Employees (Internal)

Investors/Venture Capitalists (Equity financing)

Lenders/Suppliers

(Debt financing)

Customers

Advisors/Consultants


Key Question from the Business Plan: What do you need from your business?

• Income• Wealth• Lifestyle• Passion• Fun• Built from experiences• Key “must have’s” taken care of?


Reasons For Plan Failure

1. Unreasonable Goals

2. Goals Not Measurable

3. No Total Commitment

4. Lack Of Experience

5. No Understanding Of Threats Or Weaknesses

6. Customer Need Not Established


A Basic FrameworkA Basic FrameworkA Basic FrameworkA Basic Framework

THE VENTURE

Goals & Values

Resources &Capabilities

Structure & Systems

THE INDUSTRY

ENVIRONMENT

CompetitorsCustomersSuppliers

STRATEGYSTRATEGY


Strategic Planning Checksheet

Analysis

Formulation

Implementation

Eval., Review, & Feedback

SWOTStrengths, Weaknesses Opportunities, Threats

Competitive Advantage

Mission Objectives Strategies Policies

Tasks Timetables Budgets Responsibilities

Performance Review


SAMPLE Business Plan Outline

Executive Summary• One page summary of the entire plan.• Write this last!



The Business Concept

Vision of Company– Mission Statement– Core Values– Major Goals


What Should the Mission Statement Include?

• Statement of who are the firm’s customers.

• Statement of firm’s basic product (or service).

• Statement of firm’s competitive market.

• Statement of firm’s basic values / beliefs.

• Statement of firm’s competitive advantage.

• Statement of who are the stakeholders and how they will be served.



Market Analysis: Industry• Size• Status (growing, mature, declining)• Trends• Barriers to entry



Marketing Plan• Description of Target Market• Entry Strategy• Competitive Analysis (include grid and list

of competitive advantages)• Pricing• Promotional Plan• Distribution



Operating Plan• Map out the flow of your business• Raw materials and supplies• Making the product or providing the service• Bookkeeping and billing• Team & Advisors • Space requirements and costs • Basic staffing plan as you grow



Growth Plan• Growth goals: long and short term• Growth strategies• Growth requirements



• Financial Plan– Cash flow (including break even analysis)– Income Statement– Balance Sheet

• Appendices


Do’s and Don’ts for Preparing a Business Plan

Do’s• Involve entire management team• Make the plan logical, comprehensive, readable, and as

short as possible• Articulate what the critical risks and assumptions are

and how they are tolerable• Disclose and discuss any current or potential problems

in the venture• Be creative, but spell out how the investors will win• Let realistic market and sales projections drive the

assumptions underlying financials, rather than reverse


Do’s and Don’ts for Preparing a Business Plan (cont.)

Don’ts• Have unnamed, mysterious people on the management

team• Make ambiguous, vague, or unsubstantiated statements,

such as estimating sales on what you would like to produce

• Describe technical products or manufacturing processes using jargon or in a way that only an expert can understand – limits the plans usefulness

• Spend money on developing fancy brochures, elaborate slide show presentations, and other “sizzle,” instead, show the “beef”


Key Issues Associated with the Business Plan

• Clarify Objectives– Quantifiable– Obtainable– Flexible

• Obsolete at the Printer– Pace of technological change– Increasing degree of global dynamism

• Work in progress – Bent Knees Required• The Plan is NOT the Business


Key Takeaway Points . . .

• Analysis and critical thinking are the beginnings of a good business plan.

• Business plans should be comprehensive, yet facilitate an ease of understanding for ALL stakeholders in the venture.


Key Takeaway Points . . .

• If the reader is unclear on a point, then you have missed something . . . redouble your efforts accordingly.

• Utilize the full range of conceptual tools available to aid in the development and enhance the selling of the compelling story.

Documents

© 2005 Mark T. Schenkel1 Mark T. Schenkel, Ph. D. The Business Plan Foundations of Entrepreneurship