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Good Opportunities Have Good “Fit”6-2
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Abbreviated Business Plan Outline6-3
Section Heading• Cover Page
• Table of Contents
• Executive Summary
• Industry, Target Customer, and Competitor Analysis
• Company Description
• Product/Service Plan
• Marketing Plan
• Operations and Development Plan
• Management Team
• Critical Risks
• Offering
• Financial Plan
• Appendix of Supporting Documents
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The Content of a Business Plan• Cover Page
Company name, address, phone number, fax number, and website
Tagline and company logoName and contact information of contact personDate on which the business plan was preparedConfidentiality disclaimerNumber of the copy
• Table of ContentsProvides a sequential listing of the sections of the
plan, with page numbers
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The Content of a Business Plan (cont’d)• Executive Summary/Synopsis/Narrative
Description of the opportunityExplanation of the business conceptIndustry overviewTarget marketCompetitive advantage to be achieved in the marketEconomics of the opportunityManagement team descriptionAmount and purpose of the money being requested
(the “offering”) if seeking financing
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The Content of a Business Plan (cont’d)• Industry Description
Broader industry in which the firm will competeIndustry size, growth rate, trends, and competitors
Different segments of the industryNiche in which the firm plans to participate
• Target CustomersDemographics and psychological variables—values,
attitudes, and fears
• Competitor AnalysisProduct or service attributes that are or are not
provided by competitors
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The Content of a Business Plan (cont’d)• Company Description
When and where was this business started? What is the history of the company? What are the firm’s objectives? What changes in structure and/or ownership? In what stage of development is the firm? What has been achieved to date? What is the firm’s distinctive competence? What are the nature and activity of the business? What is its primary product or service? What customers will be served? What is the firm’s form of organization? What are the projected economic states of the industry? How is ownership of the firm to be structured?
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The Content of a Business Plan (cont’d)• Products/Service Plan
Describes the product and/or service to be provided and explains its merits
• Marketing PlanDescribes the user benefits of the product or service
and the type of market that exists
• Operations and Development PlanHow product will be produced or service provided
• Management PlanDescribes the firm’s organizational structure and the
backgrounds and qualifications of key personnel
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The Content of a Business Plan (cont’d)• Critical Risks
Identifies the potential risks that may be encountered by an investor
• OfferingIndicates to an investor how much money is needed
and when, and how the money will be used
• Financial PlanProjects the company’s financial position based on
well-substantiated assumptions and explains of how the figures have been determinedPro forma statements project a firm’s financial
condition for up to five years.
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The Content of a Business Plan (cont’d)• Appendix of Supporting Documents
Supplementary materials and attachments to expand the reader’s understanding of the plan:
Résumés of key investors and owners/managers
Professional references
Photographs of products, facilities, and buildings
Marketing research studies
Pertinent published research
Signed contracts of sale
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Making an Effective Written Presentation• Insist on confidentiality
• Use good grammar
• Limit the presentation to a reasonable length
• Go for an attractive, professional appearance
• Provide solid evidence for any claims
• Describe the product in lay terms
• Emphasize the qualifications of the management team
• Analyze the market thoroughly
• Include financial statements that are neither overly detailed nor incomplete
• Don’t hide weaknesses—identify potential fatal flaws
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Presenting the Business Plan to Investors• Attracting Investors
A business plan must be an effective marketing document that quickly captures investor interest.
• Understanding the Investor’s PerspectiveEntrepreneurs are optimists; investors are skeptics.
Investors focus on break-even and positive cash flow.
Investors have a short attention span.
Bad information and poor preparation cause investors to lose interest quickly.
© 2008 Cengage Learning. All rights reserved. 6–12
Plan Features that Attract Investors• Plans that speak the investors’ language:
Are market-oriented in meeting customer needs; are not product-oriented.
Show evidence of target customer acceptance of the proposed product or service.
Present credible and not overly optimistic financial projections.
Are not a formal prospectus or offering memorandum.
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Plans Features that Attract Investors (cont’d)
Recognize the investors’ needs for required rates of return on investments.
Demonstrate evidence of focus on a limited number of products or services
Have a proprietary market position through patents, copyrights, and/or trademarks
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Features of Plans Unattractive to Investors• Plans that create unfavorable reactions:
Show an infatuation with the product or service and downplay market needs or acceptance.
Are based on financial projections at odds with accepted industry norms.
Have unrealistic growth projections.Contain a need for custom or
applications engineering, which makes substantial growth difficult.
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Resources for Business Plan Preparation• Computer-Aided Business
PlanningWord-processorsSpreadsheetsSpecialized business plan
software packages
• Professional AssistanceAccountantsMarketing specialistsAttorneysInvestment bankerFinancial intermediary
• Professional Assistance (cont’d) Small business
development centers (SBDCs)
Incubator organizations Regional and local
economic development offices.
Service Corps of Retired Executives (SCORE)
FastTrac Entrepreneurial Training Program
© 2008 Cengage Learning. All rights reserved. 6–16
What Not to Do• Mistakes to avoid in preparing a business plan:
Failing to provide solid data.Failing to describe the product in lay terms.Failing to thoroughly analyze the market.Including financial statements that are overly detailed
or incomplete.Hiding weaknesses.Overlooking the fatal flaw.Using bad grammar.Making the overall plan too long.
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• Detailed formulation of the actions needed to carry out the marketing program
• An action documentThe handbook for marketing implementation, evaluation,
and control
• Not the same as a business plan• Requires a great deal of information from many
different sources
The Marketing Plan
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• I. Executive SummarySynopsis of the overall marketing planIntroduces major aspects of the marketing plan
• II. Situation AnalysisSummarizes information about 3 key environments:
Internal environmentCustomer environmentFirm’s external environment
Marketing Plan Structure
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• III. SWOT AnalysisIII. SWOT AnalysisStrengthsStrengthsWeaknessesWeaknessesOpportunitiesOpportunitiesThreatsThreatsAnalysis of the SWOT matrixAnalysis of the SWOT matrixEstablishing a strategic focusEstablishing a strategic focus
Marketing Plan Structure
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• IV. Marketing Goals and ObjectivesFormal statements of desired and expected outcomes of
the marketing planGoals:
Broad, simple statements of what is to be accomplishedObjectives:
More specific and essential to planning
• V. Marketing StrategyPrimary target market and marketing mixSecondary target market and marketing mix
Marketing Plan Structure
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• VI. Marketing ImplementationWhat specific marketing activities will be undertaken?How will these activities be performed?When will these activities be performed?Who is responsible for the completion of these activities?How will the completion of planned activities be
monitored?How much will these activities cost?
• VII. Evaluation and ControlFormal marketing controlInformal marketing controlFinancial assessments
Marketing Plan Structure