Entrepreneurship

Lecture Number 13
Talha Zubair Ahmad Khan
Faculty of Management Sciences
UCP, Business School
 Chapter Objectives

1. Explain the purpose of a business plan.

2. Discuss the two primary reasons for writing a
business plan.
3. Describe who reads a business plan and what they’re
looking for.
4. Explain the difference between a summary business
plan, a full business plan, and an operational business
plan.
5. Explain why the executive summary may be the most
important section of a business plan.
 Chapter Objectives

6. Describe a milestone and how milestones are used

in business plans.
7. Explain why its important to include separate
sections on a firm’s industry and its target market in
a business plan.
8. Explain why the “Management Team and Company
Structure” section of a business plan is particularly
important.
9. Describe the purposes of a “sources and uses of
funds” statement and an “assumptions sheet.”
 Chapter Objectives

10. Detail the parts of an oral presentation of a business

plan.
 What Is a Business Plan?

• Business Plan
– A business plan is a written narrative, typically 25 to 35
pages long, that describes what a new business plans to
accomplish.
• Dual-Use Document
– For most new ventures, the business plan is a dual-purpose
document used both inside and outside the firm.
Why Reads the Business Plan—And What
Are They Looking For?
There are two primary audience for a firm’s business plan

Audience What They are Looking For

A Firm’s A clearly written business plan helps the

Employees employees of a firm operate in sync and move
forward in a consistent and purposeful manner.

Investors and A firm’s business plan must make the case that the
other external firm is a good use of an investor’s funds or the
stakeholders attention of others.
 Guidelines for Writing a Business Plan

• Structure of the Business Plan

– To make the best impression a business plan should follow
a conventional structure, such as the outline for the
business plan shown in the chapter.
– Although some entrepreneurs want to demonstrate
creativity, departing from the basic structure of the
conventional business plan is usually a mistake.
– Typically, investors are busy people and want a plan where
they can easily find critical information.
 Guidelines for Writing a Business Plan

• Content of the Business Plan

– The business plan should give clear and concise
information on all the important aspects of the proposed
venture.
– It must be long enough to provide sufficient information
yet short enough to maintain reader interest.
– For most plans, 25 to 35 pages is sufficient.
• Types of Business Plans
– There are three types of business plans, which are shown
on the next slide.
Guidelines for Writing a Business Plan

Types of Business Plans

 Outline of Business Plan

• Outline of Business Plan

– A suggested outline of a business plan is shown on the next
several slides.
– Most business plans do not include all the elements
introduced in the sample plan; we include them here for the
purpose of completeness.
– Each entrepreneur must decided which elements to include
in his or her plan.
 Section 1: Executive Summary

Key Insights
• In many instances an investor will
ask for a copy of a firm’s executive
Executive Summary summary and will ask for a copy of
the entire plan only if the executive
summary is sufficiently convincing.
• The executive summary, then, is
arguably the most important
section of a business plan.
 Section 2: Company Description

• Company Description
– The main body of the business plan beings with a general
description of the company.
– Items to include in this section:
• Company description.
• Mission statement.
• Products and services.
• Current status.
• Key partnerships (if any).
 Section 2: Company Description

Key Insights
• While at first glance this section
may seem less important than the
Company Description others, it is extremely important.
• It demonstrates to your reader that
you know how to translate an idea
into a business.
 Section 3: Industry Analysis

• Industry Analysis
– This section should being by describing the industry the
business will enter in terms of its size, growth rate, and
sales projections.
– Items to include in this section:
• Industry size, growth rate, and sales projections.
• Industry structure.
• Nature of participants.
• Key success factors.
• Industry trends.
• Long-term prospects.
 Section 3: Industry Analysis

Key Insights
• Before a business selects a target
market it should have a good grasp
Industry Analysis of its industry—including where its
promising areas are and where its
points of vulnerability are.
• The industry that a company
participates in largely defines the
playing field that a firm will
participate in.
 Section 4: Market Analysis

• Market Analysis
– The market analysis breaks the industry into segments and
zeros in on the specific segment (or target market) to which
the firm will try to appeal.
– Items to include in this section:
• Market segmentation and target market selection.
• Buyer behavior.
• Competitor analysis.
 Section 4: Market Analysis

Key Insights
• Most startups do not service their
entire industry. Instead, they focus
Market Analysis on servicing a specific (target)
market within the industry.
• It’s important to include a section in
the market analysis that deals with
the behavior of the consumers in the
market. The more a startup knows
about the consumers in its target
market, the more it can tailor its
products or service appropriately.
 Section 4: Marketing Plan

• Marketing Plan
– The marketing plan focuses on how the business will
market and sell its product or service.
– Items to include in this section:
• Overall marketing strategy.
• Product, price, promotions, and place.
 Section 4: Marketing Plan

Key Insights
• The best way to describe a startup’s
marketing plan is to start by
Marketing Plan articulating its marketing strategy,
positioning, and points of
differentiation, and then talk about
how these overall aspects of the
plan will be supported by price,
promotional mix, and distribution
strategy.
 Section 5: Management Team and Company
Structure
• Management Team and Company Structure
– The management team of a new venture typically consists
of the founder or founders and a handful of key
management personnel.
– Items to include in this section:
• Management team.
• Board of directors.
• Board of advisers.
• Company structure.
 Section 5: Management Team and Company
Structure
Key Insights
• This is a critical section of a
business plan.
Management Team and • Many investors and others who
Company Structure read the business plan look first at
the executive summary and then go
directly to the management team
section to assess the strength of the
people starting the firm.
 Section 6: Operations Plan

• Operations Plan
– Outlines how your business will be run and how your
product or service will be produced.
– A useful way to illustrate how your business will be run is
to describe it in terms of “back stage” (unseen to the
customer) and “front stage” (seen by the customer)
activities.
– (Restaurant Example)
– Items to include in this section:
• General approach to operations.
• Business location.
• Facilities and equipment.
 Section 6: Operations Plan

Key Insights
• Your have to strike a careful balance
between adequately describing this
Operations Plan topic and providing too much
detail.
• As a result, it is best to keep this
section short and crisp.
 Section 7: Financial Projections

• Financial Projections
– The final section of a business plan presents a firm’s pro
forma (or projected) financial projections.
– Items to include in this section:
• Sources and uses of funds statement.
• Assumptions sheet.
• Pro forma income statements.
• Pro forma balance sheets.
• Pro forma cash flows.
• Ratio analysis.
 Section 7: Financial Projections

Key Insights
• Having completed the earlier
sections of the plan, its easy to see
Financial Projections why the financial projections come
last.
• They take the plans you’ve
developed and express them in
financial terms.