LECTURE - 6

Writing a
Business Plan
BUS 360: Leading Innovation
M Wahidul Islam
1-2
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.
 Inside the firm, the plan helps the company develop a “road map”
to follow in executing its strategies and plans.
 Outside the firm, it introduces potential investors and other
stakeholders to the business opportunity the firm is pursuing and
how it plans to pursue it.
 Who Reads the Business Plan
And What Are They Looking For?

Audience What They are Looking For

A clearly written business plan, which articulates the

A Firm’s vision and future plans of the firm, helps the employees of
Employees a firm operate in sync and move forward in a consistent
and purposeful manner.

A firm’s business plan must make the case that the firm is a
Investors and good use of an investor’s funds or the attention of other
Other External external stakeholders. The key is to include facts generated
Stakeholders through a properly conducted feasibility analysis. A
business plan rings hollow if it is based strictly on what an
entrepreneur or team of founders “thinks” will happen.
Types of Business Plans
Guidelines for Writing a Business Plan
Structure of the Business Plan
 Follow a conventional structure

 Easy and accessible information layout

 Creativity is necessary but not at the price of ease

 Careful use of Software Packages

 Sense of Excitement
Guidelines for Writing a Business Plan
Content of the Business Plan
 Clear and concise information on all the important
aspects of the proposed venture.

 Itmust be long enough to provide sufficient

information yet short enough to maintain reader
interest.

 For most plans, 25 to 35 pages is sufficient.

Outline of Business Plan
 Cover Page
 Table of Contents
 The Executive Summary

The Business
 Management Team
 Company Structure, Ownership, and Intellectual Property

Industry Analysis
 Marketing Plan
 Operations Plan
 Financial Plan

Critical Risk Factors

 Appendix
Exploring Each Section of the Plan
 Cover Page
 The cover page should include the name of the company, its address,
its phone number, the date, and contact information for the lead
entrepreneur.
 Tableof Contents
 The Executive Summary
 The executive summary is a short overview of the entire business
plan; it provides a busy reader with everything that needs to be
known about the new venture’s distinctive nature.
 Inmany instances, an investor will first ask for a copy of the executive
summary and will request a copy of the full business plan only if the
executive summary is sufficiently convincing.
Exploring Each Section of the Plan
 The Business
 The most effective way to introduce the business is to
describe the opportunity the entrepreneur has identified–
that is, the problem to solve or the need to be filled–and
then describe how the business plans to address the issue.
 The description of the opportunity should be followed by
a brief history of the company, along with the company’s
mission statement and objectives.
 An explanation of the company’s competitive advantage
and a brief description of the business model follow.
Exploring Each Section of the Plan
 Management Team
 As mentioned earlier, one of the most important things
investors want to see when reviewing the viability of new
ventures is the strength of its management team.
 If the team doesn’t “pass muster,” most investors won’t read
further.
 The material in this section should include a brief summary
of the qualifications of each member of the management
team, including his or her relevant employment and
professional experiences, significant accomplishments, and
educational background.
Exploring Each Section of the Plan
 Company Structure, Ownership, and Intellectual
Property
 This section should begin by describing the structure of
the new venture, including the reporting relationships
among the top management team members.
 The next part of the section should explain how the firm
is legally structured.
 The third part of this section should discuss the
intellectual property the firm owns, including patents,
trademarks, and copyrights.
Exploring Each Section of the Plan
 Industry Analysis
 This section should begin by discussing the major trends
in the industry in which the firm intends to compete
along with important characteristics of the industry, such
as its size, attractiveness, and profit potential.
 This section should also discuss how the firm will
diminish or sidestep the forces that suppress its
industry’s profitability.
 The firm’s target market should be discussed next, along
with an analysis of how it will compete in that market.
Exploring Each Section of the Plan
 Marketing Plan
 This marketing plan should immediately follow the
industry analysis and should provide details about the
new firm’s products or services.
 After reading this section of the plan, an investor
should be confident that the firm’s overall approach to
its target market and its product strategy, pricing
strategy, channels of distribution, and promotional
strategy are in sync with one another and make sense.
Exploring Each Section of the Plan
 Operations Plan
 This section of the plan deals with the day-to-day operations
of the company.
 An overview of the manufacturing plan (or service delivery
plan) should be followed by a description of the network of
suppliers, business partners, and service providers that will
be necessary to build the product or produce the service the
firm will sell.
 Any risks or regulations pertaining to the operations of the
firm should be disclosed, such as non-routine regulations
regarding waste disposal and worker safety.
Exploring Each Section of the Plan
 Financial Plan
 The financial section of the plan must demonstrate the financial
viability of the business. A careful reader of the plan will scrutinize
this section.
 The financial plan should begin with an explanation of the funding
that will be needed by the business during the next three to five
years along with an explanation of how the funds will be used.
 It is important to remember that the business plan should be based
on realistic projections.
 If it is not and the company gets funding or financing, there will most
certainly be a day of reckoning. Investors and bankers hold
entrepreneurs accountable for the numbers in their projections.
Exploring Each Section of the Plan
 Critical Risk Factors
 Although a variety of potential critical risks may exist, a
business should tailor this section to depict its truly critical
risks.
 Appendix
 Any material that does not easily fit into the body of a
business plan should appear in an appendix. Examples of
materials that might appear in the appendix include:
 Resumes of the top management team members, photos or
diagrams of product or product prototypes, certain financial
data, and market research projections.
 Putting It All Together
The 10 Most Important Questions a Business Plan Should Answer

Does the firm have an exciting and

Is the business just an idea, or is it an sensible business model? Will other
opportunity with real potential? firms be able to easily copy it?

Is the product or service viable? Does it Is the industry in which the product or
add significant value to the customer? service will be competing growing,
Was a feasibility analysis completed? stable, or declining?

Does the firm have a well-defined

target market?
 Putting It All Together
The 10 Most Important Questions a Business Plan Should Answer

Is the management team experienced, Is the firm organized in an appropriate

skilled, and up to the task of launching manner? Are its strategy and business
the new firm? practices legal and ethical?

Are the financial projections realistic,

and do they project a bright future for How will the firm’s competitors react
the firm? What rate of return can to its entrance into their markets?
investors expect?

What are the critical risks surrounding the business,

and does the management team have contingency
plans in place if risks become actual problems?
Presenting the Business Plan to
Investors
 Making a Presentation to Investors
 If the business plan successfully elicits the interest of
potential investors, the next step is to meet with the investors
and present the plan in person.
 The first meeting with an investor is generally very short,
about one hour. The investor will typically ask the firm to
make a 20- to 30-minute presentation using PowerPoint
slides and use the rest of the time to respond to questions.
 If the investor is impressed and wants to learn more about
the venture, the firm will be asked back for a second
meeting.
Presenting the Business Plan to
Investors
 Tips on Making an Oral Presentation to Investors
 When asked to meet with an investor, the founders of a
new venture should prepare a set of PowerPoint slides that
will fill the time slot permitted.
 The presentation should be smooth and well rehearsed.
The slides should be sharp and not cluttered with material.
 The first rule in making an oral presentation is to follow
instructions. If an investor tells an entrepreneur that he or she
has one hour and that the hour will consist of a 30-minute
presentation and a 30-minute question-and-answer period, the
presentation shouldn’t last more than 30 minutes.
Presenting the Business Plan to Investors
Ten PowerPoint Slides to Include in an Investor Presentation
1. Title slide
2. Problem
3. Solution
4. Business model
5. Management team
6. Industry and target market
7. Competition
8. Intellectual property
9. Financial projections
10.Current status, amount of money requested, and
projected use of funds
References
 Chapter 4 – Writing a Business Plan
 Barringer,Bruce R. and Ireland, Duane (2010)
Entrepreneurship: Successfully Launching New
Ventures (3rd Edition) Pearson Education Inc