The Business Plan

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The Business Plan
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What is a business plan?

• A written document that explains every aspect of
  a new business venture

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Parts of a business plan (Sample)

• Executive Summary
• Company Description
• Industry Analysis
• Market Analysis
• Marketing Plan
• Management Team and Company Structure
• Operations Plan
• Product (or Service) Design and Development Plan
• Financial Projections
• Appendices (may include feasibility research,
  industry research, customer research, resumes
  of team members)

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Executive Summary

• A short overview of the business plan itself
• No more than 2 pages
• Not an introduction but a brief section by
  section summary

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Company Description

• Overview of what company is all about
• Includes information about what the product (or
  service) provided is, where the idea came from,
  what the goals and purpose of the company are,
  etc.

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Industry Analysis

• Defines the industrygroup of firms producing a
  similar product or service
• Explain key industry features such as the size,
  growth rate, sales projections

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Market Analysis

• Explains the trends of particular segment of the
  market that a firm attempts to capture

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Marketing Plan

• Explains specifically how the firm will make the
  target market aware of the product or service
  provided
• Develops plan for positioning a company relative
  to competetors

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Management Team and Company Structure

• Explains who will be involved in the enterprise
  and what their roles will be

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Operations Product or Service Development Plan

• Explains in detail how the business will run and
  how the product or service will be produced

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Financial Projections

• Explains how much money you need and how much you
  expect to make

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Why Plan Anyways?

• Internal Reasonsforces the founding team to work
  together to hammer out the details of a business
  venture
• External ReasonsCommunicates the merits of a new
  venture to outsiders, such as investors and
  bankers

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Internal Reasons

• Refine ideas for the business
• Decide if it is a good idea
• Decide if you have what it takes
• Define the type of business you are creating
• Survivalmake a living
• Lifestyledo what you love or maintain a
  lifestyle
• Managed growthhas a few employees with goals of
  expansion
• Aggressive growthbringing new product or service
  to market with the plan of expanding

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External Reasons

• People use your plan to decide whether or not to
  give you money or provide access to a business
  incubator
• Avoid Red Flags
• Founders with none of their own money to risk
• Poorly cited plan
• Defining the market to broadly
• Overly aggressive financials
• Hiding or avoiding weaknesses
• Sloppiness in any area
• Too long a plan

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Is my idea a good one?

• Where does it come from?
• Changing Environmental Trends
• Unsolved Problems
• Gaps in the Marketplace

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A Changing Environment

• Economic trends have changed
• Social trends have changed
• Technology has advanced
• Rules of Laws have changed

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Unsolved Problems

• Examples?
• Problem
• Solution
• Company that solved

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Gaps in the Market

• Examples?
• Gap
• Resulting opportunity
• Company that resulted

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Is my idea a good one?

• The first screena quick assessment of the merits
  of a business plan
• Part 1 Strength of an idea
• Part 2 Industry related issues
• Part 3 Market Customer related issues
• Part 4 Founder Related issues
• Part 5 Financial Issues

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Part 1 Strength of an Idea

• What does this mean?
• Where might we find this information?

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Part 2 Industry-Related Issues

• Types of issues we might be concerned about?
• Where might we find this information?

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Part 3 Market Customer Related Issues

• What might we be concerned about?
• Where might we find this information

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Part 4 Founder Related Issues

• What should you think about in this
  self-assessment?

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Part 5 Financial Issues

• What might you want to know?
• Where might you find this information?

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Some Sources to Consider

• ProQuestDatabase of articles both scholarly and
  popular
• Lexis-NexisDatabase containing newspapers,
  magazines, statistical info, and government info
• MintelMarket research on major industries and
  subcategories
• Hoover'sbusiness news source
• CountryWatchinternational and country specific
  news and information
• BizMinertracks small and large business for
  industry analysis
• MeLMichigan eLibrary, includes online databases
  and Michigan specific information

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Summary

• A business plan is a written document that
  summarized the idea for a business
• There are 2 important functions
• Internally it helps you refine your idea and
  decide if it is a good one
• Externally it is used to get investment

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Group Assignment

• Evaluate a business plan
• Is the idea a good one?
• Are their any red flags?
• How could it be improved?

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Tasks this week

• Discussion identify your idea and subject it to
  a first screen
• Assessment find organizations that offer help
  for small business and describe what they do
• Next week readings about conducting business in
  a global environment