Transcript Powerpoint Presentation

Chapter 10
Building an
Effective
Business Plan
Learning Objectives
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Describe how to move from a feasible concept
to a business plan
Discuss the strategy and structure of the
business plan
Explain how to organize a business plan
effectively
Describe how to successfully present a
business plan
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10 | 2
From Feasible Concept to Business Plan
Purpose of the business plan:
– Serves as a reality check for the
entrepreneur
– Is a living guide to the business
– Is a statement of intent for interested third
parties
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10 | 3
Investors’ Interests and Concerns
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Rate of growth
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Return on investment
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Degree of risk
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Degree of protection
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10 | 4
Bankers’/Lenders’…
Interests and Concerns
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YEAR
SALES
2010
2011
2012
2013
2014
2015
0
786,000
1,691,000
2,776,000
4,432,000
6,713,000
OPERATING
EXPENSES
772,000
1,218,000
1,662,100
2,013,600
2,493,200
3,071,300
GROSS
PROFIT
-772,000
-432,000
28,900
762,400
1,938,800
3,641,700
Company margins and cash flow projections
The amount of money needed
The kind of positive impact the loan will have on
the business
The kinds of assets the business has for
collateral
How the business will repay the loan
How the bank will be protected if the business
does not meet its projections
The entrepreneur’s stake in the business
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10 | 5
Strategic Partners and Alliances
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Licenses for manufacturing and assembly
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Supply of raw materials in exchange for equity
interest
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Formal or informal partnership agreements
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10 | 6
Starting the Process
With a Compelling Pitch
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Prepare the elevator pitch: brief statement of the
business concept
Answer the following questions:
– Why you, why now, how you will change the world?
– What need is being served?
– Can the founding team serve that need?
– Why is now the right time to launch this venture?
– What is this venture’s competitive advantage?
– Can this venture make money?
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10 | 7
Starting the Business Planning
Process with a Website
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The internet is the perfect place to communicate
a new venture’s message
A new business can look as successful and
established as any large company
A website demonstration can communicate to the
visitor what the business does, who its customers
are, and its value proposition
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10 | 8
The Business Plan:
Strategy and Structure
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Tasks to guide the preparation of the plan:
– Identify who is responsible for what
– Develop a timeline based on tasks identified
– Hold the team to the timeline and work
diligently to get the plan done
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10 | 9
Components of the Business Plan
•Components:
– Executive Summary
– Business Concept
– Founding
Management Team
– Industry/Market
Analysis
– Product/Service Plan
– Operations or
Organization Plan
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Marketing Plan
Financial Plan
Growth Plan
Contingency Plan
and Harvest Strategy
– Timeline to Launch
– Appendices
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Mistakes in Developing
the Business Plan
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Projecting rapid growth beyond the capabilities of
the founding team
Envisioning a three-ring circus with only one
ringleader
Reporting performance that exceeds industry
averages
Underestimating the venture’s need for capital
Mistaking tactics for strategy
Using price as a market strategy for a
product/service
Not investing in the business
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10 | 11
Successfully Presenting the
Business Plan
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Keep the presentation to less than 30 minutes
Tell a compelling story first
Do not use a podium to speak
Move about without distracting the audience
Maintain eye contact with everyone
Make the visual aids simple
CEO and Executive Mmgt do the presentation
Use live demonstrations
Practice in advance
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10 | 12
Successfully Presenting the Business Plan…
Practice…!!!
1. Practice Delivery Out Loud.
2. Practice at Place Similar to the Real Speaking Venue.
3. Practice in Front of Real People.
4. The Mirror is Your Friend.
5. Practice from Beginning to End Without Stopping.
6. Practice with Your Props (Power Points).
7. Do it One More Time.
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10 | 13
Answering Questions
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Investors like to ask what they already know
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Trick questions are likely
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Don’t be afraid if you don’t not know the answer
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Maintain your creditability & integrity
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Founding team can join the CEO for questions
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10 | 14