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Cal Poly Pomona MHR 423 - Overview of a Business Plan

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Overview of a Business PlanPurposes of a Business PlanWhat Investors Expect to SeeWhat Do Investors Invest In?What Makes a Good Plan?Main Sections of a Plan (1)Main Sections of a Plan (2)Main Sections of a Plan (3)Why Is It Hard to Prepare?Keep It Short and SimpleEdit, Edit, EditAny Questions?Overview of a Business PlanMHR 308July 9, 2002Purposes of a Business PlanTo get equity financing from a third partyTo get a bank loanTo determine what you have to do to launch and grow the businessForms your monthly operational budgetProvides specific objectives to achieveEnables you to share the plan with key managers, employees, and prospective advisorsSignals whether the business is worth startingWhat Investors Expect to SeeAn exciting, innovative business conceptA pro prietary product, or some other competitive advantageA sound revenue model (reflecting demand)Good return on investmentThe investment dealAn exit strategyWhat Do Investors Invest In?PeoplePeoplePeopleWhat Makes a Good Plan?Is the business concept sound?Can the company compete?Will it make money?Can it be understood?Is it realistic?Can we trust the entrepreneur to make it happen?Will s/he be unfazed by failure?Can s/he inspire and lead a team?Does it inspire confidence?Main Sections of a Plan (1)What is the business concept?What makes you think people will buy the product/service?Who are your competitors, and can you compete with them?How much do you know about your customers? (Who is your target?)What else can affect your business?Main Sections of a Plan (2)Who owns the company and who are the key managers?What experience do they have?How will you organize? What staff will you need?What is your market-entry strategy and marketing plan?What is your operations/production plan?How will you develop your next-generation product?Main Sections of a Plan (3)What are your financial assumptions and projections?How much capital will you need?When will you break even?What do you have to do before you can achieve your first revenues?What are the chief risks your business will face?And how will you cope with them?What is the investment deal or loan required?Why Is It Hard to Prepare?A lot of information to researchHard to make a case why the business will succeedHard to write clearly so that an outsider will understand it easilyHard to do it quicklyEverything has to mesh together consistentlyFigures have to be realisticHave to get a team together before going for financingKeep It Short and SimpleNo fancy colorsSimple formatting, fontUse consistent headings and subheadingsCome to the point – shorter is betterRound off dollar figures to nearest 100 or 1,000No decimals everNo dollar signsPut important but secondary information in appendicesEdit, Edit, EditWrite your first draft of any section quicklyBe prepared to spend at least as long, if not longer, editing and revising itIt’s when the real thinking gets doneEVERYONE IN THE GROUP SHOULD BE INVOLVED IN REVISING AND EDITING SECTIONSDevelop a way to do this smoothly with as little wasted time as possibleAny


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Cal Poly Pomona MHR 423 - Overview of a Business Plan

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