3 4 14 Chapter 10 Building and Effective Business Plan Purpose of the Business Plan Serves as a reality check for the entrepreneur who will be forced to think about every aspect of operating the business Its an operating guide for the business It s a statement of intent for interested third parties A feasibility analysis is primarily a test of new concept viability in the marketplace will anyone buy it Business plan is more comprehensive and discusses operational aspect of business Potential Investor s Interests Concerns Rate of growth Return on investment Degree of risk Degree of protection They tend to look for market driven rather than product or technology driven companies They expect predictions to be based on solid objective evidence demonstrate through knowledge of the market Want to know when and how their investment will be repaid Banker s Lender s Interests Concerns Company margins and cash flow projections want to see when they ll be repaid preferable Specific amount of money needed Kinds of assets the business has for collateral general use assets are How bank will be protected if the business does not meet its projections what s entrepreneur s plan B C Entrepreneurs stake in the business Prepare your elevator pitch What need is being served Can the founding team product 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 Don t get caught up on owing 100 of your company starting out sometimes you need help and it isn t a bad idea to give up say 10 equity or more of your company to have more knowledge an resource from whoever invested in you Strategy Structure Identify who is responsible for what Develop a timeline based on tasks identified Hold team to the timeline and work diligently to get the plan done Remember components of a business plan from exam 1 Mistakes in Developing Business Plan Projecting rapid growth beyond the capabilities of the founding team Developing a plan whose success is 100 reliant on the efforts of one entrepreneur investors like to see teams rather than solo entrepreneurs Projecting performance that exceeds industry averages Underestimating the venture s need for capital Mistaking tactics for strategy using price as market strategy for product service Entrepreneur not investing in the business Successfully Presenting the Business Plan Keep presentation to less than 30 minutes Tell your compelling story first Don t use podium to speak limits gestures use of visual aids Move about without distracting the audience no pacing Maintain eye contact with everyone Make visual aids simple CEO should do the presentation Use live demonstrations PRACTICE IN ADVANCE Answering Questions Investors like to ask questions they know answers to Don t be afraid to not know answer assure them you ll find out answer get back to them Founding team should join the CEO for questions Remember Purpose of business plan 6 common mistakes developing a business plan Difference between feasibility analysis business plan Potential investors risks and concerns Successfully presenting a business plan Premium Pricing setting high price because you know you have a good product
View Full Document
Unlocking...