G
Guest
Preparing a Business Plan
Two issues are of primary concern in preparing a business plan:
1.The basic format and effectiveness of the written presentation
2.The content of the plan
Formatting and Writing a Business Plan
The quality of a completed business plan ultimately depends on the quality of the underlying business concept. After all, the plan is not the business.
Clear writing gives credibility to the ideas presented in a business plan. Factual support must be supplied for any claims or promises made.
Example: When promising to provide superior service or explaining the attractiveness of the market, the entrepreneur must Include strong supporting evidence.
In short, the plan must be believable.
General writing principles, practical suggestions for writing a business plan:
1. Provide a table of contents and individual section tabs for easy reference.
2. Place the plan in a loose-leaf binder to facilitate future revisions.
3. To add interest and aid reader’s comprehension,make liberal but effective use of visual aids, such as graphs, exhibits, and tabular summaries.
4. Prominently indicate that all information in the plan is proprietary and condiential. Number every copy of the plan, and account for each outstanding copy by requiring a recipient of the plan to acknowledge receipt in writing.
5. When a startup is based on proprietary technology, be cautious about divulging certain information
6. Request that carefully chose third parties who have themselves raised capital successfully—primarily other entrepreneurs—give their perspectives on the business concept and the effectiveness of the writing plan.
Deciding on the Content of the Business Plan
In considering the content of a business plan, think first and foremost about the opportunity. Strategies and financial plans should come later. In the evaluation of an opportunity, give thorough consideration to the following basic and interdependent factors:
The entrepreneurial team – Nothing is more important than the people who are starting and manaing the venture—their qualifications and the depth and breadth of experience they bring to the venture.
The opportunity—A profile is needed of the business itself—what it will sell, to whom it will sell, and how rapidly it can grow. The industry and market outlook should include an assessment of everything that can go wrong or right, with a discussion of how the entrepreneurial team could respond to the various challenges.
The resources—The critical resources for an entrepreneurial venture include not just money, but also the human assets (suppliers, accountants, lawyers, investors, etc.) and hard assets (accounts receivable, inventories,etc.) The entrepreneurial approach to resources is “doing the most with the least.” The entrepreneur should think of ways to work with minimal resources and focus on “minimizing and controlling” rather than on “maximizing and owning”.
The deal structure—How a firm’sfinancing is structured (debt versus equity) and how the ownership percentage is shared by the founders and investors have a significant impact on an entrepreneur’s incentive to work hard. The goal is to find a win-win deal.
The big picture—The context (or external factors) of an opportunity includes the regulatory environment, interest rates, demographic trends, inflation, and other factors that inevitably change but cannot be controlled by the entrepreneur.
Two issues are of primary concern in preparing a business plan:
1.The basic format and effectiveness of the written presentation
2.The content of the plan
Formatting and Writing a Business Plan
The quality of a completed business plan ultimately depends on the quality of the underlying business concept. After all, the plan is not the business.
Clear writing gives credibility to the ideas presented in a business plan. Factual support must be supplied for any claims or promises made.
Example: When promising to provide superior service or explaining the attractiveness of the market, the entrepreneur must Include strong supporting evidence.
In short, the plan must be believable.
General writing principles, practical suggestions for writing a business plan:
1. Provide a table of contents and individual section tabs for easy reference.
2. Place the plan in a loose-leaf binder to facilitate future revisions.
3. To add interest and aid reader’s comprehension,make liberal but effective use of visual aids, such as graphs, exhibits, and tabular summaries.
4. Prominently indicate that all information in the plan is proprietary and condiential. Number every copy of the plan, and account for each outstanding copy by requiring a recipient of the plan to acknowledge receipt in writing.
5. When a startup is based on proprietary technology, be cautious about divulging certain information
6. Request that carefully chose third parties who have themselves raised capital successfully—primarily other entrepreneurs—give their perspectives on the business concept and the effectiveness of the writing plan.
Deciding on the Content of the Business Plan
In considering the content of a business plan, think first and foremost about the opportunity. Strategies and financial plans should come later. In the evaluation of an opportunity, give thorough consideration to the following basic and interdependent factors:
The entrepreneurial team – Nothing is more important than the people who are starting and manaing the venture—their qualifications and the depth and breadth of experience they bring to the venture.
The opportunity—A profile is needed of the business itself—what it will sell, to whom it will sell, and how rapidly it can grow. The industry and market outlook should include an assessment of everything that can go wrong or right, with a discussion of how the entrepreneurial team could respond to the various challenges.
The resources—The critical resources for an entrepreneurial venture include not just money, but also the human assets (suppliers, accountants, lawyers, investors, etc.) and hard assets (accounts receivable, inventories,etc.) The entrepreneurial approach to resources is “doing the most with the least.” The entrepreneur should think of ways to work with minimal resources and focus on “minimizing and controlling” rather than on “maximizing and owning”.
The deal structure—How a firm’sfinancing is structured (debt versus equity) and how the ownership percentage is shared by the founders and investors have a significant impact on an entrepreneur’s incentive to work hard. The goal is to find a win-win deal.
The big picture—The context (or external factors) of an opportunity includes the regulatory environment, interest rates, demographic trends, inflation, and other factors that inevitably change but cannot be controlled by the entrepreneur.
