CREATING AND STARTING THE VENTURE (Continued….):WRITING THE BUSINESS PLAN

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Entrepreneurship MGT602

Lesson 22

CREATING AND STARTING THE VENTURE (Continued....)

LEARNING OBJECTIVES

To identify information needs and sources for business planning.

To enhance awareness of the ability of the Internet as an information resource and marketing tool

To present helpful questions for the entrepreneur at each stage of the planning process.

To understand how to monitor the business plan

INFORMATION NEEDS

Before preparing a business plan, the entrepreneur should do a quick feasibility study to see if there are

possible barriers to success. The entrepreneur should clearly define the venture's goals, which provide a

framework for the business plan. The business plan must reflect reasonable goals.

Market Information

It is important to know the market potential for the product or service. The first step is to define the

market. A well-defined target market makes it easier to project market size and market goals. To assess the

total market potential, the entrepreneur can use trade associations, government reports, and published

studies.

Operations Information Needs

The entrepreneur may need information on:

Location

Manufacturing operations

Raw materials

Equipment

Labor skills

Space

Overhead

Each item may require some research but is needed by those who will assess the business plan.

Financial Information Needs

Before preparing the plan, the entrepreneur must evaluate the profitability of the venture through the

following:

Expected sales and expense figures for the first three years

Cash flow figures for the first three years

Current balance sheets and pro forma balance sheets for the next three years

Determination of expected sales and expenses is based on the market information gathered earlier.

Estimates of cash flow will consider the ability of the new venture to meet expenses at designated times.

Current balance sheet figures show the assets, liabilities, and investments made by the owner.

USING THE INTERNET AS A RESOURCE TOOL

Thanks to technology, entrepreneurs are able to access information efficiently, expediently, and at very little

cost. The Internet can serve as an important source of information in preparing the business plan.

Information on industry analysis, competitor analysis, and measurement of market potential can be located.

In addition, the Internet also provides opportunities for actually marketing the new venture's products. A

web site, or home page, typically describes a firm's history, existing products, background of the founders,

and other information to create a favorable image. The web site can be a vehicle for advertising or for

direct marketing. Many new ventures use web pages to increase sales contacts and reach potential

customers. An entrepreneur can also access competitors' web sites to gain knowledge of their strategy in

the marketplace. To gather information anonymously the entrepreneur can also investigate newsgroups. All

that is needed to use these sources is a small investment in hardware and software.

Entrepreneurship MGT602

WRITING THE BUSINESS PLAN

The business plan should be comprehensive enough to give a potential investor a complete understanding

of the venture.

Introductory Page

The title page provides a brief summary of the business plan's contents, and should include:

The name and address of the company

The name of the entrepreneur and a telephone number

A paragraph describing the company and the nature of the business

The amount of financing needed

A statement of the confidentiality of the report

It also sets out the basic concept that the entrepreneur is attempting to develop.

Executive Summary

This is prepared after the total plan is written. It should be three to four pages in length and should

highlight the key points in the business plan. The summary should highlight in a concise manner the key

points in the business plan.

Issues that should be addressed include:

Brief description of the business concept

Any data that support the opportunity for the venture.

Statement of you this opportunity will be pursued.

Highlight some key financial results that can be achieved

Because of the limited scope of the summary, the entrepreneur should ascertain what is important to the

audience to whom the plan is directed.

Environmental and Industry Analysis

The entrepreneur should first conduct an environmental analysis to identify trends and changes

occurring on a national and international level that may impact the new venture.

Examples of environmental factors are:

Economy

Culture

Technology

Legal concerns

All of the above external factors are generally uncontrollable

Next the entrepreneur should conduct an industry analysis that focuses on specific industry trends

Some examples of industry factors include:

Industry demand

Competition

The last part of this section should focus on the specific market. This would include such information as

who the customer is and what the business environment is like. The market should be segmented and the

target market identified.

Description of the Venture

The description of the venture should be detailed in this section. This should begin with the mission

statement or company mission, which describes the nature of the business and what the entrepreneur

hopes to accomplish. The new venture should be described in detail, including the product, location,

personnel, background of entrepreneur, and history of the venture. The emphasis placed on location is a

function of the type of business. Maps that locate customers, competitors, and alternative locations can be

helpful. If the building or site decision involves legal issues, the entrepreneur should hire a lawyer.

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