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Chapter

Writing an Effective Business Plan - Reading Notes.rtf

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Department
Business
Course Code
BU121
Professor
Roopa Reddy

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Writing an Effective Business Plan Pg. 12 - 43 WHY WRITE A BUSINESS PLAN? THE BENEFITS OF CLEAR-CUT GOALS -writing a business plan is time consuming and at times seems pointless however: "It is truly difficult to arrive somewhere unless you know where you want to go" -the business plan will: explain what the new venture is trying to accomplish and how it will go about attaining these goals -Venture Capitalists and others who might support your new venture, are looking for. The more clear your report is (your goals and methods of achieving them), the more impressive/persuasive your business plan will be -Business plans are not just written to persuade others, they are used to clearly understand the best way for proceeding Living Document: your business plan needs to be treated this way as it should/will often change and develop -Business Planning Model: 1. Develop a simple basic business plan 2. Start the business 3. Take the information and use it to refine the plan -Alex D'Arbeloff (founder of Teradyne) idea was to write a simple business plan and treat the document as a living document COMPONENTS OF A BUSINESS PLAN: BASIC REQUIREMENTS -questions to ask before investing in a new venture: 1. What - is the basic idea for the new product/service? 2. Why - is this new product useful? 3. How - will the idea for the new venture be realized? 4. Who - are the entrepreneurs (do they have knowledge, experience and skills?) 5. Financing - do you need financing?, who much?, what does the return look like?, etc. Helpful tips to ensure your Business Plan is good: 1. The plan should be arranged and prepared in proper business form. -cover page -table of contents -executive summary -major section of the plan - clearly headed and identified -appendicies -make the plan look business appropriate 2. The plan should be succinct (clear/precise ) -short, too the point, and clear 3. The plan should be persuasive -decision are made very quickly, you must begin strong and continue strong -your report should start with the executive summary - therefore your executive summary is very important 4. Quality -quality of the idea -quality of the people behind the idea -get peoples feedback on your new venture before going too far THE EXECUTIVE SUMMARY -often only a brief opportunity to stimulate another person's interest to want to know more -- this is the point of the executive summary (brief and to the point) -should answer questions briefly but enough detail for the reader to form a clear picture of what your new venture is about -first chance is your best chance, and sometimes your only chance -Order of the sections for your business plan: 1. Background and Purpose -describing your product/service -current state of the business -nature of the entrepreneur's company -what makes your product/service valuable or unique -what the new venture seeks to accomplish -mission statement 2. Market Analysis -decribe the market for your product/service (growing/shrinking) -who will buy it? why? -describe how the new product/service will be promoted -costs -competiting companies and products 3. Competition -information on existing competition and how it will be overcome -pricing -related issues 4. Development, Production, and Location -is it available -- development and production -projected costs and timetable for production -detailed information (shows you have done the prep work) 5. The Management Team -describing the experience, skills, knowledge of the management team -do they have the potential to run this new venture sucessfully? -do they have good working relationships -are roles and duties clearly assigned -do they have confidence? -if experience is lacking investors can sometimes off set these challenges and increase training in needed areas for the new venture to be successful 6. Financial Plans and Projections -companies financial state -future projections -revenue
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