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Chapter

BU121 Chapter Notes -Living Document, Teradyne, Cash Flow Statement


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
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-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
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