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Chapter 5

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Administrative Studies
ADMS 3920
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22September2012CHAPTER 5 DEVELOPING AN EFFECTIVE BUSINESS PLANWHAT IS A BUSINESS PLANA startup business plan is a written document of a set of business goals the reasons they are believed attainable and the plan for reaching those goalsAlso a business plan may also be used to get the required financing from the investors It may also contain background information about the organization or team attempting to reach those goalsNOTE Writing a business plan is primarily an ongoing process and only secondarily the means to an end product or outcome THE NEED FOR A BUSINESS PLANFor internal use to provide a clearly articulated statement of goals strategies and expected economicsImposes discipline on the entrepreneur and management team Helps them envision success and Prepare for the unexpectedIn short the business plan provides a structure for communicating the entrepreneurs mission to current employees of the firm For External use to serve as a selling document to be shared with outsidersProvides a credible overview for prospective customers suppliers and investorsHelps secure favorable credit terms from suppliersOpens approaches to lenders and other sources of financingSome common business plan flaws include the following Overly optimistic financial projections which send up a red flag to lenders as do inadequate assessments of the competition and the market environmentVague marketing strategies that fail to clearly state product differentiation or the size of the target marketA poorly prepared document that looks unprofessional or lack research material
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