The Venture Planning Process How to Develop a Venture Plan

What is a Venture Plan? A Venture Plan is a road map for running a venture- a written summary of what the venture can accomplish and how. A Venture Plan is a tool you can use to communicate with potential investors, bankers, partners, and employees.

A Venture Plan should Include: A Mission Statement that describes your vision for the venture, including your aims and objectives The Marketing Research you have done, and s detailed description of your target market A list of the Financial, Material and Human Resources you need to make your plan work An explanation of How the Business will Operate A Plan for Raising the Money you need to start the venture

Reasons to Prepare a Venture Plan: Helps identify your market, understand your customers, choose the best pricing strategy, and get to know the competition A plan forces you to take a realistic view of your idea and logically assess your goals Introduces you to others as a careful planner (First impressions are important) A plan identifies benchmarks that help you evaluate and improve the performance of the venture A written plan makes day-to-day management easier as procedures can be reviewed and adjusted as necessary

Sections in a Business Venture Plan: Executive Summary Market Analysis Resource Analysis Operating Strategy Financial Strategy

Executive Summary- Section 1 An executive summary is a one- or two page summary of the most important points in your plan. It is intended to introduce the venture and capture the attention of the reader It should be flawless and to the point to create a good first impression! Cannot be written until all other sections of the plan are complete

A Great Executive Summary: Opens with a Mission Statement Includes an accurate description of the Business Includes the names of the contact person and management team members and how these people can be reached The name of the venture and a description of its nature and objectives Information about the goods and services offered, what makes this venture unique, the location of the business, and the proposed timelines for its development

Executive Summary also includes: Information about security that can be offered to investors in exchange for the investment Information about business loans required Key highlights of the Business plan

Market Analysis- Section 2 The Marketing Analysis section describes the marketing research conducted and the conclusions you drew from the research A Market Analysis (Needs Assessment) can help you identify potential customers, analyze competition, set prices, and plan ways to advertise the venture

A Market Analysis Should Include: Demographics of potential customers (age, gender, location, buying habits, etc.) The types of Products or Services you think your customers will buy and how you know Description of trends that suggest this is the right time to introduce your product or service Who your competitors are, where they are, and how successful they are

Market Analysis (cont.) How you plan to make your product or service better than or different from your competitors’ How much you will charge for your product or service How you plan to advertise your product or service to your target market

Pricing Pricing is an important part of the market analysis that can make or break a new venture. Price too high may discourage sales Price too low, customers may perceive product or service as low quality How can my price be competitive and still provide a suitable profit margin?\

An Advertising Plan should include: An assessment of the various forms of advertising available The types of customers you hope to reach The costs involved Registration of the venture name

Registering a Company Name: First determine the type of ownership: sole proprietorship, partnership, or corporation If you use your own name as a company name and you are a sole proprietor, you are not required to register (Deb Rice) If you add any words to the name (Deb Rice Café) it is necessary to register the business name and pay a fee before you use it Registering your business name ensures that only you can use this name for advertising and legal purposes in the province of registration

RESOURCE ANALYSIS- Section 3 All good venture ideas need resources to make them work All business plans must have a resource analysis section The entrepreneur needs to consider the following types of resources needed for the venture: Material Resources Human Resources Financial Resources

Material Resources Includes all materials needed to operate the venture, both raw materials and finished products (equipment such as: storage bins,paper, computers, delivery trucks, etc.) Some of theses are consumable resources while others are fixed resources which can be used over and over

Human Resources The people needed to operate the venture Look for people whose skills complement your own and fill in the gaps How many people will you need to start your business? to help it grow?

Financial Resources The money needed to start and operate your venture This includes money to buy equipment, materials, pay staff, rent, electricity, advertising costs, etc.

Resource Section of Plan Needs to Consider: What tools and equipment is needed and where you will get them What human resources you will need Where your venture will be located How much space you will require Whether you plan to buy or rent your facility or whether your business can be operated without a bricks-and-mortar site

Resource Section of Plan Needs to Consider (cont.) Whether you will manufacture your products yourself or hire a contract organization to do it for you Which sources of raw materials you intend to use and how much these will cost How often your suppliers will deliver materials and what return and refund policies they offer on their products The total cost of all resources you need to start and operate your business

OPERATING STRATEGY- Section 4 The Operating Strategy tells you how you will manage the material and human resources in the day-to-day operation of the business

ORGANIZATIONAL CHART: Human resources OWNER / MANAGER: Mrs. D Richardson ACCOUNTING: Jeff MacKinnon budgeting accounts payable accounts receivable payroll and benefits tax SHIPPING/ RECEIVING Matt Hardiman customer service scheduling pickups and deliveries order checking parts inventory maintenance ASSISTANT MANAGER: Janis Richardson recruiting/hiring staff training staff scheduling/ sales supervision

Operating Strategy (cont.) An organizational chart is a good way to present a visual plan for Human Resources Operating Strategy also deals with the production process and how necessary supplies will be obtained It describes how the facility will be set up, including its size, location(s), special needs, the ownership terms, or the lease terms The plan also describes the facility’s present and potential production capacity, minimum levels of production needed to sustain the operation, and any overhead operating costs. This section includes inventory needs, record keeping and contingency plans if regular suppliers cannot fill your orders

The Operating Strategy should include: Where the supplies will come from and who will be in charge of ordering them What records must be kept and who will keep them How the venture can keep its cost to a minimum What rules and regulations, including environmental ones apply to the venture Who will do each job and how the work will be supervised How the people will work together What the operating facility will be like How the production process will be organized

FINANCIAL STRATEGY: Section 5 A Financial Strategy is based on projected results The financial plan involves research Possible sources of capital for a venture include: bankers, government agencies, credit unions, friends, family

The Financial Strategy will explain: How much it will cost to start the venture How much it will cost to keep the venture going after startup The expected costs and revenue for the venture (give best and worst-case scenarios)- give high and low estimate for the future How much capital will be required and when it will be needed What sources of capital are available

Financial Details to include: Detailed cash-flow projections Sales forecasts Anticipated selling costs Expected gross profits Administrative costs

Financial plans also include: Expected pretax profit Balance sheet Rate of return on investment Working capital Repayment proposal Collateral

Importance of the Venture Plan Planning and Organization are vital to the success of any venture Preparing a venture plan helps you assess potential risks and problems Venture Planning provides a framework to measure success Putting your plan in writing provides a record of what has been decided

Mentorship Mentorship occurs whenever an experienced person, the mentor, offers advice and support to a less experienced person In the business world, mentorship can be an invaluable help to an entrepreneur in early stages of a venture