Introduction to Entrepreneurship: Business Plan Elements

Introduction to Entrepreneurship: Business Plan Elements
By: Venture Highway

Objectives Describe the important elements of a business plan
Describe how a business plan is created Discuss the importance of having an effective marketing strategy

Business Plan Elements
Section 1: How to Tell Your Story A business plan specifies the goals for your business and how you plan to achieve them. It presents your strategy for all aspects of the business within a 3-5 year span. Open up with a general overview of the business plan and why it is necessary for an entrepreneur to have this plan aligned to their business goals. See supplemental notes below, as well as the instructor notes in module 5.1: A business plan is just what the name says – it is a plan that specifies your goals for your business and how you plan to achieve them. This is the information that investors and lenders need, but you need a plan whether you need money or not. Creating a plan forces you to think through the steps you need to take, your strategy for all aspects of your business, and your specific and measurable goals. Having a plan will guide you, and it will become a tool to measure your progress.

Section 1: How to Tell Your Story The business plan coveys a story of where your business is today, how you got to this point, and where you plan to be in the future. Engage in a discussion on how the business plan should tell a story about your goals and plans for the future. Reference the course notes in section 5.1.

Section 1: How to Tell Your Story General Rules for Writing the Business Plan Avoid acronyms Explain your product in understandable terms Use easily scanned bulleted list when possible Don’t use small or unusable fonts It must be polished an professional Cite any sources used for data Use charts and tables Describe each item in detail. Explain each rule as it pertains to writing a clear and professional business plan.

Section 1: How to Tell Your Story When to Write it Your business plan should be written early before launching the business. Also, your plan is dynamic and can and should change over time. Discuss why it is important for entrepreneurs to write their plan early prior to starting their business. See supplemental notes below. Also, reference the notes and article listed in section 5.1. Your business plan should be written before you launch your business. It forces you to think through all of the aspects of your business, which will better prepare you for what it takes to get started. You also need to write your business plan early so that you are prepared when (or if) you need to ask for funding. Even if you think you will not need more money than you have, an unexpected need could arise and you won’t want to take the time to write a plan from scratch.

Section 2: Who are you? The opening section of your plan should describe the company and set the stage for the rest of the business plan. Things to consider may include: What is the company name? Who are the principals of the company? What is their ownership? What do you sell? Why did you decide to start this business? When was the company started? Where is the company located? What type of corporate structure is this (LLC, S-Corp, C-Corp)? When was it formed? Is there anything else that is important to know about the company? Describe how a basic story will describe your company and set the stage for the business plan.

Section 2: Who are you? Company Plan Subsection Company Ownership: In this you will detail the names and percentage ownership of all of the company founders and other owners. Discuss the company ownership section of the written business plan. See notes in section 5.2 for details.

Section 2: Who are you? Company Plan Subsection Startup Summary: This would include a summary of your startup funding needs, what they will be used for, and how you plan to obtain and structure your funding. Discuss the company startup summary section of the written business plan. Review notes in section 5.2 of the business plan.

Section 2: Who are you? Company Plan Subsection Company Facilities: If you already have facilities such as an office space, and employees or outsourced developers, you would detail that information here. Discuss the company facilities summary section of the written business plan. Review notes in section 5.2 of the business plan.

Section 2: Who are you? Company Plan Subsection Company Mission: Create a mission statement about what value you are offering your customers. This can be more than one sentence. Discuss the company mission summary section of the written business plan. Review notes in section 5.2 of the business plan.

Section 2: Who are you? Company Plan Subsection Keys to Success: Create a bulleted or numbered list of the key factors that will make your company successful. Discuss the keys to success summary section of the written business plan. Review notes in section 5.2 of the business plan.

Section 2: Who are you? Management and Advisors The management and advisors section should give the readers a sense of confidence about the management team and should include the following: Who are the principals of the company and what are their roles? Who are the other members of the management team and what are their roles? Who are the full or part time members of the operating team? Discuss the management and advisors section of the business plan. Describe each bullet point in detail.

Section 2: Who are you? Management and Advisors What roles do you know you need to fill soon? Who are your advisors and what are their experiences? Are there any key advisors you are targeting at this time? Who are your service partners?

Section 3: What is the Problem, How will You Solve it? The core of any business will be defined by answering the following (2) questions: What is the problem? How will the problem be solved? Discuss the importance of each question and why they define the core of any business.

Section 3: What is the Problem, How will You Solve it? Opportunities Derive From Problems A few questions to consider include: What is the need or problem you have identified? Who needs a solution to this problem? How big is the current need or pain if it exists? How many people or companies have this need or problem? How are your prospective customers solving their problem now without your product? Discuss each question in detail as it related to researching problems and solutions for entrepreneurs to obtain opportunities from.

Section 3: What is the Problem, How will You Solve it? Opportunities Derive From Problems Once you have clearly described the opportunity or need that you have identified, you need to explain how you are going to take advantage of this opportunity (solve the problem of your customer) with your product or service.

Section 3: What is the Problem, How will You Solve it? Describing Your Products and Services Consider answering these questions when describing what your product or service is: What is your product or service? How are you going to produce this product? How will this product be distributed? What do you need to adequately provide your services? Are there parts that need to be created to make your product? Discuss the importance of clearly describing each question in detail within the business plan. Reference the supplemental notes and articles in section 5.3 of the content notes.

Section 3: What is the Problem, How will You Solve it? Describing Your Products and Services Cont’d: Do you need or already have strategic partnerships to make your product? How does technology affect how your products and services are made or distributed? What future products or services do you have planned? What is the price of your product or service? Discuss the importance of clearly describing each question in detail within the business plan. Reference the supplemental notes and articles in section 5.3 of the content notes.

Section 3: What is the Problem, How will You Solve it? Technology Strategy Technology can be a competitive advantage. It can also be a cost that you must bear to have a business. You need to explain what role, large or small, technology will play in your new venture. Discuss the role that a good technology strategy will have with an entrepreneurial venture. Reference the “technology strategy” notes in section 5.3 of the instructional content.

Section 3: What is the Problem, How will You Solve it? Describing Your Technology Strategy You must write the technology strategy in a language that a non-technical reader will understand while still communicating the role technology will play for the business.

Section 3: What is the Problem, How will You Solve it? Describing Your Technology Strategy A few things to consider answering within the technology section of the business plan may include: What type of software will you create, if any? What stage of development have you achieved, and what is the timeline to complete development? Do you have a long-term development plan? What software will you need to buy for your business and what role does it play? Discuss the following questions as they relate to the technology strategy section of the business plan.

Section 3: What is the Problem, How will You Solve it? Describing Your Technology Strategy Cont’d: Do you have a location to host your technology? Explain your disaster recovery plan. If you outsource technology development, tell who it is and why you chose them for this critical piece of your new venture. Will you bring the development in-house at some point? Talk about the cost structure of the technology pieces of your business. Discuss the following questions as they relate to the technology strategy section of the business plan.

Section 3: What is the Problem, How will You Solve it? Describing Your Technology Strategy Cont’d: Talk about the cost structure of the technology pieces of your business. Explain if the technology strategy will create any barriers to entry for competitors, or will make you operate more efficiently. Do you have technology that is intellectual property that needs to be or can be protected? Have you explored the time and cost involved in this? What role will technology play in other areas of your business, such as sales, marketing, or operations Discuss the following questions as they relate to the technology strategy section of the business plan.

Section 4: Who are Your Customers and How Many are There? Who are Your Customers? When describing customer demographics you must be very clear about the markets you will target and provide data to support your claim.

Section 4: Who are Your Customers and How Many are There? Who are Your Customers? The following subsections should be included in the customer demographics section of the business plan: Market analysis Market segmentation Target market segmentation strategy Describe each section of the customer demographics section in detail. Reference the notes below from section 5.4 of the course content: Market Analysis: Describe the overall market for your product including demographic information and other characteristics of your market. What has happened in the market? Is it growing, and how much? What are the trends in the market, and what is predicted for the future of the market? Market Segmentation: How is the market segmented? Based on your research, you may segment your market based on demographics, behavior patterns, or other factors. Target Market Segmentation Strategy: Your strategies to target various segments within your total addressable market (the largest pool of potential customers) may be different. You will need to specify which segments you have chosen to target, why, and what your strategies are to reach those markets. In the beginning of a new venture when your resources are limited, it may be best to choose only one target market. However, you should detail your plan to add new segments as you move forward.

Section 4: Who are Your Customers and How Many are There? Market Segmentation Strategy The market segmentation strategy subsection of the business plan should describe who your early adopters will be and the specific characteristics and strategies for each of your target market segments.

Section 4: Who are Your Customers and How Many are There? Market Segmentation Strategy Things to consider when building the market segmentation strategy within the business plan. Be as specific as possible and use validated data. What percentage of the market do you think you can attain through the life of the business? Don’t say that your total addressable market is “everyone”. Discuss in detail what factors can affect your market, and your specific target segments. How will those factors affect your strategy? Discuss each question related to building the market segmentation strategy in detail. Expound upon each generalized detail from this slide. Reinforce your discussion with information from the article and video in section 5.4 of the course content.

Section 5: Marketing and Sales Strategies Marketing After describing your target market you must explain how they will know that your business exists. Effective marketing is critical to ensure that your sales strategy has a better chance of success.

Module 5: Business Plan Elements
Section 5.5: Marketing and Sales Strategies Here are a few topics to consider in your business plan when trying to get people to understand who you are and what you are selling: How will you reach your first customer? What is your branding strategy? What is your marketing budget? What type of marketing will you use? How will you measure effectiveness? Describe each topic in detail, as it relates to getting customers to recognize and buy your product. Reference the notes within section 5.5, as well as the article links. You may want to show the “viral marketing video” link.

Section 5: Marketing and Sales Strategies Topics cont’d: What type of marketing support will you have? How will you leverage technology? What types of public relations strategies will you use? What networking strategies will you use? What strategic alliances will you form? Describe each topic in detail, as it relates to getting customers to recognize and buy your product. Reference the notes within section 5.5, as well as the article links. You may want to show the “viral marketing video” link.

Section 5: Marketing and Sales Strategies Sales After explaining the marketing strategy and how potential customers will know you exist, you must explain how you will turn those prospects into revenue producing customers. A few topics may include: How will you get your first sale? How will you structure your sales team? Discuss each sales topic in detail. The following topics are aligned to the business plan sales strategy and must be accounted for to explain how potential customers will contribute to the business revenue stream. You may also reference the article within section 5.5.

Section 5: Marketing and Sales Strategies Sales Topics cont’d: How will you get your first sale? How will you structure your sales team? What is the projected sales cycle? What will the sales process be? How will you track sales? What is the sales costs? Who will lead sales management? What risks are involved? What is the pricing strategy? Discuss each sales topic in detail. The following topics are aligned to the business plan sales strategy and must be accounted for to explain how potential customers will contribute to the business revenue stream. Reference the article within section 5.5.

Section 5: Marketing and Sales Strategies Sales Forecast Your business plan should present a monthly forecast for the first year, and an annual forecast for 3-5 years. Show your forecasts in a simple to read chart form. Example:

Section 6: Who is the Competition? Competition There is always competition for a new venture. you must be clear on who or what your direct competitors are, as well as who might enter the market and compete because their product or their customers are closely related to your proposed target market and product. Discuss the importance of knowing who your competition is. Reference the notes listed in section 5.6 of the course content.

Section 6: Who is the Competition? Competition A few topics that should be covered in the competition section may include the following: What are the buying patterns of your target customer base? Who are your specific competitors? What is your products relative value? What are the current market gaps? How will you mitigate risks? Discuss each question from this slide in detail. The competitors section of the business plan should address each topic. Reference section 5.6 of the course notes.

Section 6: Who is the Competition? Competition Topics cont’d: What are your competitors business strategies? What are your competitive advantages? Are any competitors potential acquires? Discuss each question from this slide in detail. The competitors section of the business plan should address each topic. Reference section 5.6 of the course notes.

Section 6: Who is the Competition? SWOT Analysis Strengths Weaknesses Opportunities Threats SWOT Analysis A SWOT analysis is a strategic planning method that entrepreneurs use to identify the company’s strengths, weaknesses, opportunities, and threats. Discuss each section of the SWOT analysis. See the next slide for further detail.

Section 6: Who is the Competition? SWOT Analysis A SWOT defined: Strengths: Characteristics of the company that give it an advantage over competitors. Weaknesses: Characteristics of the company that may put that at a disadvantage to competitors. Opportunities: Market or company characteristics that may be opportunities that the company can exploit. Threats: Economic, market, or competitive factors that could threaten the success of the company. Discuss each section of the SWOT analysis.

Section 6: Who is the Competition? SWOT Analysis A SWOT analysis could provide insight into the viability of the company overall and allow the entrepreneur to strategically plan around the factors that will impact the company.

Section 6: Who is the Competition? Sustainable Competitive Advantage A sustainable competitive advantage is critical to your business plan and explains how you will compete now, gain market share, and continue to compete in the future. Discuss the importance for entrepreneurs to have a sustainable competitive advantage for long-term success. Reference the supplemental notes in section 5.6 of the course content.

Section 6: Who is the Competition? Sustainable Competitive Advantage An entrepreneurs competitive advantage may include, but are not limited to: Patents Trade secrets Expert knowledge about the industry Expert knowledge about your product Expert knowledge about business connections A product that is difficult to duplicate A quality edge that is difficult to match Exclusive partnerships Discuss the importance for entrepreneurs to protect their competitive advantage from competitors.

Section 7: Financial Highlights Financial Concepts After the business growth and sustainability plan has been discussed, the financial concepts for the proposed business must be explained. A few topics of interest may include: Sales projections Startup capital Cash flow break-even Discuss the financial highlights of the business plan and the suggested topics. Expound upon each topic. Reference the notes and article in section 5.7 of the course content.

Section 7: Financial Highlights Financial Concepts Financial concepts cont’d: Industry analysis Contingency planning Funding strategy Milestones Discuss the financial highlights of the business plan and the suggested topics. Expound upon each topic. Reference the notes and article in section 5.7 of the course content.

Section 7: Financial Highlights Financial Concepts Other relevant financial information to include in the business plan: Projected Cash Flow Statement Projected Balance Sheet Analysis of Industry Ratios vs. Your Business Ratios Personnel Plan Letters from prospective customers or partners. Any governmental programs that you have been approved to use. All of that financial detail that explains your projections. Diagrams of your product. Patent information. Resumes of team members or advisors. Market research documentation Discuss the following financial information that may need to be included in the business plan financial section.

Section 8: Executive Summary The executive summary is in the beginning of the business plan and in essence is a short version of the full business plan, highlighting important facts. Explain the importance of the executive summary.

Section 8: Executive Summary Executive Summary Structure Business name and location Detailed description of your business model Introduction of management team Summary of short and long-term company and financial objectives Summary of financial highlights Summary of funding strategy Summary of exit strategy Your contact information Explain the importance of the executive summary.

Introduction to Entrepreneurship: Business Plan Elements

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