PPT 6-1

Chapter 6

The Role of the

Business Plan

PPT 6-2

Chapter 6

Learning Objectives

PPT 6-3/TM 6-1

A Business Plan

A.    What is a business plan?

·       Basic objectives

·       Role as “game plan”

·       Fundamentals of the business plan

4    The basic idea of the proposed venture (what is contemplated)

4    The central idea for the business and how it will work

4    How the idea is related to the current market and competition

4    The business plan as a work in progress, never a final product

PPT 6-4/TM 6-2

Reasons for Preparing

a Business Plan

PPT 6-5/TM 6-3

Users of Business Plans

[Acetate 6-2]

PPT 6-6/TM 6-4

Features of Good

Business Plans

[Acetate 6-3]

PPT 6-7/TM 6-5

Features of Poor

Business Plans

1.    Users of a business plan

·          The two primary functions of the business plan: (1) statement of goals and strategies for internal use and (2) a selling document for external use.

a.        Internal users of a business plan

4    The entrepreneur—to focus on the important

4    The management team—discipline for enterprise success

4    Employees—communicating the entrepreneur’s vision

b.       The business plan and outsiders

·          The business plan is an effective selling tool for use with customers, suppliers, and investors.

·          Sources of capital—both lenders and investors—can be influenced by a business plan.

·          The business plan is not a legal document for raising capital—that would be a prospectus or an offering memorandum.

2.       The investor’s perspective

·          Note the fundamental differences between the entrepreneur’s perspective (i.e., a focus on potential for success) and the investor’s perspective (i.e., a focus on potential for failure) of a business.

a.        The investor’s short attention span

·         Ask students what is suggested by the application of the “one minute                                         manager” to the investor’s situation.

·         Discuss the William Sahlman quote in the chapter.  How can an                                 entrepreneur capture a prospective investor’s attention?

b.       Business plan features that attract or repel investors—summarize what investors like and what dampens investor enthusiasm (see Figure 6-2).

PPT 6-8

Factors Affecting the

Extent of Business Plans

C.    How much business plan is needed?

1.    In making a decision on the extent of a business plan, what tradeoffs do we have to deal with?

D.    Preparing a business plan

1.    Formatting and writing of a business plan

i     Ask students for their perceptions of what makes a good term paper. Which, if          any, of these ideas would apply to a business plan?

PPT 6-9/TM 6-6

Factors Affecting

The Content of

Business Plans

PPT 6-10A, B

Abbreviated Business

Plan Outline

2.    Deciding on the content of a business plan

i    The chapter lists four factors to consider when deciding on the contents of the business plan—people, opportunity, context, and risk/reward.  Ask students why each of these should be considered.

   i    One approach to teaching this section is to select one or two companies from    your own experience or from current periodicals (e.g., examine a small firm    featured in Forbes, In Business, Inc., or The Wall Street Journal). Talk about the                      following sections of the business plan as they would apply to such a business:

                         4    Executive summary

                         4    Vision and mission statement

                         4    Company overview

                         4    Products and/or services plan

                         4    Marketing plan

                         4    Management plan

                         4    Operating plan

4       Financial plan

4       Appendix of supporting documents

PPT 6-11/TM 6-7

Where to Go for More

Information

E.       Resources for business plan preparation

·          Resist the temptation to adapt an existing business plan from another enterprise for your own use.

1.    Computer-aided business planning (e.g., BizPlanBuilder and BizPlanExpress)

PPT 6-12

BizPlanBuilder on

Writing the Narrative

PPT 6-13/TM 6-8

BizPlanBuilder on Interrelationship of

Vision, Mission,

Goals, and Objectives

The chapters in Part 2 deal with issues that are important to launching new ventures.  Chapter 6 begins with an overview of the business plan and its preparation, and the remaining chapters in Part 2 focus on specific segments of the business plan (e.g., the management plan, marketing plan, and financial plan).  To facilitate learning through this part of the text, the authors introduce the templates for constructing business plans as provided in BizPlanBuilder and BizPlanExpress.  While the specifics of using these software packages are found in their respective manuals (and in materials prepared to assist instructors in using them), this instructor’s manual presents overhead materials intended to facilitate the integration of BizPlan exercises with the chapters of the text.

The process of creating a business plan begins with the writing of a general description of the company.  The following questions may prove helpful in guiding students through this part of the development of the plan:

1.        When and where is the business to start?

2.        What is the history of the company?

3.        What changes have been made in structure or ownership?

4.        In what stage of development is the company?

5.        What has been achieved to date?

6.        What is the company’s distinctive competence?

7.        What are the basic nature and activity of the business?

8.        What is its primary product or service?

9.        What customers will be served?

10.     What is the company’s mission statement?

11.     What are the company’s objectives?

12.     What is the company’s form of organization?

13.     What are the current and projected economic states of the industry?

14.     Does the company intend to become a publicly traded company or an acquisition candidate?