2. Business plan
a formal written expression of the entrepreneurial
vision, describing the strategy and operations of the
proposed venture.
3. Why business plan
• Presented to a banker, it may be called a “loan
proposal.”
• A venture capital group might call it the
“venture plan” or “investment prospectus.”
• Offered to potential partners or top
managers, suppliers and distributors, lawyers,
accountants, and consultants.
4. Presented to a banker, it may be called
a “loan proposal.”
5. A venture capital group might call it
the “venture plan” or “investment
prospectus.
6. Offered to potential partners or top
managers, suppliers and distributors,
lawyers, accountants, and consultants
7. David Gumpert
entrepreneurs seeking financing in the new business environment follow this
process
• Get the business going through bootstrapping
• Keep in regular contact with investors.
• Show sales early.
• Prove your business model. Produce a product, sell it
for more than it costs to produce, and attract repeat
business—that proves the model.
8. David Gumpert
• Born: December 12, 1946
• a journalist and writer. have been a
newspaper reporter and magazine
editor, and have written a number
of books and articles about food
and small business. Have also
written some history, in the form of
a memoir co-authored with his
aunt, about her experiences
10. Keep in regular contact with investors
• Investor persistently need assurance that their
investment is safe
• Investors confidence brings more investment
• Investor’s confidence brings credibilty
11. Show sales early
• Your inventory need to go out
• Profitability - sell price minus cost
• Rotation of money and inventory
• Sales assist in market penetration
• Sales leads to sucesss
12. ELEMENTS OF THE BUSINESS PLAN
• People: Who are the key figures in the new
enterprise?
• Opportunity: What is the business model?
• Context: What does the big picture look like?
• Risk and Reward: What can go right and what
can go wrong?
14. business plan follows the general
format for documents
• The first section tells the audience what the
entrepreneur is going to tell them. This
prepares them for what is coming.
• The major middle sections give the audience
the information and arguments that are
central to the company’s purpose.
• The last section reminds the audience what it
has heard and summarizes the presentation.
16. Cover page
• Company name, address, telephone and fax numbers,
and e-mail address. The reader is more likely to contact
the entrepreneur if it’s easy to do so.
• The name and position of the contact person, one of
the firm’s top executives, who must be fully prepared
to answer questions about the plan.
• The date the business was established (e.g.,
“established 2006”) and the date of this version of the
business plan (e.g., “February 2007”).
• The full name of the organization from which funding
(or credit, or a supplier agreement, etc.) is being
sought.
17. Executive summary
• Most important part of the business plan
• Most readers, especially investors, never read
beyond the summary
• Only 10 percent of all business plans are read
thoroughly, meaning that 90 percent are
rejected after the summary.
• The company name and contact person
should appear as they do on the cover page.
19. Main parts
1. Type of Business
2. Company summary
3. Management
4. Product/service and competition
5. Funds requested, collateral, use of
proceeds*
6. Financial history, financial projections*
7. Deal structure, exit*
20. Type of Business
The summary should describe the firm’s
industry or sector in about ten words. Some
investors will not invest in certain industries,
so being clear up front saves time for
everyone.
21. Company summary
• Thumbnail sketch of the firm’s history and
background emphasizes the positive—briefly
• More than half a page (150 words) is not a
summary.
• A statement defining the firm’s primary
product or service should not be complicated
by lists of product extensions or auxiliary
services
22. Management
• The people running the company matter more
than any other factor, but the summary need
not include a lot of detail. Listing the top two
or three people and emphasizing their
industry experience should suffice.
23. Product/service and competition
• Mentioning the competition defines the
position the firm occupies. Again, this
description should be no longer than half a
page (150 words).
24. Funds Requested
• This brief statement specifies the exact amount
of money needed and the investment vehicle:
debt, equity, or some hybrid.
• If the firm is flexible in this regard, the summary
should state both the company’s preference and
its willingness to consider alternatives.
• In this case an investor may make a
counterproposal and the deal can be restructured
25. Financial history
• The firm’s financial history should include only
the major categories—revenues, net income,
assets, liabilities, and net worth
26. Deal structure
• These projections follow the same format as
the financial history, covering two or three
years and matching the figures in the main
body of the plan.
