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Chapter 5 Notes

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The document discusses the importance of a business plan for entrepreneurs. It outlines the initial steps in setting up a business plan, which includes completing market research to determine demand. The main parts of a business plan are then described in detail, including the executive summary, management team plan, company description, product/service plan, vision/mission statements, industry/market analysis, competitive analysis, marketing plan, operational plan, organizational plan, financial plan, growth plan, and contingency plan. The business plan gives entrepreneurs a way to focus their vision and determine feasibility, and helps investors understand how the business intends to be profitable.

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Chapter 5 Entrepreneurship Section 5.2 The Business Plan

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Read to Learn Describe how to prepare for your own business. Discuss the parts of a business plan.

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The Main Idea Once an entrepreneur discovers a good business opportunity, the next step is to do market research. Market research helps to determine whether there will be a demand for a new product or service. It can also uncover issues to address in a business plan.

4

Key Concepts Initial Steps in Setting up a Business Plan Parts of a Business Plan

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Key Term business plan a written description of a new business venture that describes all aspects of the business executive summary a brief account of the key points contained in a business plan

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Key Term vision statement establishes the scope and purpose of a company and reflects its values and beliefs mission statement expresses the specific aspiration of a company, the major goals it will try to reach

7

Initial Steps in Setting up a Business • Complete Market Research to determine there is demand for your product or service • Write a business plan business plan a written description of a new business venture that describes all aspects of the business

8

Why write a business plan? Entrepreneur/ Business Owner • Helps focus on: – what they want to do – how they will do it – what they expect to accomplish Investors/ Finance Agencies • Helps them determine how the business intends to make their venture profitable in order to get a return on their investment or pay back their loan.

9

What will I produce? Who are my main competitors? Why is my product or service needed? How much will my product or service cost to produce? How many people will I need to run the business? What physical facilities will I need? What licenses, permits, or other legal documents do I need? How much money will I need to get started? Checklist for Starting a Venture

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Parts of a Business Plan • A business plan must be well organized and easy to read. • There are 16 essential parts of a business plan.

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Executive Summary Should: • be short and contain the most important information from each section of the business plan. • Open with a compelling story to persuade the reader that the business is going to succeed • have support gathered through market research executive summary a brief account of the key points contained in a business plan.

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Management Team Plan • presents your qualifications and those of any partners you might have. • discusses how you will fill gaps in expertise. (examples: hire consultants, additional partners, advisory board)

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Company Description • provides an outline of the business and helps investors understand the size, scope, and type of business you plan to start. • explains why the venture is going to succeed.

14

Product and Service Plan • describes the product or service you want to offer • Describes spin-offs (additional products you plan to offer after your company is more established) This shows growth potential.

15

Vision and Mission Statements • state the guiding principles of your business. vision statement establishes the scope and purpose of a company and reflects its values and beliefs mission statement expresses the specific aspirations of a company and the goals it will try to reach

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Industry Overview • presents your research of the industry (Industry – is defined as companies that provide similar, complementary, or different products or services) • discusses trends and growth within the industry.

17

Market Analysis • Research about your customer’s profile. • Helps you determine your overall market and sales strategy • Should include the following about the target market and business location: • geographic (zip code, state, climate) • economic (environment in terms of barriers to entry and regulations) • demographic (age, gender, income and occupation

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Competitive Analysis • Explains how does your business have an advantage over your competition? • Gather information on your competitors by viewing their websites, talking to their customers, vendors, suppliers, and employees, attending trade shows

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Marketing Plan discusses how a company makes its customers aware of its products or services. Market niche Company image Media plan/social Media plan Pricing Marketing tactics Marketing budget Parts of the Marketing Plan

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Operational Plan The operational plan includes the business processes that result in production and delivery of the product or service.

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Organizational Plan • describes the people who will run the firm as well as management’s philosophy. • Discuss the form of the organization, such as sole proprietorship, partnership, corporation, etc.

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Financial Plan • presents forecasts for the business. • provides proof that the new business will be financially healthy.

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Growth Plan • looks at how the business will expand in the future. • Investors and lenders like to know that a business plans to grow and deal with growth.

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Contingency Plan • looks at likely risks to the business and ways to minimize those risks. • Examples: what if we have lower than expected sales. What will we do?

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Cover Page, Title Page, Table of Contents, and Supporting Documents The cover page should include: Company name Address Phone number Web site E-mail addresses Company logo

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Cover Page, Title Page, Table of Contents, and Supporting Documents The title page should include: Company name Names, titles, and addresses of the owners The date the plan was submitted The name of the preparer

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Cover Page, Title Page, Table of Contents, and Supporting Documents The table of contents details the components of the business plan.

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Cover Page, Title Page, Table of Contents, and Supporting Documents Supporting documents include exhibits and other information relevant to the business.

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Figure 5.2 Parts of a Business Plan

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1. Why is a business plan important? It gives important information before embarking upon the venture and helps sell lenders and investors on the plan.

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2. Why should entrepreneurs carefully study their competitors before starting a business? To know they are competing against, allowing them to figure out how they will attract customers.

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3. Why is a growth plan important in a business plan? It shows the business can grow beyond the initial stage of development.

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Chapter 5 Entrepreneurship Section 5.2 The Business Plan End of

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Chapter 5 Notes

  • 2. Read to Learn Describe how to prepare for your own business. Discuss the parts of a business plan.
  • 3. The Main Idea Once an entrepreneur discovers a good business opportunity, the next step is to do market research. Market research helps to determine whether there will be a demand for a new product or service. It can also uncover issues to address in a business plan.
  • 4. Key Concepts Initial Steps in Setting up a Business Plan Parts of a Business Plan
  • 5. Key Term business plan a written description of a new business venture that describes all aspects of the business executive summary a brief account of the key points contained in a business plan
  • 6. Key Term vision statement establishes the scope and purpose of a company and reflects its values and beliefs mission statement expresses the specific aspiration of a company, the major goals it will try to reach
  • 7. Initial Steps in Setting up a Business • Complete Market Research to determine there is demand for your product or service • Write a business plan business plan a written description of a new business venture that describes all aspects of the business
  • 8. Why write a business plan? Entrepreneur/ Business Owner • Helps focus on: – what they want to do – how they will do it – what they expect to accomplish Investors/ Finance Agencies • Helps them determine how the business intends to make their venture profitable in order to get a return on their investment or pay back their loan.
  • 9. What will I produce? Who are my main competitors? Why is my product or service needed? How much will my product or service cost to produce? How many people will I need to run the business? What physical facilities will I need? What licenses, permits, or other legal documents do I need? How much money will I need to get started? Checklist for Starting a Venture
  • 10. Parts of a Business Plan • A business plan must be well organized and easy to read. • There are 16 essential parts of a business plan.
  • 11. Executive Summary Should: • be short and contain the most important information from each section of the business plan. • Open with a compelling story to persuade the reader that the business is going to succeed • have support gathered through market research executive summary a brief account of the key points contained in a business plan.
  • 12. Management Team Plan • presents your qualifications and those of any partners you might have. • discusses how you will fill gaps in expertise. (examples: hire consultants, additional partners, advisory board)
  • 13. Company Description • provides an outline of the business and helps investors understand the size, scope, and type of business you plan to start. • explains why the venture is going to succeed.
  • 14. Product and Service Plan • describes the product or service you want to offer • Describes spin-offs (additional products you plan to offer after your company is more established) This shows growth potential.
  • 15. Vision and Mission Statements • state the guiding principles of your business. vision statement establishes the scope and purpose of a company and reflects its values and beliefs mission statement expresses the specific aspirations of a company and the goals it will try to reach
  • 16. Industry Overview • presents your research of the industry (Industry – is defined as companies that provide similar, complementary, or different products or services) • discusses trends and growth within the industry.
  • 17. Market Analysis • Research about your customer’s profile. • Helps you determine your overall market and sales strategy • Should include the following about the target market and business location: • geographic (zip code, state, climate) • economic (environment in terms of barriers to entry and regulations) • demographic (age, gender, income and occupation
  • 18. Competitive Analysis • Explains how does your business have an advantage over your competition? • Gather information on your competitors by viewing their websites, talking to their customers, vendors, suppliers, and employees, attending trade shows
  • 19. Marketing Plan discusses how a company makes its customers aware of its products or services. Market niche Company image Media plan/social Media plan Pricing Marketing tactics Marketing budget Parts of the Marketing Plan
  • 20. Operational Plan The operational plan includes the business processes that result in production and delivery of the product or service.
  • 21. Organizational Plan • describes the people who will run the firm as well as management’s philosophy. • Discuss the form of the organization, such as sole proprietorship, partnership, corporation, etc.
  • 22. Financial Plan • presents forecasts for the business. • provides proof that the new business will be financially healthy.
  • 23. Growth Plan • looks at how the business will expand in the future. • Investors and lenders like to know that a business plans to grow and deal with growth.
  • 24. Contingency Plan • looks at likely risks to the business and ways to minimize those risks. • Examples: what if we have lower than expected sales. What will we do?
  • 25. Cover Page, Title Page, Table of Contents, and Supporting Documents The cover page should include: Company name Address Phone number Web site E-mail addresses Company logo
  • 26. Cover Page, Title Page, Table of Contents, and Supporting Documents The title page should include: Company name Names, titles, and addresses of the owners The date the plan was submitted The name of the preparer
  • 27. Cover Page, Title Page, Table of Contents, and Supporting Documents The table of contents details the components of the business plan.
  • 28. Cover Page, Title Page, Table of Contents, and Supporting Documents Supporting documents include exhibits and other information relevant to the business.
  • 29. Figure 5.2 Parts of a Business Plan
  • 30. 1. Why is a business plan important? It gives important information before embarking upon the venture and helps sell lenders and investors on the plan.
  • 31. 2. Why should entrepreneurs carefully study their competitors before starting a business? To know they are competing against, allowing them to figure out how they will attract customers.
  • 32. 3. Why is a growth plan important in a business plan? It shows the business can grow beyond the initial stage of development.