rHi Class,

Here is your assignment for this Friday (November 15, 2013). Please be ready with your answers for oral discussion.

1. What is a business plan? What are the advantages to preparing a business plan for a new venture? 2. What are the two most common reasons that entrepreneurs write business plans? 3. Who are the primary consumers of business plans? In what ways do the people who read business plans differ in the information they are looking for? 4. It is often argued that the process of writing a business plan is as important as the plan itself. How is this so? 5. Why is it important for the founders of a firm to continually measure whether the type of company they are envisioning, as described by their business plan, is consistent with their personal goals and aspirations? 6. What are the hazards involved with using a software package to help write a business plan or hiring consultants to write the business plan for you? 7. Describe the general rules of thumb for the length and appearance of a business plan. 8. Why is it important for a firm to test the feasibility of its business idea prior to writing a business plan? 9. What is the corridor principle, and how does an understanding of the principle help entrepreneurs remain open to change as their business plans are being written and after their businesses are launched? 10. What is an elevator speech? How can developing an elevator speech help a firm write a more effective business plan?

Samson, Abielyn T 1. A business plan is a written narrative, typically 25 to 35 pages long, that describes what a new business plans to accomplish and how it plans to accomplish it. For most new ventures, the business plan is a dualpurpose document used both inside and outside the firm. Inside the firm, the plan helps the company develop a road map to follow in executing its strategies and plans. Outside the firm, it introduces potential investors and other stakeholders to the business opportunity the firm is pursuing and how it plans to pursue it. 2. To test the feasibility of your business idea. To give your new business the best possible chance of success. 3. A Firms Employees - A clearly written business plan, which articulates the vision and future plans of the firm, helps the employees of a firm operate in sync and move forward in a consistent and purposeful manner. Investors and Other External Stakeholders - A firms business plan must make the case that the firm is a good use of an investors funds or the attention of other external stakeholders. The key is to include facts generated through a properly conducted feasibility analysis. A business plan rings hollow if it is based strictly on what an entrepreneur or team of founders thinks will happen. 4. Writing a business plan forces the management team of a new venture to think through every aspect of its business and agree on its most important priorities and goals. 5. In order to achieve what they want and for the success of the business 6. Using forecasting as a substitute for business planning. Ignoring historic trends or performances at company, sectoral and national levels Overstating market shares and growth, sales forecasts, and profit levels Giving insufficient consideration to working capital requirements Underestimating costs and delays likely to be encountered Disregarding industry performance norms and competitors' responses Disregarding industry performance norms and competitors' responses Breaching generally-accepted financial guide lines and ratios Making unduly optimistic assumptions about the availability of loans, trade credit, grants, equity etc Seeking spurious accuracy while failing to recognize matters of strategic importance 7. 1) Should be self written with additional input from co-management, employees, advisors, FAMILY. It is important to keep family in the loop so they understand what you are doing and why you are devoting as much time and resources to the business. You could hire someone to write it for you but then it really is not your plan is it? 2) Plan should be formatted for the intended audience stakeholders, funding sources, etc. With todays ease of putting together documents there is no reason why you cant provide the information your intended audience will be most interested in. 3) 4) Ideal length in most cases: 20-25 type written pages KISS Keep it simple (Less is More)

5) 6)

Avoid technical jargon, abbreviations, slang, etc. unless your audience is of like mind see item 2 Use graphs, charts and pictures where possible make it as easy as possible to understand your story

7) Include support documents in the addendum anything that you can include that will support your plan should be added as reference at the end 8) Keep it confidential and Keep track of plans in circulation. Sometimes you may have the need to make copies available to different people for different reasons ie: lenders, investors, advisors, etc 9) Proof read it Let others you trust proof read it. One of the biggest problems we have seen is unprofessional looking plans with typos and other errors. 10) Make sure the financials reflect the narrative. We often see big discrepancies such as an advertising plan that calls for newspaper and radio ads but a monthly budget allocation of only a few hundred dollars. Obviously you cant do that kind of advertising for that amount of money 8. Writing a business plan is the best way to test whether or not an idea for starting a business is feasible, other than going out and doing it. In this sense, the business plan is your safety net; writing a business plan can save you a great deal of time and money if working through the business plan reveals that your business idea is untenable. Often, an idea for starting a business is discarded at the marketing analysis or competitive analysis stage, freeing you to move on to a new (and better) idea. 9. Corridor Principle is the theory that for every new business that is begun, new opportunities will arise as a result. 10. Elevator speech is a short summary used to quickly and simply define a person, profession, product, service, organization or event and its value proposition. The purpose of an elevator speech is to inspire the listener to extend assistance of some kind. Elevator speeches are supposed to grab investors' attention in less than a minute.