4Venture Product/Service Development Nike Laser Honda Pepsi Corn Flake Post ItFood IngredientsEtc.
5New Idea Opportunity - Economics Change - Social, Culture and Demographic Change- Technological Change- Political/legal Change- Competition
6Sources of Idea1. Current Job2. Special Interest3. Friends4. Media
7Venture (Business concept) Feasibility StudyBusiness Plan
8Feasibility Study Industry Product and Service Customers Investment Human resourcesChance to be successful???
9Feasibility StudyBefore committing time and energy to prepare a business plan, the entrepreneur should do a quick feasibility study of the business concept.- Are their any barriers to success?- Can the product be marketed, produced and financed?- Are goals and objectives of the venture clearly defined?- To provide a framework for business plan
15Planning as a part of the business operations : Marketing/Sales PlanFinancial PlanOperations (Production) PlanHuman Resource PlanEtc.
16Discussion Topics 1. What is the Business Plan? 2. Who write the plan? 3. Skills needed4. Who read the plan?5. How to evaluate the plan6. What information required?7. Writing the business plan8. Presenting the plan
171.What is the Business Plan ? The Business Plan is a written document prepared by the entrepreneur that describes all the relevant external and internal elements involved in starting a new venture.It is often an integration of functional plans such as marketing, finance,manufacturing(operations), and human resources.22
18Importance of Business Plan To determine the viability of the ventureTo provide guidance to organize and planTo serve as an important tool in helping to obtain financing
192. Who write the plan? Entrepreneur Lawyer Accountant Consultant EngineerEtc.
203. Skills needed Planning Forecasting Market Research Sales/Marketing ManagementHuman Resource ManagementProduct Design/ProductionLegal IssuesFinancial, Accounting and TaxesOrganizing
214. Who read the plan? Investor Banker Supplier Employee Customer Consultant/Advisor
22Three perspectives to be considered Entrepreneur perspectiveCreativity and technology by entrepreneurMarketing perspectiveSomeone would buy it in the eye of customerInvestor perspectiveFinancial projections
235. How to evaluate the plan? Analysis of business opportunityAbility to pay back the Debt including Interest with a designated period of timeAnalysis of all potential risks
246. Information Required Marketing Information Operations Information Financial Information
25Information for Planning: Market Information:Market potential for the product or serviceSize of the marketTarget marketMarket goalsSources:Trade associationsGovernment reportsInternetResearchPublished studies44
26Information for Planning: Operations Information :Location :to access customers,suppliers and distributorsManufacturing Operations: Machine, assembly, subcontractRaw materials : suppliers’ names,addresses,costEquipment : lists,purchase or leaseLabor Skills : unique skill,number,pay rate,where and how to obtainSpace : amount of space,owned or leasedOverhead : manufacturing supports, tools,supplies,utilities44
27Information for Planning: Financial Information :Expected sales and expense figures for at least the first three yearsCash flow figures for the first three yearsCurrent balance sheet and pro forma balance sheets for the first three years44
287. Writing the Business Plan 1. Executive Summary2. Business Profile3. Environmental and Industry Analysis4. Business Objectives5. Marketing Plan77
308. Presenting the PlanTo provide a short presentation/Executive SummaryAudiences :Partners,potential investors,bankers and othersTo sell their business conceptWhy this would be a good investment ?To give opportunity to ask the questionsRequest for negotiationsLeading to final investment decisions
31Using and implementing the Business Plan As a Business directionTo measure the progressUpdating the Plan for the changes
32Why do Business Plans fail? Goals are unreasonable and/or immeasurable.Total commitment to the business was never made.Entrepreneur has insufficient experience and knowledge.Customer’ need was never established.Entrepreneur has no sense of potential threats or weaknesses to business.99