Department of Business Administration - Chair for Entrepreneurship

AP Primer i in i Entrepreneurship E t hi

Prof.Dr.UlrichKaiser Ch i of Chair f Entrepreneurship E t hi UniversittZrich

Fall2013

Department of Business Administration - Chair for Entrepreneurship

Content

2008PrenticeHall Fall 2013 A Primer in Entrepreneurship, Prof. Dr. Ulrich Kaiser Seite 2

Department of Business Administration - Chair for Entrepreneurship

AP Primer i in i Entrepreneurship E t hi
PartIIDevelopingSuccessfulBusinessIdeas Lecture4 WritingaBusinessPlan

Prof.Dr.UlrichKaiser Chair of Entrepreneurship UniversittZrich Fall2013

Department of Business Administration - Chair for Entrepreneurship

Agenda
1.TheBusinessPlan 2 GuidelinesforWritingaBusinessPlan 2. 2.1StructureoftheBusinessPlan 2.2ContentoftheBusinessPlan 2.3Style/FormatoftheBusinessPlan 3.OutlineoftheBusinessPlan 4.PresentingtheBusinessPlan

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Department of Business Administration - Chair for Entrepreneurship

Questions

? ? ?
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Whatisabusinessp plan? Whataretheprimaryreasonstowriteabusinessplan? Whyisitimportantforabusinessplantofollowaconventionalstructure ratherthanbehighlyinnovativeandcreative? What Wh tshould h ldbe b included i l d din i abusiness b i plan l and d whatarethemostimportanttopicstodiscuss?

tobeansweredintodayslecture.

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Department of Business Administration - Chair for Entrepreneurship

1TheBusinessPlan
Abusinessplanisawrittennarrative(2535pages)thatdescribeswhatanew businessplanstoaccomplishandhowitplanstoaccomplishit. TheBusinessPlanisadualpurposedocument. Itisimportant,sinceitisbothaninternaldocumentandasellingdocument. Insidethefirm Theplanhelpsthecompanytodeveloparoadmaptofollowinexecuting itsstrategiesandplans. plans Outsidethefirm Theplanintroducespotentialinvestorsandotherstakeholderstothe businessopportunitythefirmispursuingandhowitplanstopursueit.

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Department of Business Administration - Chair for Entrepreneurship

1TheBusinessPlan
Therearetwoprimaryaudiencesforafirmsbusinessplan:afirmsemployees, andinvestorsaswellasotherexternalstakeholders.

Afirmmustvalidatethefeasibility internal employees ofitsbusinessidea,developan effectivebusinessmodel,and haveagoodunderstandingofits competitiveenvironmentpriorto presentingitsbusinessplantoits investors/otherstakeholders external audiences.

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Department of Business Administration - Chair for Entrepreneurship

1TheBusinessPlan
Aclearlywrittenbusinessplanisimportantforboththemanagement teamandtherankandfileemployeesofanewventure.

internal employees

Aclearly l l written itt business b i plan, l which hi harticulates ti l t the th visionandfutureplansofthefirm,helpsthe employeesofafirmtooperateinsyncandmove forwardinaconsistentandpurposefulmanner.

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Department of Business Administration - Chair for Entrepreneurship

1TheBusinessPlan
Externalstakeholders,suchasinvestors,potentialbusinesspartners,potential customers,andkeyemployeeswhoarebeingrecruitedtojoinafirm,arethe secondaudienceforabusinessplan. Afirmsbusinessplanmustmakethecasethatthe firmisagooduseofaninvestorsfundsorthe attentionofotherexternalstakeholders. Thekeyistoincludefactsgeneratedthrougha properlyconductedfeasibilityanalysis. Abusinessplanringshollowifitisbased strictlyonwhatanentrepreneurorteam offoundersthinks thinks willhappen.
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investors/ other h stakeholders k h ld external

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Fall 2013

A Primer in Entrepreneurship, Prof. Dr. Ulrich Kaiser

Department of Business Administration - Chair for Entrepreneurship

2GuidelinesforWritingaBusinessPlan

structure
structure content style/format

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2GuidelinesforWritingaBusinessPlan
2.1StructureoftheBusinessPlan Tomakethebestimpression,abusinessplanshould followaconventionalstructure.

BasicStru ucture

Typically,investorsareverybusypeopleandwantaplan wheretheycaneasilyfindcriticalinformation.

Departingfromthebasicstructureofthe conventionalbusinessplanformatinorderto demonstratecreativity yisusually yamistake.

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Department of Business Administration - Chair for Entrepreneurship

2GuidelinesforWritingaBusinessPlan
2.1StructureoftheBusinessPlan

Softw ware Packa ages

Softwarepackagesemployaninteractive,menudriven approachtoassistinthewritingofabusinessplan.

However,entrepreneursshouldavoidcreatingaboilerplate planthatlooksasthoughitcamefromacannedsource.

Senseof Excitem ment

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Alongwithfactsandfigures,abusinessplanneedstoprojecta senseofanticipationandexcitementaboutthepossibilitiesthat surroundanewventure.

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2GuidelinesforWritingaBusinessPlan
2.2ContentoftheBusinessPlan TheBusinessPlanshouldgiveclearandconciseinformationonallthe importantaspectsoftheproposedventure.

longenough YET

toprovidesufficientinformation,

shortenough tomaintainreaderinterest.

www.oeag.at

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2GuidelinesforWritingaBusinessPlan
2.2ContentoftheBusinessPlan

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Department of Business Administration - Chair for Entrepreneurship

2GuidelinesforWritingaBusinessPlan
2.3Style/FormatoftheBusinessPlan TheappearanceoftheBusinessPlanmustbecarefullythoughtof.

Itshouldlooksharp BUT not givetheimpressionthatalotofmoneywasspent toproduceit.

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3OutlineoftheBusinessPlan
Mostbusinessplansdonotincludealltheelementsintroduced:Each entrepreneurmustdecidewhichelementstoincludeinhisorherplan. a) b) c) d) e) f) g) h) i) j) k) ) l) CoverPageandTableofContents ExecutiveSummary TheBusiness ManagementTeam CompanyStructure,Ownership,andIP IndustryAnalysis MarketingPlan OperationsPlan FinancialPlan CriticalRiskFactors Appendix pp PuttingItAllTogether
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3OutlineoftheBusinessPlan
a)CoverPage shouldincludethenameofthecompany, p y,itsaddress, ,itsphone p number,thedate,andcontactinformationfortheleadentrepreneur. b) )ExecutiveSummary y isashortoverviewoftheentirebusinessplanandshouldbecreated aftertheplanisfinished;itprovidesbusyreaderswitheverythingthat needstobeknownaboutthenewventure ventures sdistinctivenature nature. Inmanyinstances,aninvestorwillfirstaskforacopyoftheexecutive summary yandwillrequest q acopy pyofthefullbusinessp planonly yifthe executivesummaryissufficientlyconvincing.

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Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
c)TheBusiness Themosteffectivewaytointroducethebusinessistodescribethe opportunitytheentrepreneurhasidentified thatis,theproblemto solveortheneedtobefilled andthendescribehowthebusiness planstoaddresstheissue. Thedescription p oftheopportunity pp yshouldbefollowedby yabriefhistory y ofthecompany,alongwiththecompanysmissionstatementand objectives. Anexplanationofthecompanyscompetitiveadvantageandabrief descriptionofthebusinessmodelfollow.

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3OutlineoftheBusinessPlan
d)ManagementTeam Oneofthemostimportantthingsinvestorswanttoseewhenreviewing theviabilityofanewventureisthestrengthofitsmanagementteam.If itdoesnotpass passmuster, muster ,mostinvestorswillnotreadfurther. SkinInTheGame isoftencalledtheamountofmoneythe management g teamhasinvested. Investorswaryifthereisnoskin. relevantemployment professionalexperience significantaccomplishments educational d ti l b background k d
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RelevantInformation
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A Primer in Entrepreneurship, Prof. Dr. Ulrich Kaiser

Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
e)CompanyStructure,Ownership,andIntellectualProperty Thissectionshoulddescribeanddiscuss

1 1. 2. 3.
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Thestructureofthenewventure venture,includingthereporting relationshipsamongthetopmanagementteammembers Howthefirmislegallystructured

Theintellectualpropertyownedbythefirm,includingpatents, trademarks,andcopyrights

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Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
f)IndustryAnalysis Thissectionshoulddiscuss

1. 2. 3.
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Majortrendsintheindustryinwhichthefirmintendsto compete,alongwithimportantcharacteristicsoftheindustry, such hasits it size, i attractiveness, tt ti and dprofit fitpotential t ti l Howthefirmwilldiminishorsidesteptheforcesthatsuppress itsindustrys y p profitability y Thefirmstargetmarket,alongwithananalysisofhowitwill competeinthatmarket

Aninvestorshouldhaveagoodgrasponthefutureprospectsoftherelevant industry,alongwithanunderstandingofthetargetmarketthefirmwill pursueandhowitwilldefenditsposition.

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3OutlineoftheBusinessPlan
g)MarketingPlan TheMarketingPlanimmediatelyfollowstheindustryanalysisandprovides detailsaboutthenewfirmsproductsandservices. Thissectionisvery yimportant p toinvestors, ,sinceitissupposed pp to assurethemthatanewventurehasaproductthatpeoplewillbuy andhasarealisticplanforgettingthatproducttomarket. Thissectionshouldcontain.

. .

Fullerdescriptionoftheproductthatthefirmwillsellthanhas beenprovidedinprevioussections. Resultsofthefeasibilityanalysis,includingtheresultsofthe conceptandusabilitytests tests.

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Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
g)MarketingPlan Afterreadingthissection, section aninvestorshouldbeconfidentthatthefirm firms s

. overallapproachtoitstargetmarketand . productstrategy, . pricingstrategy, . channelsofdistribution,and . promotional ti lstrategy t t

areinsyncwithoneanotherandmakesense.

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3OutlineoftheBusinessPlan
h)OperationsPlan Thissectiondealswiththedaytodayoperationsofthecompanyandshould describeanddisclose

. Anoverviewofthemanufacturingplan(orservicedeliveryplan), . Adescriptionofthenetworkofsuppliers,businesspartners,andservice . Anyriskorregulationspertainingtotheoperationsofthefirm,suchas

nonroutineregulationsregardingwastedisposalandworkersafety. Anincreasinglycommonfeatureofmanybusinessplansforstartupsisa relianceonoutsourcingcertainfunctiontothirdpartiesasawayofallowing thestartuptofocusonitsdistinctivecompetencies competencies.
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providersthatwillbenecessarytobuildtheproductorproducethe servicethefirmwillsell,

Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
i)FinancialPlan Thissectionmustdemonstratethefinancialviabilityofthebusinessand includesexplanationsanddescriptionsof

. Fundingthatwillbeneededbythebusinessduringthenext35years, . Howthefundswillbeused, . Financialprojectionstofurtherdemonstratethefinancialviability,

including35yearsproformaincomestatements,balancesheets,and statementsofcashflows flows, whichwillbescrutinizedbycarefulreaders.

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3OutlineoftheBusinessPlan
i)FinancialPlan

!
toremember Thebusinessplanshouldbebasedonrealisticprojections. Ifitisnotandthecompanygetsfundingorfinancing, therewillmostcertainlybeadayofreckoning. Investorsandbankersholdentrepreneurs p accountablefor thenumbersintheirprojections.
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3OutlineoftheBusinessPlan
j)CriticalRiskFactors Althoughavarietyofpotentialrisksmayexist,abusinessshouldtailorthis sectiontodepictitstrulycriticalrisk.

Oneofthemostimportantthingsthatabusinessplanshouldconveyto itsreadersisasensethattheventures venture smanagementteamisontheball andunderstandsthecriticalrisksfacingthebusiness.

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3OutlineoftheBusinessPlan
k)Appendix ymaterialthatdoesnoteasily yfitintothebody yofabusinessplan p should Any appearinanappendix. Examplesofmaterialsthatmightappearintheappendixinclude:

. Rsumsofthetopmanagementteammembers, . Photosordiagramsofproductsorproductprototypes, . Certainfinancialdata, . Marketresearchprojections .

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Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
l)PuttingAllTogether

Inevaluatingandreviewingthecompletedbusiness plan thewritersshouldputthemselvesinthereader plan, readers s shoestodetermineifthemostimportantquestionson theviabilityoftheirbusinessventurehavebeen answered.

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3OutlineoftheBusinessPlan
The10mostimportantquestionsabusinessplanshouldanswer

? Istheproductorserviceviable?Doesitaddsignificantvaluetothecustomer? ? Wasafeasibilityanalysiscompleted? Doesthefirmhaveanexcitingandsensiblebusinessmodel?Willotherfirmsbe ? abletoeasilycopyit? ? ? Doesthefirmhaveawelldefinedtargetmarket?

Fall 2013 A Primer in Entrepreneurship, Prof. Dr. Ulrich Kaiser

justanidea, ,orisitanopportunity pp ywith Isthebusinessj realpotential?

Istheindustryinwhichtheproductorservicewillbecompetinggrowingstable, ordeclining?

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Department of Business Administration - Chair for Entrepreneurship

3OutlineoftheBusinessPlan
The10mostimportantquestionsabusinessplanshouldanswer

? Arethefinancialprojectionsrealistic,anddotheyprojectabrightfutureforthe ? firm?Whatrateofreturncaninvestorsexpect? Isthefirmorganizedinanappropriatemanner?Areitsstrategyandbusiness ? practiceslegalandethical?

firm scompetitorsreacttoitsentranceintotheirmarket? ? Howwillthefirms Whatarethecriticalriskssurroundingthebusiness,anddoesthemanagement ? teamhavecontingencyplansinplaceifrisksbecomeactualproblems?
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g teamexperienced, p ,skilled, ,andup p Isthemanagement tothetaskoflaunchingthenewfirm?

Department of Business Administration - Chair for Entrepreneurship

4PresentingtheBusinessPlantoInvestors
TheOralPresentationoftheBusinessPlan material. ! PreparationofPowerPointslides:sharpandnotclutteredwithmaterial ! Followtheinstructions(timeslots,etc.). ! Bewellrehearsedandpresentsmoothly. H agood Have did ideaof fwhat h questions i and d f feedback db ktoexpectf from ! investorsandbepreparedforthesequeries Intheinitialmeeting,investorstypicallyfocusonwhetherareal opportunityexistsandwhetherthemanagementteamhasthe experienceandskillstopullofftheventure.

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4PresentingtheBusinessPlantoInvestors
Thereare10PowerPointslidestoincludeinanInvestorPresentation. 1. 2. 3 3. 4. 5. 6. 7. 8. 9. Title Problem S l ti Solution Businessmodel g team Management Industryandtargetmarket Competition Intellectualproperty Financialprojections

10 Currentstatus 10. status,amountofmoneyrequested requested,andprojecteduseoffunds

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Doyouknowtheanswer?

?! ?! ?!
Fall 2013

Whatisabusinessp plan? Whataretheprimaryreasonstowriteabusinessplan? Whyisitimportantforabusinessplantofollowaconventionalstructure ratherthanbehighlyinnovativeandcreative? What Wh tshould h ldbe b included i l d din i abusiness b i plan l and d whatarethemostimportanttopicstodiscuss?

testyourself.

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Department of Business Administration - Chair for Entrepreneurship

References
Barringer,B.andD.,Ireland(2008):Entrepreneurship SuccessfullyLaunching NewVentures,Pearsons PrenticeHall.

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Department of Business Administration - Chair for Entrepreneurship

Outlook

2008PrenticeHall Fall 2013 A Primer in Entrepreneurship, Prof. Dr. Ulrich Kaiser Seite 36