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Chapter. 4: The Business Plan

Why Make a Business Plan?
Good Planning Improves Results
Increase Probability of Successful Financing
Helps Prevent MistakesI wish we hadn’t !
Who is the Plan for?
Yourself… essentials may be enough.

Partners… more extensive

Investors… most extensive

The More $$$ the More EXTENSIVE

Who is the Plan for?
Yourself… essentials may be enough.

Marketing Strategy
Competitor Analysis
Financial Projections

Who is the Plan for?
“Partners”… more extensive … add the

Vision & Mission
Business & Industry Profile
Plan of Operations
Partner Buy In T&C

Who is the Plan for?
Investors… most extensive… add the…

…. Full Business Plan….

The More $$$ the More EXTENSIVE

A Plan Must Pass Three Tests
The Reality Test:

The Competitive Test:

The Value Test:

Define Reality Test…?

The Reality Test – proving that:
A market really does exist for your product or service.

You can actually build or provide it for the cost estimates in the plan.

Next… Define the Competitive Test

The Competitive Test – evaluates:
A company’s position relative to its competitors.

Management’s ability to create a company that will gain an edge over its rivals.

Next define the Value Test

The Value Test – proving that:
A venture offers investors or lenders an attractive rate of return or a high probability of repayment.
What are the sub-parts of the Company Section of a Business Plan?
What is the difference between Features & Benefits?
Title Page
Table of Contents
Exec Summary
Vision & Missions
Industry Profile
Products & Services
Features vs. Benefits
Feature – a descriptive fact about a product or service: “an ergonomically designed, more comfortable handle”
Features vs. Benefits
Benefit – what a customer gains from the product or service feature: “fewer problems with carpal tunnel syndrome and increased productivity”
The Business Plan
Business Strategy
The Business Plan
Marketing Strategy
Marketing Research
Customer Research
Competitors Analysis
The Business Plan
Management Team
Plan of Operations
The Business Plan
Summary & Cash Flow
Income Sources
Payroll Detail
Proposed Financing
Loan Details if applicable

Investor Details if applicable

– Enough? and Balance of Debt vs Equity
Cash Flow
Liquid or Fixed Assets
Creditor History
Terms of Loan
Tips on Preparing a Business Plan
Make sure your plan has an attractive cover. (First impressions are crucial.)
Rid your plan of all spelling and grammatical errors.
Make your plan visually appealing.
Include a table of contents to allow readers to navigate your plan easily.
Make it interesting.
Family: The first place you go… need to get some buy in.
Friends: The second place… should be interested.
Network: Hopefully it is full of people with money.
Suppliers: If an extension of an existing business this is a great source of financing.
Money People: Angels, Mezzanine, Growth Stage, M&A

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