A.

DEFINITION (BUSINESS PLAN)

 Written summary of proposed business venture, its operational and financial details, its
marketing opportunities and strategy, and its managers’ skills and abilities
 2 Functions
1. Guides the company’s operations by charting its future course and devising a strategy
for following it – strategies, objectives, financial forecasts, target markets, budgets,
mission statement, goals (SOFTBMG)
2. To attract lenders and investors – prove that the business will be able to repay loans
and produce an attractive rate of return
B. THREE TESTS (RCV)
1. Reality test
a. External component – prove market existence or demand for the product/service
 Factors (DIMMP)
1. Degree of competition
2. Industry attractiveness
3. Market niche
4. Market size
5. Potential customers
b. Internal component – the product/service itself
2. Competitive test
a. External component – evaluate company’s relative position to its key competitors
b. Internal component – management’s ability to gain an edge over existing rivals
3. Value test – prove high repayment probability or an attractive ROR
C. ELEMENTS OF BUSINESS PLAN (TEMCBBD – MCRPPL)
1. Title page and table of contents
2. Executive summary
3. Mission and vision statement
4. Company history
5. Business and industry profile
6. Business strategy
7. Description of products/services
8. Marketing strategy
9. Competitor analysis
10. Resumes of owners and managers
11. Plan of operation
12. Pro forma (projected) financial statements
13. Loan/investment proposal
D. WORKING BUSINESS PLAN VS. PRESENTATION BUSINESS PLAN
1. Working BP – used to guide the business
2. Presentation BP – used to attract capital
E. TIPS
1. First impressions are crucial – make an attractive plan cover
2. Free of spelling and grammatical errors and “typos”
3. Visually appealing – use color charts, figures, diagrams
4. Table of contents with page numbers
5. Interesting
6. Prove that the business will make money
F. WHAT LENDERS AND INVESTORS LOOK FOR IN A BUSINESS PLAN (5C)
1. Capital
2. Capacity (Cash flow)
3. Collateral
4. Character
5. Conditions
G. BUSINESS PLAN PRESENTATION (5 BASIC AREAS – CCPSB)
1. Company and its products/services
2. Competitive edge
3. Problem
4. Solution
5. Business model
H. PORTER’S FIVE FORCES MODEL (RBBTT)
1. Rivalry among existing firms
2. Bargaining power of suppliers
3. Bargaining power of buyers
4. Threat of new entrants
5. Threat of substitute products or service