UNIT2

ENTREPRENEURSHIP

SYLLABUS
Business Planning: From idea generation to preparation of detailed business plans. Exercises in preparation of business plans.

BUSINESS PLAN
A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

Typical structure for a business plan for a start up venture

1. Cover page and table of contents 2. Executive summary 3. Business description 4. Business environment analysis 5. Industry background 6. Competitor analysis 7. Market analysis 8. Marketing plan 9. Operations plan 10. Management summary 11. Financial plan 12. Attachments and milestones

Typical questions addressed by a business plan for a start up venture

1. What problem does the company's product or service solve? What niche will it fill? 2. What is the company's solution to the problem? 3. Who are the company's customers, and how will the company market and sell its products to them? 4. What is the size of the market for this solution? 5. What is the business model for the business (how will it make money)? 6. Who are the competitors and how will the company maintain a competitive advantage? 7. How does the company plan to manage its' operations as it grows? 8. Who will run the company and what makes them qualified to do so? 9. What are the risks and threats confronting the business, and what can be done to mitigate them? 10. What are the company's capital and resource requirements? 11. What are the company's historical and projected financial statements?

SEARCH FOR BUSINESS IDEA

DEVELOPMENT OF BUSINESS IDEA

CREATIVE PROCESS

Eg: Eureka, benzene etc.

COMPONENTS OF THE CREATIVE PROCESS

1. Motivation : Initial motivation which provides stimulus for processing information and exploring alternative solutions. 2. Skills in the task domain: The extent of the knowledge, talents and technical skills of the entrepreneur will help in his search for solutions, pin pointing an idea and verifying the idea. 3. Skills in Creative thinking: These will help him to visualize different solutions generating a number of alternatives, see divergent uses of single idea etc, to come up with a workable idea or plan.

Why a Business Plan?

Strategic Guide Lenders Investors

Strategic Guide
Where Do You Want To Go? How Are You Going to Get There? What Market Niches? How Much is it Going to Cost? Greatest Profit Opportunity?

Lender Expectations
Good Business Track Record Ability to Repay Staying Power Collateral

Investor Expectations
Competitive Advantage Huge Market Strong Management Team Strong Marketing and Sales Plan Some Skin in the Game Obscene Return Exit Strategy

Entrepreneurs Start Businesses:

To Capitalize on an Invention To Pursue a Passion To Be Their Own Boss To Get Rich

---All Need an Exit Strategy

Exit Strategies
Selling the Business Transferring the Business to a Family Member Taking the Company Public Being Acquired by a Larger Company

Funding Sources:
Savings Friends and Family Financial Institutions / Banks Angel Investors Venture Capital

Business Plan Content

Executive Summary Company Description Product/Services Description Industry Overview Market Analysis Competitors

Business Plan Content

Customers Marketing and Sales Plans Development Operations Management

Business Plan Content

Personnel Financial Summary Financials Offering Appendices

Executive Summary
A mini-business plan in one or two pages Highlights the most important points of your business plan It is NOT an introduction to the plan It must grab your reader, and entice him/her to read further

Executive Summary
Identify the company, its background, structure and location Describe what the company does, and the market it serves Describe the market potential for the companys products and services, market trends, etc.

Executive Summary
Outline the backgrounds and experience of the top management team Describe the funding required, the purposes for which it will be used, the collateral available (if for a lender), and the expected outcomes

Company Overview
Brief Company Introduction
Mission statement Location, size, history Market and products Overview of company capabilities Objectives

Products/Services
Products / Services
What does it do? Uniqueness Competitive Advantage

Technology
Brief description Applications

Commercialization Status
Brief overview

Industry Overview
Set The Stage Industry Definition and Description
Major players within the industry Factors driving dynamics New products and developments

Legislation and Policies Driving the Industry Historical and Future Trends

Market Analysis
Market Definition
Primary Market Secondary Markets

Market Size and Trends

Current total revenues Predicted annual growth rate

Competitors
Direct Competitors
Who are they? Size and product breadth Revenues and profitability Strengths and weaknesses Market shares

Indirect Competitors

Customers
Customer Characteristics
Who are they? Why do they buy? Need satisfied by the product/service How is the need currently filled? What are the alternatives? Who makes the decision to buy? How frequently do they purchase?

Marketing and Sales Plans

Statement of Opportunity Marketing and Sales Objectives Existing Customers Potential Customers
Prospects targeted How prospects will be targeted and qualified

Marketing Strategies
Product/Service Strategy Pricing Strategy Distribution Strategy Advertising and Promotion Strategy Sales Strategy Marketing and Sales Forecasts

Marketing and Sales Plans

Marketing Programs
Direct Mail Trade Shows Advertising Internet Publicity/Public Relations Marketing Budget

Pricing
Basis for targeted price point Margins and profitability by volume levels

Marketing and Sales Plans

Sales Plan
Sales force structure (direct or reps) Sales expectations/quotas Margins given to intermediaries Service and warranties Sales Budget Organizational chart indicating planned growth

Development
R & D Plan
Objectives Milestones and current status Difficulties and risks Staffing R & D Budget and assumptions

Operations
Manufacturing/Production Plan
Objectives Facilities Staffing Subcontractors Quality Control Budget / Operating Expenses

Management
Company Organization Management Team Administrative Expenses

Management Team
President VP Finance VP Sales VP Marketing VP Manufacturing Board of Advisors

Personnel
Human Resource Plan
Staffing Objectives Organizational Structure 3-5 year growth plan Budget

Summary of Financials
Financial Objectives
Time to Cash Flow Positive Time to profitability

Financial Assumptions Capital Requirements Exit Scenario

Financials
Pro-forma Cash Flow Projections Pro-forma Profit & Loss Statements Pro-forma Balance Sheet

Offering
Investment Requirements Pro-forma Valuation of Business Offer

Appendices
Resumes of Key Management Patent Information Customer List Testimonials Supplemental Financial Spreadsheets References