Ebm 4
Ebm 4
Ebm 4
Writing a Business
Plan
Bruce R. Barringer
R. Duane Ireland
• Business Plan
– A business plan is a written document, typically 25 to 35
pages long, that describes what a new business plans to
accomplish and how it intends to accomplish it.
• Dual-Use Document
– For most new ventures, the business plan is a dual-purpose
document used both inside and outside the firm.
Investors and A firm’s business plan must make the case that the
other external firm is a good use of an investor’s funds or the
stakeholders attention of others.
• Executive Summary
– The executive summary is a short overview of the entire
business plan
– It provides a busy reader with everything that needs to
know about the new venture’s distinctive nature.
– An executive summary shouldn’t exceed two single-spaced
pages.
– The cleanest format for an executive summary is to provide
an overview of the business plan on a section-by-section
basis. The topics should be presented in the same order as
they are presented in the business plan.
Key Insights
• In many instances an investor will
ask for a copy of a firm’s executive
Executive Summary summary and will ask for a copy of
the entire plan only if the executive
summary is sufficiently convincing.
• The executive summary, then, is
arguably the most important
section of a business plan.
• Company Description
– This section begins with a general description of the
company.
– Items to include in this section:
• Company description/ History.
• Mission statement.
• Tagline
• Products and services, Position.
• Current status; milestones
• Legal status and ownership.
• Key partnerships (if any).
Key Insights
• While at first glance this section
may seem less important than the
Company Description others, it is extremely important.
• It demonstrates to your reader that
you know how to translate an idea
into a business.
• Industry Analysis
– This section should begin by describing the industry the
business will enter in terms of its size, growth rate, and
sales projections.
– Items to include in this section:
• Industry size, growth rate, and sales projections.
• Industry structure.
• Nature of participants.
• Key success factors.
• Industry trends.
• Long-term prospects.
Key Insights
• Before a business selects a target
market it should have a good grasp
Industry Analysis of its industry—including where its
promising areas are and where its
points of vulnerability(weak) are.
• The industry that a company
participates in largely defines the
playing field that a firm will
participate in.
• Market Analysis
– The market analysis breaks the industry into segments and
zeros in on the specific segment (or target market) to which
the firm will try to appeal.
– Items to include in this section:
• Market segmentation and target market selection.
• Buyer behavior.
• Competitor analysis.
• Firm’s annual sales and market share.
Key Insights
• Most startups do not service their
entire industry. Instead, they focus
Market Analysis on servicing a specific (target)
market within the industry.
• It’s important to include a section in
the market analysis that deals with
the behavior of the consumers in the
market. The more a startup knows
about the consumers in its target
market, the more it can tailor its
products or service appropriately.
©2010 Prentice Hall 4-24
Section 5: Marketing Plan
1 of 3
• Marketing Plan
– The marketing plan focuses on how the business will
market and sell its product or service.
– Items to include in this section:
• Overall marketing strategy.
• Product, price, promotion, distribution, and sales.
Key Insights
• The best way to describe a startup’s
marketing plan is to start by
Marketing Plan articulating its marketing strategy,
positioning, and points of
differentiation, and then talk about
how these overall aspects of the
the plan will be supported by price,
promotional mix, sales process, and
distribution strategy.
• Operations Plan
– Outlines how your business will be run and how your
product or service will be produced.
– A useful way to illustrate how your business will be run is
to describe it in terms of “back stage” (unseen to the
customer) and “front stage” (seen by the customer)
activities.
– Items to include in this section:
• General approach to operations.
• Business location.
• Facilities and equipment.
Key Insights
• Your have to strike a careful balance
between adequately describing this
Operations Plan topic and providing too much
detail.
• As a result, it is best to keep this
section short and crisp.
• Financial Projections
– The final section of a business plan presents a firm’s pro
forma (or projected) financial projections.
– Items to include in this section:
• Sources and uses of funds statement.
• Assumptions sheet.
• Pro forma income statements.
• Pro forma balance sheets.
• Pro forma cash flows.
• Ratio analysis.
Key Insights
• Having completed the earlier
sections of the plan, its easy to see
Financial Projections why the financial projections come
last.
• They take the plans you’ve
developed and express them in
financial terms.
– Any material that does not easily fit into the body of a
business plan should appear in an appendix—résumés of
the top management team, photos or diagrams of product or
product prototypes, certain financial data, and market
research projections.
• Segmentation:
– Divide the market into different group of customers.
• Target:
– Select the most attractive segment to focus your marketing on.
• Positioning:
– Determine how to position your product for each target segment