Professional Documents
Culture Documents
McGraw-Hill/Irwin
Entrepreneurship, 7/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Planning as Part of the Business Operation
• Plans: provide guidance and structure to
management in a rapidly changing market
environment.
▫ Extremely important in early stages of a new venture.
• Marketing
• Investors
• Depth and detail in the business plan depend on:
▫ Size and scope of the proposed new venture.
Nature of the product or market
-comprehensive plan for Portable Computer / retail video
store / e-commerce business
▫ Size of the market.
▫ Competition.
▫ Potential growth.
Value of the Business Plan (1 of 2)
• Valuable to the entrepreneur, potential investors,
or even new personnel.
• It is important to these people because:
▫ Helps determine viability of the venture in a
designated market.
▫ Provides guidance to the entrepreneur in organizing
his or her planning activities.
▫ Serves as an important tool in helping to obtain
financing.
• In case of a:
▫ Partnership:
Terms of the partnership should be included.
▫ Corporation:
Shares of stock authorized and share options.
Names, addresses, and resumes of the directors and
officers of the corporation.
Organization chart.
Assessment of Risk
• Identifies potential hazards and alternative strategies
to meet business plan goals and objectives.
• Assessment of risk should be based on:
▫ Potential risks to the new venture.
▫ Discussion of what might happen if risks become reality.
▫ Strategy employed to prevent, minimize, or respond.
• Major risks for a new venture could result from:
▫ Competitor’s reaction.
▫ Weaknesses in marketing/ production/ management
team.
▫ New advances in technology.
Financial Plan
• Projections of key financial data that determine
economic feasibility and necessary financial
investment commitment.
• May include:
▫ Letters from customers, distributors, or
subcontractors.
▫ Secondary data or primary research data used to
support plan decisions.
▫ Leases, contracts, or other types of agreements.
▫ Price lists from suppliers and competitors.
Using and Implementing the Business Plan
• Implementation of the strategy contain control
points to:
▫ Ascertain progress.
▫ Initiate contingency plans if necessary.
• Helps entrepreneurs:
▫ Maintain reasonable targets and goals
▫ Keep the new venture on a course to high probability
of success.
Why Business Plans Fail
• Factors can be one of many of the following:
▫ Goals set by the entrepreneur are unreasonable.
▫ Goals are not measurable.
▫ Entrepreneur has not made a total commitment to
the business or to the family.
▫ Entrepreneur has no experience in the planned
business.
▫ Entrepreneur has no sense of potential threats or
weaknesses to the business.
▫ No customer need was established for the proposed
product or service.