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1. Cover Page and Table of Contents. The cover page should include the name of
the company, its address, its phone number, the date, and contact information
for the lead entrepreneur.
3. Industry Analysis. This section should begin by describing the industry the
new business will enter in terms of its size, growth rate, and sales projections.
It is important to focus strictly on the business’s industry and not its industry
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and target market simultaneously. Before a business selects its target market,
it should have a good grasp on its industry—including where its industry’s
promising areas are and where its points of vulnerability are located.
a. The sections to include in this portion of the plan include: Industry Size,
Growth Rate and Sales Projections, Industry Structure, Nature of
Participants, Key Success Factors, Industry Trends, and Long-Term
Prospects.
5. Market Analysis. While the industry analysis focuses on the industry that a
firm will participate in, the market analysis breaks the industry into segments
and zeroes in on the specific segment (or target market) to which the firm will
try to appeal.
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6. The Economics of the Business. This section begins the financial analysis of
the business, which is further fleshed out in the financial projections. It
addresses the basic logic of how profits are earned in the business and how
many units of a business’s product or service must be sold for the business to
“break even” and then start earning a profit.
a. Revenue drivers and profit margins. Summarize the major revenue drivers
of the business in proportion to where you expect to make your money.
Describe the size of the overall gross margins and margins for each of the
major revenue drivers of the business. Then determine the weighted
average contribution margins.
b. Fixed and variable costs. Provide a detailed summary of fixed and variable
costs for the venture.
e. Overall economic model. Put the pieces above together. Indicate how you
will make money in terms of the combination of margins, volumes,
operating leverage, and revenue source flexibility. How attractive is the
combination?
g. Profit durability. Address the issue of how solid or vulnerable the profit
stream appears to be.
7. Marketing Plan. The marketing plan focuses on how the business will market
and sell its product or service. It deals with the nuts and bolts of marketing in
terms of price, promotion, distribution, and sales.
b. A firm’s marketing strategy refers to its overall approach for marketing its
products and services. A firm’s overall approach typically boils down to
how it positions itself in its market and how it differentiates itself from its
competitors.
c. The next section should deal with your company’s approach to product,
price, promotion, and distribution.
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d. The final section should describe the company’s sales process or cycle and
specific sales tactics it will employ.
9. Operations Plan. The operations plan outlines how your business will be run
and how your product or service will be produced.
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11. Overall Schedule. A schedule should be prepared that shows the major events
required to launch the business. The schedule should be in the format of
milestones critical to the business’s success.
12. Financial Projections. The final section of a business plan presents a firm’s
pro forma (or projected) financial projections. Having completed the previous
sections of the plan, it’s easy to see why the financial projections come last.
They take the plans you’ve developed and express them in financial terms.
a. The sections to include in this portion of the plan include: Sources and
Uses of Funds Statement, Assumptions Sheet, Pro Forma Income
Statements, Pro Forma Balance Sheets, Pro Forma Cash Flows, and Ratio
Analysis.
c. Pro forma (or projected) financial statements are the heart of the financial
section of a business plan. A firm’s pro forma financial statements are
similar to the historical statements an established firm would normally
prepare, except they look forward rather than track the past.
13. Appendix. Any material that does not easily fit into the body of a business
plan should appear in an appendix.
14. Putting It All Together. In evaluating and reviewing the completed business
plan, the writers should put themselves in the reader’s shoes to determine if
the most important questions about the viability of their business venture have
been answered.
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a. Table 6.4 lists the 10 most important questions a business plan should
answer. It’s a good checklist of any business plan writer.
1. When asked to meet with an investor, the founders of a new venture should
prepare a set of PowerPoint slides that will fill the time slot allowed for the
presentation portion of the meeting.
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