Chaper 6: Writing a Business Plan

Question 1

CH6 What is “business plan”?

Answer 1

• It is the last activity in the step “Developing successful business ideas” of the entrpreneurial process.
• It is a written document that describes all the aspects of a business venture in a concise manner
• It is a dual-purpose document that is used both inside (for the firm’s employees) and outside (invester, skateholders, potential employees) the firm.

Question 2

CH6 What are the formats of the business plan?

Answer 2

1. Summary business plan: 10-15 pages; new venture in the early stage of development; to test if the investors interested in the ideas; normally to ask for funding to conduct analysis
2. Full business plan: 25-35 pages; new ventures at the point where needed funding/financing; serve as a “blueprint” for company’s operations.
3. Operational business plan: 40-100 pages; is intended primarily for internal audience; provide guidance to operational managers.

Question 3

CH6 What is “executive summary”?

Answer 3

• One of the most important sections in business plan
• A short overview of the entire business plan which shows busy reader a firm’s distinctive nature
• It is not a introduction or preface, it’s a summary of the plan.

Question 4

CH6 What is “mission statement”?

Answer 4

• defines why a company exist and what it wats to become

- if carefully written, it could act as an financial and moral compass.

Question 5

CH6 What is “operating leverage”?

Answer 5

• An analysis of a company’s fixed versus variable costs.

- operating leverage is high if fixed costs is highers than variable costs.

Question 6

CH6 What is “marketing strategy”?

Answer 6

• a firm’s overall approach for marketing its prosuct/service
• to determine its position and differentiation relative to competitors.

Question 7

CH6 What is “product prototype”?

Answer 7

• a first physical form or preliminary form of the product

- to get feed back and then improve