LESSON 7 Flashcards
(37 cards)
The entrepreneurial process begins with an ____. The _________ comes next.
The entrepreneurial process begins with an idea. The business concept comes next.
What is the business concept?
The Business Concept:
It elaborates on the business idea and outlines critical information behind the execution of the idea.
WHAT IS A BUSINESS PLAN?
BUSINESS PLAN?
Is the comprehensive strategy that outlines the details behind the idea and the execution of the business.
What is the most common source for business ideas?
One of the most common sources of ideas is work experience: business ideas often stem from experience in the same industry or in a related industry.
Explain what is contained in the business concept document?
The business concept is usually a one-page business case that highlights the overriding reasons that the idea will succeed – or will reveal the reasons that it will not.
The business concept usually includes:
a brief description of the business idea;
a brief description of the products and/or services
the business’s intended market;
potential competitive advantages; and
a high level financial revenue and cost analysis.
TRUE OR FALSE?
In most cases, a business plan should aim to be 5 to 9 pages in length,
FALSE: In most cases, a business plan should aim to be 20 to 30 pages in length
TRUE OR FALSE?
There is no single template that will fit all business plans. Entrepreneurs should adapt it as needed to fit with their particular venture.
ANSWER: TRUE
WHAT IS THE OUTLINE OF A TYPICAL BUSINESS PLAN?
A typical business plan will have the following sections:
1-3 Pages Executive Summary
3-4 Pages Customer and Market Analysis
1-3 Pages Product/Service Description
3-4 Pages Business Model and Competitive Strategy
2-3 Pages Competitor Analysis
2-4 Pages Implementation Plan
1-2 Pages Risk Section
1-2 Pages Financial Highlights and Assumptions
may vary Detailed Financial Projections (in Appendix)
may vary Founder(s) Résumés (in Appendix)
may vary Other Appendices (as needed)
What is the objective of the executive summary?
The executive summary has one simple objective: to convince the reader to continue to read the rest of the business plan in its entirety.
This section must clearly articulate the needs of the customers within the target market and their ability and willingness to pay for the product or service in question.
The CUSTOMER AND MARKET ANALYSIS section must clearly articulate the needs of the customers within the target market and their ability and willingness to pay for the product or service in question.
_________ research is new research that has been completed firsthand, including surveys, focus groups, individual interviews, etc
PRIMARY research is new research that has been completed firsthand, including surveys, focus groups, individual interviews, etc
______ research involves an open-ended approach to better understand the situation at hand, whereas _______ research is focused on resolving a particular problem.
EXPLORATORY research involves an open-ended approach to better understand the situation at hand, whereas SPECIFIC research is focused on resolving a particular problem.
_____ research consists of market research that has already been conducted by other sources.
SECONDARY research consists of market research that has already been conducted by other sources.
NOTE ONLY / RISK
Risks
The risk section of the business plan identifies all major risks pertaining to the business venture. Disclosing risks is important: if the entrepreneur glosses over real and major risks, the reader will conclude that the entrepreneur has not done his or her research.
Though risks often carry a negative connotation, this section can still be positive. It provides the opportunity to discuss mitigation strategies towards the risk. It proves to the reader that the entrepreneur has thought through the potential issues and has plans in place to cope with them.
NOTE ONLY / RISK
Risks
The risk section of the business plan identifies all major risks pertaining to the business venture. Disclosing risks is important: if the entrepreneur glosses over real and major risks, the reader will conclude that the entrepreneur has not done his or her research.
Though risks often carry a negative connotation, this section can still be positive. It provides the opportunity to discuss mitigation strategies towards the risk. It proves to the reader that the entrepreneur has thought through the potential issues and has plans in place to cope with them.
Potential investors often scrutinize the ______ section more than any other section of the business plan, and the entrepreneur must therefore ensure that it is immaculate.
Potential investors often scrutinize the ______ section more than any other section of the business plan, and the entrepreneur must therefore ensure that it is immaculate.
Financial Highlights and Assumptions
If the entrepreneur is requesting funding for the enterprise, a cash flow pro forma statement must be included. The degree of detail of financial statements depends on the type of business; as a rule of thumb, most investors will want to see five-year projections.
Generally, the following financial pro forma statements will be required at a minimum:
[LIST 3 FINANCIAL STATEMENTS]
Generally, the following financial pro forma statements will be required at a minimum:
- Balance sheets for the first five years;
- Income statements for the first five years; and
- Cash flow statements for the first five years.
Explain what sensitivity analysis is?
Sensitivity analysis is the use of multiple what-if scenarios to model a range of possible outcomes.
The technique is used to evaluate alternative business decisions, employing different assumptions about variables.
For example, a financial analyst could examine the potential profit levels that may be achieved as a result of an investment in machinery by altering the expected demand level, material costs, equipment downtime percentage, crewing costs, and residual value of the equipment.
Completing the _ _ _ _ _ _ overview will give the entrepreneur a better idea of whether or not there is true potential behind the initial idea. This document serves as an initial “go/no-go” decision point, helping determine whether or not it is worth developing a complete business plan for the idea.
Completing the BUSINESS CONCEPT overview will give the entrepreneur a better idea of whether or not there is true potential behind the initial idea. The business concept serves as an initial “go/no-go” decision point, helping determine whether or not it is worth developing a complete business plan for the idea.
In this section, the entrepreneur explains what the company actually does.
In the product and service description section, the entrepreneur explains what the company actually does.
The product or service is described in some detail and, if necessary, related examples are given (especially to clarify if the idea is complex or unfamiliar to most).
This section highlights the underlying process and related technology as well as any new, novel, or unusual aspects of the company.
The entrepreneur must explain any technical or industry terms used in this section that might not be familiar to the reader – remember the grandparent/child test.
Which section of the business plan can we find the revenue model for the business?
Business Model and Strategy
The _ _ _ _ _ _ section makes a realistic assessment of existing and potential competitors.
The COMPETITIOR ANALYSIS SECTION makes a realistic assessment of existing and potential competitors.
Who are angel investors?
Angels are privately wealthy people who wish to help new businesses
TRUE OR FALSE?
A business plan is not static; it evolves as the business grows and as circumstances and resources change.
ANSWER: TRUE!
NOTE ONLY / BUSINESS PLANS
Developing a business plan requires that an entrepreneur take a long-term perspective for setting goals. This perspective will help foster smarter decisions in the short term.
NOTE ONLY / BUSINESS PLANS
Developing a business plan requires that an entrepreneur take a long-term perspective for setting goals. This perspective will help foster smarter decisions in the short term.
