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Flashcards in Preparing a Business Plan- Context and Format Deck (46):

Important to do this before beginning a business plan.

Conduct a Feasability Analysis


  1. Strong market potential
  2. An attractive industry
  3. The right individual or team to execute the plan

3 Elements Evident from the Feasability Analysis Before you Move to the Business Plan


  1. The content and format of the plan
  2. The effectiveness of the written presentation

Two Issues are of Primary Concern When Writing the Business Plan


Strategies and financial plans will follow naturally if this is a good one. It should be thought about first and foremost and is identified by your feasibility analysis.



  1. Opportunity
  2. Critical resources
  3. The entrepreneural team
  4. Financing the structure
  5. The context (or external factors)

Basic Factors to Give Consideration in a Business Plan


Should reflect the potential and the attractiveness of the market and industry.



Include not just money, but also human assets (suppliers, accountants, lawyers, investors, etc.) and hard assets (accounts recievable, inventories, etc.). An entrepreneur should think of ways to minimize the resources necessary for startup.

Critical Resources


Must possess integrity, as well as bredth and depth of experience.

The Entrepreneurial Team


How a firm is financed (i.e. debt versus equity) and how the ownership percentage is shared by the founders and investors will have a significant impact on an entrepreneur's incentive to work hard. The goal is to find a win-win deal.

Financing Structure


Includes the regulatory environment, interest rates, demographic trends, inflation, and other factors that inevitably change but cannot be controlled by the entrepreneur.

The Context (External Factors) of an Opportunity


  • Cover Page
  • Table of contents
  • Executive summary
  • Company description
  • Industry, target customer, and competitor analysis
  • Product/service plan
  • Marketing plan
  • Operation and development plan
  • Management team
  • Critical risks
  • Offering
  • Exit strategy
  • Financial plan
  • Appendix of supporting documents

Abbreviated Business Plan Outline


  • Company name
  • Logo
  • Tagline
  • Contact information
  • Copy number
  • Date prepared
  • Disclaimer (If needed)

Cover Page


  • Listing of the key sections of the business plan.

Table of Contents


  • One- to three-page overview of the significant points, intended to motivate the reader to continue reading.

Executive Summary


  • Company objectives
  • The nature of the business
  • Its primary product or service
  • Its current status (startup, buyout, or expansion) and history (if applicable)
  • The legal form of organization

Company Description


  • Key characteristics of the industry including the different segments, and the niche where you plan to compete.

Industry, Target Customer, and Competitor Analysis


Justification for why people will buy the product or service, based on its unique features.

Product/Service Plan


  • Marketing strategy, including the methods of identifying and attracting customers
  • Selling approach
  • Type of sales force
  • Distribution channels
  • Types of sales promotions and advertising
  • Credit and pricing policies

Marketing Plan


  • Operatering and manufacturing methods
  • Opering facilities (location, space, and equipment)
  • Quality-control methods
  • Procedures to control inventory and operations
  • Sources of supply
  • Purchasing procedures

Operations and Development Plan


  • Description of the management team
  • Outside investors and/or directors
  • Plans for recruiting and training employees

Management Team


Any known risks in the venture.

Critical Risks


How much capital the entrepreneur needs and how the money will be used (section used to attract investors).



Ways an investor and the entrepreneur may be able to harvest their business investment.

Exit Strategy


  • Contemplated sources of financing
  • Any historical financial statements, if available.
  • Pro forma financial statements for three to five years, including some investments
  • Balance sheets
  • Cash flow statements
  • Cash budgets

Financial Plan


Various supplementary materials and attachments to expand the reader's understanding of the plan.

Appendix of Supporting Documents


In the cover page, this should preferably be for the president and should include the mailing address, phone number, fax number, and e-mail address.

Contact Information


In a cover page, if it is being given to investors, this states that the plan is being provided on a confidential basis to qualified investors only and is not to be reproduced without permission.



On the cover page, this is to keep track of how many copies have been given out.

Copy Number


This allows the reader to spot-read a plan (a common practice) rather than read the plan from front to back.

Table of Contents


Often thought to be the most important section of the business plan. A section of the business plan that conveys a clear and concise overall picture of the proposed venture and creates interest in the venture.

  • Comes at the beginning of the business plan but should be written last.

Executive Summary


  • A description of the opportunity
  • An explaination of the business concept
  • An industry overview
  • The target market
  • The competitive advantage you how to achieve in the market
  • The economics of the opportunity
  • The management team
  •  The amount and purpose of the money being requested (the "offering"), if you are seeking financing.

Subsections of the Executive Summary


  • Synopsis
  • Narrative

Forms of the Executive Summary


Briefly covers all aspects of the business plan, giving each topic relatively equal treatment. It relates, in abbreviated fashion, the conclusions of each section of the completed business plan.

  • Although it is easy to prepare, it can be dry reading for the prospective investor



Tells a story, it can convey greater excitement than the synopsis. Requres a gifted writer who can communicate the necessary information and generate enthusiasm without crossing the line into hype. More appropriate for businesses that are breaking new ground with a new product, a new market, or new operational techniques. It is also better business format for ventures that have one dominate advantage. Works well for companies with interesting or impressive backgrounds or histories.



  1. When and where is the business to be started
  2. What is the history of the company
  3. What are the firm's objectives
  4. What changes have been made in structure and/or ownership
  5. In what stage of development is the firm
  6. What has been achieved to date
  7. What is the firm's competitive advantage or distinctive competence
  8. What are the basic nature and activity of the business
  9. What is the primary product or service
  10. What customers will be served
  11. What is the firm's form organization (sole proprietorship, partnership, limited liability company, corporation, or some other form).
  12. What are the current and projected economic states of the industry
  13. Does the firm intend to sell another company or investment group. Does it plan to be a publicly traded company, or do the owners want to transfer ownership to the next generation of the family

Company Description- Questions to Answer


  1. Present the opportunity and demonstrate why there is a significant market to be served. The broader industry to be competing- industry size, growth rate, fundamental trends, major players.
  2. Identify the segments of the industry and describe in detail the niche in which you plan to participate.
  3. Describe your target customers in terms of demographics and psychological variables (values, attitudes, fears)
  4. Know your customer- serves as the basis for understanding who your competitors are.
  5. Analyze competitors in terms of product or service attributes that they offer or are failing to provide.

Industry, Target Customer, and Competitor Analysis


A section of the business plan that describes the product and/or service to be provided and explains its merits.

  • Make a convincing presentation of your company's competitive advantage.
  • How your product or service fills a gap in the market and how it is "better, cheaper and/or faster."
  • Provide working model or prototype for physical products
  • Growth strategy for the product (primary determinant of a firm's value).
  • If relevant, describe secondary markets the firm will pursue.

Product/Service Plan


A section of the business plan that describes how the firm will reach and service customers within a given market.

  • Marketing strategy, including the methods of identifying and attracting customers
  • Pricing strategies
  • Selling approach
  • Types of sales force
  • Distribution channels
  • Types of sales promotions and strategies
  • Credit and pricing policies
  • Sales forecasts will need to be developed based on this information
  • Describe and warranties, as well as planned product updates.

Marketing Plan


A section of the business plan that offers information on how a product will be produced or a service provided, including descriptions of the firm's facilities, labor, raw materials, and processing requirements.

Operations and Development Plan


A section of the business plan that describes a new form's organizational structure and the backgrounds of its key employees.

  • Well balanced team= pme that includes financial and marketing expertise as well as production experience and innovate talent.

Management Team Section


A section of the business plan that identifies the potential risks that may be encountered by an investor. Common risks:

  • Lack or market acceptance
  • Competitor retaliation
  • Longer time and higher expenses than expected to start and grow the business.
  • Inadequate financing
  • Government regulations

Critical Risk Section


A section of the business plan that indicates to an investor how much money is needed, and when and how the money will be used.

  • Helpful to convey this information on a sources and uses table- that indicates the type of fnancing being requested (debt or equity) and how the funds will be used.
    • If equity- how much ownership he or she is willing to give up.
    • Amount of money being raised should carry the firm for 12 to 18 months



A section of the business plan that focuses on options for cashing out of the investment.

  • Most equity investors absolutely will not invest in a startup or early-stage business if they are not reasonably confident that at some time in the future there will be an opportunity to recover their principal investment, plus a nice return on the investment.

Exit Strategy (Harvest)


A section of the business plan that projects the company's financial position based on well-substantiated assumptions and explains how the figures have been determined.

  • A business can be profitable but fail if it does not produce positive cash flows.

Financial Plan


Projections of a company's financial statements for up to five years, including balance sheets, income statements, and statements of cash flows, as well as cash budgets.

Pro Forma Statements (Included in Financial Plan)


Supporting documents:

  • The resumes of the key investors and owners/managers
  • Photographs of products, facilities, and buildings
  • Professional references
  • Marketing research studies
  • Pertinent published research
  • Signed contracts of sale

 Nothing is more important to investors than the qualifications of the management team.

Appendix of Supporting Documents