Term
| What is the primary purpose of a business plan? |
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Definition
| Outlines the basic concept underlying a business-what problem will be solved-and describes how the business will execute its plan to solve the problem. |
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Term
| Describe the Key Elements of a Business Plan |
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Definition
*A logical statement of a problem and its solution
*A significant amount of cold, hard evidence
*Transparent about the risks, gaps and assumptions that might be proved wrong. |
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Term
| Who are the typical users of a business plan, and how are they categorized? |
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Definition
1. Insiders:
-Entrepreneur and management team
-Employees
2. Outsiders:
-Potential customers
-Lenders
-Suppliers
-Investors (including family and friends, private investors, and venture capitalists) |
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Term
| What factors influence the structure and detail of a business plan? |
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Definition
-The cost in time and money to prepare the plan
-The management style and ability
-The preferences of the management team
-The complexity of the business
-The competitive environment
-The level of uncertainty in the market or industry |
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Term
| What are the key reasons for balancing planning and execution in a business plan? |
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Definition
-Provides a clearly articulated statement of goals and strategies for internal use.
-Imposes discipline on the entrepreneur and management team.
-Serves as a selling document to be shared with outsiders.
-Offers a credible overview for prospective customers, suppliers, and investors.
-Helps secure favorable credit terms from suppliers.
-Opens doors to lenders and other sources of funding. |
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Term
| What are the types of Business Plans |
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Definition
1. The Short Plan
-An abbreviated form of a traditional business plan that presents only the most important issues and projections.
The problem that needs to be solved for customers
• The strategy that will be developed to solve the problem
• The business model (to be described shortly)
• Measures used to gauge success
• Milestones to be met
• Tasks and responsibilities of the team
comprehensive plan
2. The Comprehensive Plan
-A complete plan that provides an in-depth analysis of the critical factors that will determine a business’s success or failure, along with all the underlying assumptions. |
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Term
| Basic Business model Framework |
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Definition
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Term
| What is a business model? |
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Definition
| An analysis of how a business plans to create profits and cash flows given its revenue sources, its cost structures, the required size of investment and sources of risk |
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Term
| Describe the Key Elements of a Business model |
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Definition
*Revenue Model
*Cost Structures
*Required Resources to grow the business
*Business Model Risk |
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Term
| List and describe the common types of revenue models used in businesses? |
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Definition
*Volume or unit-based – customers pay a fixed price for a P or S
*Subscription/membership-based – customers pay a fixed amount at regular intervals, prior to receiving a P or S
*Advertising-based – based on cost per impression, cost per click, or cost per acquisitions
*Licensing based – pay a one-time licensing fee to be able to use or resell the P or S |
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Term
| Characterization of Revenue Streams |
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Definition
1. Single stream, where a firm’s revenues come from a single product or service
2. Multiple streams, where a business realizes revenues from a combination of
multiple products and services
3. Interdependent streams, where a company’s revenues come from selling one or
more products and/or services as a way to generate revenues from other products
and/or services, such as printers and printer cartridges
4. Loss leader, where one or several revenue streams are sold at a loss in order to
create sales in a profitable revenue stream |
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Term
When forecasting revenues, an entrepreneur will find that the answers to a number
of key questions can provide the rationale for future sales estimates |
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Definition
1. Who are your most likely customers?
2. How are they different from the general population?
3. What events will trigger the need or desire for your type of product or service?
4. When will these events occur? Can they be predicted?
5. How will customers make decisions on whether or not to buy your product or
service?
6. What will be the key decision factors?
7. How will your product or service compare to that of the competition on these
key factors?
8. Will these differences be meaningful to the customer?
9. Are these differences known to the customer?
10. How can your product or service be exposed to your most likely potential
customers? |
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Term
| What are the components of a business’s cost structure, and how are costs typically classified? |
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Definition
1. A business’s cost structure consists of all the drivers that affect the cost of goods sold and operating expenses
2. classified into three categories:
Fixed Costs – Do not change with sales volume.
Example: Rent expenses.
Variable Costs – Change directly and proportionally with sales volume.
Example: Sales commissions.
Semi-variable Costs – Contain both fixed and variable elements; change with sales volume but not proportionally.
Example: Payrolls that increase with business growth but not directly with each sale. |
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Term
| What are key resource requirements and business model risk in a business model? |
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Definition
1. key resource requirements
-A component of the business model that provides estimates of the types and amounts of resources required to achieve positive profits and cash flows.
2. Business model risk
-A component of the business model that identifies risks in the model and how the model can adjust to them. |
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Term
| What are the three key elements in a feasibility analysis that determine the likelihood of a business’s success? |
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Definition
*Strong market potential
*Attractive industry
*The right individual or team to execute the plan |
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Term
| Key Factors that help determine the content of a business plan for a startup for success |
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Definition
The opportunity – must satisfy a need or want
Critical resources - all
The entrepreneurial team – possess integrity and experience
The financing structure – how it is financed
The context (or external factors) – regulations, demographics, inflation etc. |
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Term
| Executive summary should include the following subsections |
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Definition
-Description of the opportunity
-Explanation of the business concept
-Industry overview
-Target market
-Competitive advantage to be achieved
-Economics of the opportunity
-Management team description
-Amount and purpose of the money |
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Term
| Advice for Writing a Business Plan |
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Definition
*Analyse the market thoroughly
*Provide solid evidence for claims
*Think like an investor
*Don’t hide weaknesses—identify potential fatal flaws
*Maintain confidentiality
*Pay attention to details |
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Term
| How to prepare for a pitch to investors |
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Definition
1. Identify the problem to be solved.
2. Introduce your solution to the problem.
3. Discuss your beginning traction for getting sales.
4. Identify the target market.
5. Explain the costs of acquiring customers in your target market.
6. Communicate the value proposition relative to competitors.
7. Describe the basics of the revenue model.
8. Provide financial projections, along with the assumptions.
9. Sell the team.
10. Identify your funding needs, and explain the use of the funds.
11. Describe possible exit strategies—how the investors may be able to cash out.
12. End on a high note—remind investors why your product/service/team is so great. |
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Term
| Resources for Business Plan Preparation |
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Definition
1. Computer-Aided Business Planning
2. Professional Assistance
-Get referrals.
-Look for a fit.
-Check references.
-Get it in writing. |
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