Looking Ahead
                                                           Looking Ahead
                                                            Looking Ahead
                                                            Looking Ahead
            After studying this chapter, you should be able to:
            1. Answer the question “What is a business plan?”
            2. Explain the need for a business plan from the 
                  perspectives of both internal and external users.
            3. Describe what determines how much planning an 
                  entrepreneur and a management team are likely to do.
            4. List practical suggestions to follow in writing a business 
                  plan and outline the key sections of a business plan.
            5. Identify available sources of assistance in preparing a 
                  business plan.
          Copyright © by South-Western College Publishing. All rights reserved.                                                                        8–2
                                         What Is a Business Plan?
                                         What Is a Business Plan?
                                          What Is a Business Plan?
                                           What Is a Business Plan?
            • Business Plan
                  –A document that sets out the basic idea 
                     underlying a business and related startup 
                     considerations
                       
                           Identifies the nature and context of the business 
                           opportunity
                       
                           Presents the entrepreneur’s approach to 
                           exploiting the opportunity
                       
                           Identifies factors affecting the venture’s success
                       
                           Serves as the entrepreneur’s tool for raising 
                           capital
          Copyright © by South-Western College Publishing. All rights reserved.                                                                        8–3
                                  The Need for a Business Plan
                                  The Need for a Business Plan
                                   The Need for a Business Plan
                                    The Need for a Business Plan
            • Primary Functions
                  –To provide a clearly articulated statement of goals 
                     and strategies for internal use
                       
                           Imposes discipline on the entrepreneur and 
                           management team
                  –To serve as a selling document to be shared with 
                     outsiders
                       
                           Provides a credible overview for prospective 
                           customers, suppliers, and investors
                       
                           Helps secure favorable credit terms from suppliers
                       
                           Opens approaches to lenders and other sources of 
                           financing
          Copyright © by South-Western College Publishing. All rights reserved.                                                                        8–4
             Users of 
             Users of 
              Users of 
              Users of                                             New Venture
       Business Plans                                              Management
        Business Plans
        Business Plans
        Business Plans
                                           Insiders
                                                                    Employees
             New Venture
            Business Plan
                                                                    Customers
                                           Outsiders                 Suppliers
                                                                     Investors
                                                                                  Fig. 8.1
      Copyright © by South-Western College Publishing. All rights reserved.          8–5
                    Features of Plans that Attract Investors
                    Features of Plans that Attract Investors
                     Features of Plans that Attract Investors
                     Features of Plans that Attract Investors
            • Plans that speak the investors’ language:
                  –Are brief, not extremely long in written length.
                  –Have an attractive overall appearance.
                  –Are well-organized with a table of 
                     contents and numbered pages.
                  –Are market-oriented in meeting 
                     customer needs; are not 
                     product-oriented.
                  –Show evidence of customer 
                     acceptance of the proposed 
                     product or service.
          Copyright © by South-Western College Publishing. All rights reserved.                                                                        8–6