Business plan prep ch1

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• business plan
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A document designed to detail the major characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm’s present and future.
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• external legitimacy
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A document designed to detail the major characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, manage- ment), and its financial outcomes with an emphasis on the firm’s present and future.
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• internal understanding
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The extent to which employees, investors, and family members involved in the business know the business’s purposes and operations.
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• vision statement
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A very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of the firm.
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• tagline
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(also known as a slogan) Memora- ble catchphrase that captures the key idea of a business, its service, product, or customer.
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• mission statement
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A paragraph that describes the firm’s goals and competitive advantages.
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• elevator pitch
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A 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another.
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• executive summary
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A one- to two-page (250-500 words) overview of the business, its busi- ness model, market, expectations, and immediate goals. It is typically put at the start of a business plan and is the most popular summary form for a business plan.
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• cover letter
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A one-page document on business stationery (also called letterhead) that introduces the business plan and the business owner to the recip- ient and indicates why the recipient is being asked to read the plan.
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• proprietary technology
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A product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark.
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• preselling
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Involves introducing your product to potential customers and taking orders for later delivery.
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• research and development
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(often abbreviated R&D)—The part of a business (and a business plan) that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm’s market.
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• pioneering business
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A firm whose product or service is new to the industry or is itself creating a new industry.
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• test marketing
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A firm whose product or service is new to the industry or is itself creating a new industry.
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• new entrant business
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A firm whose product or service is established elsewhere,
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• screening plan
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Also called a mini-plan, gives the basic overview of the firm and a detailed look at the financials.
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• informational plans
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Give potential customers or sup- pliers information about the com- pany and its product or service.
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• proof-of-concept Web site
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An Internet-based type of busi- ness plan providing information or demonstration of a product or ser- vice designed to solicit information on customer interest.
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• key employee/partner plan
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Provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.
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• invention plan
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A business plan that provides in- formation to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.
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• operational plan
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Business plans designed to be used internally for management purposes.
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private placement memorandum
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A specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments.
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Risk
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The parts of a business or business plan that expose the firm to any kind of loss—profits, sales, reputation, assets, customers, and so on.
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LO1 Understand why and when to develop a business plan.
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? Plans are done for external legitimacy and/or internal understanding. ? Plans are sometimes essential, and are often linked to improved firm survival. ? Different audiences seek different goals when reading business plans.
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LO2 Know how to tell the business plan story.
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? The business plan is a story you write about your firm. ? The story gets told in different ways and lengths, from vision statements, to mission statements, to elevator pitches, to executive summaries, to full business plans. ? The one-page business plan can be used to help organize the classic business plan.
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LO3 Learn the major sections of the classic business plan.
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? The full business plan gives the complete story of the firm and its major elements: the company’s product/service, market, competition, marketing strategy, organization, key personnel, service providers, location, and financials. ? It is a maximum of 25 pages long, with up to 15 pages of supporting material. ? Plans for simple businesses can be shorter than those for innovative types of firms.
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LO4 Focus business plan sections to meet specific needs.
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? A full business plan is often modified for special circumstances the firm faces, such as pioneering technology, new markets, established operations, or significant government involvement. ? Parts of a full business plan are often combined to create shorter plans for particular audiences such as investors, partners, or others.
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LO5 Identify the major risks to business plan success.
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? All business plans face risks; part of the role of the business plan is to explain how the firm will handle these risks. ? The risks come from numbers or assertions that are not adequately explained or supported.
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LO6 Master presenting your business plan to others.
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? Most business plans are presented to others using a seven- slide show. ? Listeners check presentations for the presenter’s passion, expertise, professionalism, and potential as a colleague

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