Business Plan

A business plan is a formal way of providing and communicating data that results from analyses and evaluations about strategy, marketing, and financials carried out before launching a new business.

From: Studies in Surface Science and Catalysis , 2020

Entrepreneurship in Biomaterials

Robert Langer , ... Mark Levin , in Biomaterials Science (Third Edition), 2013

Business Plan Competitions

Business plan competitions have enormously increased the awareness and interest in student entrepreneurship at many universities. These competitions help motivate and mobilize student teams around exciting new company concepts. These business plan competitions provide prize money and support for moving a company concept forward. Perhaps most importantly, they provide a forum for company builders to meet with other entrepreneurs and to bounce their ideas off other teams in a very non-threatening and supportive environment. Often, the prize money these organizations award is not significant enough to build a company; however, there are many other benefits to competing in a business plan competition, such as great publicity, visibility to potential investors, and free mentorship. If your venture would benefit from publicity, business plan competitions typically have great relationships with the media, and often set up interviews for print, radio or video news with their finalists' teams. Additionally, the finalists and winners of a business plan competition are often local celebrities on campus, which can help significantly in the recruiting process, and also in raising visibility within the university system and the technology transfer office.

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Catalysis, Green Chemistry and Sustainable Energy

Barbara Masciocchi , in Studies in Surface Science and Catalysis, 2020

3 Conclusions and future trends

A business plan is made by both words and numbers, text and tables: it is quite impossible to provide a useful and effective description of a business only by using words, and on the other hand, numbers cannot explain alone the business without words. Section by section the business plan becomes a set of tables and charts along with the text. There are many resources on the internet that can help to calculate and prepare all the spreadsheets and forms listed in the chapter, also offering free downloadable sample plans, tips, outlines, and discussions on topics related to developing a business plan.

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Your Entrepreneurial Career

Thomas N. Duening , ... Michael A. Lechter , in Technology Entrepreneurship (Third Edition), 2021

Keyterms

Business plan

Is a written document describing the nature of the business, the sales and marketing strategy, and the financial backgroundcontaining a projected profit and loss statement. A business plan is also a road map that provides directions so a business can plan its future and avoid bumps in the road.

Distribution system

It is a process to make the end products/services available to the customers. It encompasses every aspect of getting the product to its target market. Distribution systems can be as simple as street vending or as complex and sophisticated as international shipping networks.

Opportunity assessment plan

An opportunity assessment plan is similar to a business plan, only it is shorter and focus on the opportunity, not the venture. It serves as the basis to decide on whether to act on an opportunity or wait until another, better opportunity comes along.

Production plan

Is a plan for any company's production activities. It's an administrative process usually for manufacturing businesses to ensure sufficient raw materials, staff, and other necessary elements are procured to create the final product as per the schedule. The plan serves as a guide for the company's production activities. A strong production plan minimizes production time and costs, efficiently organize resources, and maximizes efficiency in the workplace.

Risk capital

Generally speaking, risk capital is money, if lost completely, would not have an overly harmful impact financially. It is money one can afford to lose and is usually invested in high-risk, high-reward investments. Meaning alternative investments such as venture capital, hedge funds, or private equity; or the funds used to start your own small business.

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Green Business Development

Sam Kubba Ph.D., LEED AP , in Handbook of Green Building Design and Construction, 2012

15.3 Creating a successful business plan

Most business advisors and experienced entrepreneurs generally agree that it is wise to develop a business plan prior to starting a business and marketing your construction services. A well-structured plan can certainly help you move forward and make the right decisions, and help make your business successful. The business plan that you will need to put together is basically a written document describing the business, its objectives, and its strategies, as well as the market it is in and its financial forecasts. It will also detail precisely what services are being offered, who are the services' proposed clients, who is the competition, and the proposed method to advertise and promote your services during the first year of business and beyond. Not all business plans, however, are the same, nor do they need the same level of detail. You might develop a fairly simple plan first and then expand and elaborate on it as you prepare to approach bankers or investors. Having a business plan is essential because it will help generate interest from potential lenders, prospective employees, and strategic partners. As an operating tool, it can help manage the business and effectively work toward its success.

For getting started, it is possible to develop a plan in several stages that meet your real business needs. In writing the business plan, it should be kept simple, concise, and neatly formatted, and preferably in a Microsoft® Word format with attached or embedded spreadsheets in Microsoft Excel. Fancy graphics, "padding," and flowery language are unnecessary and should be avoided. It is possible to use business planning software to prepare your business plan, if so desired, although it may lack the flexibility to accurately convey all of the features and potential of your new business. However, business planning software has the advantage of a logical step-by-step approach, and generally formats the plan for you. Plus, unless you have sufficient startup capital to finance setting up the new business on your own (e.g., for signage, office equipment, payroll, rent, utilities), you will probably need to deal with bank loans or investors or both, and for that you will need a more extensive business plan.

For business startups in particular, proper planning is one of the keys to success and its importance cannot be overemphasized. Putting together a business plan, including the research and thought even before beginning to write, forces one to take a serious, objective, and unemotional view of the entire business project. The business plan will invariably assist in identifying areas of strengths and weaknesses. But to be truly effective and convincing, it must show, among other things, the marketing strategy to be employed.

The whole idea of having a business plan is to communicate ideas to others while providing the basis for a financial proposal. Research shows that setting up a new business is fraught with difficulties and challenges, and that over half of all new businesses fail within the first 10   years. The main cause of failure is lack of planning and lack of adequate financing. As previously mentioned, finding startup capital for a new business will not be easy, which is why owners are initially expected to use their own funds or a bank loan linked to income or security other than the business (e.g., a home equity loan) or, as a last resort, to borrow from friends or relatives.

A business plan is designed to serve several functions in addition to securing external funding. For example, it helps in measuring success within the business; for new businesses it is often used to ensure that the various aspects of running the business have been researched and adequately thought out, thereby avoiding unexpected surprises. However, it must be said that a business plan is typically required by lenders (i.e., banks) when applying for financing; it can help convince banks or potential investors that you are worthy of receiving financial assistance for the new venture, especially if you can provide a professional-looking basic sales and expense forecast, leading to high profits and minimal loss. The principal components of a business plan are shown in the sidebar.

Business Plan Components

Introduction. This should primarily consist of a brief but comprehensive summary of how the company was formed, what type of business it is (e.g., green construction), and the people linked to it.

Mission and Vision. This generally reflects the objectives, aspirations, and direction of the company's business, as well as its expected goals and achievements. A mission statement generally outlines both short- and long-term goals and strategies.

Management. Even if the new business is a one-person operation, a key ingredient for business success is the strength of your management skills. When the business consists of more than one person, describe the management team with short biographies of principals and key personnel who will be instrumental to its success. Include each team member's role, background, position and responsibilities, and why he or she is specifically qualified for his or her role.

Services Offered. Outline in detail the type of services to be offered (e.g., green building, sustainability consulting, remodeling and alterations, permitting, site preparation, carpentry, concrete foundations, painting, plumbing and utilities installation, exterior renovations), the market for these services, and how you will fit them into this market. Include drawings, specifications, previous projects executed, and anything else that would enhance your presentation. It is also important to highlight any special skills, factors, and qualities that give your firm an edge over the competition.

Financial Plan. Here you need to include financial statements; this is a critical part of the business plan and condenses your strategies and assumptions into the cost of setting up the business and its expected profits. This is the section lenders and investors will be most interested in to evaluate your financial prospects. The financial section should clearly show projections for the first few years of business (depending on the lender's requirements) and may contain formal records of the business' financial activities, including

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Written statement of key business assumptions

•

Twelve-month profit and loss projection

•

One-year cash flow projection

•

Income statement

•

Projected balance sheet and break-even point

•

Personal financial statement

•

Report on cash management

Executive Summary. Although the executive summary appears as the first part of the plan, it is not typically written until the whole document is complete. It basically summarizes the most important information and aspects of your business plan and normally does not consist of more than one or two pages. The executive summary outlines information relating to the services offered by the business, its key people, why there is a need for this company, the current market, the competition, and the strategies that will be employed. Because lenders and investors are often very busy, they normally will not spend more than a few minutes reviewing a business plan before deciding whether they should read it in detail or move on to another plan. When it is decided to read any part of the business plan, it is typically the executive summary, which is why it is so imperative for it to be both appealing and convincing; it needs to be able to capture the investor's attention and imagination. The executive summary, therefore, is considered to be the most important part of the business plan, and it will determine whether the remaining pages will be read or not.

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Launching the Technology Venture

Thomas N. Duening Ph.D , ... Michael A. Lechter , in Technology Entrepreneurship, 2010

10.1.1 Writing a Business Plan

Creating and building a successful technology venture requires effective planning. As research indicates, poor management and management inexperience are primary causes of new-venture failure. 4 Of the various management functions that entrepreneurs must perform, planning probably contributes the most to new-venture performance. Planning provides a well-thought-out roadmap of action for the critical first months of the new venture. This activity is vital because when resources are slim in the early days of the business, mistakes can be costly or even fatal. Careful planning reduces the chances of major mistakes; it also forces the entrepreneur to examine the business's external environment, competition, potential customers, strengths, and limitations. 5 But despite the importance of planning, many entrepreneurs don't like to plan because they believe planning hinders their flexibility. 6

Writing a business plan is perhaps the most difficult task for new entrepreneurs, but also one of the most essential. For many entrepreneurs, writing a business plan is similar to having dental problems: it's painful and often requires repeat visits for follow-up work. The major difference is that a trip to the dentist usually ends quietly, knowing that you'll probably be back within a year. Completing the business plan, however, can result in a feeling of exhilaration as your idea comes alive in the words and numbers.

A business plan is a roadmap for starting and running your business. It's also a sales document, since the business plan is used to convince bankers, venture capitalists, family, friends, and even yourself to invest in the venture. Actually, there are seven good reasons that you should write a business plan if you want to be an entrepreneur:

1.

To sell yourself on the business: This is a "reality check." The most important stakeholders in any business venture are the founders. The founders must be convinced that the business idea is sound, so they develop a passion to make it a reality.

2.

To obtain bank financing: Since the bank failures of the 1980s and 1990s, it's more necessary than ever for entrepreneurs to have a sound business plan if they're seeking bank financing. Getting bank money may be tougher now than it has been in a long time. A well-written, well-researched business plan can make the difference between getting the money needed to start the business and being rejected.

3.

To obtain equity financing: The business plan is the price of admission to the equity capital evaluation process. Rare is the private investor who will provide the seed capital a new business requires based merely on an oral presentation or executive summary. Even if you do get to talk with an equity investor about your deal, you'll be required at least to submit a full financial plan writing.

4.

To arrange strategic alliances: Many small companies seek alliances with larger companies to get some of their expertise in key areas, or to offer their services. Despite the corporate need for many such services, there usually are more vendors than needed. To help them select who they'll work with, large corporations usually want to see business plans of prospective small business partners.

5.

To obtain large contracts: When small companies are seeking substantial orders or ongoing service contracts from major corporations, it helps to have a business plan to convince the corporation of the long-terms prospects of the small company. Through a business plan, corporate decision makers can see that the small company expects to be in business 3 years, 5 years, and more into the future. The business plan helps convey a feeling of partnership and commitment.

6.

To attract key employees: A new business startup will need talented, flexible people who are willing to take the risks associated with a new venture. Even in today's volatile job environment, many key executives are drawn to jobs with large corporations. A written business plan can assure prospective employees that the entrepreneurs have carefully thought through key issues facing the company and have a plan for dealing with them.

7.

To motivate and focus the management team: As small companies grow and become more complex; a business plan helps the management team stay focused on the same goals. Many companies lose their way when they begin to grow. Management, including the founding entrepreneur, needs to plan growth to ensure the business has cash flow to pay the bills, people to handle the volume of work, and goods to meet the demand they've created.

Research has demonstrated that solid business planning can help entrepreneurs avoid unnecessary mistakes. 7 A business plan should include the items listed in Exhibit 10.1.

Exhibit 10.1. Basic Outline for a Business Plan.

The executive summary is probably the most important section of any business plan. Many of the people to whom you will present your plan will read little more than the executive summary. Since this is the first, and often only, part of your plan that people read, it requires careful attention. The executive summary must present a realistic appraisal of your business, usually in one to two pages.

Tech Tips 10.1

Tips for Writing the Executive Summary of Your Business Plan

Here are some tips for writing an effective executive summary to your business plan:

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Write everything else first: Although the executive summary is the first thing that people will read, it is the last section of your business plan that you will write. Since it is a summary, it must draw from the details that go into the rest of your business plan.

▪

Write in plain language: The executive summary should avoid technical jargon and/or confusing language.

▪

Describe the business: It is of primary importance that you be able to describe your business in a paragraph or less. This means that you will have to think—really think—about what you intend to do and how you intend to do it.

▪

Describe the market size: Most of the people who will read your business plan are potential investors. You should find the most recent hard data on market size and report it in the first or second paragraph of the executive summary.

▪

Identify your target market share: After you have stated the size of the market, you should next identify the market share that your company must attain to be successful. Investors will want to know how much of the existing market you must capture to reach profitability.

▪

Identify competitive advantages: In the executive summary you do not want to analyze the competitors in your industry, but you should note the competitive advantages that your business will develop.

▪

Describe the investment opportunity: The executive summary should conclude with a clear statement about the investment opportunity.

The body of the business plan will expand on each of these elements contained in the executive summary. In the next section, we will explore in detail the information that should be included in each section of the business plan.

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Governance Framework

Robert Bruce Hey , in Performance Management for the Oil, Gas, and Process Industries, 2017

International Oil Companies

British Petroleum (Post-Gulf of Mexico Disaster) 1

BP has a system of internal control, the contents of which are shown in Box 8.3.

BOX 8.3

BP's Governance Framework Contents

1.

Control environment

1.1.

Board and executive governance of the group

1.1.1.

Board governance principles including executive limitations

1.1.2.

Board committees

1.1.3.

Executive Committees

1.1.4.

Group plan and planning processes

1.1.5.

Financial framework

1.2.

The assignment of authority and responsibility

1.2.1.

System of delegation

1.3.

Integrity and ethical values and legal compliance

1.3.1.

Code of conduct

1.3.2.

Certification

1.4.

Management philosophy and operating style

1.4.1.

Group strategy

1.4.2.

Organizational structure

1.5.

Competence framework

1.5.1.

Leadership framework

1.5.2.

Learning and development

2.

Management of risk and operational performance

2.1.

Risk management

2.1.1.

Risk management system

2.1.2.

Group risk categories and group risks

2.1.3.

Operating Management System (OMS)

2.1.4.

Group standards

2.1.5.

Processes and practices

2.2.

Monitoring performance and the management of risk

2.2.1.

Operating performance reviews

2.2.2.

Management information

2.2.3.

Group financial risk committee

2.2.4.

Group operations risk committee

3.

Management of people and individual performance

3.1.

Clear lines of communication

3.1.1.

Internal communications

3.1.2.

External communications

3.2.

Management of people

3.2.1.

Performance objectives

3.2.2.

HR policies and procedures

3.3.

Employee concerns

3.3.1.

Open Talk

3.3.2.

Fraud and misconduct reporting standard

The framework is outlined in Fig. 8.5.

Figure 8.5. BP Governance Framework.

BP's Operating Management System (OMS) is outlined in Section 4.13, Integrated Management Systems: Specific and Generic Examples.

Comment

BP appeared to have restructured after the Gulf of Mexico disaster, but still has a complex control framework. After a major incident, controls tend to increase.

Shell (As of November 2007) 2

Shell has a "Shell Control Framework" document, which documents a single overall control framework for Shell. Its components are Foundations, Organization, and Processes.

It refers to five enterprise-wide risk areas: Finance, Governance and Management, Health, Safety and Environment, Information Management, and People. Each of these is covered by one or more Group Standard. Additionally, there are Manuals containing instructions on how to apply the Standards and Guides containing good practices.

In support of the "Shell Control Framework" and relevant manuals, their management processes are divided into three primary categories: Strategic management, Core business, and Resource management.

Comment

Shell has a relatively simple Control Framework with a modular Business Unit approach and categorized management processes.

ExxonMobil 3

ExxonMobil's documentation is as follows:

•

"Standards of Business Conduct" are ExxonMobil's top documents. These consist of guiding principles, 16 foundation policies, and open-door communication procedures.

•

"System of Management Control Basic Standards" defines the basic principles, concepts, and standards that drive their business controls.

•

"Controls Integrity Management System" provides a structured approach for assessing financial control risks, establishing procedures for mitigating concerns, monitoring conformance with standards, and reporting results to management.

•

"Operations Integrity Management System" is designed to identify hazards and manage risks inherent to their operations and associated with the full life cycle of projects.

Comment

ExxonMobil's control documentation appears to be straightforward and simple.

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Launching Your Venture

Thomas N. Duening , ... Michael A. Lechter , in Technology Entrepreneurship (Third Edition), 2021

The Business Plan

A business plan or its modification is an important part of the new venture creation process and is often called the entrepreneur's roadmap for implementing the vision and the strategy of such entrepreneur as Leah Busque. You would not think of building a house or a new product or service without a plan, so why do some entrepreneurs believe they can start something as complex as a new business venture without a plan?

A business plan is particularly needed in today's complex, global, hypercompetitive rapidly changing technology-driven environment. Today's environment, perhaps more than ever before, requires an understanding of the complexity of the inputs and outputs so a new enterprise can be effectively established, launched, modified, and grown particularly for a technology entrepreneur.

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Gaseous fuels and bioelectricity service learning projects and case studies

Anju Dahiya , ... Deandra Perruccio , in Bioenergy (Second Edition), 2020

Pamoja business model

Pamoja's initial business plan involved The Green Plant, a hybrid energy system that combines a 10  kW gasifier unit to turn agricultural waste into electricity, solar PV, and a diesel generator as backup. While the partnership with telecommunication companies did not materialize, Pamoja adapted their business plan and currently provides a regionally unprecedented proof of concept for a profitable business model by setting up three biomass gasification units with microgrids connecting households and agroprocessing units offering value addition to farmers. Enhancing its business model, Pamoja is developing an advanced value chain for its electricity, process heat, and charcoal by-products through establishment of briquetting operations. Biomass briquetting increases resource efficiency by utilizing by-products, process heat, and off-peak electricity. In East Africa, briquettes offer a high-value cooking-fuel substitute for firewood and charcoal, addressing serious forest degradation concerns.

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Route to market

Kurt Dasse , Ulrich Steinseifer , in Mechanical Circulatory and Respiratory Support, 2018

The Business Plan/Executive Summary/Investor Slide Deck

Potential investors expect a well-written and conceived business plan, an executive summary, as well as an "investor slide deck" when initially evaluating the opportunity for funding. A brief list of the contents typically addressed in the business plan and executive summary is provided below.

Business Plan

The typical business plan addresses each of the following elements:

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description of the product

•

market

•

competition

•

development plan

•

intellectual property

•

regulatory plan

•

manufacturing

•

sales and marketing plan

•

forecast—financial plan

•

management team

•

board members

Don't be surprised if the investor immediately jumps to the financial plan to see if he is even interested in the opportunity. It's all about making a significant return on investment in a reasonable period of time. Small markets and long periods until the investor sees a return are nonstarters for most investors. Business plans are notoriously optimistic to stimulate interest from investors. Regretfully, this is a game that both the founders and the investors are aware of, but it is expected to a limited extent.

Executive Summary

The Executive Summary is exactly what it sounds like; it provides a punchy, concise grabber that gets the potential investor excited about your company. A good executive summary for a start-up is short, written in simple language, and fascinates the investor about your company. Avoid being professorial and using terms the investor will not understand. Provide a brief overview of the key elements of the business plan, including timelines for developing the product(s) and costs of achieving the goals of the business.

Slide Deck

Investors typically require a brief 20–25-slide presentation on the business. The slide deck and executive summary are typically sent to a potential investor ahead of a face-to-face meeting or a phone call after a confidentiality agreement has been executed. A nonconfidential slide deck may also be used. The slide deck generally reflects the business plan and is designed to present the company in the most attractive manner. The same presentation is used during an in-person meeting or teleconference allowing the speaker to add detail and respond to questions.

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MANAGEMENT AND SUPERVISION

In Management of Medical Technology, 1992

Business History

If the business plan is being developed solely for internal use, the discussion of the history of the business may be omitted. However, it is often important to understand the department from a historical perspective. As a result, this section of the plan should include the following:

•

A discussion of when the business (department) was founded, its progress to date, and a brief biographical sketch of the founders.

•

The organizational structure.

•

A discussion of products or services the department has developed or marketed over the years.

If it is believed that the company's past performance is not a reliable indicator of its potential, the reasons should be cited in this section.

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