Podcast
Questions and Answers
What is a primary purpose of a business plan?
What is a primary purpose of a business plan?
- To record daily transactions
- To assess employee performance
- To manage customer relationships
- To outline business goals and strategies (correct)
Business plans are only used to obtain bank loans.
Business plans are only used to obtain bank loans.
False (B)
What type of business plan focuses on goals important to outside stakeholders?
What type of business plan focuses on goals important to outside stakeholders?
Externally-focused plan
A business plan serves as a __________ for a business, providing direction for its operations.
A business plan serves as a __________ for a business, providing direction for its operations.
Match the following types of business plans with their descriptions:
Match the following types of business plans with their descriptions:
Which of the following is not typically included in a business plan?
Which of the following is not typically included in a business plan?
Operational plans are created solely for the purpose of gaining external funding.
Operational plans are created solely for the purpose of gaining external funding.
What is a common tool used to measure the success of an internally-focused business plan?
What is a common tool used to measure the success of an internally-focused business plan?
What is a primary concern of venture capitalists when reviewing a business plan?
What is a primary concern of venture capitalists when reviewing a business plan?
A non-profit business plan focuses primarily on financial goals like maximizing profit.
A non-profit business plan focuses primarily on financial goals like maximizing profit.
What is the purpose of an elevator pitch?
What is the purpose of an elevator pitch?
A business plan for a bank loan will build a convincing case for the organization's ability to _______.
A business plan for a bank loan will build a convincing case for the organization's ability to _______.
Match the following types of business plans with their primary audience:
Match the following types of business plans with their primary audience:
Which element is important to include in an externally targeted business plan?
Which element is important to include in an externally targeted business plan?
Writing a good business plan guarantees business success.
Writing a good business plan guarantees business success.
What are common problems during the estimation of costs and revenues in a business plan?
What are common problems during the estimation of costs and revenues in a business plan?
An internal operational plan has a higher degree of _______ than externally targeted plans.
An internal operational plan has a higher degree of _______ than externally targeted plans.
Match the following business plans with their characteristics:
Match the following business plans with their characteristics:
What is the primary purpose of many business plans?
What is the primary purpose of many business plans?
Reference class forecasting aims to increase the risk of cost overruns in business planning.
Reference class forecasting aims to increase the risk of cost overruns in business planning.
What can complicate the sharing of a business plan with venture capitalists?
What can complicate the sharing of a business plan with venture capitalists?
For-profit organizations focus on maximizing _______ while non-profit organizations aim for generating societal benefits.
For-profit organizations focus on maximizing _______ while non-profit organizations aim for generating societal benefits.
What is a common risk for technology start-ups during the dot-com bubble?
What is a common risk for technology start-ups during the dot-com bubble?
Flashcards
What is a business plan?
What is a business plan?
A formal written document outlining a business's goals, methods for achieving them, and timeframes for accomplishment.
What are external stakeholders?
What are external stakeholders?
These stakeholders are primarily external to the business, such as investors, customers, or donors.
What are internal stakeholders?
What are internal stakeholders?
These stakeholders are internal to the business and include those responsible for achieving the organization's goals.
What is an externally-focused business plan?
What is an externally-focused business plan?
A business plan focusing on goals important to external stakeholders, often including detailed information about the organization or the team.
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What is an internally-focused business plan?
What is an internally-focused business plan?
A business plan focusing on intermediate goals needed to achieve the external goals, often covering specific projects or initiatives.
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What is a strategic plan?
What is a strategic plan?
A type of business plan that outlines the organization's strategic goals without necessarily detailing the specific methods for achieving them.
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What is a project plan?
What is a project plan?
A plan that outlines the goals of a specific project, its place within the organization's strategic goals, and the methods for achieving those goals.
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What is an operational plan?
What is an operational plan?
A plan that describes the goals of an internal organization unit, working group, or department.
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Elevator Pitch
Elevator Pitch
A short summary of the business plan's key points, often used to pique the interest of potential investors or partners. It's called an "elevator pitch" because it should be concise enough to be delivered in the time it takes to ride an elevator.
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Pitch Deck
Pitch Deck
A visual presentation that uses slides and oral commentary to capture the attention of investors and encourage them to review a written business plan. It often includes key financial data and trends.
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External Presentation
External Presentation
A detailed, well-written, and formatted document that outlines the business plan's key elements for external stakeholders like investors or partners. It aims to impress and provide a comprehensive overview.
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Internal Operational Plan
Internal Operational Plan
A comprehensive plan outlining the internal operations and details of the business, providing information relevant to management and internal decision-making. It can be less formal than the external presentation.
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Reference Class Forecasting
Reference Class Forecasting
A method used to estimate costs and revenues for a business plan. It helps to reduce the risk of overestimating revenue or underestimating costs by analyzing similar ventures and historical data.
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Non-Disclosure Agreement (NDA)
Non-Disclosure Agreement (NDA)
A legal agreement that protects confidential information shared during the business plan review process. It safeguards the business's ideas and prevents potential investors from exploiting them.
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Fundraising
Fundraising
The process of raising funds from investors to finance the business. A strong business plan is critical to securing investments and convincing investors of the company's potential.
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For-Profit Organizations
For-Profit Organizations
Organizations that primarily focus on generating profits and maximizing financial gains. Their business plans typically center around financial goals.
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Non-Profit Organizations
Non-Profit Organizations
Organizations that primarily focus on serving a social cause or mission. Their business plans prioritize achieving their mission and ensuring financial sustainability to support their goals.
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Organizational Mission
Organizational Mission
The guiding principle or purpose that defines the activities of a non-profit organization. It outlines the organization's reason for existence and its intended impact on society.
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Margin
Margin
The ability of a business to generate revenue and sustain itself financially. In non-profit organizations, it's balancing the mission with financial viability.
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Business Plan Satire
Business Plan Satire
A humorous or satirical representation of business plans that is often used to highlight flaws and common mistakes. Can be used to improve the quality of business planning.
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Financial Viability
Financial Viability
The ability of a business to generate revenue and sustain itself financially. In non-profit organizations, it's balancing the mission with financial viability.
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Financial Sustainability
Financial Sustainability
The ability of a business to generate revenue and sustain itself financially. In non-profit organizations, it's balancing the mission with financial viability.
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Business Plan Overview
- A business plan is a formal document outlining business goals, methods to achieve them, and a timeframe.
- It details the business, background, financial projections, and strategies.
- It acts as a roadmap for the business.
- Often required for securing loans or financing.
- Templates available from organizations like the Small Business Administration (US).
- May be internally or externally focused.
External Focus
- Externally focused plans address goals important to external stakeholders, like investors, customers (for-profit), donors, clients (non-profit), taxpayers, higher-level government agencies, and international lending bodies.
Internal Focus
- Internally focused plans target intermediate goals needed to achieve external goals.
- May cover new products, services, IT systems, restructuring, or refurbishing.
- Often developed with tools like balanced scorecards, OGSM, or critical success factors.
- Measurements use non-financial data.
- Strategic plans identify internal goals but provide general guidance.
- Operational plans detail departmental goals.
- Project plans detail individual project goals and their place within the overall strategy.
Business Plans as Decision-Making Tools
- The content and format depend on the goals and the audience.
- Different audiences have different concerns (e.g., banks focus on repayment, venture capitalists on investment & exit).
- The plan draws on various business disciplines: finance, HR, IP, supply chain, operations, marketing.
- The plan can be viewed as a collection of interconnected sub-plans.
- A good plan can make a business more credible and attractive.
Presentation Formats
- Multiple formats for a single plan (especially startups).
- "Elevator pitch": A brief summary (30-60 seconds) to pique interest.
- Pitch deck: A slide show/presentation to generate discussion.
- Written presentation for external stakeholders: A detailed, well-formatted document.
- Internal operational plan: detailed for internal use.
Business Plan Viability
- Cost and revenue estimates are crucial for viability.
- Cost overruns and revenue shortfalls common, especially in startups.
- Reference class forecasting can improve accuracy.
- Legal considerations (e.g., NDAs, non-competes) affect audience and presentation.
- Two versions of the plan may sometimes be necessary.
Motivation and Goals
- Funding is often a primary reason to create a plan.
- Goals vary based on the organization type (for-profit vs. non-profit).
- For-profit often targets financial goals (profit, wealth creation).
- Non-profit focuses on mission and providing societal benefit, but may also target revenue optimization.
- Non-profits balance mission and margin (revenue).
Satire and Education
- Satires of business plans exist to highlight shortcomings and educate.
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