Podcast
Questions and Answers
What is a primary purpose of a business plan?
What is a primary purpose of a business plan?
Business plans are only used to obtain bank loans.
Business plans are only used to obtain bank loans.
False
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.
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Match the following types of business plans with their descriptions:
Match the following types of business plans with their descriptions:
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Which of the following is not typically included in a business plan?
Which of the following is not typically included in a business plan?
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Operational plans are created solely for the purpose of gaining external funding.
Operational plans are created solely for the purpose of gaining external funding.
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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?
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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?
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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.
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What is the purpose of an elevator pitch?
What is the purpose of an elevator pitch?
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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 _______.
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Match the following types of business plans with their primary audience:
Match the following types of business plans with their primary audience:
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Which element is important to include in an externally targeted business plan?
Which element is important to include in an externally targeted business plan?
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Writing a good business plan guarantees business success.
Writing a good business plan guarantees business success.
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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?
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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.
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Match the following business plans with their characteristics:
Match the following business plans with their characteristics:
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What is the primary purpose of many business plans?
What is the primary purpose of many business plans?
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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.
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What can complicate the sharing of a business plan with venture capitalists?
What can complicate the sharing of a business plan with venture capitalists?
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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.
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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?
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Study Notes
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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Description
This quiz explores the essential elements of a business plan, including both internal and external focuses. Understand how these plans serve various stakeholders and guide the path to achieving business goals. Dive into the tools and methods that aid in developing effective strategies and projections.
