M4-S1 10 Entrepreneurial Business Planning Principles - II

Communication (1) Expectations

• Translating the vision of the venture into a format that is dictated by the audience (prime audience is always an investor)
  • Key success factors
  • Projected market size and market penetration potential
  • Strategy for commercialization, profitability and market dominance
  • Strong proprietary competitive position can be established and protected

(2) Milestones

• An effective EBP embodies the principle that "milestone planning takes entrepreneurs at the lowest possible cost to the next important stage, where they can make informed decisions rather than blunder along adhering to a fixed plan that out of ignorance they have based on faulty projections"

(3) Opportunity No opportunity lasts forever, you should include:

1. the new combination (of distinctive competencies and sustainable competitive advantage) of the venture
2. the magnitude of the opportunity or market size
3. market growth trends
4. the venture's value from the market, or the percent of market share proposed or market share value in dollars

(4) Context

1. Show a high awareness of the new venture's context and how it helps or hinders the venture
2. Demonstrate that you know the venture's context will inevitably change and describe how those changes might affect the business.
3. Further, the EBP should spell out what management can (and will) do in the event the context grows unfavorable.
4. Finally, the business plan should explain the ways (if any) in which the entrepreneurial team can affect context in a positive way.

try and be quantative: ""Each one-month delay in market introduction beyond 15 months from now will cost us a 2% market share." (5) Business Model

1. A business model states who pays, how much and how often
2. Describes the activities to produce and deliver the product
3. Three C's: 'Concept', 'Competency' and 'Competitive advantage'

Credibility (6) Team

1. the EBP should state what specific skills the team has
2. what specific additional skills are needed
3. identify how the required additional skills will be acquired.
4. if the team has identified candidates, those candidates should be revealed.
5. If candidates have not been identified, then the EBP should discuss what skills the team intends to look for in prospective candidates

Other questions to ask for a team:

1. What do they know?
2. Who do they know?
3. How well are they known?

(7) Elaboration

1. Link milestones to subplans
2. Use a timeline to show how tasks, milestones and subplans interconnect

(8) Scenario Integration

1. The most effective EBPs discuss the team (principle #6), opportunity (principle #3), and context (principle #4) as a moving target. All three principles (and the relationships among them) are likely to change over time as a company evolves from start-up to ongoing enterprise. The entrepreneurial team must focus on the dynamic aspects of the entrepreneurial process when writing the EBP.

(9) Financial Link

1. Income
2. Cash flow
3. Market size
4. Sales
5. Productivity
6. Basis for revenue estimates

(10)The Deal

1. People
2. Contect
3. Business Opportunity
4. Deal