BUS503 Study Guide
Unit 3: The Business Plan
3a. Determine the elements of a strong business plan
- What is the purpose of a business plan?
- What are the main elements of a business plan?
- How does the business plan attract investors?
A well-crafted business plan serves a dual purpose: securing investment and guiding your company's operations. For investors, the business plan offers a clear overview of your venture. It explains the "what, how, when, and why" of your business, demonstrating how their investment will translate to financial returns. Remember, investors often prioritize the team behind the idea. Your business plan should showcase the capabilities of your management team and key personnel, along with details of your operations and financial projections. In essence, the plan acts as a scaled-down prototype of your business model, outlining how your company will function and generate revenue.
The business plan also fosters internal communication among founders, aligning everyone on the company's goals and strategies. Furthermore, it serves as a valuable blueprint for operating your business, particularly during the crucial first year. While there's no one-size-fits-all approach to length, your plan should be comprehensive enough to address all essential components. Use clear and concise language, avoiding jargon. Structure your plan with bulleted lists, short paragraphs, and visually appealing formatting to enhance readability. Maintain a professional and enthusiastic tone throughout the document. Common elements of a standard business plan include a title page, table of contents, executive summary, company description, product or service details, market analysis, marketing and sales strategy, operating plan, management team structure, financing plan, and any relevant supporting documents.
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3b. Explain how to write a formalized business plan
- How comfortable do you feel with the mechanics of writing a business plan?
- How can business plan templates be customized for your needs?
- Can you present a business plan in the most effective way possible?
Whether you're seeking funding, analyzing the market, or investigating growth potential, the mechanics and design of your plan should cater to that objective. However, most plans share a core structure – it can be adapted for different levels of complexity depending on your business's needs. This structure tackles key questions that inevitably arise during the writing process: what information should be included, how should it be organized into sections, and how should those sections be arranged for optimal flow and perception?
Templates and business plan software can be very beneficial and timesaving. These resources provide a pre-built framework you can customize, saving you valuable time in the writing process. Remember, the goal is to strike a balance: provide just enough information to satisfy your audience's questions, but avoid bogging them down with unnecessary detail. Consider using compelling visuals like charts and graphs to enhance your message, and don't forget to practice your delivery if you will be presenting/pitching your plan. Clear, concise presentations that effectively communicate your vision are just as important as the written plan itself. By leveraging structure, technology, and effective presentation, you can craft a business plan that not only informs but also inspires, which hopefully leads to the kickoff of business success.
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3c. Evaluate the role of franchising
- What is the role of franchising?
- How should the decision to franchise be evaluated?
- How can franchising be a disadvantage?
Franchising is a business model where a successful company (the franchisor) licenses its brand and operations to another party (the franchisee). This allows the franchisor to expand its reach without the high costs and risks of opening company-owned stores. A franchisor is a well-established company that owns the brand and the proven business model. A franchisee is an individual or company that purchases the right to operate a business under the franchisor's brand. The franchisee gains access to a proven business model, brand recognition, and support from the franchisor but also faces limitations on control and potentially high costs.
Both parties can benefit from franchising. Franchisors enjoy regular income from royalties and expand their reach without heavy investment. Franchisees benefit from lower startup costs, a proven model, and established brand recognition that allows them to hit the ground running. However, drawbacks can exist. Franchisors face a lack of control over franchisee operations and potential reputational risks, given the distance and hands-off presence. Franchisees may have limited flexibility, high costs, and inconsistent support from the franchisor. Understanding these advantages and disadvantages is crucial for both parties to decide if franchising is the right fit for them.
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Unit 3 Vocabulary
This vocabulary list includes terms you will need to know to successfully complete the final exam.
- business plan
- franchisee
- franchising
- franchisor