Exam 2 Entrepreneurship

Business plan

written narrative that describes (25-35 pg) what a new bus intends to accomplish and how it intends to accomplish it

Purpose of busniness plan

1) internal= forces founding team to sytematically think through every aspect of its new venture 2) external= communicates the merits of a new venture to outsiders, like investors and bankers

Bus. plan audiences

1) employees= helps them operate in sync and move forward in a consistent and purposeful manner 2) investors and other stakeholders= makes the case that the firm is a good use of their funds and attention of others

Bus. plan red flags

1) founders have no own money at risk 2) poorly cited 3) market too broad 3) aggressive financials 4) sloppy

Bus. plan guidelines

1) follow a conventional structure 2) use online platform to help write plan but do not copy exactly 3) sense of excitement= project excitement and anticipation 4) content= clear and concise information on all aspects 5) Types = summary (10-15 pg) for testing, full plan for funding and financing (25-35pg), operational (40-100pg) for internal org. blueprint for operations guidance for op. mgmt. 6) elements may change=due to new insights, feedback etc.

Bus. plan outline

1) executive summary= short overview of bus. plan, 2 pg, should be written last, executive summary given to investor and they judge whether they’re interested or not, most important of bus. plan 2) Industry analysis= describe industry with size, growth rate, sales projections,trends, prospects, structure, nature of participants, success factors, key insights= promising areas and vulnerabilities 3) Company description=co. description, history, mission stmt., G/S, status, legal status/ownership, partnerships, translate idea into bus. 4) Market analysis= break industry into segments and hones in specific segment to which firm will appeal, include: market segment and target selection, buyer behavior, competitor anlysis, estimate of firm’s annual sales and market share 5) economics of bus. =how profits are earned and how many units of profits must be sold for bus. to break even and earn profits, include: revenue and margins, fixed and var. costs, op. leverage, starup costs, be chart and calc. 6) marketing plan= include: strategy, product, price, promotions, distribution, sales processes, sales tactics 7) product or service design and development plan 8) operations plan=how bus. runs and service is produced 9)mgmt team 10) schedule= shows events needed to launch bus. 11) fin. projections

Present bus. plan to investors

1) oral presentation don’t go over allotted, time, smooth and rehrearsed, 20 min, 12 slides, 40 min for ?s and feedback

Slides for presentation

1) title 2) problem 3)solution 4) opportunity and target market 5) technology 6) competition 7) marketing and sales 8) mgmt team 9) fin. projections 10) current status 11) financing sought 12)summary

Ethical and legal issues firms may face

1)establish strong ethical culture at org. 2) choose a lawyer 3) draft founder agreement 3) avoiding litigation 4) get bus. license and permit 5) choose form for bus. org.

How to establish strong ethical culture

1) lead by example 2) establish code of conduct 3) have an ethics training program

Dealing with legal issues

1) choose attorney for firm 2) draft founders agreement/shareholders agreement 3) avoiding legal disputes 4) having employees sign legal agreements

obtaining bus. license/permit

1) ask someone running a similar bus. 2) contact secretary of state office

Forms of bus. organization

1) sole proprietorship 2) partnership 3) corp. 4) LLC

Types of Agreements

1) founders agreement=doc that deals with issues like split of equity of founders, founder compensation, duration of time at company, founder:roles, nature and legal form of ownership, id of IP,  2) NDA 3) noncompete

Types of permits

1) sales tax 2) professional license/permit 3) local licenses and permits either for type of bus. or types of activities(health and safety for food, building etc) 4) bus. name permit 5) federal licenses like alcohol

Legal structures/forms of businesses

1) sole proprietorship= 1 person is same as bus. liabilities, pros: easy and cheap, ownership, deduct taxes, tax benefits, easy to dissolve cons: liability, rely on owner skills, getting capital, ends at death or no interest, low investment liquidity 2) partnership=2 or more, either general(isnt dependent on 1 person, liability shared, easy and cheap, more people more skills, raise funds, deductions, less tax burden, cons:same as sole prop.) or LLC. Limited partnership= 2 classes of owners general and limited, limited only liable for amount of investment. 3)Corp. =C or S. C=seperate from owners, board, taxed seperately, con: double taxation, maintenance, no deductionspros: raising capital, stock is liquid, stock sharing. S=no taxes, profits and losses go through owners tax returns, US citizens and not a subsidiary, 1 class stock, no more than 100 members, LLC=limited liability and no taxes,set up and maintenance difficult and expensive, complicated taxes