The recommendations and resources on this page complement the Whitman School of Management's Nuts and Bolts of Great Business Plans, which was written by Department of Entrepreneurship and Emerging Enterprises. The sections on this page correspond to the Nuts and Bolts of Great Business Plan sections.
Nearly every part of your business plan will require some type of research. Since gathering and analyzing the amount of information and data this assignment requires can be time consuming, be sure to plan your time accordingly. These recommendations and resources are just starting points. Be prepared to gather information and data from many different sources as you research and put together your business plan.
The following video tutorials were developed to provide a refresher on general research and business research strategies. The four business research video tutorials, in particular, were developed by Business, Management and Entrepreneurship Librarian Stephanie JH McReynolds to support EEE 457 students in the development of Capstone business plans.
First outline the nature of the entity you plan to create and where you are in that process, then capture the essence of your business concept and explain that concept, then detail the products and services you anticipate selling, and then talk about your entry approach and your vision for growth over the next five years.
As you draft your idea, use the resources on the Article and News page of the Business Information Guide to explore trends and relevant company, industry, and product news and analysis. Refer to the resources on the Company Research page of the Business Information Guide to become familiar with other companies offering similar products or services.
The "industry" refers to the larger landscape, as in the "computer hardware wholesale trade industry" or the "card and gift industry" or the "architectural services industry." The focus here is on what is happening in the industry and on the relative attractiveness of the industry as a whole.
Refer to the Industry Research page of the Business Information Guide for recommendations and guidance.
This section should convince the reader or investor that you truly know your customers. It should convince the reader that your product or service a) solves a customer need that customers want solved; b) will have a substantial market in a growing industry; and c) can achieve sales in the face of competition. For example, the predicted sales levels directly influence such factors as the size of the manufacturing operation, the marketing plan, and the amount of debt and equity capital you will require. Yet most entrepreneurs seem to have great difficulty preparing and presenting market research and analyses that show that their ventures' sales estimates are sound and attainable. Consult industry publications, articles in trade magazines and trade associations to understand how the industry defines, identifies and segments its customers. Then apply yourself creatively by integrating the information in a unique way.
The economics of the business is the section addressing the basic logic of how profits are earned in your business as well as the sales level required to breakeven. Two companies in the same industry might make profit in very different ways. Will this be a high margin, low volume business with low fixed costs? Will it be a low margin, high volume business where the cost structure is predominantly variable? The story begins by identifying your sources of revenue and how much margin you make on each of them.
Explore Company Research resources on the Business Information Guide to find revenue and expenses of similar companies. Find industry ratios (such as profit/loss ratio by sales class) in Industry Research resources, such as Bizminer.
The Marketing Plan describes how your projected sales will actually be attained. How will you make sales actually happen? A great idea is meaningless if you cannot find customers. Thus, this section builds on the Market Section, where you defined your market and outlined your targeted segments and their buyer behavior. The marketing plan needs to provide detail on the overall marketing strategy that will exploit the opportunity and your competitive advantages. Include a discussion of sales and service policies, pricing, distribution, promotion and advertising strategies, and sales projections. The marketing plan needs to describe what is to be done, how it will be done, when it will be done, and who will do it.
Articles and News Search Tips:
Pay close attention to the words and terms in this section from The Nuts and Bolts of Great Business Plans. These words can be useful search terms. For example, sales and service policies, pricing, distribution, promotion, advertising strategies, and sales projections. As you review your search results, pay particular attention to the words and phrases in the keywords and subject terms of the article records, as these can yield additional search terms.
A basic search for marketing and strategy and (your product or concept term) can also yield relevant results. The databases will also suggest additional terms to use in your search, such as market research AND strategy, advertising agencies, advertising campaigns, marketing management, market research, marketing agreements for you to explore.
This is a very important section for those teams developing a non-existent product, doing research and development, having technical obstacles to overcome, or seeking patent or copyright protection. However, if you are in a business where research and development is not a major issue (e.g., retailing, many consumer services), then you can leave this section out and just address and technologies you plan to employ in the OPERATIONS section.
The nature and extent of any design and development work, and the time and money required before the product or service is marketable, need to be considered in detail. (Note that design and development costs are often underestimated.) Design and development might be the engineering work necessary to convert a laboratory prototype to a finished product; the design of special tooling; the work of an industrial designer to make a product more attractive and saleable; or the identification and organization of employees, equipment, and special techniques, such as the equipment, new computer software, and skills required for computerized credit checking, to implement a service business.
Refer to the Patents & Intellectual Property guide for resources and research tips.
The operations section outlines how you will run your business and deliver value to your customers. Operations is defined as the processes that deliver your products/services to a customer or user and can include the production process for delivering your service to a given customer, manufacturing process if you are a manufacturer, transportation, logistics, travel, printing, consulting, and after-sales service. It also includes such factors as plant location, the type of facilities needed, space requirements, internal processes, capital equipment requirements, and labor force (both full- and part-time) requirements.
Explore resources on the Business Information Guide for Market Research, Data & Demographics, and Articles and News. For the geographic subsection, the mapping features of some Company Research databases (such as Data Axle Reference Solutions) and the mapping feature, or geographic limiters, available in certain Market Research resources (such as SimplyAnalytics) may be especially useful. To help identify suppliers, explore Thomasnet.com.
This section of the business plan includes a description of the functions that will need to be filled, a description of the key management personnel and their primary duties, an outline of the organizational structure for the venture, a description of the board of directors and key advisors, a description of the ownership position of any other investors, and so forth. You need to present indications of commitment, such as the willingness of team members to initially accept modest salaries, and of the existence of the proper balance of technical, managerial, and business skills and experience in doing what is proposed.
Find articles on building your management team and board of directors with databases on the Articles and News page of the Business Information Guide. Explore the Career Research Guide for relevant information, such as salary research resources.
A graphical schedule that shows the timing and interrelationship of the major events necessary to launch the venture and realize its objectives is an essential part of a business plan. The underlying cash conversion and operating cycle of the business will provide key inputs for the schedule. In addition to being a planning aid by showing deadlines critical to a venture's success, a well-presented schedule can be extremely valuable in convincing potential investors that the management team is able to plan for venture growth in a way that recognizes obstacles and minimizes investor risk. Since the time necessary to do things tends to be underestimated in most business plans, it is important to demonstrate that you have correctly estimated these amounts in determining the schedule.
The development of a business has risks and problems, and the business plan invariably contains some implicit assumptions about these issues. You need to include a description of the risks and the consequences of adverse outcomes relating to your industry, your company and its personnel, your product's market appeal, and the timing and financing of your startup. Be sure to discuss assumptions concerning sales projections, customer orders, and so forth. If the venture has anything that could be considered a fatal flaw, discuss why you do not see it as a problem or how you intend to overcome it. The discovery of any unstated negative factors by potential investors can undermine the credibility of the venture and endanger its financing. Be aware that most investors will read the section describing the management team first and then this section.
This section lays out a picture of the financial performance of the firm as it is started, stabilizes and grows. The financial plan is basic to the evaluation of an investment opportunity and needs to represent your best estimates of financial requirements. The purpose of the financial plan is to indicate the venture’s potential and to present a timetable for financial viability. It also can serve as an operating plan for financial management using financial benchmarks. In preparing the financial plan, look creatively at the venture and think about bootstrapping techniques, especially in the early days.
Explore Company Research resources (such as PrivCo, which includes venture capital financial data, and Mergent Online, which includes 10-K reports) on the Business Information Guide to find revenue and expenses of similar companies. Find industry ratios (such as profit/loss ratio by sales class) in Industry Research resources, such as Bizminer.
The purpose of this section of the plan is to indicate the amount of any money that is being sought, the nature and amount of the securities offered to the investor, a brief description of the uses that will be made of the capital revised, and a summary of how the investor is expected to achieve its targeted rate of return. It is important to realize the terms for financing your company that you propose here are only the first step in the negotiation process with those interested in investing, and it is very possible that your financing will involve different kinds of securities than originally proposed.
Discover relevant articles with the resources on the Article and News page of the Business Information Guide.