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How to make a business plan

Table of Contents

How to make a good business plan: step-by-step guide.

A business plan is a strategic roadmap used to navigate the challenging journey of entrepreneurship. It's the foundation upon which you build a successful business.

A well-crafted business plan can help you define your vision, clarify your goals, and identify potential problems before they arise.

But where do you start? How do you create a business plan that sets you up for success?

This article will explore the step-by-step process of creating a comprehensive business plan.

What is a business plan?

A business plan is a formal document that outlines a business's objectives, strategies, and operational procedures. It typically includes the following information about a company:

Products or services

Target market

Competitors

Marketing and sales strategies

Financial plan

Management team

A business plan serves as a roadmap for a company's success and provides a blueprint for its growth and development. It helps entrepreneurs and business owners organize their ideas, evaluate the feasibility, and identify potential challenges and opportunities.

As well as serving as a guide for business owners, a business plan can attract investors and secure funding. It demonstrates the company's understanding of the market, its ability to generate revenue and profits, and its strategy for managing risks and achieving success.

Business plan vs. business model canvas

A business plan may seem similar to a business model canvas, but each document serves a different purpose.

A business model canvas is a high-level overview that helps entrepreneurs and business owners quickly test and iterate their ideas. It is often a one-page document that briefly outlines the following:

Key partnerships

Key activities

Key propositions

Customer relationships

Customer segments

Key resources

Cost structure

Revenue streams

On the other hand, a Business Plan Template provides a more in-depth analysis of a company's strategy and operations. It is typically a lengthy document and requires significant time and effort to develop.

A business model shouldn’t replace a business plan, and vice versa. Business owners should lay the foundations and visually capture the most important information with a Business Model Canvas Template . Because this is a fast and efficient way to communicate a business idea, a business model canvas is a good starting point before developing a more comprehensive business plan.

A business plan can aim to secure funding from investors or lenders, while a business model canvas communicates a business idea to potential customers or partners.

Why is a business plan important?

A business plan is crucial for any entrepreneur or business owner wanting to increase their chances of success.

Here are some of the many benefits of having a thorough business plan.

Helps to define the business goals and objectives

A business plan encourages you to think critically about your goals and objectives. Doing so lets you clearly understand what you want to achieve and how you plan to get there.

A well-defined set of goals, objectives, and key results also provides a sense of direction and purpose, which helps keep business owners focused and motivated.

Guides decision-making

A business plan requires you to consider different scenarios and potential problems that may arise in your business. This awareness allows you to devise strategies to deal with these issues and avoid pitfalls.

With a clear plan, entrepreneurs can make informed decisions aligning with their overall business goals and objectives. This helps reduce the risk of making costly mistakes and ensures they make decisions with long-term success in mind.

Attracts investors and secures funding

Investors and lenders often require a business plan before considering investing in your business. A document that outlines the company's goals, objectives, and financial forecasts can help instill confidence in potential investors and lenders.

A well-written business plan demonstrates that you have thoroughly thought through your business idea and have a solid plan for success.

Identifies potential challenges and risks

A business plan requires entrepreneurs to consider potential challenges and risks that could impact their business. For example:

Is there enough demand for my product or service?

Will I have enough capital to start my business?

Is the market oversaturated with too many competitors?

What will happen if my marketing strategy is ineffective?

By identifying these potential challenges, entrepreneurs can develop strategies to mitigate risks and overcome challenges. This can reduce the likelihood of costly mistakes and ensure the business is well-positioned to take on any challenges.

Provides a basis for measuring success

A business plan serves as a framework for measuring success by providing clear goals and financial projections . Entrepreneurs can regularly refer to the original business plan as a benchmark to measure progress. By comparing the current business position to initial forecasts, business owners can answer questions such as:

Are we where we want to be at this point?

Did we achieve our goals?

If not, why not, and what do we need to do?

After assessing whether the business is meeting its objectives or falling short, business owners can adjust their strategies as needed.

How to make a business plan step by step

The steps below will guide you through the process of creating a business plan and what key components you need to include.

1. Create an executive summary

Start with a brief overview of your entire plan. The executive summary should cover your business plan's main points and key takeaways.

Keep your executive summary concise and clear with the Executive Summary Template . The simple design helps readers understand the crux of your business plan without reading the entire document.

2. Write your company description

Provide a detailed explanation of your company. Include information on what your company does, the mission statement, and your vision for the future.

Provide additional background information on the history of your company, the founders, and any notable achievements or milestones.

3. Conduct a market analysis

Conduct an in-depth analysis of your industry, competitors, and target market. This is best done with a SWOT analysis to identify your strengths, weaknesses, opportunities, and threats. Next, identify your target market's needs, demographics, and behaviors.

Use the Competitive Analysis Template to brainstorm answers to simple questions like:

What does the current market look like?

Who are your competitors?

What are they offering?

What will give you a competitive advantage?

Who is your target market?

What are they looking for and why?

How will your product or service satisfy a need?

These questions should give you valuable insights into the current market and where your business stands.

4. Describe your products and services

Provide detailed information about your products and services. This includes pricing information, product features, and any unique selling points.

Use the Product/Market Fit Template to explain how your products meet the needs of your target market. Describe what sets them apart from the competition.

5. Design a marketing and sales strategy

Outline how you plan to promote and sell your products. Your marketing strategy and sales strategy should include information about your:

Pricing strategy

Advertising and promotional tactics

Sales channels

The Go to Market Strategy Template is a great way to visually map how you plan to launch your product or service in a new or existing market.

6. Determine budget and financial projections

Document detailed information on your business’ finances. Describe the current financial position of the company and how you expect the finances to play out.

Some details to include in this section are:

Startup costs

Revenue projections

Profit and loss statement

Funding you have received or plan to receive

Strategy for raising funds

7. Set the organization and management structure

Define how your company is structured and who will be responsible for each aspect of the business. Use the Business Organizational Chart Template to visually map the company’s teams, roles, and hierarchy.

As well as the organization and management structure, discuss the legal structure of your business. Clarify whether your business is a corporation, partnership, sole proprietorship, or LLC.

8. Make an action plan

At this point in your business plan, you’ve described what you’re aiming for. But how are you going to get there? The Action Plan Template describes the following steps to move your business plan forward. Outline the next steps you plan to take to bring your business plan to fruition.

Types of business plans

Several types of business plans cater to different purposes and stages of a company's lifecycle. Here are some of the most common types of business plans.

Startup business plan

A startup business plan is typically an entrepreneur's first business plan. This document helps entrepreneurs articulate their business idea when starting a new business.

Not sure how to make a business plan for a startup? It’s pretty similar to a regular business plan, except the primary purpose of a startup business plan is to convince investors to provide funding for the business. A startup business plan also outlines the potential target market, product/service offering, marketing plan, and financial projections.

Strategic business plan

A strategic business plan is a long-term plan that outlines a company's overall strategy, objectives, and tactics. This type of strategic plan focuses on the big picture and helps business owners set goals and priorities and measure progress.

The primary purpose of a strategic business plan is to provide direction and guidance to the company's management team and stakeholders. The plan typically covers a period of three to five years.

Operational business plan

An operational business plan is a detailed document that outlines the day-to-day operations of a business. It focuses on the specific activities and processes required to run the business, such as:

Organizational structure

Staffing plan

Production plan

Quality control

Inventory management

Supply chain

The primary purpose of an operational business plan is to ensure that the business runs efficiently and effectively. It helps business owners manage their resources, track their performance, and identify areas for improvement.

Growth-business plan

A growth-business plan is a strategic plan that outlines how a company plans to expand its business. It helps business owners identify new market opportunities and increase revenue and profitability. The primary purpose of a growth-business plan is to provide a roadmap for the company's expansion and growth.

The 3 Horizons of Growth Template is a great tool to identify new areas of growth. This framework categorizes growth opportunities into three categories: Horizon 1 (core business), Horizon 2 (emerging business), and Horizon 3 (potential business).

One-page business plan

A one-page business plan is a condensed version of a full business plan that focuses on the most critical aspects of a business. It’s a great tool for entrepreneurs who want to quickly communicate their business idea to potential investors, partners, or employees.

A one-page business plan typically includes sections such as business concept, value proposition, revenue streams, and cost structure.

Best practices for how to make a good business plan

Here are some additional tips for creating a business plan:

Use a template

A template can help you organize your thoughts and effectively communicate your business ideas and strategies. Starting with a template can also save you time and effort when formatting your plan.

Miro’s extensive library of customizable templates includes all the necessary sections for a comprehensive business plan. With our templates, you can confidently present your business plans to stakeholders and investors.

Be practical

Avoid overestimating revenue projections or underestimating expenses. Your business plan should be grounded in practical realities like your budget, resources, and capabilities.

Be specific

Provide as much detail as possible in your business plan. A specific plan is easier to execute because it provides clear guidance on what needs to be done and how. Without specific details, your plan may be too broad or vague, making it difficult to know where to start or how to measure success.

Be thorough with your research

Conduct thorough research to fully understand the market, your competitors, and your target audience . By conducting thorough research, you can identify potential risks and challenges your business may face and develop strategies to mitigate them.

Get input from others

It can be easy to become overly focused on your vision and ideas, leading to tunnel vision and a lack of objectivity. By seeking input from others, you can identify potential opportunities you may have overlooked.

Review and revise regularly

A business plan is a living document. You should update it regularly to reflect market, industry, and business changes. Set aside time for regular reviews and revisions to ensure your plan remains relevant and effective.

Create a winning business plan to chart your path to success

Starting or growing a business can be challenging, but it doesn't have to be. Whether you're a seasoned entrepreneur or just starting, a well-written business plan can make or break your business’ success.

The purpose of a business plan is more than just to secure funding and attract investors. It also serves as a roadmap for achieving your business goals and realizing your vision. With the right mindset, tools, and strategies, you can develop a visually appealing, persuasive business plan.

Ready to make an effective business plan that works for you? Check out our library of ready-made strategy and planning templates and chart your path to success.

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The Business Planning Process: 6 Steps To Creating a New Plan

In this article, we will define and explain the basic business planning process to help your business move in the right direction.

What is Business Planning?

Business planning is the process whereby an organization’s leaders figure out the best roadmap for growth and document their plan for success.

The business planning process includes diagnosing the company’s internal strengths and weaknesses, improving its efficiency, working out how it will compete against rival firms in the future, and setting milestones for progress so they can be measured.

The process includes writing a new business plan. What is a business plan? It is a written document that provides an outline and resources needed to achieve success. Whether you are writing your plan from scratch, from a simple business plan template , or working with an experienced business plan consultant or writer, business planning for startups, small businesses, and existing companies is the same.

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The Better Business Planning Process

The business plan process includes 6 steps as follows:

• Do Your Research
• Calculate Your Financial Forecast
• Draft Your Plan
• Revise & Proofread
• Nail the Business Plan Presentation

We’ve provided more detail for each of these key business plan steps below.

1. Do Your Research

Conduct detailed research into the industry, target market, existing customer base,  competitors, and costs of the business begins the process. Consider each new step a new project that requires project planning and execution. You may ask yourself the following questions:

• What are your business goals?
• What is the current state of your business?
• What are the current industry trends?
• What is your competition doing?

There are a variety of resources needed, ranging from databases and articles to direct interviews with other entrepreneurs, potential customers, or industry experts. The information gathered during this process should be documented and organized carefully, including the source as there is a need to cite sources within your business plan.

You may also want to complete a SWOT Analysis for your own business to identify your strengths, weaknesses, opportunities, and potential risks as this will help you develop your strategies to highlight your competitive advantage.

2. Strategize

Now, you will use the research to determine the best strategy for your business. You may choose to develop new strategies or refine existing strategies that have demonstrated success in the industry. Pulling the best practices of the industry provides a foundation, but then you should expand on the different activities that focus on your competitive advantage.

This step of the planning process may include formulating a vision for the company’s future, which can be done by conducting intensive customer interviews and understanding their motivations for purchasing goods and services of interest. Dig deeper into decisions on an appropriate marketing plan, operational processes to execute your plan, and human resources required for the first five years of the company’s life.

3. Calculate Your Financial Forecast

All of the activities you choose for your strategy come at some cost and, hopefully, lead to some revenues. Sketch out the financial situation by looking at whether you can expect revenues to cover all costs and leave room for profit in the long run.

Begin to insert your financial assumptions and startup costs into a financial model which can produce a first-year cash flow statement for you, giving you the best sense of the cash you will need on hand to fund your early operations.

A full set of financial statements provides the details about the company’s operations and performance, including its expenses and profits by accounting period (quarterly or year-to-date). Financial statements also provide a snapshot of the company’s current financial position, including its assets and liabilities.

This is one of the most valued aspects of any business plan as it provides a straightforward summary of what a company does with its money, or how it grows from initial investment to become profitable.

4. Draft Your Plan

With financials more or less settled and a strategy decided, it is time to draft through the narrative of each component of your business plan . With the background work you have completed, the drafting itself should be a relatively painless process.

If you have trouble writing convincing prose, this is a time to seek the help of an experienced business plan writer who can put together the plan from this point.

5. Revise & Proofread

Revisit the entire plan to look for any ideas or wording that may be confusing, redundant, or irrelevant to the points you are making within the plan. You may want to work with other management team members in your business who are familiar with the company’s operations or marketing plan in order to fine-tune the plan.

Finally, proofread thoroughly for spelling, grammar, and formatting, enlisting the help of others to act as additional sets of eyes. You may begin to experience burnout from working on the plan for so long and have a need to set it aside for a bit to look at it again with fresh eyes.

6. Nail the Business Plan Presentation

The presentation of the business plan should succinctly highlight the key points outlined above and include additional material that would be helpful to potential investors such as financial information, resumes of key employees, or samples of marketing materials. It can also be beneficial to provide a report on past sales or financial performance and what the business has done to bring it back into positive territory.

Business Planning Process Conclusion

Every entrepreneur dreams of the day their business becomes wildly successful.

But what does that really mean? How do you know whether your idea is worth pursuing?

And how do you stay motivated when things are not going as planned? The answers to these questions can be found in your business plan. This document helps entrepreneurs make better decisions and avoid common pitfalls along the way. ​

Business plans are dynamic documents that can be revised and presented to different audiences throughout the course of a company’s life. For example, a business may have one plan for its initial investment proposal, another which focuses more on milestones and objectives for the first several years in existence, and yet one more which is used specifically when raising funds.

Business plans are a critical first step for any company looking to attract investors or receive grant money, as they allow a new organization to better convey its potential and business goals to those able to provide financial resources.

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Other Helpful Business Plan Articles & Templates

11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

• Describe the different purposes of a business plan
• Describe and develop the components of a brief business plan
• Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

• These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
• Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

• You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
• Would you have started the Laughing Man Foundation?
• What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

• What steps should the new restaurant take to create a new business plan?
• Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

• 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
• 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
• 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
• 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
• 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
• 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
• 54 Foodstart. http://foodstart.com
• 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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Business Plan Development Guide

(6 reviews)

Lee Swanson, University of Saskatchewan

Copyright Year: 2017

Publisher: OPENPRESS.USASK.CA

Language: English

Formats Available

Conditions of use.

Learn more about reviews.

Reviewed by Kevin Heupel, Affiliate Faculty, Metropolitan State University of Denver on 3/4/20

The text does a good job of providing a general outline about writing and developing a written business plan. All of the important steps and components are included. However, the text is light on details, examples, and rationale for each element... read more

Comprehensiveness rating: 3 see less

The text does a good job of providing a general outline about writing and developing a written business plan. All of the important steps and components are included. However, the text is light on details, examples, and rationale for each element of the business plan. Some examples from actual business plans would be helpful.

Content Accuracy rating: 4

For the most part, the content is accurate. The content covers all important aspects of drafting a business plan. I thought the industry analysis could use more information about collecting primary and secondary sources; instead, this information was referenced in the marketing plan section.

Relevance/Longevity rating: 5

Most of the content relies on cites as far back as 2006; however, when it comes to developing and writing a business plan nothing has changed. Thus, the content is current and there is no concern about it becoming obsolete in the near future.

Clarity rating: 4

The text is clear. There are no difficult terms used and the writing is simple. The text uses a lot of bullet points though, which gets tedious to read for a few pages.

Consistency rating: 5

The text does a good job of maintaining consistency in terms of framework and terminology. The text is organized where it's easy to find the information you want in a quick manner.

Modularity rating: 3

The text has a lot of bullet points and the paragraphs are dense. However, the use of subheading is excellent.

Organization/Structure/Flow rating: 5

The book is organized as if you're writing a business plan from start to finish, which is helpful as a practical guide.

Interface rating: 5

There are no navigation problems, distortion of images/charts, or any other display features that may distract or confuse the reader.

Grammatical Errors rating: 5

The text is free of grammatical errors. The sentence structure is simple with many bullet points, which helps to avoid any grammatical issues.

Cultural Relevance rating: 5

This book was written by a Canadian professor and provides references to Canadian sources. However, the information in this text can be used for U.S. schools.

This book is very short and provides a good, general overview about the process of creating and writing a business plan. It won't help a reader if he/she is confused about a certain part of the business plan. The reader will have to find another source, such as "Preparing Effective Business Plans" by Bruce Barringer, Ph.D. The book provides links to good resources and a finished business plan that the reader can reference. I would recommend the book for undergraduate courses.

Reviewed by Kenneth Lacho, Professor of Management, The University of New Orleans on 6/19/18

1. Text is relevant to Canada. Not the United States 2. Needs to cover resources available to entrepreneur, e.g., federal government agencies, trade associations, chambers of commerce, economic development agencies. 3. Discuss local economy or... read more

1. Text is relevant to Canada. Not the United States 2. Needs to cover resources available to entrepreneur, e.g., federal government agencies, trade associations, chambers of commerce, economic development agencies. 3. Discuss local economy or economic area relevant to this proposed business. 4. Business model ok as a guide. 5. Suggested mission statement to cover: product/business, target customer, geographical area covered. 6. Need detailed promotion plan, e.g., personal selling, advertising, sales promotion, networking publicity, and social media. 7. How do you find the target market? 8. Chapter 6 too much detail on debt and equity financing. 9. Discuss how to find sources of financing, e.g., angels. 10. Expand coverage of bootstring, crowdfunding. 11. Chapter 4 – good checklist. 12. Chapter 3 - overlaps. 13. Chapter 7 – 3 pages of executive summary – double or single spaced typing. Number all tables, graphs. 14. Some references out-of-date, mostly academic. Bring in trade magazines such as Entrepreneur.

Content Accuracy rating: 5

In my opinion, the content is accurate and error free.

Relevance/Longevity rating: 4

The material is relevant to writing a business plan. I wonder if the Porter, SWOT VRIO, etc. material is too high level for students who may not be seniors or have non-business degrees (e.g., liberal arts). Porter has been around for a while and does have longevity. The author has to be more alert to changes in promotion, e.g., social media and sources of financing, e.g., crowdfunding.

Clarity rating: 3

As noted in No. 9, the tone of the writing is too academic, thus making the material difficult to understand. Paragraphs are too long. Need to define: Porter, TOWS Matrix, VRIO, PESTEL. A student less from a senior or a non-business major would not be familiar with these terms.

Consistency rating: 4

The text is internally consistent. The model approach helps keep the process consistent.

Modularity rating: 4

The process of developing a business plan is divided into blocks which are parts of the business plan. Paragraphs tend to be too long in some spots.

Organization/Structure/Flow rating: 4

The topics are presented in a logical step-wise flow. The language style is too academic in parts, paragraphs too long. Leaves out the citations. Provides excellent check lists.

There are no display features which confuse the reader.

Grammatical Errors rating: 4

The text has no grammatical errors. On the other hand, I found the writing to be too academic in nature. Some paragraphs are too long. The material is more like an academic conference paper or journal submission. Academic citations references are not needed. The material is not exciting to read.

The text is culturally neutral. There are no examples which are inclusive of a variety of races, ethnicities, and backgrounds.

This book best for a graduate class.

Reviewed by Louis Bruneau, Part Time Faculty, Portland Community College on 6/19/18

The text provides appropriate discussion and illustration of all major concepts and useful references to source and resource materials. read more

Comprehensiveness rating: 5 see less

The text provides appropriate discussion and illustration of all major concepts and useful references to source and resource materials.

Contents of the book were accurate, although it could have benefited from editing/proofreading; there was no evidence of bias. As to editing/proofreading, a couple of examples: A. “Figure 1 – Business Plan… “ is shown at the top of the page following the diagram vs. the bottom of the page the diagram is on. (There are other problems with what is placed on each page.) B. First paragraph under heading “Essential Initial Research” there is reference to pages 21 to 30 though page numbering is missing from the book. (Page numbers are used in the Table of Contents.)

The book is current in that business planning has been stable for sometime. The references and resources will age in time, but are limited and look easy to update.

Clarity rating: 5

The book is written in a straightforward way, technical terms that needed explanations got them, jargon was avoided and generally it was an easy read.

The text is internally consistent in terms of terminology and framework.

Modularity rating: 5

The book lends itself to a multi-week course. A chapter could be presented and students could work on that stage of Plan development. It could also be pre-meeting reading for a workshop presentation. Reorganizing the book would be inappropriate.

The topics in the text are presented in a logical, clear fashion.

Generally, the book is free of interface problems. The financial tables in the Sample Plan were turned 90° to maintain legibility. One potential problem was with Figure 6 – Business Model Canvas. The print within the cells was too small to read; the author mitigated the problem by presenting the information, following Figure 6, in the type font of the text.

I found no grammatical errors.

The text is not culturally insensitive or offensive in any way.

I require a business plan in a course I teach; for most of the students the assignment is a course project that they do not intend to pursue in real life. I shared the book with five students that intended to develop an actual start-up business; three of them found it helpful while the other two decided not to do that much work on their plans. If I were planning a start-up, I would use/follow the book.

Reviewed by Todd Johnson, Faculty of Business, North Hennepin Community College on 5/21/18

The text is a thorough overview of all elements of a business plan. read more

Comprehensiveness rating: 4 see less

The text is a thorough overview of all elements of a business plan.

The content is accurate and seems to lack bias.

Content seems relevant and useful . It does not help an entrepreneur generate ideas, and is very light on crowdfunding and other novel funding source content. It is more traditional. This can be easily updated in future versions, however. "Social Media" appears once in the book, as does "Crowd Funding".

The book is comprehensive, but perhaps not written in the most lucid, accessible prose. I am not sure any college student could pick this up and just read and learn. It would be best used as a "teach along guide" for students to process with an instructor.

The text seems consistent. The author does a nice job of consistently staying on task and using bullets and brevity.

Here I am not so certain. The table of contents is not a good guide for this book. It does make the book look nicely laid out, but there is a lot of complexity within these sections. I read it uncertain that it was well organized. Yes there are many good bits of information, however it is not as if I could spend time on one swathe of text at a time. I would need to go back and forth throughout the text.

Organization/Structure/Flow rating: 2

Similar to the above. I did not like the flow and organization of this. An editor would help things be in a more logical order.

Interface rating: 2

The interface is just OK. It is not an attractice interface, as it presents text in a very dense manner. The images and charts are hard to follow.

I did not find any grammatical errors.

Cultural Relevance rating: 4

I a not certain of the origins of Saskatchewan, but I do feel this is a different read. It is more formal and dense than it has to be. This would be a difficult read for my students. I do not feel it is insensitive in any way, or offensive in any way.

I would not adopt this book if given the chance. It is too dense, and not organized very well, even though the information is very good. The density and lack of modularity are barriers to understanding what is obviously very good information.

Reviewed by Mariana Mitova, Lecturer, Bowling Green State University on 2/1/18

Though this textbook has a prescriptive nature, it is quite comprehensive. The author strikes a good balance between presenting concepts in a concise way and providing enough information to explain them. Many every-day examples and live links to... read more

Though this textbook has a prescriptive nature, it is quite comprehensive. The author strikes a good balance between presenting concepts in a concise way and providing enough information to explain them. Many every-day examples and live links to other resources add to the completeness of the textbook.

Content seems accurate.

Since the content is somewhat conceptual, the text will not become obsolete quickly. In addition, the author seems to be updating and editing content often hence the relevance to current developments is on target.

The text is very clear, written in clear and straight-to-the point language.

The organization of content is consistent throughout the entire text.

The textbook is organized by chapters, beginning with overview of the model used and followed by chapters for each concept within the model. Nicely done.

The flow is clear, logical and easy to follow.

Overall, images, links, and text are well organized. Some headlines were misaligned but still easy to follow.

No concerns for grammar.

No concerns for cultural irrelevance.

Reviewed by Darlene Weibye, Cosmetology Instructor, Minnesota State Community and Technical College on 2/1/18

The text is comprehensive and covers the information needed to develop a business plan. The book provides all the means necessary in business planning. read more

The text is comprehensive and covers the information needed to develop a business plan. The book provides all the means necessary in business planning.

The text was accurate, and error-free. I did not find the book to be biased.

The content is up-to-date. I am reviewing the book in 2017, the same year the book was published.

The content was very clear. A business plan sample included operation timelines, start up costs, and all relevant material in starting a business.

The book is very consistent and is well organized.

The book has a table of contents and is broken down into specific chapters. The chapters are not divided into sub topics. I do not feel it is necessary for sub topics because the chapters are brief and to the point.

There is a great flow from chapter to chapter. One topic clearly leads into the next without repeating.

The table of contents has direct links to each chapter. The appearance of the chapters are easy to read and the charts are very beneficial.

Does not appear to have any grammatical errors.

The text is not culturally insensitive or offensive.

I am incorporating some of the text into the salon business course. Very well written book.

Table of Contents

Introduction

• Chapter 1 – Developing a Business Plan
• Chapter 2 – Essential Initial Research
• Chapter 3 – Business Models
• Chapter 4 – Initial Business Plan Draft
• Chapter 5 – Making the Business Plan Realistic
• Chapter 6 – Making the Plan Appeal to Stakeholders and Desirable to the Entrepreneur
• Chapter 7 – Finishing the Business Plan
• Chapter 8 – Business Plan Pitches

References Appendix A – Business Plan Development Checklist and Project Planner Appendix B – Fashion Importers Inc. Business Plan Business Plan Excel Template

Ancillary Material

About the book.

This textbook and its accompanying spreadsheet templates were designed with and for students wanting a practical and easy-to-follow guide for developing a business plan. It follows a unique format that both explains what to do and demonstrates how to do it.

About the Contributors

Dr. Lee Swanson is an Associate Professor of Management and Marketing at the Edwards School of Business at the University of Saskatchewan. His research focuses on entrepreneurship, social entrepreneurship, Aboriginal entrepreneurship, community capacity-building through entrepreneurship, and institutional-stakeholder engagement. Dr. Swanson’s current research is funded through a Social Sciences Humanities Research Council grant and focuses on social and economic capacity building in Northern Saskatchewan and Northern Scandinavia. He is also actively studying Aboriginal community partnerships with resource based companies, entrepreneurship centres at universities, community-based entrepreneurship, and entrepreneurial attitudes and intentions. He teaches upper-year and MBA entrepreneurship classes and conducts seminars on business planning and business development.

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• Developing a Business Plan in Entrepreneurship: A Comprehensive Guide

Welcome to our comprehensive guide on developing a business plan in entrepreneurship! Whether you're a seasoned entrepreneur or just starting out on your business journey, having a well-crafted business plan is essential for success. In this article, we will walk you through the process of creating a business plan from start to finish, providing valuable insights and expert advice along the way.

Table of Contents

☑️ 1. understanding the importance of a business plan, 👩‍💻 2. conducting market research: identifying your target audience, 🎯 3. defining your business goals and objectives, 🛠️ 4. crafting a unique value proposition, 👥 5. analyzing the competitive landscape, 🛗 6. developing a marketing and sales strategy, ⚙️ 7. creating an operational plan, 📈 8. building a financial plan: budgeting and forecasting, 💼 9. securing funding for your business, ⚖️ 10. legal and regulatory considerations, 📏 11. measuring success: key performance indicators (kpis), 🎛️ 12. adapting and evolving your business plan, ✨ conclusion.

💡 A business plan is more than just a document; it's your roadmap to entrepreneurial success. It guides you, step by step, on your journey towards building a thriving business. When you take the time to create a comprehensive business plan, you not only gain a deeper understanding of your vision and objectives, but you also show potential investors, partners, and stakeholders that you mean business.

💡 A well-crafted business plan allows you to present your business idea in a structured and organized way. Clearly outlining your products or services, target market, and unique selling proposition effectively communicates your concept to others and build trust in your vision.

💡 Additionally, a business plan helps you strategize and set realistic goals. It prompts you to analyze the market, assess competition, and identify opportunities and challenges. Armed with this knowledge, you can make informed decisions that minimize risks and increase your chances of success.

💡 Now let's talk finances. Financial projections are another vital aspect of a business plan. You can create a realistic financial forecast by thoroughly analyzing your costs, revenue streams, and cash flow. This not only helps you gauge the financial viability of your business, but it also provides essential information for potential investors evaluating your venture's profitability and sustainability.

💡 Moreover, a business plan is often required by external parties when seeking funding. But here's the thing: a well-structured and comprehensive plan showcases your professionalism, competence, and dedication to your venture. It boosts your credibility with potential investors who are more likely to invest in a business with a clear and well-thought-out plan.

💡 To sum it up, developing a business plan is a critical step in entrepreneurship. It helps you clarify your vision, effectively communicate your ideas, make informed decisions, and attract potential investors. So, take the time to craft a comprehensive business plan so you can establish a solid foundation for the success of your venture and demonstrate your commitment to its growth and sustainability.

Let's get started on that business plan and set yourself up for success !

You know what's essential for developing a successful business plan? Understanding your target audience. That's right, it's all about conducting thorough market research to gain valuable insights into the needs, preferences, and behaviors of your potential customers . This knowledge will empower you to customize your products or services to meet their specific demands, giving you a competitive edge in the market .

🔍 So, how do you go about this market research? Well, it involves gathering and analyzing data related to your industry, target market, and competition. It's a comprehensive process that allows you to identify and assess potential opportunities and challenges within your chosen market segment. You won't be relying on assumptions or guesswork. Instead, you'll make informed decisions based on reliable data.

👂 Let's talk about identifying your target audience . These are the individuals or groups who are most likely to be interested in and benefit from your products or services. To identify them, think about demographic factors such as age, gender, location, income level, and occupation. And don't forget to delve into psychographic factors too, like interests, values, lifestyles, and purchasing behaviors. The more detailed and specific you can be in defining your target audience, the better you'll be able to tailor your marketing strategies to effectively reach and engage them.

🎛️ Now, let's dive into the methods of market research. You can use surveys, interviews, focus groups, and analyze data from secondary sources. Surveys will provide you with quantitative data, giving you insights on a large scale. And when it comes to interviews and focus groups, you'll get qualitative data that takes you deeper into the thoughts, opinions, and motivations of your target audience. Secondary sources like industry reports, government publications, and online databases will provide you with valuable information about market trends, competitor analysis, and customer behavior.

📊 Once you have all this data, it's time to analyze it . Look for patterns, trends, and opportunities that will inform your business strategies. When you truly understand your target audience's needs, pain points, and preferences, you'll be able to develop products or services that truly resonate with them. And guess what? This customer-centric approach increases the likelihood of customer satisfaction, loyalty, and ultimately, business success.

🧐 But wait, there's more! Market research also helps you assess the competitive landscape . Take a close look at your competitors' strengths, weaknesses, and market positioning. This analysis will help you identify gaps and differentiation opportunities for your business. Armed with this knowledge, you can develop unique value propositions and effective marketing strategies that set you apart from the competition.

Ready to dive into market research and gain valuable insights? Let's get started and propel your business forward!

Welcome to the next step in developing your business plan: defining your goals and objectives. It is important to set clear and well-defined goals and objectives for your business. These goals serve as guideposts, directing and giving purpose to your entrepreneurial journey. With the SMART framework—specific, measurable, attainable, relevant, and time-bound—you can set yourself up for success and ensure that your efforts are focused and effective.

With a clear roadmap in place, you are well-positioned to navigate the challenges and achieve the success you envision for your business.

Let's break down each element of the SMART framework:

✅ Specific: Your goals should be clear, concise, and well-defined. Instead of stating a vague objective like "increase revenue," let's be specific. For example, you could aim to "increase annual revenue by 20% within the next fiscal year."

✅ Measurable: It is important to establish metrics or key performance indicators (KPIs ) that allow you to track your progress. This enables you to measure the success of your strategies and determine whether you are on track to achieve your goals. For instance, if your goal is to expand your customer base, you can track the number of new customers acquired within a specific period.

✅ Attainable: While setting ambitious goals is important, they should also be realistic and attainable. Consider your available resources, market conditions, and industry trends when defining your objectives. Finding the balance between ambition and practicality is key to avoiding frustration and disappointment.

✅ Relevant: Ensure that your goals align with your overall vision, mission, and values. They should be relevant to your industry, target market, and the specific needs of your customers. Set relevant goals so you can stay focused on what truly matters for the growth and success of your business.

✅ Time-bound: Set specific timeframes or deadlines for achieving your objectives. This creates a sense of urgency, helps you prioritize tasks, and allows you to track your progress. Having a timeline ensures that your goals remain actionable and within reach.

Defining your business goals and objectives brings numerous benefits:

✔️ It keeps you focused and motivated, providing a clear vision of what you want to accomplish. Goals serve as milestones, giving you a sense of achievement as you make progress toward them.

✔️ They also provide a framework for decision-making, enabling you to effectively prioritize tasks and allocate resources.

✔️ Moreover, clearly defined goals make it easier to communicate your vision and strategies to your team members, investors, and stakeholders. Alignment of efforts and shared purpose foster collaboration and synergy within your organization.

In the world of business, standing out from the competition is key to your success. In today's crowded marketplace, having a unique value proposition (UVP) is essential. Your UVP is what sets you apart and defines the special benefits and value your products or services offer to customers.

With a strong UVP, you can thrive in a crowded marketplace and build a loyal customer base that recognizes and appreciates what you bring to the table.

Let's dive into the steps of crafting a compelling UVP that will attract and retain customers , differentiate your business, and build a strong and sustainable brand.

Step 1: Identify your target audience. Get to know your customers inside and out. Understand their needs, desires, and pain points. This knowledge forms the foundation for creating a UVP that truly resonates with them.

Step 2: Analyze the competition. Take a closer look at your competitors and their value propositions. What are others offering? Can you identify gaps and opportunities in the market that you can leverage to set your business apart?

Step 3: Focus on differentiation. Determine what makes your offerings unique. What are the standout features, advantages, or benefits that set you apart? How do your products or services better address the specific needs of your target audience compared to the competition?

Step 4: Communicate the value. Craft a clear and concise statement that communicates the value customers can expect from choosing your business. Use compelling language to highlight the benefits and outcomes they can achieve by using your products or services.

Step 5: Make it memorable. Your UVP should be easy to understand and leave a lasting impression. Consider using a catchy slogan or tagline that captures the essence of your UVP and resonates with your target audience.

Step 6: Consistency is key. Keep your Unique Value Proposition (UVP) consistently communicated across all your marketing and communication channels. It should shine through on your website, social media presence, advertising materials, and customer interactions. Consistency builds trust and reinforces your brand identity.

When it comes to developing a robust and resilient business plan, understanding your competitors and their strategies is crucial.

Analyzing the competitive landscape involves a comprehensive examination of your direct and indirect competitors within your industry or market segment.

When you understand your competitors' strengths, weaknesses, and market positioning, you can identify opportunities, develop differentiated strategies, and gain a competitive edge. Regularly update your analysis to stay ahead of the competition and ensure your business remains relevant and successful in the ever-changing business landscape.

To begin, let's break down the key steps for effectively analyzing the competition:

Step 1: Identify your competitors Start by identifying your direct competitors—those businesses offering similar products or services to the same target audience. Additionally, consider indirect competitors—those providing alternative solutions that fulfill the same customer needs. This broader understanding will uncover both direct and indirect threats and opportunities.

Step 2: Gather information Collect as much information as possible about your competitors. Study their websites, social media presence, advertising campaigns, product offerings, pricing strategies, distribution channels, customer reviews, and any available market reports or industry publications. Utilize tools like SWOT analysis to organize and evaluate the data.

Step 3: Assess strengths and weaknesses Analyze the strengths and weaknesses of your competitors. Identify what they excel at, such as unique features, exceptional customer service, strong brand recognition, or extensive industry experience. Similarly, pinpoint their weaknesses, like limited product range, poor customer reviews, outdated technology, or inefficient processes. This assessment will highlight areas where you can leverage your strengths and differentiate yourself.

Step 4: Understand market positioning Examine how your competitors position themselves in the market. Consider their target audience, brand image, value propositions, and marketing messages. Identify the specific niche or market segment they focus on and determine if there are untapped opportunities for you to capitalize on. Positioning your business uniquely will attract customers who resonate with your specific value propositions.

Step 5: Identify opportunities and threats Through your analysis, identify potential opportunities and threats within the competitive landscape. Look for gaps in the market that your competitors have overlooked or underserved customer needs that you can address. Also, be on the lookout for emerging trends, technological advancements, or regulatory changes that may impact your business. This knowledge enables you to adapt and strategize effectively.

Step 6: Develop strategies for differentiation Based on your analysis, devise strategies that differentiate your business from the competition. Leverage your unique strengths and address customer pain points that your competitors haven't resolved. Focus on developing value-added features, delivering exceptional customer experiences, or offering innovative solutions that set you apart. Effective differentiation will give you a competitive edge and attract customers who appreciate your distinct offerings.

When it comes to growing and making your business profitable, having a well-defined and comprehensive marketing and sales strategy is key. It outlines the steps you'll take to promote your products or services, attract customers, and generate sales. An effective marketing and sales strategy in your business plan increases brand visibility, reaches a wider audience, and ultimately drives revenue.

With a well-designed marketing and sales strategy, you can establish a strong brand presence, attract customers, and achieve sustainable business growth.

Here are some important elements to consider as you develop your marketing and sales strategy:

• Identify your target market: Start by clearly defining your target market and understanding their demographics, preferences, and buying behavior. This knowledge will help you tailor your marketing messages and promotional activities to effectively reach and engage your ideal customers.
• Choose the right marketing channels: Determine the most suitable marketing channels to reach your target audience. This could include a mix of traditional and digital channels such as print media, television, radio, search engine marketing (SEM) , social media platforms, email marketing, and content marketing. Select the channels based on your target audience's preferences and behavior.
• Leverage digital marketing techniques: Maximize your online presence and attract potential customers by leveraging digital marketing techniques. This includes search engine optimization (SEO) to improve your website's visibility in search engine results, social media marketing to engage with your audience and build brand awareness, and content marketing to provide valuable and relevant information that establishes your expertise and credibility.
• Craft compelling marketing messages: Develop clear and compelling marketing messages that effectively communicate the unique value of your products or services. Highlight the key benefits, features, and solutions your offerings provide to address customer needs and pain points. Emphasize what sets your business apart from competitors and how customers stand to benefit by choosing your products or services.
• Determine your pricing strategy: Align your pricing strategy with your target market, positioning, and business goals. Take into account factors such as production costs, market demand, perceived value, and competitor pricing. Striking the right balance between affordability and profitability is essential to attract customers while maintaining healthy profit margins.
• Plan targeted promotional activities: Plan and execute targeted promotional activities to create awareness and generate interest in your offerings. This may include advertising campaigns, public relations efforts, participation in industry events, sponsorships, or partnerships with complementary businesses. Use both online and offline channels to reach a broader audience and maximize exposure.
• Develop a sales forecast: Create a sales forecast that outlines your projected sales revenues based on your marketing and sales strategies. Consider factors such as market size, growth potential, customer acquisition rate, and conversion rates. This will provide you with a realistic view of your revenue goals and help you track your progress.
• Monitor and evaluate: Continuously monitor the performance of your marketing and sales efforts and make necessary adjustments. Keep track of key metrics such as website traffic, conversion rates, social media engagement, and sales revenue to gauge the effectiveness of your strategies. Use analytics tools to gain insights into customer behavior and preferences, allowing you to refine your marketing and sales approaches.

In this section, we'll explore the importance of an operational plan and provide you with valuable insights to help you create one that sets the stage for smooth and efficient business operations. Let's dive in!

An operational plan is a vital component of your business plan, serving as a guide for your day-to-day activities and processes. It covers various aspects of your operations, such as production, inventory management, supply chain logistics, quality control, and more. With a comprehensive operational plan, you will have seamless operations while being prepared to tackle challenges.

With a well-designed operational plan in place, you can confidently manage day-to-day activities and position your business for long-term success.

Here are key considerations for creating your plan:

• Production processes: Start by describing the specific steps involved in producing your products or delivering your services. Outline the necessary resources, equipment, and manpower for each stage. Identify any bottlenecks or areas for improvement to streamline your processes and boost productivity.
• Inventory management: Detail how you'll manage your inventory to meet customer demand while minimizing costs. Determine optimal inventory levels, establish tracking systems, and implement replenishment strategies for stock availability. This avoids stockouts or excess inventory, enhancing customer satisfaction and reducing expenses.
• Supply chain logistics: Outline your supply chain logistics, including sourcing raw materials, managing suppliers, and coordinating distribution. Identify potential risks and develop contingency plans to mitigate disruptions. Streamline processes to minimize lead times, optimize transportation, and improve overall efficiency.
• Quality control: Explain how you'll maintain quality standards and ensure consistency in your products or services. Define quality control measures, such as inspections, testing procedures, and adherence to industry standards. Implement feedback loops to capture customer input and continuously enhance your offerings.
• Resource allocation: Determine how you'll allocate financial, human, and technological resources to support your operations. This involves budgeting, workforce planning, and identifying technology solutions that boost efficiency and productivity.
• Risk management: Assess potential risks and develop strategies to minimize their impact on your operations. Identify key risks like supply chain disruptions, compliance issues, cybersecurity threats, or natural disasters. Establish contingency plans and protocols for business continuity.
• Legal and regulatory compliance: Make sure your operational plan considers legal and regulatory requirements. Familiarize yourself with applicable laws, regulations, and industry standards. Incorporate measures for compliance, such as obtaining licenses, implementing data protection policies, and adhering to health and safety guidelines.
• Monitoring and evaluation: Establish key performance indicators (KPIs) to track the effectiveness of your operational plan. Consistently monitor and evaluate your operations against these metrics to identify areas for improvement. Continuously refine your plan based on feedback and changing business needs.

In this part, we'll explore the importance of budgeting and forecasting in developing a robust financial plan for your business. Focus on these key aspects so you can demonstrate your financial expertise to potential investors and lenders.

When you are able to build a comprehensive financial plan through budgeting and forecasting, you demonstrate your financial acumen to potential investors and lenders. This gives them a clear understanding of how you'll manage the financial aspects of your business, instilling confidence in your ability to achieve profitability and sustainable growth.

💰 Budgeting: Controlling Costs and Allocating Resources

When establishing your business's financial foundation, budgeting plays a pivotal role. It allows you to identify and estimate startup costs, ongoing expenses, and projected revenues. To efficiently allocate resources, optimize cash flow, and ensure long-term financial sustainability, meticulously track and control costs.

Here are some key steps to consider when creating your budget:

• Identify startup costs: Start by determining the initial investments needed to launch your business, such as equipment purchases, lease agreements, legal fees, marketing collateral, and website development. Accurately estimating these costs will help you avoid unexpected financial burdens and ensure a smooth startup process.
• Outline ongoing expenses: Once your business is up and running, consider the recurring expenses for day-to-day operations, such as rent, utilities, employee salaries, inventory costs, marketing expenses, insurance premiums, and loan repayments. Thoroughly identifying these expenses provides a comprehensive understanding of your financial commitments.
• Project revenues: Forecast your expected revenues by conducting market research and analyzing industry trends. Consider factors like market demand, competition, and seasonality. Projecting revenues gives you insights into your business's financial viability and empowers you to make informed decisions.
• Track and adjust: Remember, a budget is a dynamic tool that requires continuous monitoring and adjustment. Regularly compare your actual expenses and revenues against your budgeted figures. This enables you to identify deviations, make necessary adjustments, and maintain financial discipline. Stay vigilant and proactively address any financial challenges that may arise.

📈 Financial Forecasting: Anticipating Future Performance

Alongside budgeting, financial forecasting plays a critical role in your financial plan. It involves estimating future cash flows, financial performance, and potential risks. You can project the financial health of your business and make informed strategic decisions by forecasting.

Consider the following elements when conducting financial forecasting:

• Sales projections: Develop realistic sales projections based on market research, industry trends, and historical data. Factor in customer demand, pricing strategies, marketing initiatives, and potential competition impact. These projections serve as a foundation for estimating future revenues.
• Expense projections: Forecast ongoing expenses, considering factors like inflation, changes in supplier costs, and potential growth-related expenses. This helps you anticipate and plan for the financial resources required to support your business operations.
• Cash flow analysis: Analyze projected cash inflows and outflows to assess your business's liquidity and solvency. Monitoring cash flow allows you to identify potential shortages and take proactive measures to ensure adequate working capital.
• Financial ratios and indicators: Calculate key financial ratios and indicators to assess your business's performance, including profitability, liquidity, debt-to-equity, and return on investment (ROI). Analyzing these metrics provides valuable insights into your financial stability and growth potential.
• Risk assessment: Identify potential risks that may impact your financial performance, such as market conditions, regulatory changes, or economic downturns. Develop contingency plans to mitigate these risks and ensure business continuity.

Turn your entrepreneurial vision into reality! Securing funding is vital for bringing your business plan to life. In this section, we'll explore funding options and strategies to help you obtain the financial resources you need. Let's get started!

• Understand Your Funding Needs

Before diving into the world of funding, it's crucial to assess your business's financial requirements. Take the time to evaluate startup costs, working capital needs, and projected expenses. Consider factors such as equipment purchases, inventory costs, marketing campaigns, employee salaries, and overhead expenses. Understand your funding needs so you can develop a targeted approach to secure the necessary capital.

• Explore Funding Options

There are numerous funding options available today. It's important to explore these options and select the ones that align with your business goals and industry requirements. Some common funding sources include:

• Loans: Traditional bank loans, Small Business Administration (SBA) loans, and MSME Financing Programs offer favorable interest rates and repayment terms for businesses with a solid credit history and collateral.
• Grants: Research grants and government-sponsored programs provide non-repayable funds specific to your industry or business sector, supporting growth and development.
• Venture Capital: Venture capital firms invest in high-growth potential businesses, providing capital, expertise, and industry connections to help your business thrive.
• Angel Investors: Angel investors invest their own capital in startups or early-stage companies in exchange for equity. They often bring industry experience and valuable networks to the table.
• Crowdfunding: Utilize online platforms to raise funds from individuals who believe in your business idea. Crowdfunding allows you to showcase your product or service and attract support from a broad audience.
• Craft a Compelling Business Plan

A well-crafted and compelling business plan is crucial when seeking funding. Clearly articulate your value proposition, target market, competitive advantage, and growth potential. Include financial projections, market analysis, and a solid understanding of your industry. Present a persuasive case that highlights the profitability and viability of your venture. Your business plan should inspire confidence in potential investors and convince them of the potential returns on their investment.

• Network and Build Relationships

Building strong relationships within your industry and entrepreneurial ecosystem can significantly enhance your funding prospects. Attend networking events, industry conferences, and pitch competitions to connect with potential investors and mentors. Join relevant industry associations and participate in community events to expand your network. Cultivating these relationships can open doors to funding opportunities and valuable advice from experienced professionals.

• Demonstrate Your Commitment and Expertise

Investors want to see your dedication and ability to execute your business plan. Demonstrate your commitment by investing your own capital into the business and showcasing your industry expertise. Highlight your past achievements, relevant experience, and the skills that make you uniquely qualified to succeed. Investors are more likely to fund entrepreneurs who are passionate, knowledgeable, and committed to their business's success.

• Be Prepared for Due Diligence

When investors show interest in your business, they will likely conduct due diligence to assess its viability and potential risks. Be prepared to provide detailed financial statements, legal documentation, market research, and any other relevant information. Show transparency and professionalism throughout the due diligence process to build trust with potential investors.

When developing your business plan, it is very important to consider the legal and regulatory requirements that apply to your industry and location. Adhering to these requirements not only ensures that your business operates within the boundaries of the law but also establishes trust with customers, investors, and other stakeholders. In this section, we will explore the key legal and regulatory considerations that you should address in your business plan.

Addressing legal and regulatory considerations in your business plan shows your commitment to operating ethically and lawfully. This instills confidence in stakeholders, assuring them that you've taken steps to safeguard your business and maintain compliance with relevant laws and regulations.

Step 1: Research Applicable Laws and Regulations

Begin by conducting thorough research to identify the specific laws, regulations, licenses, and permits that apply to your industry and location. Laws and regulations can vary significantly depending on the nature of your business, whether it is a food service establishment, a healthcare provider, or an e-commerce platform. Stay up to date with any changes in legislation that may impact your business operations.

Step 2: Obtain the Necessary Licenses and Permits

Ensure that your business obtains all the required licenses and permits before starting operations. These may include business licenses, professional licenses, health and safety permits, environmental permits, and zoning permits. Failure to secure the necessary licenses and permits can result in fines, penalties, or even legal action that could jeopardize the viability of your business.

Step 3: Protect Intellectual Property

Safeguarding your intellectual property (IP) is crucial for protecting your business's unique assets and competitive advantage. Intellectual property refers to creations of the mind, such as inventions, designs, logos, and artistic works. Depending on the type of IP you want to protect, consider applying for trademarks, copyrights, or patents. Addressing intellectual property considerations in your business plan demonstrates your commitment to safeguarding your innovations and brand.

Step 4: Ensure Compliance with Employment Laws

If you plan to hire employees, it is essential to understand and comply with employment laws and regulations. These laws govern aspects such as minimum wage, working hours, employee benefits, workplace safety, and anti-discrimination practices. Familiarize yourself with both federal and state employment laws to ensure fair treatment of your employees and avoid legal issues that could harm your business's reputation.

Step 5: Protect Consumer Rights and Privacy

Consumer protection and privacy laws are designed to safeguard the rights of your customers and their personal information. Ensure that your business follows best practices for data protection, privacy policies, and marketing practices. Incorporate compliance measures into your business plan to demonstrate your commitment to protecting consumer rights and privacy.

Step 6: Address Compliance and Risk Management

In your business plan, demonstrate your commitment to compliance and risk management by outlining the strategies and processes you will implement. This can include establishing internal controls, conducting regular audits, and addressing potential risks and mitigation measures. Proactively address compliance and risk management to show potential investors and partners that you prioritize responsible and ethical business practices.

Step 7: Seek Legal Counsel

Consider consulting with legal professionals experienced in your industry to ensure that your business plan accurately addresses all legal and regulatory considerations. They can provide guidance on specific legal requirements, review your business plan for compliance, and help you navigate any complex legal issues that may arise.

It's vital to have a clear understanding of how well your business is performing. That's where Key Performance Indicators (KPIs) come in. These quantifiable metrics allow you to measure the success and progress of your business. Identifying and tracking the right KPIs provides valuable insights into your strategies' effectiveness and empowers you to make informed growth-oriented decisions. In this section, we'll emphasize the significance of KPIs and assist you in selecting the most relevant ones for your business.

👉 Choosing the Right KPIs

Selecting the right KPIs is crucial for accurately measuring the success of your business. Let's go through some steps to help you choose the most relevant KPIs:

• Define Your Business Goals: Start by clearly defining your business goals and objectives. What do you want to achieve? Whether it's revenue growth, customer acquisition, operational efficiency, or customer satisfaction, your KPIs should align with your overarching goals.
• Identify Key Areas of Focus: Identify the key areas of your business that directly contribute to achieving your goals. These could include sales, marketing, customer service, production, or financial performance. Focus on KPIs that provide insights into these critical areas.
• Quantify and Measure: Determine how you will quantify and measure each KPI. Ensure that the metrics are reliable, consistent, and easily measurable. Consider both lagging indicators (reflecting past performance) and leading indicators (predicting future outcomes) for a comprehensive view.
• Be Specific and Relevant: Choose KPIs that are specific to your business and industry. Generic metrics may not accurately reflect the unique aspects and challenges of your business. Tailor your KPIs to measure the factors that drive success in your particular market.
• Keep it Balanced: Select a mix of financial and non-financial KPIs to gain a holistic view of your business's performance. While financial metrics like revenue and profit are important, don't overlook other aspects such as customer satisfaction, employee engagement, or brand recognition.

📋 Examples of Common KPIs

Now, let's look at some examples of common KPIs that businesses track:

• Revenue Growth Rate: Measures the percentage increase in revenue over a specific period.
• Customer Acquisition Cost (CAC): Calculates the cost required to acquire a new customer.
• Customer Lifetime Value (CLV): Estimates the total value a customer brings to your business over their lifetime.
• Conversion Rate: Tracks the percentage of website visitors or leads that convert into customers.
• Net Promoter Score (NPS): Measures customer satisfaction and loyalty based on surveys.
• Return on Investment (ROI): Evaluates the profitability of an investment or marketing campaign.
• Employee Turnover Rate: Measures the percentage of employees who leave your organization within a given period.

Congratulations on developing a solid business plan! However, it's important to remember that a business plan is not set in stone. In today's dynamic business environment, the ability to adapt and evolve is crucial for long-term success. In this section, we will explore why it's necessary to be flexible with your business plan and provide strategies for effectively adapting to changes.

🎚️ The Importance of Adaptation

The business landscape is ever-changing, shaped by technology, market trends, customer preferences, and competition. Holding onto an outdated plan can hinder progress and limit opportunities. Embracing adaptation keeps you ahead and fuels continued growth.

🤳 Embracing Market Trends

Market trends have a profound impact on your business's success. Stay ahead by monitoring industry trends, identifying opportunities, and anticipating threats. Stay informed through market research, industry publications, and networking with experts. Adapt your strategies to align with changes in consumer behavior, technology, and competition. Stay proactive and make necessary adjustments to ensure your business thrives.

👂 Listening to Customer Feedback

Your customers hold a wealth of valuable insights and feedback. Engage with them directly through surveys, focus groups, and social media. Listen attentively to their needs, preferences, and challenges. This feedback is a treasure trove of guidance to enhance your offerings and elevate the customer experience. Incorporating customer feedback into your business plan showcases your dedication to meeting their evolving needs. Let their voices shape your success.

💪 Remaining Agile and Flexible

In today's fast-paced business environment, agility and flexibility are essential. Be ready to make quick decisions and pivot when needed. This could mean adjusting marketing strategies, exploring new distribution channels, or even modifying your business model. Regularly assess performance and be willing to adapt based on insights gained. Stay nimble and open-minded, embracing change for your business's success.

🧿 Leveraging Emerging Opportunities

While navigating the business landscape, keep a keen eye out for emerging opportunities that align with your core competencies and goals. This could entail embracing new technologies, exploring untapped markets, or forging partnerships with complementary businesses. Actively seeking and seizing these opportunities positions your business for growth and differentiation. Stay vigilant and stay ahead in this dynamic journey!

There are three predicted trends of emerging change, worries, and hopes that we need to brace ourselves for. Read “ Future-proof Your Team in the New Normal ” blog post or watch the webinar replay for free to learn more.

🖥️ Monitoring Key Performance Indicators (KPIs)

Continuously monitor and assess your KPIs to gauge the effectiveness of your strategies. Identify trends, patterns, and areas of improvement. Regularly review your KPIs to ensure their relevance and alignment with your evolving business goals. Use this data-driven approach to guide your decision-making process and make informed adjustments to your business plan.

📖 Frequently Asked Questions (FAQs)

FAQ 1: What is the purpose of a business plan in entrepreneurship?

A business plan plays a pivotal role in entrepreneurship by serving as a roadmap for your journey. It encompasses various elements such as your business idea, strategies, goals, and financial projections. The primary purpose of a business plan is to provide clarity and direction to your entrepreneurial endeavors. Documenting your vision and outlining the steps to achieve it helps you stay focused, make informed decisions, and effectively communicate your ideas to potential investors, partners, and stakeholders. A well-crafted business plan showcases your professionalism and strategic thinking, increasing your chances of success in the competitive business landscape.

FAQ 2: How do I identify my target audience for my business plan?

Identifying your target audience is crucial for developing a business plan that resonates with your customers. To do this, conduct thorough market research to gather valuable insights. Start by analyzing demographic information such as age, gender, location, and income level. Next, delve deeper into understanding their needs, preferences, and behaviors. Surveys, focus groups, and social media analytics are effective tools for gathering such information. If you understand your target audience, you can tailor your products or services to meet their specific demands, develop effective marketing strategies, and differentiate yourself from competitors. This understanding of your target audience will give you a competitive edge and increase your chances of success.

FAQ 3: Why is a unique value proposition important in a business plan?

A unique value proposition (UVP) is of paramount importance in a business plan as it sets your business apart from competitors. It encapsulates the unique benefits and value that your products or services offer to customers. In today's crowded marketplace, where consumers have numerous options, a compelling UVP helps you attract and retain customers. It communicates why customers should choose your business over others and highlights the distinct advantages you bring to the table. When crafting your UVP, emphasize the key features, advantages, and benefits that differentiate your offerings. When you clearly articulate your UVP in your business plan, you demonstrate your understanding of the market, customer needs, and how your business fulfills those needs better than others.

FAQ 4: How can I secure funding for my business?

Securing funding is often a critical aspect of developing a business plan. There are various avenues to explore, including loans, grants, venture capital, angel investors, and crowdfunding. It is essential to tailor your funding strategy based on your business needs and industry requirements. Start by thoroughly researching and identifying the funding options that align with your goals and vision. Craft a compelling business plan that highlights the profitability and viability of your venture, showcasing potential investors or lenders the potential return on their investment. Include detailed financial projections, market analysis, and a clear plan for utilizing the funds. Demonstrating your financial acumen and presenting a compelling case increases your chances of securing the necessary funding to turn your entrepreneurial dreams into reality.

FAQ 5: Why is it important to adapt and evolve your business plan?

Adapting and evolving your business plan is essential because the business landscape is constantly changing. Market trends, technological advancements, consumer preferences, and competitive forces can impact your business significantly. Regularly review and update your business plan to align your strategies with the evolving market dynamics. This allows you to seize new opportunities, mitigate risks, and stay ahead of the competition. Additionally, customer feedback plays a vital role in adapting your business plan. Actively listening to your customers and incorporating their feedback into your strategies will continuously improve your offerings and enhance the customer experience. Adaptability and flexibility are key traits of successful entrepreneurs, enabling them to navigate challenges and capitalize on emerging trends.

FAQ 6: How can I measure the success of my business?

Measuring the success of your business requires the establishment of key performance indicators (KPIs) that align with your business goals. KPIs are measurable metrics that allow you to track and evaluate your performance over time. Examples of KPIs include revenue growth, customer acquisition rate, customer satisfaction, and market share. It's important to identify the KPIs that are most relevant to your business and industry. Regularly track and analyze these metrics to gain insights into your business's progress and performance. This data-driven approach enables you to make informed decisions, identify areas for improvement, and capitalize on your strengths. To measure your business's success objectively and make crucial adjustments, it's essential to consistently monitor and assess your Key Performance Indicators (KPIs). This enables you to stay on track and work towards your long-term goals.

You've reached the end of this comprehensive guide, and now you have the tools to create a business plan that leads to success. Your business plan is more than just a document—it's your roadmap on this entrepreneurial journey. So, let's summarize the key points you should keep in mind:

• Understand the importance of a business plan: A well-crafted plan clarifies your vision and effectively communicates your ideas to stakeholders.
• Conduct thorough market research: Identify your target audience's needs and preferences to tailor your products or services and gain a competitive edge.
• Define SMART goals: Set specific, measurable, attainable, relevant, and time-bound goals to stay focused and motivated throughout your entrepreneurial journey.
• Craft a unique value proposition: Highlight the unique benefits and value your offerings provide to differentiate yourself in a crowded marketplace.
• Analyze the competitive landscape: Understand your competitors and develop strategies to gain a competitive advantage.
• Develop a marketing and sales strategy: Outline your marketing channels, pricing, promotions, and leverage digital marketing techniques to reach a wider audience.
• Create a robust operational plan: Ensure smooth business operations by addressing aspects such as production processes, inventory management, and quality control.
• Build a comprehensive financial plan: Demonstrate your financial acumen by creating a budget, conducting financial forecasting, and identifying potential risks.
• Secure funding strategically: Explore various funding options and present a compelling case in your plan to attract investors.
• Consider legal and regulatory requirements: Comply with applicable regulations and showcase your commitment to operating within the legal framework.
• Measure success with KPIs: Establish relevant metrics to track and analyze your business's progress and make data-driven decisions.
• Adapt and evolve your plan: Regularly review and update your strategies to align with market trends, customer feedback, and emerging opportunities.

Now, it's time for you to take action. Based on the insights you've gained from this guide, which key aspect of your business plan will you focus on improving? How do you think this refinement will contribute to the success of your venture?

For those who are just starting up a business, here's an additional question to consider:

As you embark on your entrepreneurial journey, what initial steps will you take to validate your business idea and ensure its feasibility in the market? How will this validation process contribute to building a solid foundation for your business?

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Entrepreneurship and Business Planning

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Methods to Capitalize a Business

Business plans for new inventions, how to write a description for a business plan.

• What Can You Learn by Comparing Successful & Unsuccessful Businesses?
• What Is the Business Planning Process?

Ventures that are thoughtfully planned are more likely to succeed than those based primarily on guesswork and hope. The business planning process in entrepreneurship helps an entrepreneur identify exactly what needs to be accomplished to build the venture, and what human and financial resources are required to implement the plan. It is a planning tool that helps entrepreneur startups get where they are going. The forecast profit and loss statement provides a means to compare actual results to what had been forecast, and make corrections to business strategy if shortfalls in revenue occur.

Aspects of a Business Plan

According to the Small Business Administration, business planning for a start-up venture or an established company does not have to be complicated. You start by describing your products and services in relationship to those of competitors. You describe what you will be doing that is superior to what customers have seen from these other companies. This answers the critical question of why your products solve a significant, current customer need. You then devise strategies for introducing your products and services to the market. You determine the costs of producing the products or delivering the services and the marketing costs required to attract customers. You also plan the managerial and staff resources required to accomplish all of these tasks, when they will be hired, and what their compensation will be.

Know Your Customer

It is vital for entrepreneurs to understand who their target customers are--those who can benefit the most from the company’s products or services. According to Forbes , knowing your customer can help you show that there is significant opportunity and a good market for the goods or services you are trying to provide. Knowing these prime customers’ demographic characteristics allows you to tailor the marketing message so it is most effective. Communicating with teenagers requires a different message and possibly different media than reaching seniors. A depth of understanding about your competition is similarly important. You want to identify their strengths so you don’t attempt to compete with them head-on in a market where they have built an insurmountable advantage. Knowing their weaknesses shows you where you can capture customers from them.

Skills for Success

The ability to envision how you want your company to evolve over the next three to five years is important. These long-range goals help you determine the steps and strategies you need to implement to reach them. A basic knowledge of finance concepts helps you prepare logical financial models and projections using spreadsheet software. Entrepreneurs should also have an understanding of all the functional areas of a business so they can accurately project the costs of running the business.

Planning Versus Writing

Entrepreneurs don’t always understand that the planning process itself is of value. They have been advised they should have a business plan document ready to present to potential investors so they--sometimes reluctantly--devote the time to writing a business plan. Ideally, the document is the final product of a planning process that would be completed whether or not the company was actively seeking capital. The plan is very much like a road map. It helps you choose the best route to get to your destination--creating a successful venture.

Common Financial Miscalculations

Entrepreneurs often underestimate how difficult it will be to launch a company. Gaining the attention and trust of potential customers may take longer than the entrepreneur envisioned. This can result in start-up capital being quickly depleted. In a worst case scenario, the company can go out of business because its funding runs out. Adding five to ten percent more capital to the start-up budget is a prudent way to allow for both lower than planned revenues and higher than anticipated expenses.

• Forbes: Basic Structure of a Business Plan for Beginners

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• 1 The Importance of a Business Plan
• 2 How to Plan & Grow a Business Venture
• 3 The Impact of Planning on Business Growth
• 4 Advice on Business Planning

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Chapter 7 Entrepreneurship and Small Business Development

Learning Objectives

• Define entrepreneur and describe what it means to be entrepreneurial.
• Identify common roles or activities needed to start your own business.
• Explain the conditions of when entrepreneurship takes place.
• Describe the different kinds of funding approaches to starting a company.
• Identify different parts of an entrepreneurial ecosystem that entrepreneurs can leverage when starting up.
• Explain the assumptions that can cause some startups to fail.

What is Entrepreneurship? What does Entrepreneurial Mean?

Entrepreneurship as a social science is the study of how people turn an idea into reality to create a new social agreement or institution (most often a new business). Social agreements are taken for granted ways of organizing so that the social world works and usually for the benefit or safety of a greater societal whole.

Entrepreneurs try to change the status quo or existing social agreements to new ways of doing things that are beneficial for a particular group of people. This proactive process of overcoming constraints to create value in new ways is what is meant by the adjective “ entrepreneurial “. An entrepreneurial spirit refers to someone that challenges the status quo and tries new ways to solve a problem. It can also refer to someone who is able to take limited resources—a constraint—and create something valuable. Historically speaking, the term entrepreneur was used to describe individuals who take on the financial risk that something might not work out believing they can take action that will generate a profit. Economists have further specified that entrepreneurs act under conditions of uncertainty rather than risk . Risk is something you can guess the results of, a kind of probability. Uncertainty is a kind of knowledge problem that doesn’t have probabilities and can’t really be guessed.

To illustrate the concept of uncertainty versus risk imagine that this cloud encompasses everything that you need to know to successfully run the business you want to start. Now imagine within the cloud there is a smaller circle that represents everything you are aware of in relation to starting the business, and finally inside of that circle is an even smaller circle about what you already know how to do to start the business. All that stuff that is outside your circle of knowledge that you are aware of is risk and all the other stuff that is outside your circle of awareness is uncertainty . It is the things that you don’t even know you should worry about. It also represents stuff you can’t know because it is dependent upon the future action of yourself and others like potential customers or competitors. As entrepreneurs take action and interact with others under these kinds of conditions they are able to reduce the uncertainty associated with a new venture.

The Nature of Entrepreneurship

If we look a little more closely at the definition of  entrepreneurship , we can identify three characteristics of entrepreneurial activity: [1]

• Innovation . Entrepreneurship generally means offering a new product, applying a new technique or technology, opening a new market, or developing a new form of organization for the purpose of producing or enhancing a product.
• Running a business . A business, as we saw in Chapter 1 “The Foundations of Business,” combines resources to produce goods or services. Entrepreneurship means setting up a business to make a profit.
• Risk   taking . The term risk means that the outcome of the entrepreneurial venture can’t be known. Entrepreneurs, therefore, are always working under a certain degree of uncertainty, and they can’t know the outcomes of many of the decisions that they have to make. Consequently, many of the steps they take are motivated mainly by their confidence in the innovation and in their understanding of the business environment in which they’re operating.

A Few Things to Know about Going into Business for Yourself

Mark Zuckerberg founded Facebook while a student at Harvard. By age 27 he built up a personal wealth of $13.5 billion. By age 31, his net worth was $37.5 billion.

So what about you? Do you ever wonder what it would be like to start your own business? You might even turn into a “serial entrepreneur” like Marcia Kilgore. [2] After high school, she moved from Canada to New York City to attend Columbia University. But when her financial aid was delayed, Marcia abandoned her plans to attend college and took a job as a personal trainer (a natural occupation for a former bodybuilder and middleweight title holder). But things got boring in the summer when her wealthy clients left the city for the Hamptons. To keep busy, she took a skin care course at a Manhattan cosmetology institute. As a teenager, she was self-conscious about her complexion and wanted to know how to treat it herself. She learned how to give facials and work with natural remedies. She started giving facials to her fitness clients who were thrilled with the results. As demand for her services exploded, she started her first business—Bliss Spa—and picked up celebrity clients, including Madonna, Oprah Winfrey, and Jennifer Lopez. The business went international, and she sold it for more than $30 million. [3]

But the story doesn’t end here; she launched two more companies: Soap and Glory, a supplier of affordable beauty products sold at Target, and FitFlops, which sells sandals that tone and tighten your leg muscles as you walk. Oprah loves Kilgore’s sandals and plugged them on her show. [4] You can’t get a better endorsement than that. Kilgore never did finish college, but when asked if she would follow the same path again, she said, “If I had to decide what to do all over again, I would make the same choices…I found by accident what I’m good at, and I’m glad I did.”

So, a few questions to consider if you want to go into business for yourself:

• How do I find a problem to solve and know it is an opportunity worth pursuing?
• How do I come up with a business idea?
• Should I build a business from scratch, buy an existing business, or invest in a franchise?
• What steps are involved in developing a business plan?
• Where could I find help in getting my business started?
• How can I increase the likelihood that I’ll succeed?

In this chapter, we’ll provide some answers to questions like these.

Why Start Your Own Business?

What sort of characteristics distinguishes those who start businesses from those who don’t? Or, more to the point, why do some people actually follow through on the desire to start up their own businesses? The most common reasons for starting a business are the following:

• To be your own boss
• To accommodate a desired lifestyle
• To achieve financial independence
• To enjoy creative freedom
• To use your skills and knowledge

The  Small Business Administration  (SBA) points out, though, that these are likely to be advantages only “for the right person.” How do you know if you’re one of the “right people”? The SBA suggests that you assess your strengths and weaknesses by asking yourself a few relevant questions: [5]

• Am I a self-starter? You’ll need to develop and follow through on your ideas.
• How well do I get along with different personalities? Strong working relationships with a variety of people are crucial.
• How good am I at making decisions? Especially under pressure…..
• Do I have the physical and emotional stamina? Expect six or seven work days of about twelve hours every week.
• How well do I plan and organize? Poor planning is the culprit in most business failures.
• How will my business affect my family? Family members need to know what to expect: long hours and, at least initially, a more modest standard of living.

Before we discuss why businesses fail we should consider why a huge number of business ideas never even make it to the grand opening. One business analyst cites four reservations (or fears) that prevent people from starting businesses: [6]

• Money . Without cash, you can’t get very far. What to do: line up initial financing early or at least have done enough research to have a plan to raise money.
• Security . A lot of people don’t want to sacrifice the steady income that comes with the nine-to-five job. What to do: don’t give up your day job. Run the business part-time or connect with someone to help run your business—a “co-founder.”
• Competition . A lot of people don’t know how to distinguish their business ideas from similar ideas. What to do: figure out how to do something cheaper, faster, or better.
• Lack of ideas . Some people simply don’t know what sort of business they want to get into. What to do: find out what trends are successful. Turn a hobby into a business. Think about a franchise. Find a solution to something that annoys you—entrepreneurs call this a “pain point” —and try to turn it into a business.

If you’re interested in going into business for yourself, try to regard such drawbacks as mere obstacles to be overcome by a combination of planning, talking to potential customers, and creative thinking

Who is an Entrepreneur?

You might be thinking, “All that sounds great, but I’m not an entrepreneur.” While some research has found some correlation between personality traits, like openness to new experiences, to be common among entrepreneurs; entrepreneurs are not that different from you. You can learn to act entrepreneurially and decide if starting your own business is right for you now or in the future. While many people choose to be single founders of their own company (sometimes referred to as solopreneurs) most of entrepreneurship requires working with others in some way.

Founding Teams

One of the most effective ways to get more done is to collaborate with others. Founding Teams increases your capacity and provides additional knowledge and experience from which to draw during any problem-solving process. Working with others can also provide emotional support and motivation to persist when obstacles or failures are encountered. However, there is also a cost to collaboration requiring time and effort to ensure everyone’s actions are aligned to support one another, and that everyone agrees on what those actions are and how they should be accomplished. It can get tricky when you started something together but then start to see different opportunities. A founding team can be comprised of two (most common) or more co-founders that own the company together, take the chance to capitalize on an opportunity and are usually working for free as you get things off the ground.

When organizing a team it is good to start with yourself and an understanding of what you can do. Among entrepreneurship scholars, there is a bit of a debate and mixed results regarding the best kind of founding team. A diverse founding team can give you additional expertise, expand your network and access to additional knowledge and resources, as well as providing unique ways of seeing the world when it comes to problem-solving. Whereas, a founding team where members are more similar can reduce those benefits but it can also reduce the collaboration costs if you and you co-founders have the same kinds of backgrounds, experience, and goals which make communication and coordination more efficient for shared leadership.

If you are considering working with a co-founder start first by identifying what you can do, then consider what other skills or roles would allow you to achieve your goals of launching a new venture. Some common roles within a startup generally include someone who:

• Had the idea/pathfinder;
• Manages the project/company;
• Raises money or makes connections;
• Brings in the revenues;
• Built the product (or performs the services)

Now you may be able to do all of them pretty well yourself but you still only have 24 hours in a day and may need to spend your time doing something that no one else on your team can do, or using the time to work on your business rather than in it.

Identifying Co-Founders

How do you find co-founders once you know what you are looking for? You can start with your personal networks. Share your vision or what you are looking for and ask them to refer you to anyone they think would be interested and a good fit for what you are looking for. You can also try to put yourself in places where you are more likely to meet potential co-founders whether that is online or offline. You can search according to expertise. For example, if you’re experienced on the making side but not as experienced on the business side you might go to a business networking event. If the situation were reversed and you had some business acumen but didn’t know how to actually build say a software product you might go to a hackathon to find people that know how to code and develop software. In either case be sure you are bringing something to the relationship besides just an idea. Again, when recruiting, share your passion for the vision and why you need help. It is helpful to be very clear about the role they would fill as you work together. Because you are starting a new relationship try working together on a small project that would move things forward that can be completed in a week or two. Remember, you do not have to decide on how to divide the work and the ownership right away and in fact should probably make the amount of ownership contingent upon certain milestones completed.

When Does Entrepreneurship Occur? When Does it End?

Organization lifecycle.

An organizational lifecycle refers to the different stages that organizations pass through. Similarly, industries and products also experience this same kind of lifecycle, as you’ll see in Chapter 15.

As the entrepreneur or founding team begins their journey of turning their idea into a new organization they are in the startup phase . This phase is usually characterized by large amounts of uncertainty associated with customer demand, operational capabilities, and the financial feasibility of the business model. After the startup phase the business continues on to the growth phase when founders have figured out how to provide the product profitably and are implementing systems to find and reach more customers. After that stage the mature phase occurs when growth slows and the focus is more on optimization and resource allocation rather than exploring how to create additional value. The final stage is the decline or rebirth stage . A decline occurs when there is negative growth or profits. Instead of shutting down the company many will try a rebirth stage where they attempt to change what they do and find new customers. This stage doesn’t have to be after or during a decline but can occur whenever the company chooses to explore new products or services that create new value. This is when corporate entrepreneurship happens. However, the absence of uncertainty about what to create or how to create value signals the end of entrepreneurship and entrepreneurial thinking, but can resurface as the organization decides to launch a new product or faces uncertain market conditions.

Uncertainty

When we talk about uncertainty experienced by entrepreneurs we are often referring to various knowledge problems they encounter during the startup or rebirth stages. Uncertainty is one kind of knowledge problem that happens when you cannot know what action is likely to lead to a desired outcome. Other common knowledge problems entrepreneurs deal with are complexity, ambiguity, and equivocality. Complexity occurs because of the number of variables that make up a problem and the number of interactions between those variables that could influence outcomes. Ambiguity occurs when there isn’t clarity around what is important or even what might happen. Equivocality occurs when there are multiple meanings or interpretations of what is important and what is possible. Each of these knowledge problems are navigated differently. For example, suppose you find yourself confronted with a complexity or equivocality knowledge problem and decide you just need more information before you make a decision. You have just added to your problems by creating more complexity to sift through or more possible options to consider. However, for knowledge problems like uncertainty and ambiguity additional information might help you to understand what will or will not work. [7]

These knowledge problems are why many people do not attempt entrepreneurship and why startups fail despite resources and effort. The judgement and action under these conditions are what define the domain of entrepreneurship. Once there has been a reduction in uncertainty and the other knowledge problems have been overcome to at least a level of probabilistic risk then as the emphasis shifts from exploration to optimization to minimize or to estimate the known risks.  

Where Does Entrepreneurship Occur?

Entrepreneurship occurs in all sorts of different settings and industries. Each industry has its own set of norms, resources, and constraints. While new ideas can happen by bringing what has worked in one industry to another; it can also be challenging because of these differences of context. The common element in all the contexts is the creation of value under conditions of uncertainty.

Value is a subjective term that represents the perceived importance or preference of a good or service. Companies are able to capture some of that value because of the price they charge for delivering that value. Customers also receive enough value that they are willing and able to pay that price and receive enough of a benefit for doing so. An entrepreneur works with potential customers to understand and create a system that can continue to produce enough value for the customer to make providing a good or service worth doing. Let’s look at different types of entrepreneurship to see how context and other factors matter in value creation.

Types of Entrepreneurship

Lifestyle versus high-growth.

One way to classify startups are by the goals or aspirations of the founders and the market size they choose to serve. On one end of the continuum, we have startups that grow up to be commonly called lifestyle businesses (also referred to as small businesses). These tend to create value for a niche group of customers that benefit from their service, product, or platform. These “small” businesses can still be very profitable and employ upwards of 500 people. This kind of business makes up the largest quantity of businesses, however, despite the sheer number of them, in total, they produce less than the type of business at the other end of the continuum,, which are usually referred to as high-growth ventures . High-growth venture startups tend to create value for much larger sized markets and become or are acquired by large and often publicly-traded corporations. They tend to employ thousands or tens of thousands of employees within one country though often have a larger global market that they serve.

Social Entrepreneurship

Traditionally all entrepreneurship seeks to systematize value creation in a way that generates enough profits to continue to create value through providing beneficial experiences or solving problems. Social entrepreneurship seeks to use a startup or company to not only generate enough profit but also enough social and/or environmental impact. This might mean addressing a social need experienced by those unable to pay for a solution on their own due to conditions of poverty. This might mean the company donates part of its revenue or profit to a charitable cause. It might also mean that the company is set up and supported to be able to provide a service at a price that normally wouldn’t be sustainable. It also might look like a charity or non-profit that uses donations and grants instead of service or product revenue to address a social issue. It could also be a for-profit entity selling a service, product, or platform through a business model that provides employment to underemployed groups or areas. In most social entrepreneurship, the startup measures their success according to not only profits, but social and environmental impact referred to as a triple bottom line . Though both entrepreneurship and social entrepreneurship add value and do good, what differentiates them are the kind of constraints a founder must address.

Corporate Entrepreneurship/Intrapreneurship

When we think of entrepreneurship most of the time we think of new startup companies, but entrepreneurship can happen within an existing organization as well. As was mentioned in the organization lifecycle section, as a company grows it may sell its service or product to everyone within a particular market such that the demand for what they produce eventually declines. Intrapreneurship is entrepreneurship within an established organization. Instead of closing the organization because of a lack of demand, they can redeploy resources to make additional products or improve upon old ones to extend the lifecycle of the organization. Established companies might not wait until their current product is no longer in demand. Instead they build a better product that competes against their own product before someone else can. Existing businesses may also need to change different parts of their existing business model due to changes outside the company like competitors or environmental constraints. Some companies have separate divisions dedicated to exploring ways they can create new products, such as research and development (R&D) or a corporate venture capital division, while other companies encourage and rely on employees to suggest new ideas and improvements without any changes to dedicated roles or structures. In the figure below the dotted line represents the point at which intrapreneurship tends to take place during the lifecycle of the organization.

Intrapreneurship or entrepreneurship in this corporate setting tends not to have the same constraints found in new startups, like a lack of resources or legitimacy. Entrepreneurs within corporations must instead deal with constraints like institutional inertia and internal politics. Institutional inertia comes from the fact that the company is largely known for and focused on optimizing what they do well. The company does not want to risk a reputation in the market and is reluctant to compete against itself at times.

There is also the matter of not using the company’s resources efficiently. Most choices about what project to invest in are made using assumptions about risk. Unfortunately, these same approaches do not account for conditions of uncertainty, and innovation projects are often rejected through the normal project evaluation process because they will be seen as too risky. New ideas are often met with resistance because it means someone has to do something different or because there are differences about what or how the different things should be. New ideas might not receive support because of the internal competition for resources or power. Intrapreneurship requires a slightly different skill set that is able to navigate rejection and internal politics to generate enough momentum and internal support to be able to move an idea forward.

Health Entrepreneurship

While every industry has its own set of challenges, rules, and norms, the health industry is one that is very regulated. Health entrepreneurship requires extra time to bring a new product to market. Within the United States, the Food and Drug Administration is responsible for ensuring the safety and efficacy of food, drugs, biologics, medical devices, cosmetics, and other health-related categories. This requires getting approval or a (510k) exemption from the agency before being able to sell your product. Drugs in particular need to go through a series of experiments to make sure they work as they should without side effects first on animals and then on people. Even on an accelerated track, these tests can take a lot of time and money.

Another unique aspect of the U.S. health industry for entrepreneurs to navigate is the role of the insurance companies. Insurance companies have a series of medical codes that classify different kinds of treatments or devices that some insurance plans will pay on behalf of the consumer while others will not. In addition, each insurance company has different agreements regarding how much will be paid to the medical providers. Introducing new products or services requires understanding how the insurance coding and claims process works so that the insurance payor system will be able to finance what you are doing. Just because consumers like your health product doesn’t mean they will be able to afford it without it being covered by their insurance. These kinds of systemic constraints are experienced in the health industry in addition to the uncertainty associated with entrepreneurship.

Digital Entrepreneurship

Digital entrepreneurship is a term that has surfaced as a result of the increase in the use of technological advances that can be used to start a new venture. Often these kinds of new ventures create value by leveraging existing technological platforms or services to create and automate traditional business or organizational processes. Digital entrepreneurship also encompasses the use of digital products that only exist and can be used online. Often this kind of entrepreneurship lowers the cost to start but also introduces more complexities that make it difficult to understand which process and activities will create value that can be captured and delivered in a sustainable way. The internet context also introduces additional security concerns of protecting data that is used, collected, and stored.

Figure 7.7: Types of startups.

Entrepreneurial Ecosystem

Each of these types and contexts is also part of a larger ecosystem that can make it easier or more difficult to go through the entrepreneurial process. When you hear the word ecosystem your mind might flash back to the first time you were introduced to biology and saw how things were connected. An entrepreneurial ecosystem refers to a community or network of people, spaces, and available resources that interact around the creation of new ventures. Traditionally, entrepreneurial ecosystems have been geographically oriented allowing for more frequent interactions between different groups of people who exchange information, connections, and resources. However, more and more entrepreneurs are turning to online ecosystems that can provide some of the same access.

Some common spaces where you are likely to find entrepreneurs within an ecosystem include coworking spaces, incubators, and accelerators. Coworking spaces are open areas where entrepreneurs and business professionals can work out of. The spaces can be free or accessible by paying for a membership to get access. Usually, those just getting started or solopreneurs tend to leverage these spaces. Incubators are basically a bunch of offices in the same area that are rented out to particular startup companies. The rent is usually below what you would find out in the current market to provide low-cost options for those getting started. There are also usually shared spaces or services to facilitate community amongst the tenants. Accelerators are programs that provide money, space, services, and some sort of training or mentoring to startups selected to participate in their program usually in exchange for equity. Accelerators often are for a limited time frame (e.g. 3 months) and end in a demo day when startups show off or demonstrate what they have done in front of other external investors.

There are also different variations on these kinds of spaces and programs in different ecosystems. For example, on a university campus you might find something similar to the Apex Center for Entrepreneurs, located at Virginia Tech in Blacksburg, Virginia, that is dedicated to helping students, faculty, and/or alumni turn their passion and purpose into action through various programs and entrepreneurial experiences. You might also find other organizations that support and provide services to entrepreneurs sponsoring these spaces. So don’t be surprised to find lawyers, accountants, consultants, bankers, and investors at these places or other entrepreneurial events and activities.

See Virginia Tech Apex Center for Entrepreneurs’ annual report here: https://www.apex.vt.edu/about/annual-report

How to do entrepreneurship?

Process/approaches.

The process of starting a new venture is a dynamic series of experiences that can be approached in a variety of ways. Some ventures may begin with an idea, others may come across a new technology, while some founders experience a problem they want to solve for themselves and discover others want a similar solution. Getting access to new resources or a desire to work with a particular group can be the start of finding ways to create value utilizing those talents, connections, or resources. This means that you can start from just about anywhere though you’ll quickly discover the need to engage in other experiences to help reduce uncertainty as you figure out how it all fits together.

While the entrepreneurial journey can be started from different places most of the time in the early stage it begins with one of the following 5 scenarios:

Each of these is an on-ramp to a similar path with slight deviations depending on the industry and contextual factors. The entrepreneurs’ path is about creating a vision, reducing the unknowns by validating assumptions associated with that vision, gathering resources needed to execute, and generating enough collective agreement to execute on the vision. It is usually best to start with the riskiest or most impactful assumption. The following assumptions are frequently found to be the challenge:

• Assumption #1: Your envisioned customer has the problem you are trying to solve
• Assumption #2: Your solution solves the problem in a unique and desirable way

Assumption #3: You know how to find and attract enough of your customers

Assumption #4: your customers are willing to pay you for the solution, assumption #5: you can build or provide the solution.

• Assumption #6: You can recruit the talent needed to create, capture, and deliver value

Assumption #7: You can establish partnerships that allow you to scale

Assumption #1 your envisioned customer has the problem you are trying to solve.

Many people tend to come up with and get excited about product ideas or solutions without fully understanding the customers’ problems. This can be problematic because they are at risk of only paying attention to information that can be used to justify that they are right instead of figuring out what the real problem is that customers actually care about. Another version of this underlying assumption is keeping the idea a secret, for fear of someone stealing the idea, until it is ready to buy instead of getting feedback along the way. This prevents entrepreneurs from taking advantage of the perspectives and ideas of others to refine and improve the idea. In both cases, the potential downside is that the entrepreneur puts in the time, effort, and resources to build something that no one really wants. Sure it might be annoying to the customer but so what? It isn’t that big of a deal, at least enough that it would motivate them to buy something to solve it. Before falling in love with your solution make sure you understand the problem so you can create the right solution. Reducing the uncertainty associated with this assumption can be done by identifying the emotional evidence of the problem. In addition, understanding what the core problem is and not just the symptoms can reduce uncertainty around what would be valued.

Assumption #2 Your solution solves the problem in a unique and desirable way

This assumption is closely related to the first one but has more to do with gauging market timing or demand rather than understanding the motivations of your buyer. One way to figure that out is to talk with potential customers about their current experience when they encounter the problem you are interested in solving. You are listening to hear if they have the problem and are actively trying to solve it with workarounds, trying new products, or doing a bunch of research but just are not happy with the outcomes. These are the people most ready to buy and are your Early Adopters. Early adopters also tend to tell other people about new solutions through word of mouth. In order to gauge market timing, you are trying to find problem spaces in which the majority of the people you talk to are the early adopters. However, many times people will simply acknowledge the problem but just deal with it instead of trying to solve it. They’ll be annoyed or discount the problem someway. Others won’t have a problem with the current outcomes due to their own preferences or priorities. If you talk to 10 people that you believe have the problem but only 2 or 3 are actively trying to address the issue with time, money, or effort then it probably isn’t the right time. This means you will end up spending a lot of time educating your customers about the problem and convincing them it is worth solving. You can choose to do that it just usually takes a lot more time, money, and motivation to generate enough momentum.

Once you have talked to early adopters about their experiences you can decide which problems you can or want to address. Now that the problem has been identified it is time to come up with a novel, useful, and valued solution. Ideation techniques and tools help entrepreneurs come up with those solutions. This process usually involves divergent thinking that generates as many kinds of solutions as possible before engaging in convergent thinking that narrows down choices to help us make a decision and move forward. Associative thinking that encourages unlikely recombinations of concepts or contexts has also been used to inspire novel ideas. Ultimately the idea needs to address the unmet needs of your early adopters.

Many entrepreneurs have the thought that as soon as they launch their website or app or if they just build it then people will immediately start buying. However, in most cases, people are so inundated with information or only use particular channels to get their information thereby making it difficult to even make them aware that your startup exists. As you talk to your early adopters figure out where they heard about the last new product, service, or platform that they considered buying. That can help you identify the marketing channels to start with but don’t stop there. The cost to acquire a new customer, referred to as customer acquisition cost (CAC), is one of the most uncertain costs associated with your business that can make or break how profitable you can be. Some entrepreneurs assume those costs can be low because “social media is free”. It still costs time to create, post, and interact with content even if it is your own time. Be sure to track how much it takes to get a new follower, put an hourly wage to that time, and include that in your CAC. You are trying to create a system that can continuously find and attract those early adopters who in turn will help you get more customers. You want to try to find what is most effective but also what brings in the largest quantity of potential customers. Because not everyone that sees your social media post will click on it, and not everyone that clicks on will, go to your website. Not everyone that comes to your website will be ready to buy and in fact, you’ll have a much smaller percentage of potential customers that will result in a conversion or sale than what you started out with. Keeping track of how many potential customers move from one stage to the next can help you do a better job at finding and attracting more customers.

If potential customers do make it to the point of purchase they may still be unwilling to pay the price you are asking them to pay. Determining the right price for a new product or service can be tricky. Many factors outside of your control can influence this like what the competition or alternatives for the buyer are and how much value is perceived by the customer. You can use a market comparables approach where you look at potential alternatives to what you’re selling and either offer at a premium price or a discounted price. You can also try a cost-plus approach where you figure out how much it costs you to deliver the service, product, or platform and then add a particular markup percentage that represents your profits. Or you can attempt to quantify the subjective value that your early adopters place upon what you are creating. [8]

Sometimes the value created by a startup is not in a new service, product, or platform but rather, in the way they make it available to potential customers. A startup may sell its product at a loss or at a lower profit margin if they also have additional products or services that will be purchased by that customer over a lifetime. The lifetime value of a customer (LTV) is an assumed amount that each new customer will spend in the future. In most startup cycles lifetime means the next twelve to eighteen months.

Many a potential entrepreneur has come up with an idea but have no idea how to actually make or build their idea. Some of that may be because of a lack of personal knowledge or skill in which case you will have to recruit the talent needed but it also may be because of the limitations of current technologies. Or it can be built but not at a cost anyone is ready to pay for. Remember as an entrepreneur you are wanting to create a system that can continuously create value. But you have to do it the first time before you can grow or scale it. This usually involves creating a prototype or a simple version of the product or service to learn what it would take to produce it and if it can work as envisioned. A prototype doesn’t need to be completely functional in order to learn. You could even use competitors’ products as your prototype and find out what needs to change or stay the same. Regardless in most cases, you’ll make multiple versions of a product or service after having received feedback from potential customers before arriving at the finished outcome, which includes a repeatable process.

Assumption #6: You can recruit talent needed to create, capture, & deliver value

This builds off of the prior assumption that you don’t have the necessary skills or knowledge to create, capture, and deliver value to your customers in a profitable way. This is often where passion for an idea can bring similarly passionate people together to work towards achieving a better future. However, while people might be interested in an idea, they are also interested in being well paid on a consistent basis. A lack of ability to pay people’s salaries puts startups at a considerable disadvantage when recruiting. However, you may be able to offer longer-term benefits such as equity or the chance to gain experience by working on things they’re not qualified to attempt in the general labor market. Or you can find experienced individuals who are willing to be a part of your advisory board and give you a few hours every month or so to help you know things that you are not aware of.

Most of the time startups can’t do everything and need to partner with others. This might be suppliers or raw material providers that provide parts or resources, Or it could be manufacturers, distributors, wholesalers, or retailers. It might also look like bankers, accountants, consultants, or independent contractors who provide expertise on particular parts of your business. However, like the prior recruiting assumption they tend to want to be paid or guaranteed they won’t lose money for helping you. Finding partners who are willing to work with you as you figure out the best way can be challenging. Often personal networks and referrals are utilized to find partners willing to take a chance on a new startup. Contracts also become a common tool to spell out expectations and recourse if things do not go well.

Each assumption or area has experiences, milestones, or artifacts, a few of which we’ve mentioned above. The image below is an attempted visual roadmap of various stages/artifacts.

Startup Financing

While a lot of the process can be done without any money there are eventual costs that need to be covered to be able to create, capture, and deliver value. Often founders struggle to get started because of a lack of resources, this section talks about different ways the startup can be funded along a continuum that goes from straightforward to more complex.

Figure 7.11: Different types of funding for viral pathways.

Bootstrapping is when the founders use their own funds to start a company. This might be income from their full-time job, it might savings, or the use of their personal credit cards. They can also get favorable invoice or line of credit terms from suppliers so that they can have the product made and sell it before they have to pay for the cost of production. However, this often requires a personal guarantee from the founder exposing their personal assets to risk. As you progress along this continuum, founders might be funded with a gift or loan by friends or family members who want to help them start the business. Sometimes government institutions like universities or other ecosystem stakeholders might provide grants or competition prizes that allow the founder to get started. Some founders can pre-sell their ideas getting the money prior to building a product like on crowdfunding platforms. For those that need a lot of money to start their venture due to the kinds of equipment or property needed to create value, they may need to pursue debt financing like a bank loan. Others might be able to convince suppliers or manufacturers to extend a line of credit so that they have time to sell the service or products before the invoice comes due.

All these are ways to get to the primary funding mechanism of any business, revenue from paying customers. However, even if a startup has initial revenue, it may not be able to afford the changes needed to support rapid growth to reach large amounts of customers. This is when external investors may become involved. Investors will give the founders money in exchange for some equity or ownership of the company. Investors, in general, want a return on their investment which means the value of the company they invest in must increase considerably and have a way for them to get their money back. This becomes important for founders to understand as not all companies are investable due to the market size or growth potential. It doesn’t mean that they won’t be profitable just not enough for investors to get what they want or need. Below is an example of a Venture Investment-Readiness and Awareness Levels framework used by venture capital firms to help startups understand when they would be ready to be considered for investment.

The two primary types of investors in investable startups are angels and venture capitalists. Angel investors invest their own money either on their own or with a group of others. They might invest for a variety of reasons (a product they’d use, want to be involved in something exciting, desire to help a passionate founder, etc.) besides just the chance to make money but are often hoping to get a return on their money in a three to a five-year window through an acquisition or during the next round (Seed, Series A, B, C, etc.) of funding with venture capitalists. Venture capitalists invest primarily other people’s money promising high returns in seven to ten years to those individuals who contribute to their fund. The venture capitalists then search for a portfolio of high-growth ventures that serve large amounts of customers. They hope that some of the ventures will be acquired and that at least one of them will get really big, really fast to become a publicly-traded stock so they can cash out and return the promised money to their clients. Angel investors invest smaller amounts than venture capitalists but also don’t need the company to grow as much as the venture capitalist to get the desired return. Whereas venture capitalists have a fiduciary responsibility or to act in good faith on behalf of their clients. The tricky part is being able to tell which startups will be the ones to be that high-growth success with all the uncertainty that exists.

Beyond Founding

A key aspect of the entrepreneurial journey is the creation of a service, product, or platform. In order to build a system that creates value through one of these creations requires some experimentation and rapid learning to develop an offering that is enough to merit revenue transactions. Besides launching your own company the skills developed during the commercialization process tend to be those used by product managers within existing corporations and are often a career path for those that study entrepreneurship in higher education.

Distinguishing Entrepreneurs from Small Business Owners

Though most entrepreneurial ventures begin as small businesses, not all small business owners are entrepreneurs.  Entrepreneurs  are innovators who start companies to create new or improved products. They strive to meet a need that’s not being met, and their goal is to grow the business and eventually expand into other markets.

In contrast, many people either start or buy small businesses for the sole purpose of providing an income for themselves and their families. They do not intend to be particularly innovative, nor do they plan to expand significantly. This desire to operate is what’s sometimes called a “lifestyle business.” [9] The neighborhood pizza parlor or beauty shop, the self-employed consultant who works out of the home, and even a local printing company—many of these are typically lifestyle businesses.

The Importance of Small Business to the US Economy

What is a “small business”.

To assess the value of small businesses to the US economy, we first need to know what constitutes a small business. Let’s start by looking at the criteria used by the Small Business Administration. According to the SBA, a  small business  is one that is independently owned and operated, exerts little influence in its industry, and (with a few exceptions) has fewer than 500 employees. [10]

Why Are Small Businesses Important?

There are more than 30.7 million small businesses in this country, and they generate about 47.3 percent of jobs in the US. [11]  The millions of individuals who have started businesses in the United States have shaped the business world as we know it today. Some small business founders like Henry Ford and Thomas Edison have even gained places in history. Others, including Bill Gates (Microsoft), Sam Walton (Wal-Mart), Steve Jobs (Apple Computer), and Larry Page and Sergey Brin (Google), have changed the way business is done today.

Aside from contributions to our general economic well-being, founders of small businesses also contribute to growth and vitality in specific areas of economic and socioeconomic development. In particular, small businesses do the following:

• Create jobs
• Spark innovation
• Provide opportunities  for many people, including women and minorities, to achieve financial success and independence

In addition, they complement the economic activity of large organizations by providing them with components, services, and distribution of their products. Let’s take a closer look at each of these contributions.

Job Creation

The majority of US workers first entered the business world working for small businesses. Although the split between those working in small companies and those working in big companies is about even, small firms hire more frequently and fire more frequently than do big companies. [12] Why is this true? At any given point in time, lots of small companies are started and some expand. These small companies need workers and so hiring takes place. But the survival and expansion rates for small firms is poor, and so, again at any given point in time, many small businesses close or contract and workers lose their jobs. Fortunately, over time more jobs are added by small firms than are taken away, which results in a net increase in the number of workers, as seen in figure 7.12.

Figure 7.12: Small business job gains and losses, 2000-2021 (in millions of jobs).

The size of the net increase in the number of workers for any given year depends on a number of factors, with the economy being at the top of the list. A strong economy encourages individuals to start small businesses and expand existing small companies, which adds to the workforce. A weak economy does just the opposite: discourages start-ups and expansions, which decreases the workforce through layoffs. Figure 7.12 reports the job gains from start-ups and expansions and job losses from business closings and contractions.

Given the financial resources available to large businesses, you’d expect them to introduce virtually all the new products that hit the market. Yet according to the SBA, small companies develop more patents per employee than do larger companies. During a recent four-year period, large firms generated 1.7 patents per hundred employees, while small firms generated an impressive 26.5 patents per employee. [13]  Over the years, the list of important innovations by small firms has included the airplane, air-conditioning, DNA “fingerprinting,” and overnight national delivery. [14]

Small business owners are also particularly adept at finding new ways of doing old things. In 1994, for example, a young computer-science graduate working on Wall Street came up with the novel idea of selling books over the Internet. During the first year of operations, sales at Jeff Bezos’ new company—Amazon.com—reached half a million dollars. In less than 20 years, annual sales had topped $107 billion. [15] Not only did his innovative approach to online retailing make Bezos enormously rich, but it also established a viable model for the e-commerce industry.

Why are small businesses so innovative? For one thing, they tend to offer environments that appeal to individuals with the talent to invent new products or improve the way things are done. Fast decision making is encouraged, their research programs tend to be focused, and their compensation structures typically reward top performers.

According to one SBA study, the supportive environments of small firms are roughly 13 times more innovative per employee than the less innovation-friendly environments in which large firms traditionally operate. [16]

The success of small businesses in fostering creativity has not gone unnoticed by big businesses. In fact, many large companies have responded by downsizing to act more like small companies. Some large organizations now have separate work units whose purpose is to spark innovation. Individuals working in these units can focus their attention on creating new products that can then be developed by the company.

Opportunities for Women and Minorities

Small business is the portal through which many people enter the economic mainstream. Business ownership allows individuals, including women and minorities, to achieve financial success, as well as pride in their accomplishments. Figure 7.14 gives you an idea of how many American businesses are owned by women and minorities.

Figure 7.14: Percent of all businesses owned by women and minorities.

What Industries Are Small Businesses In?

If you want to start a new business, you probably should avoid certain types of businesses. You’d have a hard time, for example, setting up a new company to make automobiles or aluminum, because you’d have to make tremendous investments in property, plant, and equipment, and raise an enormous amount of capital to pay your workforce. These large, up-front investments present barriers to entry.

Fortunately, plenty of opportunities are still available. Many types of businesses require reasonable initial investments, and not surprisingly, these are the ones that usually present attractive small business opportunities.

Industries by Sector

Let’s define an  industry  as a group of companies that compete with one another to sell similar products. We’ll focus on the relationship between a small business and the industry in which it operates, dividing businesses into two broad types of industries, or sectors: the goods-producing sector and the service-producing sector.

• The  goods-producing sector  includes all businesses that produce tangible goods. Generally speaking, companies in this sector are involved in manufacturing, construction, and agriculture.
• The  service-producing sector  includes all businesses that provide services but don’t make tangible goods. They may be involved in retail and wholesale trade, transportation, finance, entertainment, recreation, accommodations, food service, and any number of other ventures.

About 20 percent of small businesses in the United States are concentrated in the goods-producing sector. The remaining 80 percent are in the service sector. [17]  The high concentration of small businesses in the service-producing sector reflects the makeup of the overall US economy. Over the past 50 years, the service-producing sector has been growing at an impressive rate. In 1960, for example, the goods-producing sector accounted for 38 percent of GDP, the service-producing sector for 62 percent. By 2015, the balance had shifted dramatically, with the goods-producing sector accounting for only about 21 percent of GDP. [18]

Goods-Producing Sector

The largest areas of the goods-producing sector are construction and manufacturing. Construction businesses are often started by skilled workers, such as electricians, painters, plumbers, and home builders, and they generally work on local projects. Though manufacturing is primarily the domain of large businesses, there are exceptions.

How about making something out of trash? Daniel Blake never followed his mother’s advice at dinner when she told him to eat everything on his plate. When he served as a missionary in Puerto Rico, Aruba, Bonaire, and Curacao after his first year in college, he noticed that the families he stayed with didn’t either. But they didn’t throw their uneaten food into the trash. Instead they put it on a compost pile and used the mulch to nourish their vegetable gardens and fruit trees. While eating at an all-you-can-eat breakfast buffet back home at Brigham Young University, Blake was amazed to see volumes of uneaten food in the trash. This triggered an idea: why not turn the trash into money? Two years later, he was running his company—EcoScraps—collecting 40 tons of food scraps a day from 75 grocers and turning it into high-quality potting soil that he sells online and to nurseries. His profit has reach almost half a million dollars on sales of $1.5 million. [19]

Service-Producing Sector

Many small businesses in this sector are  retailers —they buy goods from other firms and sell them to consumers, in stores, by phone, through direct mailings, or over the Internet. In fact, entrepreneurs are turning increasingly to the Internet as a venue for start-up ventures. Take Tony Roeder, for example, who had a fascination with the red Radio Flyer wagons that many of today’s adults had owned as children. In 1998, he started an online store through Yahoo! to sell red wagons from his home. In three years, he turned his online store into a million-dollar business. [20]

Other small business owners in this sector are  wholesalers —they sell products to businesses that buy them for resale or for company use. A local bakery, for example, is acting as a wholesaler when it sells desserts to a restaurant, which then resells them to its customers. A small business that buys flowers from a local grower (the manufacturer) and resells them to a retail store is another example of a wholesaler.

A high proportion of small businesses in this sector provide professional, business, or personal services. Doctors and dentists are part of the service industry, as are insurance agents, accountants, and lawyers. So are businesses that provide personal services, such as dry cleaning and hairdressing.

David Marcks, for example, entered the service industry about 14 years ago when he learned that his border collie enjoyed chasing geese at the golf course where he worked. While geese are lovely to look at, they can make a mess of tees, fairways, and greens. That’s where Marcks’ company, Geese Police, comes in: Marcks employs specially trained dogs to chase the geese away. He now has 27 trucks, 32 border collies, and five offices. Golf courses account for only about 5 percent of his business, as his dogs now patrol corporate parks and playgrounds as well. [21] Figure 7.15 provides a more detailed breakdown of small businesses by industry.

Advantages and Disadvantages of Business Ownership

Do you want to be a business owner someday? Before deciding, you might want to consider the following advantages and disadvantages of business ownership. [22]

Advantages of Small Business Ownership

Being a business owner can be extremely rewarding. Having the courage to take a risk and start a venture is part of the American dream. Success brings with it many advantages:

• Independence . As a business owner, you’re your own boss. You can’t get fired. More importantly, you have the freedom to make the decisions that are crucial to your own business success.
• Lifestyle . Owning a small business gives you certain lifestyle advantages. Because you’re in charge, you decide when and where you want to work. If you want to spend more time on non-work activities or with your family, you don’t have to ask for the time off. Given today’s technology, if it’s important that you be with your family all day, you can run your business from your home.
• Financial rewards . In spite of high financial risk, running your own business gives you a chance to make more money than if you were employed by someone else. You benefit from your own hard work.
• Learning opportunities . As a business owner, you’ll be involved in all aspects of your business. This situation creates numerous opportunities to gain a thorough understanding of the various business functions.
• Creative freedom and personal satisfaction . As a business owner, you’ll be able to work in a field that you really enjoy. You’ll be able to put your skills and knowledge to use, and you’ll gain personal satisfaction from implementing your ideas, working directly with customers, and watching your business succeed.

Disadvantages of Small Business Ownership

As the little boy said when he got off his first roller-coaster ride, “I like the ups but not the downs!” Here are some of the risks you run if you want to start a small business:

• Financial risk . The financial resources needed to start and grow a business can be extensive. You may need to commit most of your savings or even go into debt to get started. If things don’t go well, you may face substantial financial loss. In addition, there’s no guaranteed income. There might be times, especially in the first few years, when the business isn’t generating enough cash for you to live on.
• Stress . As a business owner, you are the business. There’s a bewildering array of things to worry about—competition, employees, bills, equipment breakdowns, etc.. As the owner, you’re also responsible for the well-being of your employees.
• Time commitment . People often start businesses so that they’ll have more time to spend with their families. Unfortunately, running a business is extremely time-consuming. In theory, you have the freedom to take time off, but in reality, you may not be able to get away. In fact, you’ll probably have less free time than you’d have working for someone else. For many entrepreneurs and small business owners, a 40-hour workweek is a myth. Vacations will be difficult to take and will often be interrupted. In recent years, the difficulty of getting away from the job has been compounded by cell phones, iPhones, Internet-connected laptops and iPads, and many small business owners have come to regret that they’re always reachable.
• Undesirable duties . When you start up, you’ll undoubtedly be responsible for either doing or overseeing just about everything that needs to be done. You can get bogged down in detail work that you don’t enjoy. As a business owner, you’ll probably have to perform some unpleasant tasks, like firing people.

In spite of these and other disadvantages, most small business owners are pleased with their decision to start a business. A survey conducted by the Wall Street Journal and Cicco and Associates indicates that small business owners and top-level corporate executives agree overwhelmingly that small business owners have a more satisfying business experience. Interestingly, the researchers had fully expected to find that small business owners were happy with their choices; they were, however, surprised at the number of corporate executives who believed that the grass was greener in the world of small business ownership. [23]

Starting a Business

Starting a business takes talent, determination, hard work, and persistence. It also requires a lot of research and planning. Before starting your business, you should appraise your strengths and weaknesses and assess your personal goals to determine whether business ownership is for you. [24]

Questions to Ask Before You Start a Business

If you’re interested in starting a business, you need to make decisions even before you bring your talent, determination, hard work, and persistence to bear on your project.

Here are the basic questions you’ll need to address:

• What, exactly, is my business idea? Is it feasible?
• What industry do I want to enter?
• What will be my competitive advantage?
• Do I want to start a new business, buy an existing one, or buy a franchise?
• What form of business organization do I want?

After making these decisions, you’ll be ready to take the most important step in the entire process of starting a business: you must describe your future business in the form of a business plan —a document that identifies the goals of your proposed business and explains how these goals will be achieved. Think of a business plan as a blueprint for a proposed company: it shows how you intend to build the company and how you intend to make sure that it’s sturdy. You must also take a second crucial step before you actually start up your business: You need to get financing —the money that you’ll need to get your business off the ground.

The Business Idea

For some people, coming up with a great business idea is a gratifying adventure. For most, however, it’s a daunting task. The key to coming up with a business idea is identifying something that customers want—or, perhaps more importantly, filling an unmet need . Your business will probably survive only if its purpose is to satisfy its customers—the ultimate users of its goods or services. In coming up with a business idea, don’t ask, “What do we want to sell?” but rather, “What does the customer want to buy?” [25]

To come up with an innovative business idea, you need to be creative. If your idea is innovative enough, it may be considered intellectual property, a right that can be protected under the law. Prior experience accounts for the bulk of new business idea and also increases your chances of success. Take Sam Walton, the late founder of Wal-Mart. He began his retailing career at JCPenney and then became a successful franchiser of a Ben Franklin five-and-dime store. In 1962, he came up with the idea of opening large stores in rural areas, with low costs and heavy discounts. He founded his first Wal-Mart store in 1962, and when he died 30 years later, his family’s net worth was $25 billion. [26]

Industry experience also gave Howard Schultz, a New York executive for a housewares company, his breakthrough idea. In 1981, Schultz noticed that a small customer in Seattle—Starbucks Coffee, Tea and Spice—ordered more coffeemaker cone filters than Macy’s and many other large customers. So he flew across the country to find out why. His meeting with the owner-operators of the original Starbucks Coffee Co. resulted in his becoming part-owner of the company. Schultz’s vision for the company far surpassed that of its other owners. While they wanted Starbucks to remain small and local, Schultz saw potential for a national business that not only sold world-class-quality coffee beans but also offered customers a European coffee-bar experience. After attempting unsuccessfully to convince his partners to try his experiment, Schultz left Starbucks and started his own chain of coffee bars, which he called Il Giornale (after an Italian newspaper). Two years later, he bought out the original owners and reclaimed the name Starbucks. [27]

Ownership Options

As we’ve already seen, you can become a small business owner in one of three ways— by starting a new business, buying an existing one, or obtaining a franchise. Let’s look more closely at the advantages and disadvantages of each option.

Starting from Scratch

The most common—and the riskiest—option is starting from scratch . This approach lets you start with a clean slate and allows you to build the business the way you want. You select the goods or services that you’re going to offer, secure your location, and hire your employees, and then it’s up to you to develop your customer base and build your reputation. This was the path taken by Andres Mason who figured out how to inject hysteria into the process of bargain hunting on the Web. The result is an overnight success story called Groupon. [28] Here is how Groupon (a blend of the words “group” and “coupon”) works: A daily email is sent to 6.5 million people in 70 cities across the United States offering a deeply discounted deal to buy something or to do something in their city. If the person receiving the email likes the deal, he or she commits to buying it. But, here’s the catch, if not enough people sign up for the deal, it is cancelled. Groupon makes money by keeping half of the revenue from the deal. The company offering the product or service gets exposure. But stay tuned: the “daily deals website isn’t just unprofitable—it’s bleeding hundreds of millions of dollars.” [29] As with all start-ups cash is always a challenge.

Buying an Existing Business

If you decide to buy an existing business , some things will be easier. You’ll already have a proven product, current customers, active suppliers, a known location, and trained employees. You’ll also find it much easier to predict the business’s future success.

There are, of course, a few bumps in this road to business ownership. First, it’s hard to determine how much you should pay for a business. You can easily determine how much things like buildings and equipment are worth, but how much should you pay for the fact that the business already has steady customers?

In addition, a business, like a used car, might have performance problems that you can’t detect without a test drive (an option, unfortunately, that you don’t get when you’re buying a business). Perhaps the current owners have disappointed customers; maybe the location isn’t as good as it used to be. You might inherit employees that you wouldn’t have hired yourself. Careful study called due diligence is necessary before going down this road.

Getting a Franchise

Lastly, you can buy a franchise . A franchiser (the company that sells the franchise) grants the franchisee (the buyer—you) the right to use a brand name and to sell its goods or services. Franchises market products in a variety of industries, including food, retail, hotels, travel, real estate, business services, cleaning services, and even weight-loss centers and wedding services. Figure 7.17 lists the top 10 franchises according to Entrepreneur magazine for 2015, 2020, and 2022.

Figure 7.17: Entrepreneur’s top franchises (2015, 2020, 2022).

As you can see from figure 7.18 below, the popularity of franchising has been growing quickly since 2011. Although the economic downturn decreased the number of franchises between 2008-11, note that the overall value of franchise outputs steadily increased. A new franchise outlet opens once every eight minutes in the United States, where one in ten businesses is now a franchise. Franchises employ eight million people (13 percent of the workforce) and account for 17 percent of all sales in the US ($1.3 trillion). [30]

In addition to the right to use a company’s brand name and sell its products, the franchisee gets help in picking a location, starting and operating the business, and benefits from advertising done by the franchiser. Essentially, the franchisee buys into a ready-to-go business model that has proven successful elsewhere, also getting other ongoing support from the franchiser, which has a vested interest in her success.

Coming with so many advantages, franchises can be very expensive. KFC franchises, for example, require a total investment of $1.3 million to $2.5 million each. This fee includes the cost of the property, equipment, training, start-up costs, and the franchise fee—a one-time charge for the right to operate as a KFC outlet. McDonald’s is in the same price range ($1 million to $2.3 million). SUBWAY sandwich shops offer a more affordable alternative, with expected total investment ranging from $116,000 to $263,000. [31]

In addition to your initial investment, you’ll have to pay two other fees on a monthly basis—a royalty fee (typically from 3 to 12 percent of sales) for continued support from the franchiser and the right to keep using the company’s trade name, plus an advertising fee to cover your share of national and regional advertising. You’ll also be expected to buy your products from the franchiser. [32]

But there are disadvantages. The cost of obtaining and running a franchise can be high, and you have to play by the franchiser’s rules, even when you disagree with them. The franchiser maintains a great deal of control over its franchisees. For example, if you own a fast-food franchise, the franchise agreement will likely dictate the food and beverages you can sell; the methods used to store, prepare, and serve the food; and the prices you’ll charge. In addition, the agreement will dictate what the premises will look like and how they’ll be maintained. As with any business venture, you need to do your homework before investing in a franchise.

Launching a Business from the Inside

When someone mentions “entrepreneurship,” many people equate the term to “start up,” but entrepreneurial activity can also come from within established firms. However, it’s often the case that the entrepreneurial spirit is not fully unleashed until an independent entity is formed around a venture.

That’s exactly what happened in the case of Qualtrax, a company located in Blacksburg, Virginia. [33] The company was spawned from a need for customers of CCS, Inc. to become compliant with the requirements of the International Standards Organization. CCS (now known as Foxguard Solutions) employees developed a software tool to simplify ISO compliance audits, and the auditors were so impressed that they suggested marketing the tool more broadly. Over a period of nearly 20 years, the business grew to 10 dedicated employees, but Foxguard did not invest heavily in the software because the product was essentially a sideline business. Qualtrax shared sales and marketing resources with other business lines, so its growth was not necessarily a focal point for the company.

In 2011, CCS management appointed Amy Ankrum, an executive in their marketing department, to lead the Qualtrax business line with a simple mission in mind—determining whether Qualtrax could be scaled up or should be scaled down. Having the feeling that there was more to the business than had been achieved to date, Amy added Ryan Hagan as engineering manager for the software. Hagan quickly moved Qualtrax to an agile style of development, allowing for 5-6 new releases a year when annual releases had previously been the norm. This approach was much more responsive to customer needs, and in a business that depends on recurring revenue, it led to increased customer retention, which improved to over 95 percent each year. Revenue growth rates went up double digits.

In 2015, Qualtrax took its biggest leap of faith, moving out of Foxguard headquarters and becoming a separate legal entity. Ankrum located the offices near the campus of Virginia Tech, allowing the company to attract top-notch developers. The new location also allowed the company to take on its own culture—it’s more like a start-up company now than it was 23 years ago when it started! Employees enjoy flexible hours, short walks to downtown lunches, and a brightly-lit, open, and collaborative space with the company values painted right on the walls.

The move to a separate entity also allowed the company to attract new investor funding which will be used to push the company into new markets, such as the utility industry. Much of the new investor group is local and made up of former executives with significant experience in Software-as-a-Service (SaaS) and Business-to-Business (B2B) relationships. These execs will offer expertise beyond what Qualtrax had in-house, and all involved share the objective of increasing job growth in the region.

Asked what was different before and after Qualtrax began its rapid growth, Ankrum said, “It takes focus for any business to reach its full potential.” Since becoming its own company, Qualtrax has certainly enhanced that focus, and the new funding will allow them to offer ownership options to its now 26 employees. Qualtrax now dominates in quality and compliance software for a number of industries, including forensic crime labs. Thanks to the foresight of management, the company’s best days most certainly lie ahead.

Why Some Businesses Fail and Where to Get Help

Why do some businesses fail.

If you’ve paid attention to the occupancy of shopping malls over a few years, you’ve noticed that retailers come and go with surprising frequency. The same thing happens with restaurants—indeed, with all kinds of businesses. By definition, starting a business—small or large—is risky, and though many businesses succeed, a large proportion of them don’t. One-third of small businesses that have employees go out of business within the first two years. As shown in figure 7.20, nearly half of small businesses have closed by the end of their fifth year, and 60-70 percent do not make it past their eighth year. [34]

As bad as these statistics on business survival are, some industries are worse than others. If you want to stay in business for a long time, you might want to avoid some of these risky industries. Even though your friends think you make the best pizza in the world, this doesn’t mean you can succeed as a pizza parlor owner. Opening a restaurant or a bar is one of the riskiest ventures (and, therefore, start-up funding is hard to get).

You might also want to avoid the transportation industry. Owning a taxi might appear lucrative until you find out what a taxi license costs. It obviously varies by city, but in New York City the price tag is upward of $400,000. No wonder taxi companies are resisting Uber and Lyft with all the energy they can muster. And setting up a shop to sell clothing can be challenging. Your view of “what’s in” may be off, and one bad season can kill your business. The same is true for stores selling communication devices: every mall has one or more cell phone stores so the competition is steep, and business can be very slow. [35]

Businesses fail for any number of reasons, but many experts agree that the vast majority of failures result from some combination of the following problems:

• Bad business idea . Like any idea, a business idea can be flawed, either in the conception or in the execution.
• Cash problems . Too many new businesses are underfunded. The owner borrows enough money to set up the business but doesn’t have enough extra cash to operate during the start-up phase, when very little money is coming in but a lot is going out.
• Managerial inexperience or incompetence . Many new business owners have no experience in running a business; many have limited management skills. Knowing how to make or market a product doesn’t necessarily mean knowing how to manage people or retain talented employees.
• Lack of customer focus . A major advantage of a small business is the ability to provide special attention to customers. But some small businesses fail to seize this advantage. Perhaps the owner doesn’t anticipate customers’ needs or keep up with changing markets or the customer-focused practices of competitors.
• Inability to handle growth . Growing sales is usually a good thing, but sometimes it can be a major problem. When a company grows, the owner’s role changes. He or she needs to delegate work to others and build a business structure that can handle the increase in volume. Some owners don’t make the transition and find themselves overwhelmed. In such cases, expansion actually damages the company.
• Failure to adapt . The external environment for a company can change dramatically. Companies that fail to keep up will not be around for long.

Help from the Small Business Administration

If you had your choice, which cupcake would you pick—vanilla Oreo, triple chocolate, or latte? In the last few years, cupcake shops are popping up in almost every city. Perhaps the bad economy has put people in the mood for small, relatively inexpensive treats.

Whatever the reason, you’re fascinated with the idea of starting a cupcake shop. You have a perfect location, have decided what equipment you need, and have tested dozens of recipes (and eaten lots of cupcakes). You are set to go with one giant exception: you don’t have enough savings to cover your start-up costs. You have made the round of most local banks, but they are all unwilling to give you a loan. So what do you do? Fortunately, there is help available. It is through your local Small Business Administration (SBA), which offers an array of programs to help current and prospective small business owners. The SBA won’t actually loan you the money, but it will increase the likelihood that you will get funding from a local bank by guaranteeing the loan.

Here’s how the SBA’s loan guarantee program works: You apply to a bank for financing. A loan officer decides if the bank will loan you the money without an SBA guarantee. If the answer is no (because of some weakness in your application), the bank then decides if it will loan you the money if the SBA guarantees the loan. If the bank decides to do this, you get the money and make payments on the loan. If you default on the loan, the government reimburses the bank for its loss, up to the amount of the SBA guarantee.

In the process of talking with someone at the SBA, you will discover other programs it offers that will help you start your business and manage your organization. For example, to apply for funding you will need a well-written business plan. Once you get the loan and move to the business start-up phase, you will have lots of questions that need to be answered. And you are sure you will need help in a number of areas as you operate your cupcake shop. Fortunately, the SBA can help with all of these management and technical-service tasks.

This assistance is available through a number of channels, including the SBA’s extensive website, online courses, and training programs. A full array of individualized services is also available. The Small Business Development Center (SBDC) assists current and prospective small business owners with business problems and provides free training and technical information on all aspects of small business management.

These services are available at approximately 1,000 locations around the country, many housed at colleges and universities. [36]

If you need individualized advice from experienced executives, you can get it through the Service Corps of Retired Executives (SCORE). Under the SCORE program, a businessperson needing advice is matched with someone on a team of retired executives who work as volunteers. Together, the SBDC and SCORE help more than a million small businesspersons every year. [37]

Chapter Video:

Corporate innovation and technology—solving customer challenges.

Key Takeaways

• Being entrepreneurial means you engage in a proactive process of overcoming constraints to create value in new ways usually in the form of a business
• Entrepreneurs can be single founders or co-founders that are part of a founding team
• Entrepreneurship tends to happen most in the startup phase of the organization’s lifecycle and later during the rebirth stage when there is uncertainty present
• Uncertainty is one kind of knowledge problem that happens when you cannot know what action is likely to lead to a desired outcome as opposed to Risk which can be given a probability
• Complexity is another knowledge problem entrepreneurs experience because of the number of variables that make up a problem and the number of interactions between those variables that could influence outcomes.
• Ambiguity occurs when there isn’t clarity for the entrepreneur around what is important or even what might happen.
• A related knowledge problem is e quivocality which occurs when there are multiple meanings or interpretations of what is important and what is possible that the entrepreneur must choose to pursue.
• All these knowledge problems surface as the entrepreneur seeks to create value for a group of customers
• There are different kinds of businesses that entrepreneurs start that vary in how they are funded (bootstrapping versus, debt financing, versus external investment), their goals (fiduciary responsibility, social and environmental responsibility, and lifestyle for founders), and the context or industry (health, digital, or corporate entrepreneurship) in which it happens.
• There are two main types of external investors. Angel investors invest their own money and venture Capital invests other people’s money and expects high returns
• An entrepreneurial ecosystem refers to a community or network of people, spaces, and available resources that interact around the creation of new ventures.
• Coworking spaces are open areas where entrepreneurs and business professionals can work out of that can be free or accessible through paying for a membership to get access.
• Incubators are offices that share common areas and support services that are rented out below the market rate to particular startup companies.
• Accelerators are investment programs that provide money, space, services, and some sort of training or mentoring to startups selected to participate in their program usually in exchange for equity and access to more investors on demo day.
• The process of starting a business requires the entrepreneur to reduce uncertainty around the customer and their problems in order to generate a solution that is unique and desirable that can be produced and sold in a sustainable and profitable system. This may require building a prototype, figuring out your customer acquisition cost (CAC), and understanding how much the lifetime value of a customer (LTV) is and how to find the right talent to create, capture and deliver value.

Figure 7.1: Entrepreneurial boundaries. Kindred Grey. 2022. CC BY 4.0 . https://archive.org/details/7.1_20220804 .

Figure 7.2: Facebook founder Mark Zuckerberg. Anthony Quintano. 2018. CC BY 2.0 . https://commons.wikimedia.org/wiki/File:Mark_Zuckerberg_F8_2018_Keynote.jpg .

Figure 7.3: Collaborative teams yield the best results! Mario Gogh. 2018. Unsplash license . https://unsplash.com/photos/VBLHICVh-lI .

Figure 7.4: The organization life cycle. Kindred Grey. 2022. CC BY 4.0 . https://archive.org/details/7.3_20220804 .

Figure 7.5: Value creation. Kindred Grey. 2022. CC BY 4.0 . https://archive.org/details/7.4-value-creation .

Figure 7.6: When entrepreneurship happens with the organization’s lifecycle. Kindred Grey. 2022. CC BY 4.0 . https://archive.org/details/7.5_20220804 .

Figure 7.8: Glenn Feit, of grand prize winner QuickTech, pitches the team’s product. Used with permission of Virginia Tech.

Figure 7.9: Different entrepreneurial journeys. Kindred Grey. 2022. CC BY 4.0 . Includes photo by Romain Virtuel from Unsplash ( Unsplash license ), photo by Good Faces from Unsplash ( Unsplash license ), photo by Mikelya Fournier from Unsplash ( Unsplash license ), photo by Rock Staar from Unsplash ( Unsplash license ), and photo by Laura Chouette from Unsplash ( Unsplash license ). https://archive.org/details/7.7_20220804 .

Figure 7.10: Establish partnerships that allow you to scale. Cytonn Photography. 2018. Unsplash license . https://unsplash.com/photos/n95VMLxqM2I .

Figure 7.11: Different types of funding for viral pathways. Village Capital’s VIRAL Pathway. © Village Capital. 2017. Used under fair use. https://medium.com/village-capital/entrepreneurs-and-vcs-need-to-be-more-precise-in-the-way-they-talk-to-each-other-3e714e7a5245

Figure 7.12: Small business job gains and losses, 2000-2021 (in millions of jobs). Data from https://www.bls.gov/bdm/bdmfirmsize.htm#SIZE1 .

Figure 7.13: Amazon annual revenue growth (2009-2021). Kindred Grey. 2022. CC BY 4.0 . Includes Amazon logo from WikimediaCommons (public domain). Data from https://www.macrotrends.net/stocks/charts/AMZN/amazon/revenue . https://archive.org/details/7.3_20220804_202208 .

Figure 7.14: Percent of all businesses owned by women and minorities. Data from https://www.census.gov/library/publications/2007/econ/2007-sbo-business-owners.html (2007) and https://www.census.gov/newsroom/press-releases/2021/annual-business-survey.html#:~:text=According%20to%20the%202019%20Annual,businesses%20were%20owned%20by%20women (2018).

Figure 7.15: Number of small business establishments by industry, 2019. Kindred Grey. 2022. CC BY 4.0 . Data from https://www.census.gov/data/tables/2019/econ/susb/2019-susb-annual.html . https://archive.org/details/7.5_20220804_202208 .

Figure 7.16: The original Starbucks store in Seattle, Washington. Backupboy. 2011. CC BY-SA 3.0 . https://commons.wikimedia.org/wiki/File:1st_Starbucks_Seattle.jpeg .

Figure 7.18: The growth of franchising in the U.S. Kindred Grey. 2020. CC BY 4.0 . Data from https://www.statista.com/statistics/190318/economic-output-of-the-us-franchise-sector/ and https://www.statista.com/statistics/190318/economic-output-of-the-us-franchise-sector/ . https://archive.org/details/7.18_20220809 .

Figure 7.19: Amy Ankrum at the Qualtrax headquarters in Blacksburg, Virginia. Stephen Skripak. 2017. CC BY NC SA 4.0 .

Figure 7.20: Long term survival rate of businesses in the U.S. (2009-2021). Kindred Grey. 2022. CC BY 4.0 . Data from Table 7 under “Total Private” https://www.bls.gov/bdm/bdmage.htm#Total . https://archive.org/details/7.10_20220804 .

Figure 7.21: Your new cupcake shop. Meghan Rodgers. 2019. Unsplash license . https://unsplash.com/photos/QpeoWEazLlM .

Video 1: Corporate innovation and technology—solving customer challenges. OpenStax. 2019. CC BY 4.0 . https://www.youtube.com/watch?v=kMt4wqZfgmU .

• Adapted from Marc J. Dollinger (2003). Entrepreneurship: Strategies and Resources, 3rd ed. Upper Saddle River, NJ: Prentice Hall. pp. 5–7.  ↵
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• Jessica Bruder (2010). “The Rise Of The Serial Entrepreneur.” Forbes. Retrieved from: http://www.forbes.com/2010/08/12/serial-entrepreneur-start-up-business-forbes-woman-entrepreneurs-management.html ↵
• Ibid. ↵
• U.S. Small Business Administration (2016). “Is Entrepreneurship For You?” Retrieved from: https://www.sba.gov/starting-business/how-start-business/entrepreneurship-you ↵
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• Townsend, D. M., Hunt, R. A., McMullen, J. S., & Sarasvathy, S. D. (2018). Uncertainty, knowledge problems, and entrepreneurial action. Academy of Management Annals, 12(2), 659-687. ↵
• Töytäri, P., & Rajala, R. (2015). Value-based selling: An organizational capability perspective. Industrial Marketing Management, 45, 101-112. ↵
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• Brian Headd (2010).  An Analysis of Small Business and Jobs . U.S. Small Business Administration, Office of Advocacy. Retrieved from: https://www.sba.gov/sites/default/files/files/an analysis of small business and jobs(1).pdf ↵
• Anthony Breitzman and Diana Hicks (2008). “An Analysis of Small Business Patents by Industry and Firm Size.” Faculty Scholarship for the College of Science & Mathematics. Retrieved from: https://rdw.rowan.edu/csm_facpub/12 ↵
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• Yahoo.com (2016). “Amazon.com Income Statement.” Finance.yahoo.com. Retrieved from: http://finance.yahoo.com/q/is?s=AMZN Income Statement&annual ↵
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• Central Intelligence Agency (2016). “World Factbook.” Retrieved from: https://www.cia.gov/library/publications/the-world-factbook/fields/2012.html ↵
• Ecoscraps (2016). “Our Story." Retrieved from: http://ecoscraps.com/pages/our-story ↵
• Isabel Isidro (2003). “How to Succeed Online with a Niche Business: Case of RedWagons.com.” PowerHomeBiz.com. Retrieved from: http://www.powerhomebiz.com/online-business/success-online-business/succeed-online-niche-business-case-redwagons-com.htm ↵
• Isabel Isidro (2001). “Geese Police: A Real-Life Home Business Success Story.” PowerHomeBiz.com. Retrieved from: http://www.powerhomebiz.com/working-from-home/success/geese-police-real-life-home-business-success-story.htm ↵
• Illinois Small Business Development Center at SIU (2016). “What are the Pros and Cons of Owning a Business?” Retrieved from: http://sbdc.siu.edu/frequently-asked-questions/index.html ↵
• Janean Chun (1997). “Type E Personality: What makes entrepreneurs tick?” Entrepreneur. Retrieved from: https://www.entrepreneur.com/article/13764 ↵
• Kathleen Allen (2001). “Getting Started in Entrepreneurship” in Entrepreneurship for Dummies . New York: Wiley. p. 46. ↵
• Scott Thurm and Joann S. Lublin (2005). “Peter Drucker’s Legacy Includes Simple Advice: It’s All about the People.” Wall Street Journal. Retrieved from: http://www.wsj.com/articles/SB113192826302796041 ↵
• Peter Krass (1997). “Sam Walton: Running a Successful Business: Ten Rules that Worked for Me” in The Book of Business Wisdom: Classic Writings by the Legends of Commerce and Industry . New York: Wiley. pp. 225-230. ↵
• Howard Schultz and Dori Jones Yang (1997). Pour Your Heart into It . New York: Hyperion. pp. 24–109. ↵
• Christopher Steiner (2010). “Meet the Fastest Growing Company Ever.” Forbes. Retrieved from: http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html ↵
• The Week (2011). “Groupon's 'Startling' Reversal of Fortune.” Yahoo.com. Retrieved from: https://www.yahoo.com/news/groupons-startling-reversal-fortune-172800802.html ↵
• U.S. Census Bureau (2008). “2007 Economic Census: Franchise Statistics.” Retrieved from: https://www.census.gov/econ/census/pdf/franchise_flyer.pdf ↵
• Hayley Peterson (2014). “Here's How Much It Costs To Open Different Fast Food Franchises In The US.” Business Insider. Retrieved from: http://www.businessinsider.com/cost-of-fast-food-franchise-2014-11 ↵
• Michael Seid and Kay Marie Ainsley (2002). “Franchise Fee—Made Simple.” Entrepreneur. Retrieved from: https://www.entrepreneur.com/article/51174 ↵
• Stephen Skripak (2017, February 22). Interview with Amy Ankrum. ↵
• U.S. Bureau of Labor Statistics (n.d.). Table 7: Survival of private sector establishments by opening year. Retrieved from: https://www.bls.gov/bdm/bdmage.htm#Total ↵
• Maureen Farrell (2007). “Risky Business: 44% of Small Firms Reach Year 4.” Forbes. Retrieved from: http://www.msnbc.msn.com/id/16872553/ns/business-forbes_com/t/risky-business-small-firms-reach-year/#.Tl_xVY7CclA ↵
• U.S. Small Business Administration (2016). “Office of Small Business Development Centers: Entrepreneurial Development Services.” Retrieved from: https://www.sba.gov/tools/local-assistance/districtoffices ↵
• U.S. Small Business Administration (2016). “SCORE.—Counselors to America’s Small Businesses.” Retrieved from: https://www.score.org/ ↵

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Chapter 5 – Business Planning

Business planning is an important precursor to action in new ventures. By helping firm founders to make decisions, to balance resource supply and demand, and to turn abstract goals into concrete operational steps, business planning reduces the likelihood of venture disbanding and accelerates product development and venture organizing activity. – Delmar and Shane (2003, p. 1165) We always plan too much and always think too little. We resent a call to thinking and hate unfamiliar argument that does not tally with what we already believe or would like to believe. – Joseph Schumpeter Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window. – Peter Drucker

Learning Objectives

After completing this chapter you will be able to

• Describe the purposes of business planning
• Describe common business planning principles
• List and explain the elements of the business plan development process outlined in this book
• Explain the purposes of each of the elements of the business plan development process outlined in this book
• Explain how applying the business plan development process outlined in this book can aid in developing a business plan that will meet entrepreneurs’ goals
• Describe general business planning guidelines and format

This chapter describes the purposes of business planning, the general concepts related to business planning, and guidelines and a format for a comprehensive business plan.

Business Planning Purposes

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. The most common external purpose for a business plan is to raise capital.

Internal Purposes

• defines the vision for the company
• establishes the company’s strategy
• describes how the strategy will be implemented
• provides a framework for analysis of key issues
• provides a plan for the development of the business
• is a measurement and control tool
• helps the entrepreneur to be realistic and to put theories to the test

External Purposes

The business plan is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel. It also provides the most complete source of information for valuation of the business.

Business Planning Principles

Business plan communication principles.

As Hindle and Mainprize (2006) note, business plan writers must strive to communicate their expectations about the nature of an uncertain future. However, the liabilities of newness make communicating the expected future of new ventures difficult (more so than for existing businesses).  They outline five communications principles:

• Translation of your vision of the venture and how it will perform into a format compatible with the expectations of the readers
• you have identified and understood the key success factors and risks
• the projected market is large and you expect good market penetration
• you have a strategy for commercialization, profitability, and market domination
• you can establish and protect a proprietary and competitive position
• Anchoring key events in the plan with specific financial and quantitative values
• your major plan objectives are in the form of financial targets
• you have addressed the dual need for planning and flexibility
• you understand the hazards of neglecting linkages between certain events
• you understand the importance of quantitative values (rather than just chronological dates)
• Nothing lasts forever—things can change to impact the opportunity: tastes, preferences, technological innovation, competitive landscape
• the new combination upon which venture is built
• magnitude of the opportunity or market size
• market growth trends
• venture’s value from the market (% of market share proposed or market share value in dollars)
• Four key aspects describing context within which new venture is intended to function (internal and external environment)
• how the context will help or hinder the proposal
• how the context may change & affect the business & the range of flexibility or response that is built into the venture
• what management can or will do in the event the context turns unfavourable
• what management can do to affect the context in a positive way
• Brief and clear statement of how an idea actually becomes a business that creates value
• Who pays, how much, and how often?
• The activities the company must perform to produce its product, deliver it to its customers and earn revenue
• And be able to defend assertions that the venture is attractive and sustainable and has a competitive edge

Business Plan Credibility Principles

Business plan writers must strive to project credibility (Hindle & Mainprize, 2006), so t here must be a match between what the entrepreneurship team (resource seekers) needs and what the investors (resource providers) expect based on their criteria. A take it or leave it approach (i.e. financial forecasts set in concrete) by the entrepreneurship team has a high likelihood of failure in terms of securing resources. Hindle and Mainprize (2006) outline five principles to help entrepreneurs  project credibility:

• Without the right team, nothing else matters.
• What do they know?
• Who do they know?
• How well are they known?
• sub-strategies
• ad-hoc programs
• specific tactical action plans
• Claiming an insuperable lead or a proprietary market position is naïve.
• Anticipate several moves in advance
• View the future as a movie vs. snapshot
• Key assumptions related to market size, penetration rates, and timing issues of market context outlined in the business plan should link directly to the financial statements.
• Income and cash flow statements must be preceded by operational statements setting forth the primary planning assumptions about market sizes, sales, productivity, and basis for the revenue estimate.
• If the main purpose is to enact a harvest, then the business plan must create a value-adding deal structure to attract investors.
• Common things: viability, profit potential, downside risk, likely life-cycle time, potential areas for dispute or improvement

General Business Plan Guidelines

Many businesses must have a business plan to achieve their goals. The following are some basic guidelines for business plan development.

• A standard format helps the reader understand that the entrepreneur has thought everything through, and that the returns justify the risk.
• Binding the document ensures that readers can easily go through it without it falling apart.
• everything is completely integrated: the written part must say exactly the same thing as the financial part
• all financial statements are completely linked and valid (make sure all balance sheets validly balance)
• the document is well formatted (layout makes document easy to read and comprehend—including all diagrams, charts, statements, and other additions)
• everything is correct (there are NO spelling, grammar, sentence structure, referencing, or calculation errors)
• It is usually unnecessary—and even damaging—to state the same thing more than once. To avoid unnecessarily duplicating information, you should combine sections and reduce or eliminate duplication as much as possible.
• all the necessary information is included to enable readers to understand everything in your document
• For example, if your plan says something like “there is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units,” a reader is left completely confused. Does this mean there is a total shortage of 100,000 units, but competitors are filling this gap by producing 25,000 per year (in which case there will only be a shortage for four years)? Or, is there an annual shortage of 100,000 units with only 25,000 being produced each year, in which case the total shortage is very high and is growing each year? You must always provide the complete perspective by indicating the appropriate time frame, currency, size, or another measurement.
• if you use a percentage figure, you indicate to what it refers, otherwise the figure is completely useless to a reader.
• This can be solved by indicating up-front in the document the currency in which all values will be quoted. Another option is to indicate each time which currency is being used, and sometimes you might want to indicate the value in more than one currency. Of course, you will need to assess the exchange rate risk to which you will be exposed and describe this in your document.
• If a statement is included that presents something as a fact when this fact is not generally known, always indicate the source. Unsupported statements damage credibility
• Be specific. A business plan is simply not of value if it uses vague references to high demand, carefully set prices, and other weak phrasing. It must show hard numbers (properly referenced, of course), actual prices, and real data acquired through proper research. This is the only way to ensure your plan is considered credible.

Developing a High Power Business Plan

The business plan development process described next has been extensively tested with entrepreneurship students and has proven to provide the guidance entrepreneurs need to develop a business plan appropriate for their needs; a high power business plan .

The Stages of Development

There are six stages involved with developing a high power business plan . These stages can be compared to a process for hosting a dinner for a few friends. A host hoping to make a good impression with their anticipated guests might analyze the situation at multiple levels to collect data on new alternatives for healthy ingredients, what ingredients have the best prices and are most readily available at certain times of year, the new trends in party appetizers, what food allergies the expected guests might have, possible party themes to consider, and so on. This analysis is the  Essential Initial Research stage.

In the Business Model stage, the host might construct a menu of items to include with the meal along with a list of decorations to order, music to play, and costume themes to suggest to the guests. The mix of these kinds of elements chosen by the host will play a role in the success of the party.

The Initial Business Plan Draft stage is where the host rolls up his or her sleeves and begins to assemble make some of the food items, put up some of the decorations, send invitations, and generally get everything started for the party.

During this stage, the host will begin to realize that some plans are not feasible and that changes are needed. The required changes might be substantial, like the need to postpone the entire party and ultimately start over in a few months, or less drastic, like the need to change the menu when an invited guest indicates that they can’t eat food containing gluten. These changes are incorporated into the plan to make it realistic and feasible in the  Making the Business Plan Realistic stage.

Making A Plan to Appeal to Stakeholders stage involves further changes to the party plan to make it more appealing to both the invited guests and to make it a fun experience for the host. For example, the host might learn that some of the single guests would like to bring dates and others might need to be able to bring their children to be able to attend. The host might be able to accommodate those desires or needs in ways that will also make the party more fun for them—maybe by accepting some guests’ offers to bring food or games, or maybe even hiring a babysitter to entertain and look after the children.

The final stage— Finishing the Business Plan— involves the host putting all of the final touches in place for the party in preparation for the arrival of the guests.

Figure 5 – Business Plan Development Process (Illustration by Lee A. Swanson)

Essential Initial Research

A business plan writer should analyze the environment in which they anticipate operating at each of the s ocietal , i ndustry , m arket , and f irm  levels of analysis  (see pages 51–60). This stage of planning, the e ssential initial research , is a necessary first step to better understand the trends that will affect their business and the decisions they must make to lay the groundwork for, and to improve their potential for success.

In some cases, much of the  e ssential initial research should be included in the developing business plan as its own separate section to help build the case for readers that there is a market need for the business being considered and that it stands a good chance of being successful.

In other cases, a business plan will be stronger when the components of the e ssential initial research are distributed throughout the business plan as a way to provide support for the plans and strategies outlined in the business plan. For example, the industry or market part of the  e ssential initial research might outline the pricing strategies used by identified competitors and might be best placed in the pricing strategy part of the business plan to support the decision made to employ a particular pricing strategy.

Business Model

Inherent in any business plan is a description of the business model chosen by the entrepreneur as the one that they feel will best ensure success. Based upon their essential initial research of the setting in which they anticipate starting their business (their analysis from stage one) an entrepreneur should determine how each element of their business model—including their revenue streams, cost structure, customer segments, value propositions, key activities, key partners, and so on—might fit together to improve the potential success of their business venture (see Chapter 4 – Business Models ).

For some types of ventures, at this stage an entrepreneur might launch a lean start-up (see page 68) and grow their business by continually pivoting, or constantly adjusting their business model in response to the real-time signals they get from the markets’ reactions to their business operations. In many cases, however, an entrepreneur will require a business plan. In those cases, their initial business model will provide the basis for that plan.

Of course, throughout this and all of the rounds in this process, the entrepreneur should seek to continually gather information and adjust the plans in response to the new knowledge they gather. As shown in Figure 8 by its enclosure in the progressive research box, the business plan developer might need conduct further research before finishing the business model and moving on to the initial business plan draft.

Initial Business Plan Draft

The Business Plan Draft stage involves taking the knowledge and ideas developed during the first two stages and organizing them into a business plan format. An approach preferred by many is to create a full draft of the business plan with all of the sections, including the front part with the business description, vision, mission, values, value proposition statement, preliminary set of goals, and possibly even a table of contents and lists of tables and figures all set up using the software features enabling their automatic generation. Writing all of the operations, human resources, marketing, and financial plans as part of the first draft ensures that all of these parts can be appropriately and necessarily integrated. The business plan will tell the story of a planned business startup in two ways by using primarily words along with some charts and graphs in the operations, human resources, and marketing plans and in a second way through the financial plan. Both ways must tell the same story.

The feedback loop shown in Figure 8 demonstrates that the business developer may need to review the business model.  Additionally, as shown by its enclosure in the progressive research box, the business plan developer might need conduct further research before finishing the Initial Business Plan Draft stage and moving on to the Making Business Plan Realisticstage.

Making Business Plan Realistic

The first draft of a business plan will almost never be realistic. As the entrepreneur writes the plan, it will necessarily change as new information is gathered. Another factor that usually renders the first draft unrealistic is the difficulty in making certain that the written part—in the front part of the plan along with the operations, human resources, and marketing plans—tells the exact same story as the financial part does. This stage of work involves making the necessary adjustments to the plan to make it as realistic as possible.

The Making Business Plan Realistic stage has two possible feedback loops. The first goes back to the Initial Business Plan Draft stage in case the initial business plan needs to be significantly changed before it is possible to adjust it so that it is realistic. The second feedback loop circles back to the Business Model stage if the business developer need to rethink the business model. As shown in Figure 8 by its enclosure in the progressive research box, the business plan developer might need conduct further research before finishing the Making Business Plan Realistic stage and moving on to the Making Plan Appeal to Stakeholders stage.

Making Plan Appeal to Stakeholders and Desirable to the Entrepreneur

A business plan can be realistic without appealing to potential investors and other external stakeholders, like employees, suppliers, and needed business partners. It might also be realistic (and possibly appealing to stakeholders) without being desirable to the entrepreneur. During this stage the entrepreneur will keep the business plan realistic as they adjust plans to appeal to potential investors and to themselves.

If, for example, investors will be required to finance the business start, some adjustments might need to be relatively extensive to appeal to potential investors’ needs for an exit strategy from the business, to accommodate the rate of return they expect from their investments, and to convince them that the entrepreneur can accomplish all that is promised in the plan. In this case, and in others, the entrepreneur will also need to get what they want out of the business to make it worthwhile for them to start and run it. So, this stage of adjustments to the developing business plan might be fairly extensive, and they must be informed by a superior knowledge of what targeted investors need from a business proposal before they will invest. They also need to be informed by a clear set of goals that will make the venture worthwhile for the entrepreneur to pursue.

The caution with this stage is to balance the need to make realistic plans with the desire to meet the entrepreneur’s goals while avoiding becoming discouraged enough to drop the idea of pursuing the business idea. If an entrepreneur is convinced that the proposed venture will satisfy a valid market need, there is often a way to assemble the financing required to start and operate the business while also meeting the entrepreneur’s most important goals. To do so, however, might require significant changes to the business model.

One of the feedback loops shown in Figure 8 indicates that the business plan writer might need to adjust the draft business plan while ensuring that it is still realistic before it can be made appealing to the targeted stakeholders and desirable to the entrepreneur. The second feedback loop indicates that it might be necessary to go all the way back to the Business Model stage to re-establish the framework and plans needed to develop a realistic, appealing, and desirable business plan. Additionally, this stage’s enclosure in the progressive research box suggests that the business plan developer might need conduct further research.

Finishing the Business Plan

The final stage involves putting all of the important finishing touches on the business plan so that it will present well to potential investors and others. This involves making sure that the math and links between the written and financial parts are accurate. It also involves ensuring that all the needed corrections are made to the spelling, grammar, and formatting. The final set of goals should be written to appeal to the target readers and to reflect what the business plan says. An executive summary should be written and included as a final step.

General Business Plan Format

Include nice, catchy, professional, appropriate graphics to make it appealing for targeted readers

Executive summary

• Can be longer than normal executive summaries, up to three pages
• Write after remainder of plan is complete
• Includes information relevant to targeted readers as this is the place where they are most likely to form their first impressions of the business idea and decide whether they wish to read the rest of the plan

Table of Con t ents

List of tables.

Each table, figure, and appendix included in the plan must be referenced within the text of the plan so the relevance of each of these elements is clear.

List of Figures

Introduction.

• Describes the business concept
• Indicates the purpose of the plan
• Appeals to targeted readers

Business Idea

• May include description of history behind the idea and the evolution of the business concept if relevant
• Generally outlines what the owner intends for the venture to be
• Should inspire all members of the organization
• Should help stakeholders aspire to achieve greater things through the venture because of the general direction provided through the vision statement
• Should be very brief—a few sentences or a short paragraph
• Indicates what your organization does and why it exists—may describe the business strategy and philosophy
• Indicates the important values that will guide everything the business will do
• Outlines the personal commitments members of the organization must make, and what they should consider to be important
• Defines how people behave and interact with each other.
• Should help the reader understand the type of culture and operating environment this business intends to develop

Major Goals

• Describes the major organizational goals
• Specific, Measurable, Action-Oriented, Realistic, and Timely [SMART]
• Realistic, Understandable, Measurable, Believable, and Achievable [RUMBA]
• Perfectly aligns with everything in plan

Operating Environment

Trend analysis.

• Consider whether this is the right place for this analysis: it may be better positioned in, for example, the Financial Plan section to provide context to the analysis of the critical success factors, or in the Marketing Plan to help the reader understand the basis for the sales projections.

Industry Analysis

• Includes an analysis of the industry in which this business will operate
• consider whether this is the right place for this analysis: it may be better placed in, for example, the Marketing Plan to enhance the competitor analysis, or in the Financial Plan to provide context to the industry standard ratios in the Investment Analysis section

Operations Plan

• expressed as a set physical location
• expressed as a set of requirements and characteristics
• How large will your facility be and why must it be this size?
• How much will it cost to buy or lease your facility?
• What utility, parking, and other costs must you pay for this facility?
• What expansion plans must be factored into the facility requirements?
• What transportation and storage issues must be addressed by facility decisions?
• What zoning and other legal issues must you deal with?
• What will be the layout for your facility and how will this best accommodate customer and employee requirements?
• Given these constraints, what is your operating capacity (in terms of production, sales, etc.)?
• What is the workflow plan for your operation?
• What work will your company do and what work will you outsource?

Operations Timeline

• When will you make the preparations, such as registering the business name and purchasing equipment, to start the venture?
• When will you begin operations and make your first sales?
• When will other milestone events occur such as moving operations to a larger facility, offering a new product line, hiring new key employees, and beginning to sell products internationally?
• May include a graphical timeline showing when these milestone events have occurred and are expected to occur

Business Structure and other Set-up Elements

Somewhere in your business plan you must indicate what legal structure your venture will take. Your financial statements, risk management strategy, and other elements of your plan are affected by the type of legal structure you choose for your business:

• Sole Proprietorship
• Partnership
• Limited Partnership
• Corporation
• Cooperative

As part of your business set-up, you need to determine what kinds of control systems you should have in place, establish necessary relationships with suppliers and prior to your start-up, and generally deal with a list of issues like the following. Many of your decisions related to the following should be described somewhere in your business plan:

• Zoning, equipment prices, suppliers, etc.
• Lease terms, leasehold improvements, signage, pay deposits, etc.
• Getting business license, permits, etc.
• Setting up banking arrangements
• Setting up legal and accounting systems (or professionals)
• Ordering equipment, locks and keys, furniture, etc.
• Recruiting employees, set up payroll system, benefit programs, etc.
• Training employees
• Testing the products/services that will be offered
• Testing the systems for supply, sales, delivery, and other functions
• Deciding on graphics, logos, promotional methods, etc.
• Ordering business cards, letter head, etc.
• Setting up supplier agreements
• Buying inventory, insurance, etc.
• Revising business plan
• And many more things, including, when possible, attracting purchased orders in advance of start-up through personal selling (by the owner, a paid sales force, independent representatives, or by selling through brokers wholesalers, catalog houses, retailers), a promotional campaign, or other means
• What is required to start up your business, including the purchases and activities that must occur before you make your first sale?
• When identifying capital requirements for start-up, a distinction should be made between fixed capital requirements and working capital requirements.

Fixed Capital Requirements

• What fixed assets, including equipment and machinery, must be purchased so your venture can conduct its business?
• This section may include a start-up budget showing the machinery, equipment, furnishings, renovations, and other capital expenditures required prior to operations commencing.
• If relevant you might include information showing the financing required; fixed capital is usually financed using longer-term loans.

Working Capital Requirements

• What money is needed to operate the business (separately from the money needed to purchase fixed assets) including the money needed to purchase inventory and pay initial expenses?
• This section may include a start-up budget showing the cash required to purchase starting inventories, recruit employees, conduct market research, acquire licenses, hire lawyers, and other operating expenditures required prior to starting operations.
• If relevant you might include information showing the financing required … working capital is usually financed with operating loans, trade credit, credit card debt, or other forms of shorter-term loans.

Risk Management Strategies

• enterprise – liability exposure for things like when someone accuses your employees or products you sell of injuring them.
• financial – securing loans when needed and otherwise having the right amount of money when you need it
• operational – securing needed inventories, recruiting needed employees in tight labour markets, customers you counted on not purchasing product as you had anticipated, theft, arson, natural disasters like fires and floods, etc.
• avoid – choose to avoid doing something, outsource, etc.
• reduce – through training, assuming specific operational strategies, etc.
• transfer – insure against, outsource, etc.
• assume – self-insure, accept, etc.

Operating Processes

• What operating processes will you apply?
• How will you ensure your cash is managed effectively?
• How will you schedule your employees?
• How will you manage your inventories?
• If you will have a workforce, how will you manage them?
• How will you bill out your employee time?
• How will you schedule work on your contracts?
• How you will manufacture your product (process flow, job shop, etc.?)
• How will you maintain quality?
• How will you institute and manage effective financial monitoring and control systems that provide needed information in a timely manner?
• How will you manage expansion?
• May include planned layouts for facilities

Organizational Structure

• May include information on Advisory Boards or Board of Directors from which the company will seek advice or guidance or direction
• May include an organizational chart
• Can nicely lead into the Human Resources Plan

Human Resources Plan

• How do you describe your desired corporate culture?
• What are the key positions within your organization?
• How many employees will you have?
• What characteristics define your desired employees?
• What is your recruitment strategy? What processes will you apply to hire the employees you require?
• What is your leadership strategy and why have you chosen this approach?
• What performance appraisal and employee development methods will you use?
• What is your organizational structure and why is this the best way for your company to be organized?
• How will you pay each employee (wage, salary, commission, etc.)? How much will you pay each employee?
• What are your payroll costs, including benefits?
• What work will be outsourced and what work will be completed in-house?
• Have you shown and described an organizational chart?

Recruitment and Retention Strategies

• Includes how many employees are required at what times
• Estimates time required to recruit needed employees
• employment advertisements
• contracts with employment agency or search firms
• travel and accommodations for potential employees to come for interviews
• travel and accommodations for interviewers
• facility, food, lost time, and other interviewing costs
• relocation allowances for those hired including flights, moving companies, housing allowances, spousal employment assistance, etc.
• may include a schedule showing the costs of initial recruitment that then flows into your start-up expense schedules

Leadership and Management Strategies

• What is your leadership philosophy?
• Why is it the most appropriate leadership approach for this venture?
• What training is required because of existing rules and regulations?
• How will you ensure your employees are as capable as required?
• Health and safety (legislation, WHMIS, first aid, defibulators, etc.)
• Initial workplace orientation
• Financial systems
• Product features

Performance Appraisals

• How will you manage your performance appraisal systems?

Health and Safety

• Any legal requirements should be noted in this section (and also legal requirements for other issues that may be included in other parts of the plan)

Compensation

• Always completely justifies your planned employee compensation methods and amounts
• Always includes all components of the compensation (CPP, EI, holiday pay, etc.)
• Outlines how will you ensure both internal and external equity in your pay systems
• Describes any incentive-based pay or profit sharing systems planned
• May include a schedule here that shows the financial implications of your compensation strategy and supports the cash flow and income statements shown later

Key Personnel

• May include brief biographies of the key organizational people

Marketing Plan

• You must show evidence of having done proper research, both primary and secondary. If you make a statement of fact, you must back it up with properly referenced supporting evidence. If you indicate a claim is based on your own assumptions, you must back this up with a description as to how you came to the conclusion.
• It is a given that you must provide some assessment of the economic situation as it relates to your business. For example, you might conclude that the current economic crisis will reduce the potential to export your product and it may make it more difficult to acquire credit with which to operate your business. Of course, conclusions such as these should be matched with your assessment as to how your business will make the necessary adjustments to ensure it will thrive despite these challenges, or how it will take advantage of any opportunities your assessment uncovers.
• If you apply the Five Forces Model, do so in the way in which it was meant to be used to avoid significantly reducing its usefulness while also harming the viability of your industry analysis. This model is meant to be used to consider the entire industry—not a subcomponent of it (and it usually cannot be used to analyze a single organization).
• Your competitor analysis might fit within your assessment of the industry or it might be best as a section within your marketing plan. Usually a fairly detailed description of your competitors is required, including an analysis of their strengths and weaknesses. In some cases, your business may have direct and indirect competitors to consider. Be certain to maintain credibility by demonstrating that you fully understand the competitive environment.
• Assessments of the economic conditions and the state of the industry appear incomplete without accompanying appraisals outlining the strategies the organization can/should employ to take advantage of these economic and industry situations. So, depending upon how you have organized your work, it is usually important to couple your appraisal of the economic and industry conditions with accompanying strategies for your venture. This shows the reader that you not only understand the operating environment, but that you have figured out how best to operate your business within that situation.
• Have you done an effective analysis of your venture? (See the Organizational Analysis section below.)

Market Analysis

• Usually contains customer profiles, constructed through primary and secondary research, for each market targeted
• Contains detailed information on the major product benefits you will deliver to the markets targeted
• Describes the methodology used and the relevant results from the primary market research done
• If there was little primary research completed, justifies why it is acceptable to have done little of this kind of research and/or indicate what will be done and by when
• Includes a complete description of the secondary research conducted and the conclusions reached
• Define your target market in terms of identifiable entities sharing common characteristics. For example, it is not meaningful to indicate you are targeting Canadian universities. It is, however, useful to define your target market as Canadian university students between the ages of 18 and 25, or as information technology managers at Canadian universities, or as student leaders at Canadian universities. Your targeted customer should generally be able to make or significantly influence the buying decision.
• You must usually define your target market prior to describing your marketing mix, including your proposed product line. Sometimes the product descriptions in business plans seem to be at odds with the described target market characteristics. Ensure your defined target market aligns completely with your marketing mix (including product/service description, distribution channels, promotional methods, and pricing). For example, if the target market is defined as Canadian university students between the ages of 18 and 25, the product component of the marketing mix should clearly be something that appeals to this target market.
• Carefully choose how you will target potential customers. Should you target them based on their demographic characteristics, psychographic characteristics, or geographic location?
• You will need to access research to answer this question. Based on what you discover, you will need to figure out the optimum mix of pricing, distribution, promotions, and product decisions to best appeal to how your targeted customers make their buying decisions.

Competition

• However, this information might fit instead under the market analysis section.
• Describes all your direct competitors
• Describes all your indirect competitors
• If you can, includes a competitor positioning map to show where your product will be positioned relative to competitors’ products

Figure 6 – Competitor Positioning Map (Illustration by Lee A. Swanson)

• What distinguishes your business from that of your competitors in a way that will ensure your sales forecasts will be met?
• You must clearly communicate the answers to these questions in your business plan to attract the needed support for your business. One caution is that it may sound appealing to claim you will provide a superior service to the existing competitors, but the only meaningful judge of your success in this regard will be customers. Although it is possible some of your competitors might be complacent in their current way of doing things, it is very unlikely that all your competitors provide an inferior service to that which you will be able to provide.

Marketing Strategy

• Covers all aspects of the marketing mix including the promotional decisions you have made, product decisions, distribution decisions related to how you will deliver your product to the markets targeted, and pricing decisions
• Outlines how you plan to influence your targeted customers to buy from you (what is the optimum marketing mix, and why is this one better than the alternatives)

Organizational Analysis

• Leads in to your marketing strategy or is positioned elsewhere depending upon how your business plan is best structured
• If doing so, always ensure this analysis results in more than a simple list of internal strengths and weaknesses and external opportunities and threats. A SWOT analysis should always prove to the reader that there are organizational strategies in place to address each of the weaknesses and threats identified and to leverage each of the strengths and opportunities identified.
• An effective way to ensure an effective outcome to your SWOT Analysis is to apply a TOWS Matrix approach to develop strategies to take advantage of the identified strengths and opportunities while mitigating the weaknesses and threats. A TOWS Matrix evaluates each of the identified threats along with each of the weaknesses and then each of the strengths. It does the same with each of the identified opportunities. In this way strategies are developed by considering pairs of factors
• The TOWS Matrix is a framework with which to help you organize your thoughts into strategies. Most often you would not label a section of your business plan as a TOWS Matrix. This would not normally add value for the reader. Instead, you should describe the resultant strategies—perhaps while indicating how they were derived from your assessment of the strengths, weaknesses, opportunities, and threats. For example, you could indicate that certain strategies were developed by considering how internal strengths could be employed toward mitigating external threats faced by the business.

Product Strategy

• If your product or service is standardized, you will need to compete on the basis of something else – like a more appealing price, having a superior location, better branding, or improved service. If you can differentiate your product or service you might be able to compete on the basis of better quality, more features, appealing style, or something else. When describing your product, you should demonstrate that you understand this.

Pricing Strategy

• If you intend to accept payment by credit card (which is probably a necessity for most companies), you should be aware of the fee you are charged as a percentage of the value of each transaction. If you don’t account for this you risk overstating your actual revenues by perhaps one percent or more.
• Sales forecasts must be done on at least a monthly basis if you are using a projected cash flow statement. These must be accompanied by explanations designed to establish their credibility for readers of your business plan. Remember that many readers will initially assume that your planned time frames are too long, your revenues are overstated, and you have underestimated your expenses. Well crafted explanations for all of these numbers will help establish credibility.

Distribution Strategy

• If you plan to use e-commerce, you should include all the costs associated with maintaining a website and accepting payments over the Internet.

Promotions Strategy

• If you are attracting customers away from competitors, how will these rivals respond to the threat you pose to them?
• If you intend to create new customers, how will you convince them to reallocate their dollars toward your product or service (and away from other things they want to purchase)?
• In what ways will you communicate with your targeted customers? When will you communicate with them? What specific messages do you plan to convey to them? How much will this promotions plan cost?
• If your entry into the market will not be a threat to direct competitors, it is likely you must convince potential customers to spend their money with you rather than on what they had previously earmarked those dollars toward. In your business plan you must demonstrate an awareness of these issues.
• Consider listing the promotional methods in rows on a spreadsheet with the columns representing weeks or months over probably about 18 months from the time of your first promotional expenditure. This can end up being a schedule that feeds the costs into your projected cash flow statement and from there into your projected income statements.
• If you phone or visit newspapers, radio stations, or television stations seeking advertising costs, you must go only after you have figured out details like on which days you would like to advertise, at what times on those days, whether you want your print advertisements in color, and what size of print advertisements you want.
• Carefully consider which promotional methods you will use. While using a medium like television may initially sound appealing, it is very expensive unless your ad runs during the non-prime times. If you think this type of medium might work for you, do a serious cost-benefit analysis to be sure.
• Some promotional plans are developed around newspaper ads, promotional pamphlets, printing business cards, and other more obvious mediums of promotion. Be certain to, include the costs of advertising in telephone directories, sponsoring a little league soccer team, producing personalized pens and other promotional client give-always, donating items to charity auctions, printing and mailing client Christmas cards, and doing the many things businesses find they do on-the-fly. Many businesses find it to be useful to join the local chamber of commerce and relevant trade organizations with which to network. Some find that setting a booth up at a trade fair helps launch their business.
• If you are concerned you might have missed some of these promotional expenses, or if you want to have a buffer in place in case you feel some of these opportunities are worthwhile when they arise, you should add some discretionary money to your promotional budget. A problem some companies get into is planning out their promotions in advance only to reallocate some of their newspaper advertisement money, for example, toward some of these other surprise purposes resulting in less newspaper advertising than had been intended.

Financial Plan

• It is nearly certain you will need to make monthly cash flow projections from business inception to possibly three years out. Your projections will show the months in which the activities shown on your fixed capital and working capital schedules will occur. This is nearly the only way to clearly estimate your working capital needs and, specifically, important things like the times when you will need to draw on or can pay down your operating loans and the months when you will need to take out longer-term loans with which to purchase your fixed assets. Without a tool like this you will be severely handicapped when talking with bankers about your expected needs. They will want to know how large of a line of credit you will need and when you anticipate needing to borrow longer-term money. It is only through doing cash flow projections will you be able to answer these questions. This information is also needed to determine things like the changes to your required loan payments and when you can take owner draws or pay dividends.
• Your projected cash flows are also used to develop your projected income statements and balance sheets.

Pro forma Cash Flow Statements

Pro forma income statements, pro forma balance sheets, investment analysis, projected financial ratios and industry standard ratios, critical success factors (sensitivity analysis).

Entrepreneurship and Innovation Toolkit Copyright © 2017 by Lee A. Swanson is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License , except where otherwise noted.

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What Is Business Development?

• Understanding the Basics
• Areas of Development
• The Process
• Creating a Plan
• Skills Needed

The Bottom Line

• Small Business
• How to Start a Business

Business Development: Definition, Strategies, Steps & Skills

Why more and more companies worldwide are embracing this planning process

In the simplest terms, business development is a process aimed at growing a company and making it more successful. That can include seeking new business opportunities, building and sustaining connections with existing clients, entering strategic partnerships, and devising other plans to boost profits and market share.

Key Takeaways

• The overarching goal of business development is to make a company more successful.
• It can involve many objectives, such as sales growth, business expansion, the formation of strategic partnerships, and increased profitability.
• The business development process can impact every department within a company, including sales, marketing, manufacturing, human resources, accounting, finance, product development, and vendor management.
• Business development leaders and team members need a wide range of both soft and hard skills.

How Business Development Works Within an Organization

Business development, sometimes abbreviated as BD, strives to increase an organization's capabilities and reach in pursuit of its financial and other goals. In that way, it can impact—and also call upon the specialized skills of—a variety of departments throughout the organization.

As the financial services giant American Express puts it, "When it comes to organizational growth, business development acts as the thread that ties together all of a company's functions or departments, helping a business expand and improve its sales, revenues, product offerings, talent, customer service, and brand awareness."

For example:

Sales and Marketing

Sales personnel frequently focus on a particular market or a particular (set of) client(s), often for a targeted revenue number. A business development team might assess the Brazilian market, for example, and conclude that sales of $1.5 billion can be achieved there in three years. With that as their goal, the sales department targets the customer base in the new market with their sales strategies.

Business development often takes a longer-range perspective in setting goals than many sales departments have in the past. As the Society for Marketing Professional Services puts it, "A traditional view of sales is akin to hunting, but business development is more like farming: it's a longer-term investment of time and energy and not always a quick payoff."

Marketing , which oversees the promotion and advertising of the company's products and services, plays a complementary role to sales in achieving its targets.

A business development leader and their team can help set appropriate budgets based on the opportunities involved. Higher sales and marketing budgets allow for aggressive strategies like cold calling , personal visits, roadshows, and free sample distribution. Lower budgets tend to rely on more passive strategies, such as online, print, and social media ads, as well as billboard advertising.

Legal and Finance

To enter a new market, a business development team must decide whether it will be worth going solo by clearing all the required legal formalities or whether it might be more sensible to form a strategic alliance or partnership with firms already operating in that market. Assisted by legal and finance teams, the business development group weighs the pros and cons of the available options and selects the one that best serves the business.

Finance may also become involved in cost-cutting initiatives. Business development is not just about increasing market reach and sales, but improving the bottom line . An internal assessment revealing high spending on travel , for instance, may lead to travel policy changes, such as hosting video conference calls instead of on-site meetings or opting for less expensive transportation modes. The outsourcing of non-core work, such as billing, technology operations, or customer service, may also be part of the development plan.

Project Management/Business Planning

Does an international business expansion require a new facility in the new market, or will all the products be manufactured in the base country and then imported into the targeted market? Will the latter option require an additional facility in the base country? Such decisions are finalized by the business development team based on their cost- and time-related assessments. Then, the project management /implementation team can swing into action to work toward the desired goal.

Product Management and Manufacturing

Regulatory standards and market requirements can vary across regions and countries. A medicine of a certain composition may be allowed in India but not in the United Kingdom, for example. Does the new market require a customized—or altogether new—version of the product?

These requirements drive the work of product management and manufacturing departments, as determined by the business strategy. Cost considerations, legal approvals, and regulatory adherence are all assessed as a part of the development plan.

Vendor Management

Will the new business need external vendors ? For example, will the shipping of a product require a dedicated courier service? Will the company partner with an established retail chain for retail sales? What are the costs associated with these engagements? The business development team works through these questions with the appropriate internal departments.

10 Potential Areas for Business Development

As noted earlier, business development can require employees throughout an organization to work in tandem to facilitate information, strategically plan future actions, and make smart decisions. Here is a summary list of potential areas that business development may get involved in, depending on the organization.

• Market research and analysis: This information helps identify new market opportunities and develop effective strategies.
• Sales and lead generation: This involves prospecting, qualifying leads, and coordinating with the sales team to convert leads into customers.
• Strategic partnerships and alliances: This includes forming strategic alliances, joint ventures, or collaborations that create mutually beneficial opportunities.
• Product development and innovation: This involves conducting market research, gathering customer feedback, and collaborating with internal teams to drive innovation.
• Customer relationship management: This involves customer retention initiatives, loyalty programs, and gathering customer feedback to enhance customer satisfaction and drive repeat business.
• Strategic planning and business modeling: This includes identifying growth opportunities, setting targets, and implementing strategies to achieve sustainable growth.
• Mergers and acquisitions: This involves evaluating potential synergies, conducting due diligence , and negotiating and executing deals.
• Brand management and marketing: This includes creating effective marketing campaigns, managing online and offline channels, and leveraging digital marketing techniques.
• Financial analysis and funding: This includes exploring funding options, securing investments, or identifying grant opportunities.
• Innovation and emerging technologies: This involves assessing the potential impact of disruptive technologies and integrating them into the organization's growth strategies.

The Business Development Process in Six Steps

While the specific steps in the business development process will depend on the particular company, its needs and capabilities, its leadership, and its available capital, these are some of the more common ones:

Step 1: Market Research/Analysis

Begin by conducting comprehensive market research to gain insights into market trends, customer needs, and the competitive landscape. Analyze data and gather additional information to identify potential growth opportunities and understand the market dynamics.

Step 2: Establish Clear Goals and Objectives

Leveraging that research, define specific objectives and goals for business development efforts. These goals could include revenue targets, market expansion goals, customer acquisition targets, and product/service development objectives. Setting clear goals provides a focus for the business development process.

Step 3: Generate and Qualify Leads

Use various sources, such as industry databases, networking , referrals, or online platforms to generate a pool of potential leads. Identify individuals or companies that fit the target market criteria and have the potential to become customers. Then, evaluate and qualify leads based on predetermined criteria to determine their suitability and potential value.

Step 4: Build Relationships and Present Solutions

Initiate contact with qualified leads and establish relationships through effective communication and engagement. Utilize networking events, industry conferences, personalized emails, or social media interactions to build trust and credibility. As your relationship forms, develop and present tailored solutions that align with the client's needs. Demonstrate the value proposition of the organization's offerings and highlight key benefits and competitive advantages.

Step 5: Negotiate and Expand

Prepare and deliver proposals that outline the scope of work, pricing, deliverables, and timelines. Upon agreement, coordinate with legal and other relevant internal teams to ensure a smooth contract execution process.

Step 6: Continuously Evaluate

Continuously monitor and evaluate the effectiveness of business development efforts. Analyze performance metrics , gather feedback from clients and internal stakeholders, and identify areas for improvement. Regularly refine strategies and processes to adapt to market changes and optimize outcomes.

While it's common for startup companies to seek outside assistance in developing the business, as a company matures, it should aim to build its business development expertise internally.

How to Create a Business Development Plan

To effectively create and implement a business development plan, the team needs to set clear objectives and goals—ones that are specific, measurable, achievable, relevant, and time-bound (SMART). You can align these objectives with the overall business goals of the company.

Companies often analyze the current state of the organization by evaluating its strengths, weaknesses, opportunities, and threats through a SWOT analysis . That can make it easier to identify target markets and customer segments and define their unique value proposition.

A substantial component of a business development plan is the external-facing stages. It should lay out sales and marketing strategies to generate leads and convert them into customers. In addition, it may explore new potential strategic partnerships and alliances to expand your reach, access new markets, or enhance your offerings.

Teams should conduct a financial analysis and do resource planning to determine the resources required for implementing the plan. Once you implement, you should track progress against the key performance indicators (KPIs) you've chosen.

Skills Needed for Business Development Jobs

Business development is a fast-growing field across industries worldwide. It is also one that calls upon a wide range of hard and soft skill sets.

Leaders and other team members benefit from well-honed sales and negotiating skills in order to interact with clients, comprehend their needs, and sway their decisions. They have to be able to establish rapport, cope with challenges, and conclude transactions. They need to be able to communicate clearly, verbally and in writing, to both customers and internal stakeholders.

Business development specialists should have a thorough awareness of the market in which they operate. They should keep up with market dynamics, competition activity, and other industry developments. They should be able to see potential opportunities, make wise judgments, and adjust tactics as necessary. Because many of their decisions will be data-driven, they need good analytical skills.

Internally, business development practitioners need to be able to clarify priorities, establish reasonable deadlines, manage resources wisely, and monitor progress to guarantee timely completion.

Finally, people who work in business development should conduct themselves with the utmost morality and honesty. They must uphold confidentiality, act legally and ethically, and build trust with customers and other stakeholders.

Why Is Business Development Important?

In addition to its benefits to individual companies, business development is important for generating jobs, developing key industries, and keeping the economy moving forward.

What Are the Most Important Skills for Business Development Executives?

Development executives need to have leadership skills, vision, drive, and a willingness to work with a variety of people to get to a common goal.

How Can I Be Successful in Business Development?

Having a vision and putting together a good team are among the factors that help predict success in business development. A successful developer also knows how to write a good business plan, which becomes the blueprint to build from.

What, in Brief, Should a Business Development Plan Include?

A business development plan, or business plan , should describe the organization's objectives and how it intends to achieve them, including financial goals, expected costs, and targeted milestones.

Business development provides a way for companies to rise above their day-to-day challenges and set a course for a successful future. More and more companies, across many different types of industries, are coming to recognize its value and importance.

American Express. " Business Development and Its Importance ."

Society for Marketing Professional Services. " What Is Business Development? "

World Economic Forum. " The Future of Jobs Report 2020 ," Page 30.

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• Business Development: Definition, Strategies, Steps & Skills 6 of 25
• Business Plan: What It Is, What's Included, and How to Write One 7 of 25
• Small Business Development Center (SBDC): Meaning, Types, Impact 8 of 25
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• Business Startup Costs: It’s in the Details 10 of 25
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• Bootstrapping Definition, Strategies, and Pros/Cons 12 of 25
• Crowdfunding: What It Is, How It Works, and Popular Websites 13 of 25
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Book: Business Plan Development Guide (Swanson)

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• Page ID 21267

• Lee A. Swanson
• University of Saskatchewan

This textbook and its accompanying spreadsheet templates were designed with and for students wanting a practical and easy-to-follow guide for developing a business plan. It follows a unique format that both explains what to do and demonstrates how to do it.

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23 Formulation of Business Plans

Monica Bansal

    1.  Learning Outcome:

After completing this module the students will be able to:

• Understand the procedure of Formulation of a Business Plan.
• To have the knowledge about advantages of Creating a Business Plan.
• Describe the Nature and Scope of Business Plan.
• Clear Understanding of the Features of a Successful Business Plan.
• To know about the Procedure to Write a Business Plan
• Knowledge about the Various Elements of a Business Plan
• Understand how to Implement a Business Plan by the Entrepreneur

   2. Introduction

A business plan refers to a formal statement of plans of an enterprise. It explains business goals of the enterprise and means to achieve those goals. It seeks to address the strengths, weaknesses, opportunities, and threats of starting a venture. The business plan differs from enterprise to enterprise depending on various factors, such as complexity in organizational structure, types of products and services, and demand for the product. However, the basic elements of a business plan remain the same. The business plan is often an integration of all the functional plans such as finance, marketing, manufacturing, and human resources. It helps the entrepreneur in both short term and long term decision making.

In the words of Tariq Siddique, “If you are failing to plan, you are planning to fail.” The definition explains the importance of a plan to succeed.

David Gumpert has defined a business plan as, “It’s a document that convincingly demonstrates that your business can sell enough of its product or services to make a satisfactory profit and to be attractive to potential backers.” In the view of Gumpert, a business plan is essentially a selling document that convinces the key investors that the venture has a real potential to be successful.

The advantages of creating a business plan are as follows:

• Encourages individuals to take into consideration all the aspects of business .
• Helps in obtaining the opinion of trusted and experienced external advisors on initial plans. It helps to identify the weaknesses, missed opportunities, and unsupportable assumptions, which further help in improving the prospects, reducing the probability of rejections, and chances of operational failure.
• Helps in formulating a proposed budget, as it involves proper financial forecasting. This further helps in matching the results with projections and inducing corrective measures on time.
• Forms an important document for creditors and investors, as they would always refer the business plan before investing. An investor looks into the following 5Cs of an entrepreneurial venture while evaluating the business plan:
• Capital: Refers to the amount of money invested in the business by the entrepreneur
• Capacity: States whether the financial budget is realistic and sufficient
• Collateral: Refers to the security provided by the entrepreneurs
• Character: Refers to the trustworthiness of the entrepreneur
• Conditions: Signifies whether the environment is conducive for the purposed business.
• Helps in obtaining statutory permissions/approvals for starting a business.

    Thus, it is essential for an entrepreneur to create a realistic business plan. The business plan should ideally be prepared by the entrepreneur. However, he/she may consult advisors, such as lawyers, accountants, marketing consultants, and engineers, to prepare an accurate plan.

3.  Nature and Scope of Business Plan

A well-prepared business plan helps in gaining the trust of suppliers and various other parties and securing favorable credit terms. It states the vision, future plans of the enterprise, and products and services offered by it. This helps investors and lenders to take interest in the enterprise as both of them use the business plan to understand the new venture and relate it with the current market opportunities. Mark Steven, an advisor to small businesses aptly expressed the importance of the business plan in dealing with investors. In his words, “If you are inclined to view the business plan as just another piece of useless paperwork, it’s time for an attitude change. When you are starting out, investors will justifiably want to know a lot about you and  your qualification for running a business and will want to see a step-by-step plan for how you intend to make it success .”

However, the business plan is not a legal document for raising the required capital. When it comes to a solicit investment, a memorandum is also needed. An entrepreneur uses the business plan to create interest of investors in the enterprise and then follow up with a formal offering of memorandum to investors, who are willing to invest in the enterprise. Furthermore, it helps in communicating the entrepreneur’s vision to current and prospective employees of the enterprise. Thus, a business plan is used by both the insiders and outsiders, as shown in the following Figure:

Figure: Users of a Business Plan

Features of a Successful Business Plan

• Containing an executive summary, a table of contents, and chapters in the right order
• Exhibiting the right appearance and the right length-not too long and too short, not too fancy and too plain
• Providing a clear idea of what the founders and the enterprise expect to accomplish in the future
• Explaining the benefits of products and services to be given to customers
• Presenting hard evidence of the marketability of products or services
• Justifying the means that is selected to sell products or services
• Explaining and justifying the level of product development
• Providing the details of the manufacturing process and associated costs
• Portraying the partners as a team of experienced managers with complementary business skills
• Stating clearly how the entrepreneurs’ products are better than that of its competitors
• Mentioning the superiority of the team members
• Containing realistic financial projections
• Providing a well-organized oral presentation

    4.  Writing a Business Plan

Creating a business plan is the first step of the planning process of an enterprise. An enterprise needs to conduct lot of research to develop an effective business plan. Figure shows the essentials of an effective business plan:

Figure: Elements of a Business Plan

The elements of an effective business plan (as shown in Figure) are explained in the next sections:

The title page of a business plan includes the name of the business, date, and the name, address, and contact number of the entrepreneur or the concerned person. The cover page can be simple or complex depending upon the choice of the entrepreneur.

• Table of Contents

The structure of the table of contents may vary from one enterprise to another depending upon the scale and nature of business operation. An entrepreneur generally prepares the table of  content after adding all the features of the business plan. The table of content consists of main headings and sub-headings with related page numbers.

• Executive Summary

The executive summary is a brief summary of the entire plan, highlighting all important aspects of the plan in a concise and appealing manner. It contains basic information, such as the name of an enterprise and its location, nature of business, types of product or services, and financial requirements. The executive summary may also contain important points or news about the enterprise, which attract investors, suppliers, and other target audience. It is the most critical section from readers’ point of view because people generally go through this to decide whether to read other sections. The executive summary should not exceed 3-4 pages and should be short and comprehendible. It should provide the technical, marketing, managerial, and financial details of the venture.

• Description of the Business

The business description presents the details of the business opportunity and the strategy to capture that opportunity. It contains a detail description of enterprise’s background, country of origin, strengths of employees, stakeholders, products, and portfolio. The description of the enterprise comprises the historical background and current status of the enterprise as well as details about its products and services.

Different components of strategic management, such as enterprise’s vision, mission, profile, and external environmental objectives, need to be considered before creating a business plan. A comprehensive study of these components helps in designing effective plans for the future of the enterprise. A process of building these components in a systematic manner is called strategic intent.

Concept of Strategic Intent

Strategic intent is a process that helps the management team to set priorities, make decisions, and achieve the goals of the enterprise. These priorities, decisions, and goals are integrated to form the vision and mission statements of the enterprise. Following figure shows the process of strategic intent in an enterprise:

Figure: Strategic Intent

The importance of vision and mission statement is drawn in the following points:

• Infuses a common purpose throughout the enterprise. This statement helps in providing the direction of enterprise’s goal to managers and employees.
• Enables superiors to delegate authority to subordinates and ensure whether the targets are fulfilled.

    Product description involves information about the products or services offered by the enterprise. It helps customers to understand whether the product or service is as per their expectations. Important points to be included in product description are as follows:

• Product Specification: Includes characteristics of the product related to a particular industry. For example, if a product relates to the manufacturing industry, it should be contain the ISO trademark. The product specification includes information about patents, copyrights, and trademarks owned by the enterprise.
• Production Process: Includes information about the type of products manufactured by the enterprise. It also involves information related to inputs used to get the required output.
• Unique Selling Proposition (USP): Refers to the competitive advantage or uniqueness of a product that would help in attracting customers.
• Quality Assurance: Refers to the process of inspecting the quality of the product through various quality management system standards, such as ISI marks, ISO 9000:2000, Agmark, and Hallmark.
• Market Plan

A market plan describes how the product or service would be distributed, priced, and promoted. It involves the analysis the current market conditions and trends. The market plan involves critical marketing decision strategies and sales forecasting. Potential investors view the marketing plan as critical to the success of the new venture. Thus, the market plan should be comprehensive and detailed as much as possible, so that investors can clearly understand the goals of the enterprise and the strategies to be implemented to achieve these goals effectively. Marketing planning is an ongoing requirement for the entrepreneur, which serves as a road map for short-term decision making.

• Equipment and Material Description

An entrepreneur needs to provide a clear description of the equipment and materials required to carry on the operations of the enterprise. Equipment and materials include plant, machinery, and raw materials that act as inputs to produce the output (product). They form the most expensive purchases of an enterprise. An entrepreneur makes an advance payment to get customized some parts of the machinery as per his/her requirements. He/she should aim to achieve cost minimization and timely delivery of the materials while purchasing the materials and equipment. An entrepreneur should have good bargaining skills to get customized machinery at optimal cost.

• Operations Plan

An operations plan involves actions that need to be taken to make the efficient use of resources and processes. It includes information about the following:

• Capacity Planning: Determines the maximum amount of work that an enterprise can do in a given period of time. Generally, enterprises forecast the capacity utilization over the years and make targets to attain the final capacity utilization level. For instance, if an enterprise’s current capacity is 40% within one year and it aims to attain 60% of the capacity, then it needs to perform proper capacity planning and make judicious use of resources.
• Personnel: Refers to the human capital of an organization. The success or failure of an enterprise depends on the efficiency of its human resource. Therefore, the enterprise strives to adopt efficient human resource management system, so that the growth and development of employee is possible.

Therefore, operations planning provide a map for resource and personnel planning.

• Management and Organizational Plan

Management and organizational plan provides information background, skills, abilities, and competencies of an entrepreneur or the management team. It also contains information regarding the form of ownership of the enterprise and its organizational structure. For example, if an enterprise is running in partnership, the details of its partners, their names, and designations must  be provided in the management and organizational plan. In addition, the management and organizational plan should also contain description about roles, responsibilities, and authorities of individuals in the enterprise. This can be explained easily with the help of a tool called organizational chart.

Management plan also includes human resource policy and its strategies, such as recruitment and selection policy, promotion and increment, retention policy incentives, or motivation. Thus, management and ownership forms the most essential part without which the process of planning in an organization cannot be implemented.

• Financial Plan

A financial plan constitutes an important component of the business plan. It provides financial information and startup timeline for the business. An entrepreneur needs to raise sufficient amount of capital for starting a business. Businesses require capital to purchase fixed assets, such as land and machines, and to meet day-to-day expenses. In case of small enterprises, funds can be raised through own savings; however, in case of large enterprises, funds have to be raised by public, commercial banks, and financial institutions. Therefore, the entrepreneur is required to generate financial forecasts to raise finances. These forecasts help in calculating the amount of funds and debt financing required to carry on the business. These further help in planning the potential return on investment.

The financial portion of a business plan must be examined closely by all the partners and investors. Thus, accurate financial projections attract investors, lenders, and serve as a guide to future business decisions.

The importance of financial planning is shown in the following points:

• Acts as an integral part of corporate planning for the business
• Ensures adequate funds from various sources for smooth conduct of business
• Attempts to achieve a balance between the inflow and outflow of funds
• Ensures adequate liquidity throughout the year
• Leads to minimization of waste of resources

    Financing any new venture can be done in the following two ways:

• Debt Financing: Refers to an interest bearing investment that needs collateral security, for example, loans
• Equity Financing: Offers investor’s ownership to the extent of size of investment and does not need collateral security, for example, shares

    Financial decisions are required with respect to the following:

• The amount of long-term capital required
• The cost of raising funds
• Determination of optimum capital structure
• The estimation of return on investment

    Thus, these decisions involve making financial forecasts that require projections for three to five years. These projections include:

• Income Statement: Refers to a profit and loss statement, which shows the cash management of the enterprise by subtracting expenses from receipts.
• Cash Flow Statement: Shows all cash receipts and expenses. Cash flow is crucial for the survival of any business.
• Balance Sheet: Shows assets, liabilities, and retained earnings. It indicates the value of the cash position and owner’s equity at a given point.
• Break-even Analysis: Shows the volume of revenue from sales that are needed to balance the fixed and variable expenses. It is a no loss-no profit point.
• Key Financial Assumptions: Includes assumptions about expected cash flow in an organization, market share, and rate of return. For example, an enterprise can assume that its product would be able to capture 40% of the market and then can make plans and decisions about the investment and marketing strategies.

Financial forecasts are mostly set up on yearly basis. The yearly plans are divided into quarterly or monthly plans. These projections and forecasts form an essential part of a financial portfolio; therefore, it is required to make sure that they are valid, realistic, and accurate.

• Contingency Plan

A contingency plan mentions all the anticipated risks associated with a business and ways to mitigate those risks. One of the most important characteristic of an entrepreneur is that they are risk takers. Risks are the most important part of the business. Ignorance of the risks may lead to a negative impact on the operations or profitability of business. Risks can arise from the following two types of factors:

• Internal Factors: Refers to the controllable factors of an organization. For example, if the manufacturing plants of an enterprise are not operating at optimum efficiency, then the enterprise can correct it by revamping the operational structure of plants. These factors can be identified and corrected easily.
• External Factors: Refers to the factors that are beyond the control of an enterprise and may affect its financial condition. For example, threat of new entrants in business and uncertainties, such as natural disasters.

Every entrepreneur should have the ability to identify the risks and have readymade solutions to avoid the risks. The various types of risks faced by an entrepreneur are as follows:

• Economy Risks: Refer to the risk associated with the economy in which business operates. For example, inflation and recession.
• Industry Risks: Refer to the risk associated with the industry in which business operates. For example, competition and change in government policies
• Internal Risks: Refer to the risk unique to the business and are controllable in nature. For example, lack of funds and managerial skills.

The different measures taken by enterprise to mitigate risks are as follows:

• Risk Avoidance: Implies avoiding the activities involving risk. For example, an entrepreneur avoids the liability that he/she feels may affect negatively in future, if he/she is unable to pay it back.
• Risk Reduction: Implies using various methods to reduce risks. It lessens the possibility of loss from occurring. For example, enterprises use fire extinguishers to reduce the risk of loss arising from fire .
• Risk Transfer: Implies transferring the risk to the other person or party. It can be done by the purchase of an insurance contract, which helps in transferring the risk. For example, marine insurance covers the loss of damage of ships, cargo, and any transport or property by which cargo is transferred.
• Risk Retention: Implies accepting the loss when it occurs. All types of risks that cannot be avoided or transferred are retained, by default. This includes risks that are so large that they cannot be insured. For example, emergence of a war can lead to loss of property, which has to be retained by individuals. In most of the cases, property is not insured against war .

Every business involves a certain amount of risk. Therefore, an entrepreneur should have the ability to identify the risks, evaluate the critical risks, and make realistic contingency plans.

5.  Implementing a Business Plan

After developing the business plan, the next important step is to execute it. An enterprise communicates the progress of activities carried according to the plan, to its employees. This helps the enterprise to achieve its key objectives and mission. A business plan guides the entrepreneur throughout the entrepreneurial process. In the implementation phase, the entrepreneur arranges the essential resources, such as men, machine, and material, to achieve the set objectives. Next, he/she assigns tasks to employees to meet the goals and ensures that the assigned tasks are performed efficiently. Lastly, the entrepreneur ensures that objectives projected in the business plan are achieved effectively.

6.  Summary

In this module, you have learned the importance of developing a business idea before setting up an enterprise. An entrepreneur needs to take into consideration various factors, such as size and  location of the enterprise, before setting up an enterprise. In addition, the module has detailed upon the significance of generating a business plan and the procedure of implementing it. The various elements of a business plan are discussed in detail.

• Ahmad Khan Mukhtar (1992).Entrepreneurial Development Programmes in India. New Delhi. Kanishka Publishing House.
• Janakiram B, Raveendra P.V., & Srirama V. K. (2010). Role and Challenges of Entrepreneurship Development. New Delhi-110028: Excel Books.
• Prasain G. P. (2003). Entrepreneurship Development. New Delhi-110002: Jain Book Agency.
• Robert D Hisrich (2007). Entrepreneurship. New Delhi. Tata McGraw-Hill Publishing Company Limited.
• Trehan, Aplana (2012). Entrepreneurship. New Delhi-110002: Dreamtech Press.
• Vaish Kalpna (1993).Entrepreneurial Role of Development Banks in Backward Areas. New Delhi-110059. Concept Publishing Company.
• www.yourarticlelibrary.com/business/planning-business/…formulation…
• www.pccc.edu/home/pctc/documents5/businessplan_part_one.pdf
• www.ctpd-namibia.com/management…/business-plan-formulation-practi.
• articles.bplans.com/writing-a-business-plan/
• A business plan refers to a formal statement of plans of an enterprise. It explains business goals of the enterprise and means to achieve those goals.
• A well-prepared business plan helps in gaining the trust of suppliers and various other parties and securing favorable credit terms. It states the vision, future plans of the enterprise, and products and services offered by it.
• Creating a business plan is the first step of the planning process of an enterprise. An enterprise needs to conduct lot of research to develop an effective business plan.
• The executive summary is a brief summary of the entire plan, highlighting all important aspects of the plan in a concise and appealing manner.

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The Impact of Entrepreneurship

• In AACSB’s most recent Innovations That Inspire initiative, business schools outline their societal impact activities that align with their missions while addressing concerns in their local communities.
• Schools described innovations such as a lecture series for Ukrainian refugees, an informational hub for Black business owners, and a program for Chinese entrepreneurs at the base of the pyramid.
• Through such efforts, business schools are deploying their students’ talent and their faculty’s expertise in ways that lead to lasting real-world change.

  Entrepreneurship can bring prosperity to families, communities, and whole nations. What can business schools do to bring entrepreneurship education to the groups that need it most?

That question was answered by a number of schools that participated in AACSB’s 2024 Innovations That Inspire initiative, which recognizes programs that will shape the future of business education. Through a sampling of just a few of their submissions, we show how entrepreneurship education targeted at specific populations can have profound societal impact and change the courses of many lives.

Training for Refugees

The ongoing war between Russia and Ukraine not only has killed more than 30,000 Ukrainians, but also has displaced millions of Ukrainian citizens. To provide aid to London-based refugees, the University College London (UCL) School of Management has launched The Next Generation of Entrepreneurs for Ukraine .

Through the free seven-week lecture series, participants gain the skills and knowledge they need to transform business ideas into viable ventures that will help rebuild their country once the war is over. The lecture series was selected by AACSB as a highlighted innovation for 2024.

The initiative came about after the UCL School of Management partnered with other academic institutions in the Academic Sanctuary Scheme to host visiting scholars from Ukrainian universities. The lecture series was developed by Nataliia Hrytsiuk, an associate professor from Lesya Ukrainka Volyn National University, who has researched the best practices in U.K. entrepreneurship. She presented her findings during the first seven lectures, which were held in October and November 2023. Other speakers included Ukrainian entrepreneurs and academics.

In addition to providing examples of successful startups in the U.K., lectures covered the art of forming teams, the tools needed to carry out competitive market analysis, and the strategy behind creating value propositions. At the end of the program, aspiring entrepreneurs could participate in a Pitch Day where finalists competed for monetary prizes.

All lectures were delivered in person and in Ukrainian to break down language and cultural barriers and to maximize networking opportunities. To make it easy for people to attend, events were held in the evening and offered free childcare.

Between lectures, participants received group and individual mentoring from Ukrainian entrepreneurs and UCL faculty. Participants also had access to workshops, UCL’s Innovation and Enterprise free office space, and a system that matched refugees with UCL entrepreneurs. To enhance networking opportunities, events were run with Level 39 , a European tech accelerator, and GenUK’s Ukraine program, which is aimed at female entrepreneurs. Students also could take complimentary English language lessons provided by a nongovernmental agency.

Participants who completed the program received certificates of attendance, gained access to GenUK’s Restart Ukraine program, and were eligible to apply to UCL’s Hatchery incubator to receive up to 24 months of support for their new businesses.

For the future, the school plans to offer the lecture series twice a year and is considering an online format to reach refugees outside of London. UCL will invite former participants to return as guest speakers and organize networking opportunities for previous and current participants. The school is considering replicating the program to aid people from other displaced communities.

A Spanish-Language Podcast

According to the U.S. Hispanic Chamber of Commerce , Latinos create businesses three times faster than any other group in the United States. Between 2007 and 2012, 86 percent of new small businesses in the U.S. were owned by Latinos. Yet Latino business owners have limited access to capital and other resources: Only 3 percent of America’s 4.7 million Hispanic-owned businesses have achieved more than 1 million USD in sales, and many Latinos lack reliable access to high-speed internet services.

One resource that could remove barriers for Latino entrepreneurs? Education. To meet this need, the Jack C. Massey College of Business at Belmont University in Nashville, Tennessee, created the Latino Emprendedor Podcast . (Emprendedor means “entrepreneur.”) Four podcasts were produced last year, and more are in the works.

The podcasts are delivered in Spanish by two co-hosts who have deep roots in both the business and the Latino communities. José González is an entrepreneur and an associate professor of entrepreneurship and management at Belmont College. He established a Nashville-based Spanish-language entrepreneurial training program called Negocio Próspero. Co-host Frank González is managing director of Crown Solutions Spanish at the global financial literacy ministry Crown Financial Ministries and has held roles with other organizations devoted to the development of Latin American leaders.

The two men discuss topics that include developing an entrepreneurial mindset, understanding the difference between an idea and an opportunity, launching a business, and dealing with failure. The goal of the podcasts is to empower listeners to solve problems, innovate their businesses, and create a positive impact on their surrounding communities.

A Platform for Black Entrepreneurs

COVID-19 had a devastating effect on many small businesses. In Canada, where a significant proportion of such enterprises are owned by Black entrepreneurs, the pandemic also shone a spotlight on an uncomfortable truth: Black business owners face systemic barriers that include discrimination, lack of access to capital and networks, and unconscious biases.

In response, the Federal Government of Canada has provided 400 million CAD (approximately 296 million USD) to fund the Black Entrepreneurship Program . One of the program’s three pillars is the Black Entrepreneurship Knowledge Hub (BEKH), a platform that brings together Black entrepreneurs, not-for-profit organizations, community organizations, academic institutions, and researchers.

Launched in December 2021, BEKH provides research and statistics about Black entrepreneurs, the businesses they are engaged in, and the resources they need to grow sustainably. This research can inform policies and programs aimed at promoting Black entrepreneurship.

BEKH is co-led by the Sprott School of Business at Carleton University in Ottawa, Ontario, and the Dream Legacy Foundation , a Toronto-based philanthropic organization that works with underrepresented groups. BEKH was selected by AACSB as a highlighted innovation for 2024.

The knowledge platform consists of a central hub supported by regional hubs across the country, each one headed by a postsecondary institution. The hubs work with community organizations, an advisory board, and a research advisory committee to prioritize the unique needs of various regions.

In its first year, BEKH established six regional hubs and research platforms, secured additional funding for development and growth, and initiated a community-led symposium for idea creation. It also actively engaged with community-serving organizations and national bodies, including Statistics Canada, the Business Development Bank of Canada, and Export Development Canada.

In the coming year, BEKH plans to undertake three large-scale national studies to create a better understanding of Black entrepreneurship in Canada. A quantitative study will produce numerical data around Black entrepreneurship; a qualitative study will generate personas that use storytelling techniques to explain the experiences of Black business owners; and an ecosystem mapping project will create a geographic map of Black entrepreneurs to foster visibility and promote connections. The goal is to create a more equitable business environment that enables Black entrepreneurs to thrive.

Education to Eradicate Poverty

The School of Management at Guangdong University of Technology in China is dedicated to achieving one of the key aims of the United Nations Sustainable Development Goals : ending poverty. To that end, in 2009, the school debuted a three-part responsible management education framework called “From Classrooms to Fields.”

One component of that framework is a focus on entrepreneurship at the base of the pyramid (BoP). While students are introduced to a variety of diverse entrepreneurship initiatives, they are encouraged to develop innovations that will serve BoP populations and keep people out of poverty.

One success story comes from Che Zhou. As a student in 2014, he explored ways to help herb farmers in the western mountainous areas of China. He set up an e-commerce trading platform that involves more than 3,000 herb providers, which accounts for 12 percent of the trading volume of bulk traditional Chinese herbs sold in the region. More than 50 students from the college have participated in this endeavor. Che Zhou’s efforts have resulted in an average income increase of 4,170 RMB (about 580 USD) for each of the participating farmers.

The School of Management aims to reduce poverty in two additional ways:

• By weaving sustainable development principles into the curriculum. Students learn theories of social responsibility through required courses on sustainability and green e-commerce, modules on sustainable development that are included in other courses, and off-site opportunities to see sustainable development in action. Faculty are encouraged to develop sustainability-related cases, some of which are collected into national management case databases for other schools to use.
• By motivating faculty and students to join charitable endeavors. Students must earn two credits by engaging in a minimum of 20 hours of philanthropic work per semester. They are encouraged to participate in the social responsibility activities of two student clubs, and faculty are urged to act as advisors to such organizations. In addition, the school provides monetary support to two primary schools in the remote mountainous region of Guangdong Province.

Through these efforts, the school encourages students to embrace social responsibility, blend commercial and societal interests, and create sustainable value.

Community Opportunities

Several business schools have created initiatives aimed at bringing entrepreneurship education to underserved populations in their own neighborhoods, and they described their efforts in submissions to this year’s Innovations That Inspire.

One example comes from the College of Business and Economics at Towson University in Baltimore, which has partnered with Cristo Rey Jesuit High School to teach basic entrepreneurship skills to financially disadvantaged ninth-graders. During the four-week Cristo Rey Leadership Foundations Program , young students learn the concepts of entrepreneurship and gain experience developing ventures designed to solve real-world problems.

Speakers include entrepreneurs who hail from Cristo Rey’s own community. In addition, student interns from the College of Business—some of them alums of Cristo Rey—act as mentors and guides for teams of high school students.

Since the program launched two years ago, 135 Cristo Rey students have been exposed to the world of entrepreneurship, and two have joined Towson’s StarTUp accelerator. The College of Business has received grant money from U.S.-based company State Farm Insurance to continue the program, and it has become a resource for other area high schools that want to replicate its model.

A second example comes from the Else School of Management at Millsaps College in Jackson, Mississippi. About 14 years ago, the school launched the ELSEWORKS entrepreneurship program, dedicated to revitalizing Midtown, a nearby socioeconomically challenged inner city community. Led by faculty, staff, and alumni, the program functions like a business consultancy to provide Midtown businesses with assistance in areas such as strategy, accounting, market research, and event planning.

Since 2011, Millsaps students have provided consulting services to two incubators in Midtown; helped develop two community gathering spaces—a coffee shop and a beer garden; secured funds for three Midtown businesses; organized a quarterly event for business owners; and provided other support. About 160 Millsaps students have served as ELSEWORKS business analysts and roughly 400 students have worked on classroom projects that provided solutions to Midtown businesses.

The impact has been measurable: According to a study conducted by ELSEWORKS students, the number of assets in the neighborhood—consisting of houses, businesses, and properties in suitable living conditions—increased by 74 percent over 10 years. At the same time, students have seen firsthand how community engagement links to economic development.

‘Entrepreneurship as Survival’

Anita Roddick, social entrepreneur and founder of The Body Shop, once said, “Nobody talks of entrepreneurship as survival, but that’s exactly what it is and what nurtures creative thinking.”

Today’s business schools—and the populations they serve through entrepreneurship education—would clearly agree.

All submissions to AACSB's Innovations That Inspire program are collected in DataDirect for members to explore for additional insights and inspiration.

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3 Ways to Get on The Road to Franchising — And How to Find the Right Business For You Although franchising contributes significantly to the US economy, most US business schools lack dedicated franchising curriculums. These three sources will help you get started and find out which franchise is right for you.

By Alicia Miller • Apr 10, 2024

Key Takeaways

• Despite franchising's significant contribution to the U.S. GDP, most business schools still do not offer dedicated franchising curriculums.
• For those interested in franchising, there are several avenues to gain knowledge and insights.
• A growing number of universities are beginning to offer franchising courses or concentrations.

Opinions expressed by Entrepreneur contributors are their own.

The business school I attended had no classes on franchising and, 20 years later, still doesn't. Entrepreneurship classes, yes. Finance, of course. Real estate, yes. But nothing about franchising. There were a few case studies about franchising sprinkled through marketing courses, but that was it.

It's a big miss. Franchising represents three percent of US GDP and has global reach. It's a vibrant sector in which to build a big career or entrepreneurial venture. So, what are the options to learn about franchising best practices and make smart investing choices?

Related: Considering franchise ownership? Get started now to find your personalized list of franchises that match your lifestyle, interests and budget.

Franchise industry organizations

First – start with the International Franchise Association , (IFA) both the Certified Franchise Executive (CFE) program and IFA-sponsored events. Classes are held in person and online. The IFA also offers many opportunities to learn and meet people with franchise experience . Networking at IFA events is one of the best ways to learn how others create franchising success.

There are several franchise expos around the US and around the globe where franchisors and suppliers come together to meet with prospective franchisee candidates. Most expos offer free classes and talks about various aspects of franchising, including how to choose and finance your franchise business. Walking the floor and talking to franchisors is a good way to get a sense of the breadth of options, investment ranges, and operating models .

There are myriad online resources to help with your franchise journey, besides Entrepreneur. For example, how do you know whether franchisees are satisfied with their investment, corporate management team, and the future? Franchise Business Review provides franchisee survey results.

It's important to review Franchise Disclosure Documents (FDDs) carefully, including going back several years so you can see changes over time. A great site for this is Vetted Biz , which also includes analysis and comparisons of different franchise concepts. You can also get free franchise disclosure documents from several state websites.

Even if you're not going into the restaurant business, Restaurant Business Online has excellent reporting and covers information broadly applicable to the franchise industry including regulations and consumer trends. This company primarily serves corporate users, private equity firms, and lenders, but is an excellent source of information about overall franchise industry trends and statistics.

Related: Find Out Which Brands Have Ranked on the Franchise 500 for Longest, Earning a Spot In our New 'Hall of Fame'

Franchise start-up guides

On my website, I provide a free list of suggested questions to ask franchisees to get you started. The Federal Trade Commission published a guide to buying a franchise , and several states, including California and Maryland , have published franchise-buying guides as well. They are useful resources no matter where you reside.

Check your own state's website for franchising information, business start-up guides, business licensing requirements, funding resources , state-specific regulations, and other helpful information. For example, Texas and Ohio provide small business start-up guides.

The Small Business Administration (SBA) has many helpful guides and resources, including templates to help you build your business plan. Also, remember to check your state Chamber of Commerce as well as your local Small Business Development Centers (run by the SBA) for funding options and start-up advice and assistance.

Related: Don't Make These 5 Risky Franchise Ownership Mistakes

University-level options

Many colleges and universities do not offer degrees or classes on franchising . However, a growing list of options is becoming available and more prospective franchisees are taking classes in franchising before they invest in a franchise business. Here are a few of the major ones:

Yum! Brands endowed the Yum! Center for Global Franchise Excellence at the University of Louisville (U of L), as a part of their $100 million Unlocking Opportunity diversity initiative across the world, launched in 2021. U of L is the only university with franchise certifications at the graduate, undergraduate, and professional educational levels.

The Tariq Farid Franchise Institute at Babson College provides university courses, research, and executive education on franchising. The franchising program is attached to Babson's entrepreneurship program, consistently rated as a top MBA and undergraduate entrepreneurial program.

Finally, Palm Beach Atlantic University 's franchise classes draw from its business school. According to Dr. John Hayes of the school's Titus Center for Franchising , "It is a concentration in franchising (not a major or minor) and the concentration appears on students' university transcripts. It provides the opportunity to customize what you want to study. We are working on online education options as well."

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Rural Women Entrepreneurship in South Africa: Issues and Challenges

Despite its importance in rural development, women’s entrepreneurship has faced a series of problems in South Africa. For a holistic assessment of such problems, through a literature review approach, this study aims to review prior research on women entrepreneurship, with a focus on the issues and challenges surrounding rural women entrepreneurship in South Africa. Secondary information sources, such as journal articles, theses, books, abstracts, and credible business-affiliated websites, were used to conduct the review. Among the results emerging from the study, some of the key challenges facing South African rural women entrepreneurs include a lack of adequate financing, education and training, gender bias, inadequate business skills, and difficulties in balancing between family and business. In view of these challenges, this study recommends capacity-building programmes, a robust government policy framework, and opening wider channels of funding and awareness to foster entrepreneurial activities among rural women entrepreneurs in South Africa.

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How side hustles are redefining careers.

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Ashleigh is VP of Marketing at PracticeTek.

The traditional career path—get a college degree, secure a job, climb the corporate ladder—is undergoing a seismic shift. Today, a growing number of individuals are embracing the world of side hustles, unintentionally becoming entrepreneurs.

According to a 2023 Bankrate survey, 39% of American adults report having a side hustle. This number is even higher among millennials, with 50% reporting they have a side hustle. Fueled by technological advancements, a changing job market and a desire for greater autonomy, side hustles are more than just extra income. They are evolving into springboards for redefined careers and personal fulfillment.

I've been a people leader for close to 20 years now and have observed a monumental shift in the way my team members think about their access to income streams. In an environment where technology has enabled us to be more agile and accessible (for better or worse), we as leaders need to contemplate how we support our team members and their work goals in and outside of the company where we are employed.

The Unintentional Entrepreneur

Unlike their stereotypical counterparts, unintentional entrepreneurs don't set out to build empires. They are often driven by practical considerations—supplementing income, exploring passions or developing new skills. Take Sarah, a marketing professional by day and a freelance web designer by night. Never considering herself "entrepreneurial," she started designing websites for friends to learn new skills. The positive reception and growing demand propelled her side hustle into a successful business, eventually leading her to transition to full time.

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Chiefs rashee rice hit with 8 criminal charges in connection to multi car crash, trailblazing comics icon trina robbins dies at age 85, the side hustle advantage.

Side hustles offer a unique combination of flexibility, validation and skill development. They help test the entrepreneurial waters with minimal risk. Unlike a full-time venture, a side hustle can be scaled up or down depending on workload and success. The initial validation from paying customers provides invaluable confidence and market validation, propelling individuals to refine their offerings and explore growth opportunities. Additionally, side hustles create a space for individuals to acquire new skills and build a professional network outside their traditional careers. These skills can then enhance their main job or be leveraged to launch a full-fledged business.

An Evolving Landscape

Technology has undeniably fueled the rise of the unintentional entrepreneur. Online platforms like Etsy, Upwork and Fiverr offer user-friendly marketplaces for individuals to showcase their talents and connect with clients worldwide. Social media acts as a powerful marketing tool, allowing side hustlers to build an audience and establish credibility without a significant financial investment.

Beyond The Side Hustle

The impact of side hustles extends far beyond individual career paths. Employees are increasingly seeking flexibility, autonomy and the ability to pursue their passions. This trend has the potential to reshape traditional work structures, leading to the emergence of more flexible work arrangements and a focus on skill sets over traditional resumes. So, what can you do?

For The Aspiring Side Hustler

• Find your passion. Don't just chase trends. What are you truly interested in, and what skills can you bring to the table?

• Start small & scale. Begin with a manageable workload and gradually increase your commitment as you gain traction.

• Embrace online platforms. Utilize online marketplaces and social media to connect with potential clients and showcase your work.

• Seek continuous learning. Invest in acquiring new skills that are relevant to your side hustle and enhance its marketability.

For The Leader With Side-Hustling Employees

• Embrace the side hustle. Recognize that side hustles can be a source of motivation and skill development for your employees.

• Offer flexible work arrangements. Consider flexible work schedules or remote work options to accommodate employees' side hustles.

• Encourage transparency. Build and maintain a culture where employees feel comfortable openly communicating about their whole selves, including their side hustles.

• Identify potential conflicts. Address any potential conflicts of interest that may arise due to side hustles. The side hustle could be viewed as competitive to your business or could impact performance by taking attention away from your employee's responsibilities in your workplace.

The rise of the unintentional entrepreneur signifies a future of work that is more fluid, adaptable and driven by individual passion. By embracing the side hustle, both individuals and organizations can unlock a new era of creativity, innovation and personal fulfillment.

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