Business 12th Edition by William Pride,Robert Hughes,Jack Kapoor

Exercise 1

In this last section, provide some information about your exit strategy, and discuss any potential trends, problems, or risks that you may encounter. These risks and assumptions could relate to your industry, markets, company, or personnel. Make sure to incorporate important information not included in other parts of the business plan in an appendix. Now is also the time to go back and prepare the executive summary, which should be placed at the beginning of the business plan.
THE EXIT STRATEGY COMPONENT
Your exit strategy component should at least include answers to the following questions:
7.1 H ow do you intend to get yourself (and your money) out of the business?
7.2 Will your children take over the business, or do you intend to sell it later?
7.3 Do you intend to grow the business to the point of an IPO?
7.4 H ow will investors get their money back?
THE CRITICAL RISKS AND ASSUMPTIONS COMPONENT
Your critical risks and assumptions component should answer at least the following questions:
7.5 What will you do if your market does not develop as quickly as you predicted? What if your market develops too quickly?
7.6 What will you do if your competitors underprice or make your product obsolete?
7.7 What will you do if there is an unfavorable industry-wide trend?
7.8 What will happen if trained workers are not available as predicted?
7.9 What will you do if there is an erratic supply of products or raw materials?
THE APPENDIX COMPONENT
Supplemental information and documents are often included in an appendix. Here are a few examples of some documents that can be included:
• Résumés of owners and principal managers
• Advertising samples and brochures
• An organization chart
• Floor plans of a retail facility or factory
REVIEW OF BUSINESS PLAN ACTIVITIES
As you have discovered, writing a business plan involves a long series of interrelated steps. As with any project involving a number of complex steps and calculations, your business plan should be reviewed carefully and revised before you present it to potential investors or lenders.
Remember, there is one more component you need to prepare after your business plan is completed: The executive summary should be written last, but because of its importance, it appears after the introduction.
THE EXECUTIVE SUMMARY COMPONENT
In the executive summary, give a one- to two-page overview of your entire business plan. This is the most important part of the business plan and is of special interest to busy bankers, investors, and other interested parties. Remember, this section is a summary; more detailed information is provided in the remainder of your business plan.
Make sure that the executive summary captures the reader's attention instantly in the first sentence by using a key selling point or benefit of the business. Your executive summary should include answers to at least the following:
7.10 Company information. What product or service do you provide? What is your competitive advantage? When will the company be formed? What are your company objectives? What is the background of you and your management team?
7.11 Market opportunity. What is the expected size and growth rate of your market, your expected market share, and any relevant market trends?
Once again, review your answers to all the questions in the preceding parts to make sure that they are all consistent throughout the entire business plan.
Although many would-be entrepreneurs are excited about the prospects of opening their own business, remember that it takes a lot of hard work, time, and in most cases a substantial amount of money. Though the business plan provides an enormous amount of information about your business, it is only the first step. Once it is completed, it is now your responsibility to implement the plan. Good luck in your business venture.