The Business Plan 167X. Summary and Conclusions
XI. Scheduling and Milestones
Appendixes
The main body of the business plan contains the strategic and operating details of the
new venture. Some redundancy among the sections is inevitable because the business is
an integrated system and is necessarily self-referencing. This is not inherently bad. Some
redundancy helps to focus the reader’s attention. Where possible, using a reference such
as, “See Section III, Market Analysis” is preferable to repeating verbatim a long segment
of the market analysis.
Background and Purpose. This introductory section creates a context for understand-
ing the business. Although history is not destiny in business, it is important that read-
ers be able to gauge how far the firm has come and precisely where it is now in the new
venture creation process. Suggestions and recommendations for preparing this material
follow:
- History: This section, a brief description of the venture and its history, is especially
important if the firm is offering a unique product or service. It tells potential
investors that this company is a “prime mover.” - Current Situation: This includes a brief description of the product or service, its
potential customers, and the technology necessary to make and deliver the product.
This product/market/technology configuration (P/M/T) is the most concise
statement about your business. There is ample opportunity to expand on this later
in the plan. If the product or service is so technical that a non-expert might not
understand it, create an exhibit or an appendix with a photograph or drawing of the
product, list its technical specifications, and present any available test results. - The Business Model and Resource-Based Elements: This section tells the story of
the business: its customers, product, technology, and revenue model. How will it
make money? What key resources will contribute to the firm’s success? How will
these resources be translated into a unique product or service with a competitive
advantage? This is the first introduction of the strategy statement.
Objectives. Objectives are desired outcomes, and every new venture has three broad
objectives: creation, survival, and profitability. For firms with an operating history, of
course, only survival and profitability are pertinent. Objectives are viewed in terms of
time frame and measurement. Short-term objectives can be achieved within one year.
Long-term objectives generally require three to five years.
The measurement of how well an objective has been achieved can be quantitative or
qualitative. Quantitative measuresare stated as numbers—return on sales, return on
equity, employee turnover, etc. They usually concern the degree of the firm’s efficiency:
how well it has deployed a given set of resources. For example, a quantitative objective
involving gross margin shows cost of goods sold and direct labor charges as a percent-
age of sales. A high gross margin indicates an efficient ratio of cost to revenue, and a low
gross margin indicates inefficiency.^21 Quantitative objectives tend to concern operating
issues and the short term.
Qualitative measures, on the other hand, resist reduction to numbers. For example,