5 year entrepreneurial business plan

A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of one. Business plans are inherently strategic. You start here, today, with certain resources and abilities.

Business Plan Template for a Startup Business

The business plan admits the entrepreneur to the investment process. And the plan must be outstanding if it is to win investment funds. Too many entrepreneurs, though, continue to believe that if they build a better mousetrap, the world will beat […]. A compelling plan accurately reflects the viewpoints of your three key constituencies: the market , potential investors , and the producer the entrepreneur or inventor of the new offering.

But too many plans are written solely from the perspective of the producer. To make a convincing case that a substantial market exists, establish market interest and document your claims. Establish market interest. Provide evidence that customers are intrigued by your claims about the benefits of the new product or service:.

Document your claims. Now use data to support your assertions about potential growth rates of sales and profits. Cashing out. Show when and how investors may liquidate their holdings. Venture capital firms usually want to cash out in three to seven years; professional investors look for a large capital appreciation.

Making sound projections. Give realistic, five-year forecasts of profitability. The price. To make a convincing case for a rich return, get a product in the hands of representative customers—and demonstrate substantial market interest. Too many entrepreneurs, though, continue to believe that if they build a better mousetrap, the world will beat a path to their door. Also important is satisfying the needs of marketers and investors.

Marketers want to see evidence of customer interest and a viable market. Investors want to know when they can cash out and how good the financial projections are. Drawing on their own experiences and those of the Massachusetts Institute of Technology Enterprise Forum, the authors show entrepreneurs how to write convincing and winning business plans. A comprehensive, carefully thought-out business plan is essential to the success of entrepreneurs and corporate managers.

Whether you are starting up a new business, seeking additional capital for existing product lines, or proposing a new activity in a corporate division, you will never face a more challenging writing assignment than the preparation of a business plan. Only a well-conceived and well-packaged plan can win the necessary investment and support for your idea. It must describe the company or proposed project accurately and attractively.

You must present and justify ongoing and changing resource requirements, marketing decisions, financial projections, production demands, and personnel needs in logical and convincing fashion.

Because they struggle so hard to assemble, organize, describe, and document so much, it is not surprising that managers sometimes overlook the fundamentals. We have found that the most important one is the accurate reflection of the viewpoints of three constituencies. The market, including both existing and prospective clients, customers, and users of the planned product or service.

Too many business plans are written solely from the viewpoint of the third constituency—the producer. They describe the underlying technology or creativity of the proposed product or service in glowing terms and at great length. They neglect the constituencies that give the venture its financial viability—the market and the investor. Take the case of five executives seeking financing to establish their own engineering consulting firm.

But the executives did not determine which of the proposed dozen services their potential clients really needed and which would be most profitable. By neglecting to examine these issues closely, they ignored the possibility that the marketplace might want some services not among the dozen listed.

Moreover, they failed to indicate the price of new shares or the percentage available to investors. Because they had not convincingly demonstrated why potential customers would buy the services or how investors would make an adequate return or when and how they could cash out , their business plan lacked the credibility necessary for raising the investment funds needed.

We have had experience in both evaluating business plans and organizing and observing presentations and investor responses at sessions of the MIT Enterprise Forum.

We believe that business plans must deal convincingly with marketing and investor considerations. This reading identifies and evaluates those considerations and explains how business plans can be written to satisfy them. Organized under the auspices of the Massachusetts Institute of Technology Alumni Association in , the MIT Enterprise Forum offers businesses at a critical stage of development an opportunity to obtain counsel from a panel of experts on steps to take to achieve their goals.

In monthly evening sessions the forum evaluates the business plans of companies accepted for presentation during to minute segments in which no holds are barred. The format allows each presenter 20 minutes to summarize a business plan orally.

Each panelist reviews the written business plan in advance of the sessions. Then each of four panelists—who are venture capitalists, bankers, marketing specialists, successful entrepreneurs, MIT professors, or other experts—spends five to ten minutes assessing the strengths and weaknesses of the plan and the enterprise and suggesting improvements. In some cases, the panelists suggest a completely new direction. In others, they advise more effective implementation of existing policies.

Their comments range over the spectrum of business issues. Sessions are open to the public and usually draw about people, most of them financiers, business executives, accountants, lawyers, consultants, and others with special interest in emerging companies.

Presenters have the opportunity to respond to the evaluations and suggestions offered. They also receive written evaluations of the oral presentation from audience members. These monthly sessions are held primarily for companies that have advanced beyond the start-up stage.

They tend to be from one to ten years old and in need of expansion capital. Investors want to put their money into market-driven rather than technology-driven or service-driven companies. You can make a convincing case for the existence of a good market by demonstrating user benefit, identifying marketplace interest, and documenting market claims. He concluded with some financial projections looking five years down the road. The venture capitalist quickly reversed his original opinion.

He said he would back a company in almost any industry if it could prove such an important user benefit—and emphasize it in its sales approach. The venture capitalist knew that instruments, machinery, and services that pay for themselves in less than one year are mandatory purchases for many potential customers.

If this payback period is less than two years, it is a probable purchase; beyond three years, they do not back the product. The MIT panel advised the entrepreneur to recast his business plan so that it emphasized the short payback period and played down the self-serving discussion about product innovation. The executive took the advice and rewrote the plan in easily understandable terms. His company is doing very well and has made the transition from a technology-driven to a market-driven company.

How can start-up businesses—some of which may have only a prototype product or an idea for a service—appropriately gauge market reaction? One executive of a smaller company had put together a prototype of a device that enables personal computers to handle telephone messages. He needed to demonstrate that customers would buy the product, but the company had exhausted its cash resources and was thus unable to build and sell the item in quantity.

The executives wondered how to get around the problem. The MIT panel offered two possible responses. First, the founders might allow a few customers to use the prototype and obtain written evaluations of the product and the extent of their interest when it became available. Second, the founders might offer the product to a few potential customers at a substantial price discount if they paid part of the cost—say one-third—up front so that the company could build it.

The company could not only find out whether potential buyers existed but also demonstrate the product to potential investors in real-life installations. In the same way, an entrepreneur might offer a proposed new service at a discount to initial customers as a prototype if the customers agreed to serve as references in marketing the service to others. You can obtain letters from users even if the product is only in prototype form.

You can install it experimentally with a potential user to whom you will sell it at or below cost in return for information on its benefits and an agreement to talk to sales prospects or investors. In an appendix to the business plan or in a separate volume, you can include letters attesting to the value of the product from experimental customers. Having established a market interest, you must use carefully analyzed data to support your assertions about the market and the growth rate of sales and profits.

Even if the company makes such claims based on fact—as borne out, for example, by evidence of customer interest—they can quickly crumble if the company does not carefully gather and analyze supporting data.

An entrepreneur wanted to sell a service to small businesses. The panel pointed out that anywhere from 11 million to 14 million of such so-called small businesses were really sole proprietorships or part-time businesses. Similarly, in a business plan relating to the sale of certain equipment to apple growers, you must have U.

Department of Agriculture statistics to discover the number of growers who could use the equipment. If your equipment is useful only to growers with 50 acres or more, then you need to determine how many growers have farms of that size, that is, how many are minor producers with only an acre or two of apple trees.

A realistic business plan needs to specify the number of potential customers, the size of their businesses, and which size is most appropriate to the offered products or services. Sometimes bigger is not better. Such marketing research should also show the nature of the industry. Few industries are more conservative than banking and public utilities.

The number of potential customers is relatively small, and industry acceptance of new products or services is painfully slow, no matter how good the products and services have proven to be.

Even so, most of the customers are well known and while they may act slowly, they have the buying power that makes the wait worthwhile. At the other end of the industrial spectrum are extremely fast-growing and fast-changing operations such as franchised weight-loss clinics and computer software companies.

Here the problem is reversed. While some companies have achieved multi-million-dollar sales in just a few years, they are vulnerable to declines of similar proportions from competitors. These companies must innovate constantly so that potential competitors will be discouraged from entering the marketplace. You must convincingly project the rate of acceptance for the product or service—and the rate at which it is likely to be sold.

From this marketing research data, you can begin assembling a credible sales plan and projecting your plant and staff needs. The marketing issues are tied to the satisfaction of investors. Once executives make a convincing case for their market penetration, they can make the financial projections that help determine whether investors will be interested in evaluating the venture and how much they will commit and at what price.

Most of us know that for new and growing private companies, investors may be professional venture capitalists and wealthy individuals. For corporate ventures, they are the corporation itself.

Your business plan is how investors and potential partners see that you know everything you can about your industry. And you want to get to there, a point in the future (usually three to five years out), at which time your business will have a different set of resources and abilities as​.

This guide will show you how to get your plan done step-by-step without any of the complexity or frustration. There are a lot more details and instructions for each step later in this guide. Click the titles below to immediately jump to each section. The executive summary is an overview of your business and your plans. It comes first in your plan and is ideally only one to two pages.

Bplans offers more than free sample business plans in a wide variety of industries. If you're looking for a tool to walk you through writing your own business plan step by step, we recommend LivePlan , especially if you're seeking a bank loan or outside investment and need to use an SBA-approved format.

Start Risk Free for 60 Days. Includes special resources and offers from Entrepreneur like events, books, advice and more. It's easy to use, has more than business plan samples, and pulls in data from your accounting software.

How to Write a Winning Business Plan

The business plan admits the entrepreneur to the investment process. And the plan must be outstanding if it is to win investment funds. Too many entrepreneurs, though, continue to believe that if they build a better mousetrap, the world will beat […]. A compelling plan accurately reflects the viewpoints of your three key constituencies: the market , potential investors , and the producer the entrepreneur or inventor of the new offering. But too many plans are written solely from the perspective of the producer.

Business Plans: A Step-by-Step Guide

Having a road map helps you reach your journey's end successfully. Business plans do the same for small businesses. They lay out the milestones you need to reach on your way to building a profitable small business. From finance to marketing, operations to sales, each part of a business plan helps you reach your goals. What deters most entrepreneurs from creating a business plan, however, is taking the time to write it all out. Many are afraid to do so; they'll find their idea isn't so brilliant after all. For those who take the time to research and write a plan, though, they often find that it helps them identify risks and possible roadblocks. Business plans are essential to identifying and overcoming obstacles on your path so you can build a successful company. While writing a business plan can be frustrating especially when you're writing one from scratch, there are plenty of online templates available to take some of the pain out of the process. Small business owners can benefit from simple, easy-to-follow business plan tools so they spend less time writing and more time launching.

Every business needs to have a written business plan. But, how do you write a business plan?

Last Updated on December 27, by Richard Kershaw. In its rawest and simplest of forms, a business plan is a guide; a roadmap of sorts that allows entrepreneurs to clearly outline their business goals and how they intend to achieve them.

500+ Free Sample Business Plans

A 5-year business plan will help you manage your company and seek loans or investment money. This term is familiar to most commercial loan officers and small business investors. Learning how to write an effective five year business plan helps you manage better and improves your chances of receiving the loans or investment dollars you need to succeed. You should thoroughly understand business plan components and your company to complete a winning blueprint for success. Below are several points to consider when writing an effective 5-year business plan. Design your strategic plan. Combine your goals with your vision for your company. Decide on the best strategies — e-commerce, retail locations, business-to-business, business-to-consumers or combinations thereof — to reach your business objectives. These will be the benchmarks for your five-year business plan. Prepare an executive summary.

Simple Business Plan Templates for Entrepreneurs

Think you have a great idea for a business? The simple business plan template presented here will get you started. A standard business plan consists of a single document divided into several sections including a description of the organization, the market research , competitive analysis , sales strategies , capital and labor requirements, and financial data. The resulting document can serve as the blueprint for your business and be supplied to financial institutions or investors if debt or equity financing is needed to get your business off the ground. There is still going to be a lot of work involved. For instance, not only do you have to complete the financial spreadsheets, but you have to do the math yourself.