Unit 1: First Steps in Planning Your Business

1a. Outline the steps to take when writing a business plan

  • What are the components of a business plan?
  • What is the process for writing a business plan?
  • Which aspect of the business plan do you think is the most challenging?

A business plan is a formal document used for the long-range planning of a company's operation. A full business plan usually includes an executive summary, business description, market strategies, marketing plan, competitive analysis, operations plan management plan, financial plan, and design and development plan. A business plan is used as an organizational roadmap, which is an internal planning and working tool. There are two main types of business plans. A brief plan is an executive summary that summarizes the key elements of the entire plan. The second is the full business plan. 

After a business plan is written, the next step is to obtain financing to start the company. The two forms of business financing are debt, which are borrowed funds that must be repaid, and equity financing, which are funds raised through the sale of stock or ownership in a business. Angel investors are individual investors of people who provide financing for start-up businesses.

To establish credibility for your business plan, we can look at it from four elements: the opportunity, the market, the entrepreneur or the team, and the resources needed.

To review, see:

 

1b. Apply an appropriate business model to a business

  • What types of strategies do you think a small start-up would use?
  • How can an entrepreneur use Porter's Five Forces to develop their business plan?
  • How do entrepreneurs use the Business Model Canvas before writing their business plan?

One way to begin thinking about a business plan is to use the Business Model Canvas, which is a tool that identifies key partners, key activities, key resources, the value proposition, customer relationship, channels, customer segments, cost structure, and revenue streams.

Understanding the strategy cycle is important to determining an effective business model. The cycle begins with strategic analysis, development of objectives, choosing strategies, implementation of strategies, and measurement and evaluation of the performance of strategies, mission, and vision. A vision statement is usually very broad and expresses what a business wants to accomplish. A mission statement is more specific and broadly describes how the firm will make its vision a reality.

Companies can use various tools to determine their business model and strategic plan. They include PESTEL analysis, which looks at political, economic, social, technological, environmental, and legal issues that impact their business, and also use Porter's Five Forces, which is concerned with industry rivalry, the threat of new entrants, the threat of substitutes, supplier power, and buyer power.

There are several levels of strategies. A business-level strategy is the framework a company uses to organize its activities. Corporate strategy is the broadest level and is mostly concerned with decisions about growing, maintaining, or shrinking a company. Some companies use a growth strategy, where the goal is to increase the company's size. A stability strategy is one where a company wants to maintain its current position in the market. A defensive strategy is used when a company is struggling.

To review, see:

 

1c. Analyze ethics as it relates to entrepreneurship

  • What is the difference between a stakeholder and a shareholder?
  • What elements of ethics are important as an entrepreneur?
  • How do entrepreneurs implement corporate social responsibility into business plans?

Stakeholders are a large group of people that includes anyone involved in the interest of the business. Shareholders are a smaller group of owners of the company. To have a successful business, concern with shareholders and stakeholders is important.

Ethics relates to the behavior you expect of yourself, such as always telling the truth. Business ethics guides the conduct by which entrepreneurs and their companies abide. Many legal situations may also be ethical issues in entrepreneurship, including contracts, antitrust, fraud, employment, torts, and intellectual property. A conflict of interest is when an individual has interests in multiple areas, such as financial investments, work obligations, and personal relationships.

Corporate social responsibility is the practice of a business viewing itself in a broader context as a member of society with implicit social obligations. When we look at social responsibility, we can look at four areas of responsibility: legal, financial, ethical, and social/philanthropic. Entrepreneurs can look at excellence, fairness, and trust as cornerstones of being socially responsible.

To review, see:

 

Unit 1 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

  • Business Model Canvas
  • business plan
  • conflict of interest
  • corporate social responsibility
  • corporate strategy
  • debt financing
  • defensive strategy
  • equity financing
  • ethics
  • growth strategy
  • Porter's Five Forces
  • shareholder
  • stability strategy
  • stakeholder
Callback before_footer in local_aigrade component should be migrated to new hook callback for core\hook\output\before_footer_html_generation
  • line 7225 of /lib/moodlelib.php: call to debugging()
  • line 7292 of /lib/moodlelib.php: call to {closure}()
  • line 71 of /lib/classes/hook/output/before_footer_html_generation.php: call to get_plugins_with_function()
  • line 987 of /lib/classes/output/core_renderer.php: call to core\hook\output\before_footer_html_generation->process_legacy_callbacks()
  • line 154 of /mod/book/view.php: call to core\output\core_renderer->footer()