Chapter 19 - The business plan: an entrepreneurial tool
19.1 Planning and performance
Entrepreneurs are often called upon to prepare formal, written plans. A business plan represents an
investment in the venture. Relationship formal planning and performance weak. Planning is an activity
embedded in both the wider strategy process of the organization and the control strategy of the entrepreneur.
Good planning leads to better performance. Planning, if it is approached in a way which is right for the venture
and is aimed at addressing the right issues, would seem to offer a number of benefits.
19.2 The role of the business plan
As a tool for analysis: a business plan contains information. Provides a checklist of information to be gathered.
As a tool for synthesis: planning exercise acts to synthesise the entrepreneur’s vision with a definite plan of
action in a unified way. Coverts the vision into a strategy for the venture, and then into actions appropriate to
pursuing that strategy.
As a tool for communication: business plan for communicating the potential of the venture, the opportunities it
faces and the way it intends to exploit them in a way which is concise, efficiënt and effective.
As a call to action: provides a detailed list of the activities that must be undertaken, the tasks that must be
performed and the outcomes that must be achieved if the entrepreneur is to convert their vision into a new
world.
19.3 What a business plan should include
The information depends on what stage the venture is at.
Mission
● The mission for the venture
Overview of key objectives
● Financial objectives
● Strategic objectives
17
,The market environment
● Background to the market
● Competitors
● Competitive conditions
● Competitive advantage of the venture
● Definition of product offerings
● Definition of target markets
Strategy
● Product strategy
● Pricing strategy
● Distribution strategy
● Promotional strategy
● Networking
Financial forecasts
● Income
● Routine expenditure
● Capital expenditure
● Cash flow
Activity
● Major projects
People
● Key players in the venture
19.4 Business planning: analysis and synthesis
Information has a cost and must be gathered with an eye to how it will be used. Information is used to manage
uncertainty. Planning is about analysis; about breaking down information to spot opportunities and possibilities.
Strategy is about synthesis: bringing the capabilities of the business to bear on the opportunity in a way which
is creative and original. Synthesis must include both the strategy content and the process to deliver it.
18
,19.5 Business planning: action and communication
Communication is an attempt to elicit a particular response from someone. Business plan is a communication
that relates in a succinct way a precise and unambiguous account of the venture and what it aims to achieve.
Investors | Potential of the venture and rewards, but also risk.
Employees | Employees make their own investment in the business by committing themselves to it and can
give them confidence about the future.
Important customers | a customer may face a cost in taking on a new supplier. Sharing the business plan with
the important customers in an effective way of giving them confidence in the entrepreneurial venture and
encouraging them to make the necessary commitment.
Major suppliers | Suppliers may also need to make an investment if they wish to supply the venture. The
business plan may be used to give them the confidence to make an investment of time and resources on
behalf of the venture.
19.6 Structuring and articulating the business plan: the Pyramid Principle
Impact and influence of business plans are determined by how things are said as well as what is said. The
way the business plan is delivered makes the differences too.
Minto (1996): First, given that the recipient is likely to take away only one ‘big idea’, we should aim to control
what that is, rather than let the recipient do it for themselves. Second, we should order information in a way
that builds a hierarchy (a pyramid) of understanding under our control rather than deliver the information
linearly. ‘Big idea’: important what we want the recipients to do, rather than we would wish them to know.
Pyramid structure of business plan.
Introduction: invitation to the recipient to read the plan and to engage them. Also for the structure.
The venture’s mission
Key objectives: Market gap, customer needs and expectations, customers’ attitudes to products already
available, recent developments in the product category, long-term profitability and growth
Summary
19.7 Strategy, planning and flexibility
Many entrepreneurs see written plans as restrictive, and feel that it reduces their room for manoeuvre.
19
, Focus on ends rather than means | Goals should be given priority over plans. It is what the business aims to
achieve that matters.
Challenge assumptions | What are the assumptions on which the plan is based and how sensitive to it is the
plan?
Model scenarios | Determine what scenarios will result if an optimistic, a pessimistic and a realistic attitude is
taken to the outcomes that are expected.
Create strategic flexibility | Strategic flexibility is a way of doing things well when faced with uncertainty.
Involves actively responding to outcomes and adjusting activity.
Leave space to learn | The good business plan identifies and highlights those areas where learning can take
place.
Chapter 25 - Closing the window: sustaining competitiveness
25.1 Long-term success and sustainable competitive advantage
Must close the strategic window to limit the possibility that competitors will follow them and exploit the
opportunity as well. Sustainable competitive advantage: approach to recognising the ways in which the
strategic window can be closed to help guarantee long-term success in the marketplace. Competitive
advantage: what the business offers to the marketplace. Source: how the business is set up to deliver that
offering to the marketplace.
Competitive advantage: is present if the business consistently offers the customer something which is different
from what competitors are offering, and that difference represents something valuable for the customer.
- Lower price
- Differentiating in features / performance
- Differentiating in service
- Differentiating in branding
- Differentiating in brand imagery
- Differentiating in access / distribution
20
19.1 Planning and performance
Entrepreneurs are often called upon to prepare formal, written plans. A business plan represents an
investment in the venture. Relationship formal planning and performance weak. Planning is an activity
embedded in both the wider strategy process of the organization and the control strategy of the entrepreneur.
Good planning leads to better performance. Planning, if it is approached in a way which is right for the venture
and is aimed at addressing the right issues, would seem to offer a number of benefits.
19.2 The role of the business plan
As a tool for analysis: a business plan contains information. Provides a checklist of information to be gathered.
As a tool for synthesis: planning exercise acts to synthesise the entrepreneur’s vision with a definite plan of
action in a unified way. Coverts the vision into a strategy for the venture, and then into actions appropriate to
pursuing that strategy.
As a tool for communication: business plan for communicating the potential of the venture, the opportunities it
faces and the way it intends to exploit them in a way which is concise, efficiënt and effective.
As a call to action: provides a detailed list of the activities that must be undertaken, the tasks that must be
performed and the outcomes that must be achieved if the entrepreneur is to convert their vision into a new
world.
19.3 What a business plan should include
The information depends on what stage the venture is at.
Mission
● The mission for the venture
Overview of key objectives
● Financial objectives
● Strategic objectives
17
,The market environment
● Background to the market
● Competitors
● Competitive conditions
● Competitive advantage of the venture
● Definition of product offerings
● Definition of target markets
Strategy
● Product strategy
● Pricing strategy
● Distribution strategy
● Promotional strategy
● Networking
Financial forecasts
● Income
● Routine expenditure
● Capital expenditure
● Cash flow
Activity
● Major projects
People
● Key players in the venture
19.4 Business planning: analysis and synthesis
Information has a cost and must be gathered with an eye to how it will be used. Information is used to manage
uncertainty. Planning is about analysis; about breaking down information to spot opportunities and possibilities.
Strategy is about synthesis: bringing the capabilities of the business to bear on the opportunity in a way which
is creative and original. Synthesis must include both the strategy content and the process to deliver it.
18
,19.5 Business planning: action and communication
Communication is an attempt to elicit a particular response from someone. Business plan is a communication
that relates in a succinct way a precise and unambiguous account of the venture and what it aims to achieve.
Investors | Potential of the venture and rewards, but also risk.
Employees | Employees make their own investment in the business by committing themselves to it and can
give them confidence about the future.
Important customers | a customer may face a cost in taking on a new supplier. Sharing the business plan with
the important customers in an effective way of giving them confidence in the entrepreneurial venture and
encouraging them to make the necessary commitment.
Major suppliers | Suppliers may also need to make an investment if they wish to supply the venture. The
business plan may be used to give them the confidence to make an investment of time and resources on
behalf of the venture.
19.6 Structuring and articulating the business plan: the Pyramid Principle
Impact and influence of business plans are determined by how things are said as well as what is said. The
way the business plan is delivered makes the differences too.
Minto (1996): First, given that the recipient is likely to take away only one ‘big idea’, we should aim to control
what that is, rather than let the recipient do it for themselves. Second, we should order information in a way
that builds a hierarchy (a pyramid) of understanding under our control rather than deliver the information
linearly. ‘Big idea’: important what we want the recipients to do, rather than we would wish them to know.
Pyramid structure of business plan.
Introduction: invitation to the recipient to read the plan and to engage them. Also for the structure.
The venture’s mission
Key objectives: Market gap, customer needs and expectations, customers’ attitudes to products already
available, recent developments in the product category, long-term profitability and growth
Summary
19.7 Strategy, planning and flexibility
Many entrepreneurs see written plans as restrictive, and feel that it reduces their room for manoeuvre.
19
, Focus on ends rather than means | Goals should be given priority over plans. It is what the business aims to
achieve that matters.
Challenge assumptions | What are the assumptions on which the plan is based and how sensitive to it is the
plan?
Model scenarios | Determine what scenarios will result if an optimistic, a pessimistic and a realistic attitude is
taken to the outcomes that are expected.
Create strategic flexibility | Strategic flexibility is a way of doing things well when faced with uncertainty.
Involves actively responding to outcomes and adjusting activity.
Leave space to learn | The good business plan identifies and highlights those areas where learning can take
place.
Chapter 25 - Closing the window: sustaining competitiveness
25.1 Long-term success and sustainable competitive advantage
Must close the strategic window to limit the possibility that competitors will follow them and exploit the
opportunity as well. Sustainable competitive advantage: approach to recognising the ways in which the
strategic window can be closed to help guarantee long-term success in the marketplace. Competitive
advantage: what the business offers to the marketplace. Source: how the business is set up to deliver that
offering to the marketplace.
Competitive advantage: is present if the business consistently offers the customer something which is different
from what competitors are offering, and that difference represents something valuable for the customer.
- Lower price
- Differentiating in features / performance
- Differentiating in service
- Differentiating in branding
- Differentiating in brand imagery
- Differentiating in access / distribution
20
