Introduction to

Chapter

Planning a
Business

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Learning Objectives
Identify the key stakeholders that are involved in
a business.
Describe the key functions of business.
Explain how to develop a business plan.

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Five Key Stakeholders in a Business

Owners:
Owners:
Organize,
Organize,manage,
manage,and
andassume
assumerisk
riskof
ofstarting
startingaabusiness.
business.

Creditors:
Creditors:
Provide
Provideloans
loansto
tostart
startbusinesses.
businesses.

Employees:
Employees:
Hired
Hiredto
toconduct
conductthe
thebusiness
businessoperations.
operations.

Suppliers:
Suppliers:
Provide
Providethe
thematerials
materialsneeded
neededfor
forproduction.
production.

Customers:
Customers:
Buy
Buyproducts
productswhich
whichsatisfy
satisfytheir
theirneeds.
needs.

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Welcome to Wal-Mart
Everything we do is designed to build
shareholder value over the long haul.
WalBusiness Online
Mart

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Goal of Managers

Maximizing the
firms value.

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Five Key Functions of Business

Management

Marketing

FUNCTIONS
Finance

Accounting
Information
Systems

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Three Common Business Decisions

Management Decisions
Decisions
Management
Marketing Decisions
Decisions
Marketing
Finance Decisions
Decisions
Finance

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Steps for
Creating a Business Idea

Identify Consumer Needs:

Market research.
Assessment of The Business Environment:
Industrial, economic, and global environments.

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Business Plan
Who is it for?
For the Entrepreneur.
For Investors and Creditors.

What does it provide?

Detailed description of the proposed
business,
including types of customers,
competition,
and facilities needed
for production.
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Possible Business Plan Sections

Cover
CoverLetter
Letter
Section
Section11Executive
ExecutiveSummary
Summary
Section
Section22Company
CompanyBackground
Background
Section
Section33Management
ManagementTeam
Team
Section
Section44Financial
FinancialPlan
Plan
Section
Section55Marketing
MarketingPlan
Plan
Section
Section77Location
LocationAnalysis
Analysis
Section
Section88Manufacturing
ManufacturingPlan
Plan

Can be between 25 and 50

pages and take up to six
months to complete.

Business Online

Section
Section99Appendix
Appendix
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Business Plan: Management Section

Organizational structure
Identifies roles and responsibilities of each
employee in the firm.
Production
Decisions about production process, location,
and facilities.
Human resources
Set up work environment that will motivate
the employees to help the business succeed.
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Business Plan: Marketing Section

Target
Target Market:
Market: Profile
Profile of
of the
the target
target customer.
customer.
Product
Product Characteristics:
Characteristics: Detailed
Detailed description
description of
of
product.
product.
Pricing:
Pricing: Proposed
Proposed price
price of
of the
the product(s).
product(s).
Distribution:
Distribution: How
How products
products will
will get
get to
to the
the customer.
customer.
Promotion:
Promotion: How
How products
products will
will be
be communicated
communicated to
to
the
the target
target market.
market.

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Business Plan: Financial Section

Feasibility
Estimate costs and benefits of the business,
including sales forecasts and all expenses.
Financing the Business
Summary of the initial outlay needed to start the
business.

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Considerations in Assessing
a Business Plan

Potential revenue.
Demand for product or service.
Expense of production.
Overall potential for profitability.

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