[TEXT: Young African Leaders Initiative Online Training Series]
[Claude Grunitzky] My name is Claude Grunitzky, and this is
“Creating A Business Plan.”
In this lesson, you will learn the value in creating a business
plan and identify the primary elements needed
to make it successful.
[TEXT: Claude Grunitzky, Chairman, TRUE] Writing a business plan is not complicated, but you have to
understand the fundamentals.
If you have a great idea for an innovative
venture and want to start a business based on that idea,
[TEXT: Attract team members Secure capital] you will need to attract team members and secure capital.
[TEXT: Solid business plan] The best way to do this is with a solid business plan.
To convince others to join you in this exciting adventure,
[TEXT: Investors and funders] you will have to pitch investors and funders.
[TEXT: Anticipate questions] Before they put up any money, they will ask you many questions
about your idea, and you will need the answers!
[TEXT: Responses satisfy questions] The business plan will help you formulate the responses that
will satisfy their questions.
But even before you go out and pitch your idea, the business
[TEXT: Issues] plan will help you work out the potential issues and come up
[TEXT: Solutions] with solutions. This is important, whether you’re
working alone or leading a team.
[TEXT: Primary elements of a business plan?] So what are the primary elements of a business plan?
In clear and concise language, your business plan should
[TEXT: Idea Market potential] explain your idea as well as its market potential.
It should list the problems that you expect to encounter,
[TEXT: Risks] and how you intend to solve them. It should detail the risks
associated with your venture and how you intend to reduce
those risks. Your business plan should always begin
[TEXT: Sales demand side] with the sales demand side.
For example, if your idea is to sell a new type of battery for
mobile phones, you’ll need to make assumptions and determine
how many batteries you think you can sell in a given market in
the first year. And then in the second, third, and fourth year.
By the fifth year, perhaps you will expand into new markets and
begin selling different types of batteries and associated
services. Before you can claim that, you will need to do some
[TEXT: Current market] research and find out the size of the current market for mobile
phone batteries. Are there any problems with the batteries
currently being sold in the marketplace? If so, you need to
list those problems, and explain why your battery is better.
Is it because your battery lasts longer, is cheaper, or is
solar-powered, for instance?
In your business plan, you will also need to estimate how much
your battery will cost to produce, and how much you
can sell it for. Your battery can be cheaper than existing
batteries, or it can be more expensive if you are convinced
that your battery is better than what’s on the market.
[TEXT: How much capital to raise] The business plan will help determine how much capital you
need to raise in order to get started and grow your business
in the first few years. Once you’ve explained the sales demand
[TEXT: Use of funds] side, the business plan needs to also list the use of funds.
[[TEXT: Research] This list should cover how much is needed for research, for
[TEXT: Salaries Manufacturing Marketing Distribution] salaries, manufacturing, marketing, distribution,
and everything else you will need for the
company to grow and become profitable.
[TEXT: What makes a successful business plan?] What makes a successful business plan?
Business plans are incredibly useful because they allow you,
your team members and your investors to determine whether
you’re on the right track.
If your market and pricing assumptions are valid,
[TEXT: Affirm your business opportunity] the business plan will help you affirm your business
opportunity. The reason most successful entrepreneurs go
through the process of business planning is because it allows
[TEXT: Important issues] them to step back and think through the important issues
associated with an abstract or unproven idea.
Having thought through these important issues,
the entrepreneur is in a better position to persuade new team
[TEXT: Value] members, investors and other stakeholders of the value of
that idea. The best business plans demonstrate that the
[TEXT: Great idea] founding entrepreneur has a great idea, has identified an
[TEXT: Innovation Passion] innovation, and has a passion for that new product or service.
Because the plan forces the entrepreneur
[TEXT: Put the business under scrutiny] to put the business under scrutiny,
investors will be reassured that the
entrepreneur has done his or her homework,
has assessed the risks, and laid down a
sequence of decisions geared towards establishing
a growing market share.
Of course, entrepreneurs should know that things don’t always
go according to the business plan, and that they should
[TEXT: Prepare for contingencies] prepare for contingencies. By demonstrating potential demand
and an ability to produce goods or deliver services at a profit,
the budding entrepreneur will see the exercise of writing a
business plan as a great way to show that there is a real
opportunity, and that he or she has a game plan to exploit it.
After you’ve completed all the units in this course at YALI.state.gov,
[TEXT: Test your knowledge:yali.state.gov] you can test your knowledge and earn a
[TEXT: YALINetwork: Produced by the U.S. Department of State] YALI Network certificate.