Table Of ContentBUSINESS
PLANS THAT
WORK
A GUIDE
FOR SMALL
BUSINESS
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S E C O N D E D I T I O N
BUSINESS
PLANS THAT
WORK
ANDREW ZACHARAKIS
STEPHEN SPINELLI
JEFFRY A. TIMMONS
New York Chicago San Francisco Lisbon London Madrid
Mexico City Milan New Delhi San Juan Seoul
Singapore Sydney Toronto
A GUIDE
FOR SMALL
BUSINESS
Copyright © 2011 by Andrew Zacharakis, Stephen Spinelli, and Jeffry A. Timmons. All rights reserved. Except as
permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed
in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the
publisher.
ISBN: 978-0-07-175257-2
MHID: 0-07-175257-9
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Contents
Preface vii
1 Entrepreneurs Create the Future 1
2 Before You Start Planning, Ask the Right Questions 25
3 Getting Started 43
4 Industry: Zoom Lens on Opportunity 57
5 Company and Product Description: Selling Your Vision 79
6 Marketing Plan: Reaching the Customer 89
7 Operations and Development: Execution 103
8 Team: The Key to Success 119
9 The Critical Risks and Offering Plan Sections 127
10 Financial Plan: Telling Your Story in Numbers 137
11 Conclusion 157
Appendix 1: Quick Screen Exercise 169
Appendix 2: Business Planning Guide Exercise 173
Appendix 3: Sample Presentation 179
Index 187
About the Author 197
v
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Preface
We have worked with over a thousand students of entrepreneurship,
invested in a score of companies, and created a dozen start-ups. We’ve
worked in, consulted for, and advised businesses across several continents
and innumerable industries. Our experiences have brought us a special
appreciation of the value of business planning.
Some people will argue that writing a business plan is time consum-
ing and obsolete the minute it emerges from the printer. They miss the
point. The process of creating the plan is very important. The business
plan isn’t just a tool to raise capital; it is a process that helps entrepreneurs
gain deep knowledge about their ideas. The discipline that the planning
process provides helps you assess the nature of the opportunity and cre-
ates a greater ability to shape a business model to exploit it.
Will your business model change once you start the business? Prob-
ably. Going through the business planning process will result in modif-
cations even before you launch the business. But, we guarantee that the
act of business planning will save you countless hours and sums of money
in false starts simply because it will help you anticipate the resources
required and the pitfalls that may arise. Even though business planning
can’t help you anticipate every potential problem, the deep learning will
more than offset the cost of writing the plan.
Book Design
This book will illustrate a proven and innovative approach to writing a
business plan. Each chapter will introduce different components of the
vii
viii • Preface
planning process. Also, each chapter will illustrate the concepts by high-
lighting Lazybones, an actual company that was planned and launched
and is currently operating. The key feature of this section is the comments
in the margins that point out various aspects of the plan that are good
and others that need work. As you progress through the book, you will
become familiar not only with the process but also with the Lazybones
opportunity.
A word of caution: Your business plan will vary from the Lazybones
plan in many ways. While there is a consistent core to the business plan-
ning process, each company has a unique story. The nature of your com-
petitive advantages and the emphasis of each component of your business
plan will vary from Lazybones and every other start-up.
As you begin this exciting adventure in the world of entrepreneur-
ship or as you take a second look at your current business, we hope you
look at this as a process, not a single event or transaction. The com-
pleted business plan is only one step in the journey. There are many more
steps that will have you continually shaping, adjusting, and rewriting the
plan. The important message of this book is the idea that the business
planning process is one of learning, growing, and becoming an expert
in your industry. Going through the process helps you anticipate the
future and thereby save time and money. This is a high-yield investment
in your future success. Internalize this way of thinking and you will move
beyond the failure rule and hit the thresholds that lead to success and
value creation.
We hope you will fnd this book useful as you embark on your life in
entrepreneurship. Good luck.
A special note
This book was originally coauthored with Jeffry Timmons. Jeff passed
away a few years ago, but his infuence remains powerful. He was an
accomplished entrepreneur, a brilliant scholar and teacher, and a dear
friend.
ENTREPRENEURS
CREATE THE
1 FUTURE
The weight of this crisis will not determine
the destiny of this nation. The answers to
our problems don’t lie beyond our reach.
They exist in our laboratories and universi-
ties; in our felds and our factories; in the
imaginations of our entrepreneurs and the
pride of the hardest-working people on
Earth.
-President Barack Obama
Address to Joint Session of Congress,
Tuesday, February 24, 2009
ntrepreneurship runs deep in the American psyche. Many of today’s
heroes are celebrated for their entrepreneurial achievements. Sergey
EBrin and Larry Page, Jack Dorsey, Mark Zuckerberg, Bill Gates,
Steven Jobs, Sam Walton, and Arthur Blank among others have created
businesses that are household names (Google, Twitter, Facebook, Microsoft,
Apple, Wal-Mart, and Home Depot). Moreover, many of today’s leading
companies were founded at the depths of recession, such as IBM, Micro-
soft, GE, FedEx, Hewlett-Packard, Revlon Cosmetics among many others.
In fact, a study out of the Kauffman Foundation fnds that more than half
of the 2009 Fortune 500 companies and nearly half of the 2008 Inc. 500
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