The Evaluation Stage

Successfully launching a new business or initiative requires careful planning and the results of a business planning process are usually captured in a business plan. Any investor or those in an existing business responsible for approving new initiatives will invariably want to see a business plan before making any financial commitment. The business plan, besides being a prerequisite for gaining access to finance, also provides the blueprint for successfully creating and running a new venture. This book describes a business planning process that will generate crucial insights for the entrepreneur or existing business as well as supporting the preparation of a compelling business plan and the creation of a successful business. A business plan describes the business’s vision and objectives as well as the strategy and tactics that will be employed to achieve them. This book provides a practical step-by-step business planning process and a reference for the tools and techniques necessary to complete it. It begins with an overview of a typical business plan and the remaining chapters correspond to the stages of the business planning process described in Chart 1.1 on the next page. The evaluation stage includes developing forecasts (notably for market demand), financial projections and, in some cases, a range of valuations, as well as calculating various measures of performance with which to validate and benchmark the forecasts. The business planning process should test alternative ideas and assumptions, as one of the main reasons for planning is to help the business prepare for an uncertain future. Following stages include an examination of the funding issues and risk analysis, and lastly presenting and gaining approval for the business plan, and then implementing it. Because of the rapidly changing world in which businesses must operate, this guide places considerable emphasis on business planning in the face of uncertainty