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Written Assignment 3 has three parts. Each part provides an introduction followed by a series of questions. You are required to answer all of the questions in parts 1, 2 and 3. The answers can be found using the study materials provided in this module.
Your answers should be well developed and convey your understanding of the question topics.
Do not copy the answers word­for­word; they must be in your own words. However, when it will strengthen your answer, you may quote or paraphrase relevant facts, ideas, and theories from your course reading materials; be sure to cite these references in an appropriate manner by using footnotes or end­notes. Part 1: The time to write a business plan is midway through the the stage of the entrepreneurial process titled "Developing Successful Business Ideas". It is a mistake to write a business plan too early. The business plan must be substantive enough and have sufficient details about the merits of the new venture to convince the reader that the new business is exciting and should receive support. Much of the detail is accumulated in the feasibility analysis stage of investigating the merits of a potential new venture. With this mind, please answer the following questions: 1. What are the two primary reasons for writing a business plan?
A business plan is utilized by a firm internally, and also externally by investors, bankers, etc.
Formulating a proper business plan will allow the firm’s founder(s) to produce an extensive feasibility analysis, and help define how the business plans to startup; along with its subsequent operation. Moreover, an eventual operation business plan is used as framework for the firm so it can follow it’s purpose, goals, and otherwise fulfill its target market.
Meanwhile, when implemented externally, the business plan can be used as information to potential investors, bankers, and other interested parties for feedback and validation, along with securing an asset or service. The same summary business plan developed internally can be readily adapted, if not directly used for external parties. In the end both reasons are intertwined, and developing a plan is crucial to success.
2. Who reads a business plan and what are they looking for?
Anyone who works within the firm will read the business plan and attempt to follows its framework to benefit their company. External parties such as investors, bankers, key recruits, partners, etc. will also read a business plan. Who precisely reads it depends on the type of business plan, as each plan has a defined purpose, and a particular person may refer to a certain plan depending on their involvement with the firm. Internal parties may initially look at the summary plan for holes in it’s logic, and use it to further the firm as it’s developed, since there is a reasonable chance it will be amended. Moreover, once the plan is polished it should be followed in order to further the firm. The mission statement, target market, and overall plan shall be examined closely before it is finalized. An operational plan will be looked at for day to day activities, processes, and other more articulated tasks; which those within a firm will need to be kept indoctrinated with.

3. What are the differences among a summary business plan, a full business plan and an operational business plan?
A summary business plan is created first, and consists of the necessary information to construct a basic plan which encompasses the firm’s plans on a more granular level. It is for the earlier stages of development to explore the viability of the firm, and to be used as framework for later use. A full business plan is expounded on the summary plan, and is very entailed as it includes the entire layout of how the business is to be. inally, an operational
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business plan consists of day to day activities, processes, detailed concepts, and otherwise how the firm operates on a more daily front.
4. Why is the executive summary considered the most important section of a business plan? Why should it be written last?
The executive summary is an overview of the entire business plan, and is typically given to a prospective investor. Its importance lies within the fact that merely a few pages of information will cover the firm’s plans as a whole. Moreover, it’s importance is based within the fact that the information it contains is what an external party will base their interest and initial decisions off of. The firm’s business plan will continually evolve, so although the executive summary will be shown first on the final plan, it should be written last when the business plan has been thoroughly stratified.
5. What is the difference between the industry analysis and the market analysis sections of a business plan?
A industry analysis focuses on the size, growth rate, and sales projections for the firm's industry in question. It examines where the firm plans on conducting business, and is to help the founder(s) understand the industry they plan to work in. It is a broader focus, however, market analysis is less granular, and zeros in on the logistics for precisely where the firm will be doing business. It is where a firm examines a segment of a particular industry and also studies it’s target market. To determine the market segment of interest, the company may use demographics, location, interests, etc. to determine where the firm should conduct its thorough examinations. Moreover, the market segment analysis must have direct relevance with where the firm plans to do business or otherwise who they plan to sell their good or services to get an accurate assessment. In the end, industry analysis is done first to gain a courser understanding of where business will be conducted, whilst a market analysis is started once useful information is gleaned to further its analysis.
6. What is the purpose of a sources and uses of funds statement? The purpose of a sources and uses of funds statement is to document how much money the firm needs if it requires funds from an external source and also where they will be used.
Moreover, it shows where the funds will come from, and otherwise how it intends to procure the funds.
7. What is the number one rule in making an investor presentation?
Following the directions requested by the potential investor is crucial, as it shows respect, honor, and that you’re capable of following the criteria set by the investor. You are going to

attempt to impress an individual, since you reflect your prospective firm, and therefore acknowledging all the requests asked of you is essential.
Part 2: There are many considerations when launching a new business venture. Two main considerations include ethical and legal issues and choosing a business formation that meets your initial goals. With that in mind, please answer the following questions:
1. Why is it important for an entrepreneur to build a strong ethical culture for the firm? A strong ethical culture trickles from the top down, therefore the founders must instill this culture from the start, and build the strong ethical culture with the firm as it develops. The need for proper ethics is so the firm can reduce liability, operate legally, have better long term
PR, etc., due to having the firm’s workforce making the most ethical decisions possible.
2. What are some of the specific steps that an entrepreneurial venture can take to build a strong ethical culture?
Leading through example is important, as those under the leader observe his or her actions continuously, and setting the stage for a strong ethical culture with good leadership is important. Transparency, accountability, and otherwise living by example are ways a leader can instill the desired culture. Furthermore, managers, peers, etc. should also put an effort into displaying this culture, so that others can see it’s a prized attribute within the firm.
Establishing a code of conduct can help outline in black and white how the firm’s workforce should operate. Having such tangibility is important, moreover, the code of ethics is to be used by the firm internally, and can also be displayed externally for the firm’s benefit. 3. Describe the purpose of a nondisclosure agreement and the purpose of a noncompete agreement.
A non disclosure agreement is important as a firm may have particular plans, processes, or other sensitive information which would have negative consequences if disclosed by those involved with the firm. On the other hand, a non compete agreement is to prevent an employee from competing with their former employer for a set duration of time. This is to prevent a conflict of interests, and to otherwise assure the firm won’t foster competition against itself if employees exit the firm.
4. Describe several ways entrepreneurial ventures can avoid legal disputes.
Clarity in agreements, properly created then subsequently signed documents, and other proactive efforts are excellent ways to avoid legal disputes. Meeting all contractual obligations to suppliers, customers, etc. is important to ensure business goes about smoothly, and that the firm maintains a positive image with its associates. Undercapitalization is a pitfall that a firm may fall into. Although it is tempting to retain as much capital as possible, having sufficient equity, and pairing it with sustainable growth is important. A firm with improperly managed capital can have a higher propensity to be faced with legal disputes, as resources are occasionally needed for unforeseen expenses to get a firm through a more taxing time.
Having all agreements in writing provides clarity, reduces misunderstanding, and can mitigate

future friction. Nondisclosure and noncompete agreements can very useful to prevent future disputes in regards to sensitive information or competition with former employees. Finally, setting standards for how the firm conducts business, operates, handles issues, code of ethics, etc. can help the firm’s workforce act in a manner which insulates it against legal predicaments. 5. At what point, during the process of starting a firm, does a business need to focus on the business licenses and permits it needs? Are business licenses and permits the same in all cities and states or do they vary?
If the firm’s business model depends on a certain license which may not be easily obtained than it best be investigated well before its inception. Licenses can vary state to state therefore, research in the city and state in question is very important as the acquisition of a business license may be instrumental to a firm's success.
6. What are the different forms of organization that businesses can choose? (Identify and define each)
The most straightforward kind of business is a sole proprietorship. Barringer, Ireland, and
Duane mention “Sole proprietorships are the most prevalent form of business organization.” It has relative ease of being started, and the only legal requirement might be a business license. It’s no wonder why a sole proprietorship is a frequent choice for an entrepreneur.
Moreover, if the owner wishes to use a fictitious name or DBA they need to file for the title with their respective local government; this is to avoid duplicate names within a given region, and to create a public record of the firm’s title. However, the sole proprietor's company is not a separate legal entity, therefore the person in question is directly taxed, and carries all liability associated with the venture. Liquidity of this form of business is typically low, and since ownership of the business can’t be shared, external investment may not be as prevalent. Therefore, with the aforementioned traits of a sole proprietorship, it may not be very conducive for a more aggressive firm. However, it is a straightforward way for an entrepreneur to start a firm with the least amount of barriers of entry, allows total control over the firm, and is easy to dissolve if so required. Next, is a partnership which can be either a general partnership or a limited partnership. The first is where two or more are part of a firm, where they likely share equal control, responsibilities, etc. There is typically a partnership agreement and the advantages of more than one individual working in a firm is capitalized on with a general partnership. However, the risks associated with a sole proprietorship are shared with a general partnership, and can be magnified as the negligence of one partner may affect the other(s). Due to this shared liability investors could be reluctant about collaborating within a general partnership. However, a limited partnership may address some concerns in regards to investors, and liability. General partners still carry significant risk, however, limited partners are only liable in regards to their investment provided, they do not exert significant influence over the firm. A partnership agreement addresses what the rights and duties are for partners, along with the terms for the eventual termination of the partnership. In the end, a limited partnership is started to raise money, as it is generally more attractive to investors than a partnership, and can spread the risk without forming a corporation. 7. What are the advantages and disadvantages of each?
Hopefully properly elaborated prior in question #6.
Part 3: It is widely known that a well­conceived business plan cannot get off the ground unless a firm has the leaders and personnel to carry it out. Experienced personnel and access to good, quality advice contribute greatly to a new venture's success. Please answer the following questions: 1. What is a new­venture team? Who are the primary participants in a start­up's new venture team?
A firm’s new venture team is the initial group of people who start, and run the firm. They normally consist of the founder(s), key employees, the management team, and a few other select individuals depending on the situation. A board of directors, board of advisors, investors, and other individuals are also part of it in addition to employees. Usually a firm’s new­venture team will grow as the firm requires it, and not all be with the firm on an initial basis. 2. What is the liability of newness? What can a new venture do to overcome the liability of newness?
A firm that is relatively new can have a higher propensity to be unstable when compared to an older and more mature firm. This can manifest when management isn’t able to quickly navigate obstacles, when external firms do not recognize or otherwise have a rapport with them, or other implications which involve a new firm having more liabilities than its established counterpart. However, founders can overcome these obstacles through education; such as workshops, local education centers, and other methods of indoctrinating themselves to offset their disadvantage.
3. Describe the difference between a heterogeneous and homogeneous founding team. A heterogeneous team is one where each member has a different or complementary set of skills which reduces the amount of gaps in the team. For instance, a programmer, a businessman, and marketing expert would form a relatively diverse team which isn’t very homogenous. However, if each member had very similar skill sets, perspectives, etc. then they are considered a homogenous founding team. This form of team will inherently be more cohesive, and otherwise have less potential disputes.
4. What are the personal attributes that affect a founder's chances of launching a successful new firm? In your judgment, which of these attributes are the most important? Why?
A founder(s) prior education, relevant industry experience, networking capability, and personal aptitudes such as motivation are crucial. Without adequate skills starting a firm can

be an insurmountable task; however, with enough drive, ambition, and planning a person can potentially prepare themselves. In my opinion, motivation is the most important attribute in starting a successful venture. Having motivation to succeed, even without the necessary experience, puts you ahead of the person who lack drive and initiative.
5. What is a board of directors? Describe the three formal responsibilities of a board of directors.
A board of directors is a panel of individuals elected by the corporation's shareholders to advise, and otherwise oversee the firm. A firm is legally required to have one if organized as a corporation and therefore is an important topic. The formal responsibilities of a board of directors included: appointment of the firm’s officers, declaration of dividends, and overseeing the firm's affairs. A more recent emphasis is to have the board of directions ensure the firm is operating ethically because scandals, and a heightened interest into stronger ethics within the corporate culture.
6. Discuss the purpose of forming a board of advisers. If you were the founder of an entrepreneurial firm, would you set up an advisory board? Why or why not?
A board of directors is a prerequisite to starting a corporation, however, other forms of companies may also implement them. Having a panel of qualified individuals within a firm, who advise, and oversee can be an invaluable asset within a firm. However, smaller companies might find such additional personnel to be excessive, and not worth implementing.
Barringer, Bruce R.; Ireland, R. Duane (2011­12­09). Entrepreneurship: Successfully
Launching New Ventures (4th Edition) (Page 230). Pearson HE, Inc.. Kindle Edition.