Business Plan ers create a vicious circle of inaccuracy that siness plan on the fr Don't misunderstand me:business plans should 'winning"formula touted by some current how-to 四60 ther the Nor is it a guide o through the key drivers of the venture's success or dent factors critical to every new venture: failure.In manufacturing,such a driver might be The People.The men and women starting and lishincldon aproduction process;in maoware, the impa pate iers The model should also address the break-even The Opportunity.A profile of the business itself- issue:At what level of sales does the business begir what it will sell and to whom,whether the business can grow and fast,what its economics are,who The Context.The big picture-the regulatory plan.Near the back. environment,interest rates,demographic trends What goes at the front?What information does a g00 ange but cannot of ir and also make sure you have asked yourself the Risk and Reward.An assessment of everything HARVARD BUSINESS REVIEW July-August 1997 99 Business Plan neuvers create a vicious circle of inaccuracy that benefits no one. Don’t misunderstand me: business plans should include some numbers. But those numbers should appear mainly in the form of a business model that shows the entrepreneurial team has thought through the key drivers of the venture’s success or failure. In manufacturing, such a driver might be the yield on a production process; in magazine pub￾lishing, the anticipated renewal rate; or in software, the impact of using various distribution channels. The model should also address the break-even issue: At what level of sales does the business begin to make a profit? And even more important, When does cash flow turn positive? Without a doubt, these questions deserve a few pages in any business plan. Near the back. What goes at the front? What information does a good business plan contain? If you want to speak the language of investors – and also make sure you have asked yourself the right questions before setting out on the most daunting journey of a businessperson’s career–I rec￾ommend basing your business plan on the frame￾work that follows. It does not provide the kind of “winning” formula touted by some current how-to books and software programs for entrepreneurs. Nor is it a guide to brain surgery. Rather, the frame￾work systematically assesses the four interdepen￾dent factors critical to every new venture: The People. The men and women starting and running the venture, as well as the outside parties providing key services or important resources for it, such as its lawyers, accountants, and suppliers. The Opportunity. A profile of the business itself– what it will sell and to whom, whether the business can grow and how fast, what its economics are, who and what stand in the way of success. The Context. The big picture – the regulatory environment, interest rates, demographic trends, inflation, and the like – basically, factors that in￾evitably change but cannot be controlled by the entrepreneur. Risk and Reward. An assessment of everything that can go wrong and right, and a discussion of how the entrepreneurial team can respond. HARVARD BUSINESS REVIEW July-August 1997 99