the general area of energy, they focused on delivering massive amounts of emission-free energy that could occur in all kinds of weather conditions. This focus eventually led to concentrating on new designs to create and deliver nuclear energy that were technically feasible and developing the necessary plans for achieving this.
The group formed TerraPower, Inc. in Bellevue, Washington, and hired John Gilleland, founder of Archimedes Technology Group, a company that developed solutions for the disposal of nuclear waste, as CEO of the company. Since TerraPower did not require any public funding, the nuclear power startup could more easily develop an affordable endless supply of electricity through engineering an innovative traveling wave reactor (TWR) technology that would run on depleted uranium. Requiring a very small amount of enriched material to start, the wave reactor would slowly burn over decades the depleted uranium without refueling. This would provide better control of costs and reduce any opportunity for theft by terrorists.
The supply source of depleted uranium was enormous, with over 680,000 metric tons in just the United States. In addition, the coolant in the reactors would be liquid sodium, which is much softer water, just in case of an earthquake or another natural disaster such as happened in Japan in 2012.
As called for in the plan, the company had about 60 employees by March 2013 and has the objective of having a prototype ready for testing in 2022. This projected timeline is reasonable despite the technological and particularly the licensing problems associated with nuclear reactors.
The plan requires developing a brand-new supply chain for the components of the technology, a feat in itself. The distinctive fuel assemblies needed will require nontraditional materials and manufacturing techniques. Over 100 partner sources have been approached such as Massachusetts Institute of Technology, the University of Michigan, Kobe Steel, and Toshiba to develop the supply chain and conduct the necessary research.
As occurred in the development of TerraPower, Inc., a business plan is an important part of the new venture process, as it provides a road map for implementing the entrepreneurial strategy established. Strategy is defined in the strategic management literature as developing a plan for creating and operating a profitable new enterprise through the obtainment and development of internal and external resources in alignment with the environment (Dess & Miller, 1993; Mintzberg & Quinn, 1991; Pearce & Robinson, 1992; Thompson & Strickland, 1992). Strategy exists at various levels in a new venture, such as enterprise, corporate, business, functional, and subfunctional, so that implementation can occur throughout the firm.
A key aspect of developing a strategy at each level is establishing goals. Goals need to be difficult to achieve and represent a challenge for the new venture and yet realistic enough to be achieved with effort. Such is the case of the goal of TerraPower of having a prototype traveling wave reactor available in 2022.
To accomplish the goals established and implement the strategy, it is best to write a business plan before an entrepreneur goes very far in creating and starting a new venture. While the original plan developed will be modified and changed many times, remember, “If you do not know where you are going, any road will get you there.”
Chart 2.1 presents a schematic representation of the material covered in this chapter.
Chart 2.1 Schematic of Chapter 2
Purpose of Writing a Business Plan
Most entrepreneurs prepare a business plan for two reasons: to provide a road map for developing, managing, and operating the business and to raise outside equity or debt capital. While arguments can be made for and against writing a business plan, if financing is needed from an outside source, then a business plan needs to be written for this source to review.
Writing a business plan can be very difficult for entrepreneurs, as they are usually individuals characterized as doers, not planners. But it is not acceptable to hire someone to write the plan, as the task needs to be done personally. While outsiders (accountants, consultants, lawyers) can be used for input in terms of numbers and pieces of the plan, the final business plan needs to be developed and written by the entrepreneur and any initial top management team members when needed and appropriate. By doing this, the entrepreneur ensures that he or she is very familiar with all the details of the plan to be able to present it to outside sources of finance and make sound decisions that will affect the new venture. Every outside investor expects the entrepreneur to be knowledgeable about and totally involved in the proposed enterprise.
Developing the business plan takes energy, money, and time, with time being one of the most costly aspects. Since each business plan deals with an economy(s) and industry(s), a hidden cost of writing a business plan is a psychological one—understanding and knowing that anything can go wrong. This is particularly difficult for entrepreneurs who are overall optimistic and believe in themselves and their capabilities.
Benefits of a Business Plan
Since a business plan details the entrepreneur's vision in writing and indicates the implementation strategy and the costs involved, it has several benefits:
1 Determining the amount and timing of resources needed. The business plan indicates the existing resources of the firm, the resources needed, and some potential suppliers of these resources. This allows the entrepreneur to determine how much money is needed at various times to obtain these resources and what approach to develop and use to obtain the money as well as any other resources. The money will be obtained from outside capital providers. Other resources needed are in the areas of supply, distribution, personnel, and support services.
2 Establishing the direction of the firm. Since the business plan is a comprehensive document, it treats all the major issues faced starting and growing the venture. This enables the entrepreneur to develop strategies and contingency plans to reduce the impact of any problems.
3 Guiding and evaluating. By setting goals and milestones for the new venture, the business plan lays out the intentions of the entrepreneur as well as his or her values. Accomplishments and results can be measured and any deviations from the plan corrected in a timely manner. These results should be reported to all interested stakeholders and to outside providers of financial resources on a regular basis, usually four times a year if not more frequently, such as every month in at least the first year.
4 Avoiding conflicts. By being put together by the entrepreneur and the management team and being reviewed and revised frequently, the business plan can be used to guide decisions and help avoid conflicts among the entrepreneur, management team, employees, outside vendors, and financial providers. The amount of energy and resources needed to launch and grow something new is enormous, with the risks being high; the new firm requires reinvestment and seems to always need more time and money. This requires significant sacrifice by the entrepreneur in terms of short-term income and people and family. There are often individuals hurt by the tough personal decisions that an entrepreneur needs to make.
Elements of the Business Plan
While there are some variations on what goes into a successful business plan, they all have the same essential elements (aspects). These can be grouped into three sections:
Section 1: IntroductionTitle (Cover) PageTable of ContentsExecutive Summary
Section 2: Body of
