CHAPTER 2 LITERATURE REVIEW 2.1 Business Plan Business plan is a detailed study of the organization’s activities, which highlights where the organization has been, where it is owe and where it might get to in the future, and incorporates an action program to achieve these result (M.Coulthard, A.Howell,G.Clarke, 1999:3). The business plan is a written document prepared by the entrepeneur that describe all the relevant external and internal elements involved in starting a new venture. It is often an integration of functional plans such as marketing, finance, manufacturing and human resources (Hisrich,Peter, 1995:113). Based on Business Directory, business plan is a set of documents prepared by a firm's management to summarize its operational and financial objectives for the near future (usually one to three years) and to show how they will be achieved. It serves as a blueprint to guide the firm's policies and strategies, and is continually modified as conditions change and new opportunities and/or threats emerge. The important things that must be considered in making of business plans is implementation details are what make things happen. Your brilliant strategies and beautifully formatted planning documents are just theory unless you assign responsibilities, with dates and budgets, follow up with those responsible, and track results. Business plans are really about getting results and improving your company. 2.2 Business Plan Approach Business plan approach is a series of activities or program are used to develop an idea to become a business plan that is ready to be funded and implemented. On the way of time, the approach has several modifications in order to produce a business plan that is more accurate and reliable. In the traditional business approach, a business plan created by visibility study on their initial idea and then they begin to develop a business plan in accordance with the expected results. Contrary to this traditional approach, modern day startup follows a different model. The new approach states that a typical “company-building business plan” is to be made only when a product has fit the market, or what is called a product/market fit. So before 6 they make business plan they expect, they first doing a market tests to find products that match market demand. Or more known as “Go to market”. The difference in both approaches can be seen in Figure 1. Figure 2.1 Comparison Chart between Traditional Business Plan Approach VS Modern Day Startup Approach 2.3 Product Market Fit (PMF) Marc Andreessen was the first person that used the term: “Product/market fit means being in a good market with a product that can satisfy that market.” [1][2][3] Many people interpret product/market fit as creating a Minimum Viable Product that addresses and solves a problem or need that exists. 1. Marc Andreessen. "Product/Market Fit - EE204". 2. Quora. "How do you define Product-Market Fit?". 3. Marc Andreessen. "The Pmarca Guide to Startups, part 4: The only thing that matters". 7 4. Administration for Children and Families (2010) The Program Manager's Guide to Evaluation. Chapter 2: What is program evaluation. In Alexander Osterwalder's Business Model Canvas paradigm, product/market fit could be interpreted as a business model's value proposition, customer segment, relationship, and channel are fixed without requiring additional pivots. Means a product is said to products that fit market if it’s marketing mix (4Ps: Product, Price, Place, Promotion) did not change significantly. Based on the startup pyramid, product market fit is fundamental in a business because it is exactly what must be met at the beginning. Because after product market fit, we can determine more accurate strategies and scalable business development. Figure 2.2 The Startup Pyramid Marc Andreessen said that business plan before product market fit (BPMF) was not valid and will be valid if after product market fit (APMF). “When you are BPMF, focus obsessively on getting to product/market fit. Do whatever is required to get to product/market fit. Including changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital — whatever is required.” 2.4 Program Evaluation Evaluation is the systematic application of scientific methods to assess the design, implementation, improvement or outcomes of a program (Rossi & Freeman, 1993; Short, Hennessy, & Campbell, 1996). Program evaluation is a systematic method for collecting, analyzing, and using information to answer questions about projects, policies and programs, [4] particularly about their effectiveness and efficiency. In both the public and private sectors, stakeholders often want to know whether the programs they are funding, implementing, voting for, receiving or objecting to are producing the intended effect. 8 5. Shackman, Gene. "What Is Program Evaluation: A Beginner's Guide". The Global Social Change Research Project. 6. "Hints for Conducting Strong Evaluations".