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A Guide to Starting Your Hedge Fund by John Thompson, Erik Serrano Berntsen

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Appendix A

Sample Business Plan Outline

As described in Chapter 5, a business plan will have multiple uses during the early stages of a hedge fund's life. Initially, a business plan will likely serve as a planning document for the hedge fund founder. Later, during licensing or registering procedures, regulators will often ask for a business plan. The business plan that might be required by a regulator will likely focus on different aspects of the business and be more focused on demonstrating that regulatory requirements have been accounted for. Further, much of the information in a hedge fund's business plan will eventually find its way into a fund's PPM (see Appendix B) and due diligence questionnaire (see Appendix C). The outline below provides a menu of options for an aspiring hedge fund manager to consider, including when creating a business plan.

  1. Cover Page
  2. Table of Contents
  3. Introduction: Nature and Scope of Business
    1. Industry Overview
    2. Investment Philosophy and Strategy
    3. Relevant Experience and Historical Performance
  4. Risk Management
    1. Market Risk
      1. Identify Market Risk Factors
      2. Risk Systems, Use of Hedging, and Other Risk Management Tools
    2. Operational Risk
      1. Identify Operational Risk Factors
  5. Team
    1. Biographical Information of Key Team Members
    2. Organizational Chart
  6. Clients and Business Development
    1. Current and Prospective Clients
      1. How Will Clients Be Serviced?
      2. How Much Transparency Will Clients Have?
      3. How Frequently and With What Method(s) Will Clients Be Contacted?
        1. Newsletter ...

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