BUSINESS PLAN DEVELOPMENT I

Overview of Concept & Executive Summary

Basic Questions a Plan Answers

What

is the business of your firm? What is your business really? What will your business become? What is your firm trying to accomplish? What do your customers think your firm is trying to accomplish? Do you know how you are doing?

Identifying Opportunities
Analyzing the Product- (Service-) Market Scope
existing (developed) existing Product improve market penetration; gain market share develop new products; product diversification

Market
new market diversification; extend market scope (e.g. go international) simultaneous productand market diversification

(Service)
new

Key Business Concepts

Business model
Revenue model Value proposition What is the basic principle behind the business? How do you plan to make money? What are your sources of income? How do you plan create value? What is the commercial proposition? What is the customer going to pay for?

Key Business Concepts: Ikea Example

Business model Revenue model Value proposition Ikea is a low-cost retail service provider Sells home furnishing items at retail directly to the public Provides low-cost, easy-to-assemble items in a pleasant shopping environment

Drivers of New Venture Success

PSYCHOLOGICAL CHARACTERISTICS OF EMPLOYEES COMPETITION ORGANIZATIONAL STRUCTURE

SUCCESS

MARKETING STRATEGY

FACILITIES & LOCATION

Developing The Concept Statement

What

customer needs and wants are presently going unsatisfied? How will the requirements of present customers change? What new end-use applications are likely to emerge? What new technologies will be used to meet which needs of customer groups?

Purpose of a Mission Statement as part of the Business Concept

A mission statement will help a company to make consistent decisions, to motivate, to build organizational unity, to integrate short-term objectives with long-term goals, and to enhance communication.

Developing The Concept

What

will competitors do and what difference will this make? What customer needs, wants, and fears are being addressed What customer groups should the organization be getting in position to serve?

Setting The Firms Vision

If

you could wave a magic wand and create anything or everything, what would you create and what would your organization be like after implementing that creation? Where do you see your concept and firm one year, three years, and five years from now?

Characteristics of a Mission
An enduring statement of purpose Distinguishes the company from other firms of its type Identifies the scope of its operations in product and market terms Reveals the image the company seeks to project Describes the principal product or service areas and the primary customer needs being satisfied

THE CONCEPT CHECKLIST

Checklist For The Concept Statement

1. Define the important and distinct functions of the product / service.
Dominos distinct feature was its delivery not its pizza.

2. What are the unique or proprietary aspects of the product / service?

patents, formula, brand name, copyright, trademark, etc.

Checklist For The Concept

3. Describe any innovative technology involved with the product / service.
Whats new or different! (i.e., electric toothbrush, unique organizational structure, new production techniques)

4. Describe the position the concept plays in the industry.

Manufacturing, Distributor / Wholesaler, Retailer, etc.

Checklist For The Concept

5. Who is the intended customer or customer group?
Who will pay for the products or services? Who will use the products or services?

6. What benefits will be delivered to the customer?

What problems are you solving for your customer? (i.e., people buy 1/4 holes, not 1/4 drill bits)

Checklist For The Concept

7. How will the product / service be sold to the customer?
Retail stores, direct sales, manufacturers representatives, telemarketing, distributors, franchising

8. Who will make the product or design the service?

Subcontractor, in-house, home based contractors, etc.

THE EXECUTIVE SUMMARY

Purpose of an Executive Summary

(a) To give the reader a succinct summary of the crucial information about the business plan that follows (b) To supply the information the reader needs to quickly determine whether continued reading is warranted

What to Include in an Executive Summary

A concise statement of the corporate mission & concept

A short description of the product or service offering

A short description of the market opportunity A brief background on founders and management Key financial data, including the amount of money needed and how it will be used

Tips on Preparing an Executive Summary

Write it first, continually, and last Keep the main theme in mind

More risk means more proof

Avoid hype and jargon

Consider a topical rather than a narrative summary

Keep it as short as possible

THE EXECUTIVE SUMMARY CHECKLIST

Checklist For The Executive Summary

1. State the purpose of the business.
Retail, manufacturing, distributor, service, etc.

2. Describe the current stage of development for the venture.

Start-up, initial operations, expansion, rapid growth, stable operations, turnaround, new product

Executive Summary Checklist

3. Describe what is unique about the product / service.
List any proprietary rights the business has (patents, licenses, royalties, distribution rights, franchise agreements, etc.)

4. What form of organization will the business operate under?

Proprietorship, partnership, LLC, limited partnership, S-corporation, or corporation

Checklist: Executive Summary

5. Define and highlight the key management personnel.
What are their skills that will help the new venture? List existing and potential management team members. Complete resumes of existing management team members should be placed in the appendix.

Checklist: Executive Summary

6. Describe and highlight the key support groups for your management team.
Accountants Attorneys Consultants Board of Directors Advisory Councils

Checklist: Executive Summary

7. Describe briefly the following:
Industry Customer Customer Needs Product Benefits Target Markets Market Penetration Plan

Give the reader on overview of the marketing plan

Checklist: Executive Summary

8. Describe your major competitors.
Who is your direct competition Who is your indirect competition Their strengths and weaknesses

9. How much money does the venture need?

For product development, marketing, and operations Highlight how much money is needed to get started How it will be spent?

Checklist: Executive Summary

10. How long will it take for the business to break-even?
Explain how long it will take this venture to turn a profit. Break-even is the level of sales at which total revenue equals total costs incurred and number of units sold Profit is not a bad work.

Checklist: Executive Summary

11. What kind of financing will the company need?
From where will it come from What type of financing -- debt or equity

12. How will the money that the company needs be paid back
Stocks, warrants, loan payment schedules, etc.

Checklist: Executive Summary

13. How much money has been invested in the business to date and where did it come from?
Indicate monetary investment to date

14. What potential innovation of the product / service will ensure long-range growth?
Specifically identify what makes it difficult for competitors to enter

Checklist: Executive Summary

15. Describe any unusual contracts or relationships which the company is or may become involved in.
Include employee contracts, non-compete agreements, buy / sell agreements, off-shore relationships, etc.

QUESTIONS?