entrepreneurship and technological...

1Entrepreneurship and tehnological management

Course

Business Plan

10.04.2012


Summary

Executive Summary

Company overview

Product and services

Market and industry analysis

PESTLE & SWOT

Market strategy


Executive Summary

Chapter 1


Executive Summary

Business name

Business location

What product or service you sell

Opportunity & Purpose of the plan

Highlights that encourage potential investors to read on, such as

Growth rates

Competitive edge

• What is your competitive edge?

• How is your company different from all others?

• Is there a sustainable value that you can maintain and develop over time?

Exciting new technology or service

Return on investment


Executive Summary

Objectives

Objectives should be specific goals that can be measured

Max 3- 4

Mission

Use to establish fundamental goals for the quality of your business offering, customer satisfaction, employee welfare, compensation to owners.

Keys to Success

They make the difference between success and failure.

Ex: quality control and manufacturing resources for production or costumer intimacy and feedback implementation for services


Executive Summary

The Market

What are the key elements of your marketing strategy?

Competitive advantages

Who is the competition? What is your competitive advantage?

Startup founding requirements

Break-even analysis/ exit strategy & short financial overview

How much funding is required? What is the offering? What is the exit strategy?


Company overview

Chapter 2


Founding Members & Ownership

Founding Members

Who

What background

What roles

(if any) what advisors

Ownership of the company

[ 2. Founding Members & Ownership ]


Status

(If the company exist legally) – what legal form

Other legal details

At what state is the company and / or product/services at?

Proof of concept

Prototype

Beta test

First sale

Expanding the business

[ 2. Founding Members & Ownership ]


Product and services

Chapter 3


Technical overview and features

Description of the product / service

Main characteristics

Main innovation

Product / service package description

Any details relevant in order to distinguish the product

[ 3. Product and services ]


Competitive advantages

Possible comparison with other similar products

Distinguished characteristics that give the product / service an edge over the competition

If this characteristics are hard to copy, even better



Services

If the business is a product, and services are extra

Value added by this services

Competitive advantages added by this services

Uniqueness of the services

Extra profit produced by the services



Proprietary rights (if based on innovation/ patents)

Pending patents

Is the product based on other patents?

Are there any royalties to be paid?



Production challenges

Are there any special challenges needed to be overcome in order to go into production/ mass production?

Generally this is a question related to:

Technical challenges of going from small scale to large scale with new technologies

Row material supply possibility (are there enough materials available?)



Market and industry analysis

Chapter 4


Market overview

Summary on:

What is the market?

Who are the costumers?

Distribution channels

Satisfaction factors

Market size and growth

Trends

Target market

[ 4. Market and industry analysis ]


Description of buying patterns (if applicable) & Key satisfaction factors

How do people in your target customer group choose

between competing products?

What factors make the most difference for your products? Price, or features? Reputation? Image and visibility?

Are brand names important? Or is it simply word of mouth, in which the secret is long-term, satisfied customers?


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Market segmentation[ 4. Market and industry analysis ]

What are the maine market segments?

What are the diferentiators?

Posibble segmentation factors:

Price

Quality

Brand affilation


Target market

Explain your choice of target markets. Explain why your company is focusing on these specific target market groups.

Determine the size of the market segment: numbers of customers, units sold (or transactions) and dollar value of purchases.

What is the expected growth over the next 5 years?

Identify the source of the data.


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Value proposition & competitive edge

What is your competitive edge?

How is your company different from all others?

Is there a sustainable value that you can maintain and develop over time?



Estimated market share and Sales

Market share projections

market share and market size → costumers → sales

Sales projections

Sales projections + price strategy → gross income



Barriers to entry & competition

What barriers to entry do new companies face? Consider the following: Economies of scale: manufacturing, marketing, technological

Customer loyalty: well established brands, long established relationships

Agreements with customers, suppliers, strategic partners

Control of the distribution channel

Switching costs

Capital requirements: high investment

Access to distribution channels: exclusive distribution agreements, dominant position of competitors

Intellectual property: patents, trade secrets, copyrights, trademarks, know-how

Government regulations: defense contracts, import restrictions

Industry hostility to new entrants. Will use all means to drive out new competition: pricing, legal, spreading rumors

Social


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Opportunity

Describe succinctly the opportunity and why it is attractive.

Draw conclusions based on your research.

What is the size of the opportunity? How rapidly is it growing? What trends support the opportunity?

What is the compelling need? What problem are you solving?

What evidence do you have that proves there is a market?

Who is the target market?

What is unique about your product or service? What are the benefits?

What is your competitive advantage?


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Distribution/Sales strategy

How you will sell your product/service is a critical component of your success. Remember, nothing happens until the sale is made.

Describe how your product/service will be sold:

Personal selling? TV infomercials? Direct mail?

Who will do the selling? Company sales force? Manufacturer's representatives? Telephone solicitors?

How will you generate leads?

How will you recruit, train, and compensate the sales force?

How will you support the sales effort (e.g. internal staff, service operations, etc.)?

[ 5. Market strategy ]

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Channel Strategy

Describe how your product/service will reach your customers.

Potential channels

Original equipment manufacturers (OEM's)

Distributors, wholesalers and retailers

System integrators

Value added retailers (VAR’s)

E-commerce

Multi-channel strategy

Identify specific companies that will be your channel partners. Describe how they make buying decisions.

Describe the discussions that you have had and any commitments that have been negotiated.


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Pricing Strategy

Possible strategies: Commodity pricing

Set by the market

Supply and demand

Based on competitor(s) price

Value pricing - how much the customer is willing to pay for value received

Payback period – depends on impact on company profit

Introductory low price to get customers to use

Cost plus + markup

Razor & razor blade


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Communication Strategy

Channels / strategies:

Media advertising (TV, radio, newspaper and magazines)

Direct response advertising (mail, email, text messaging, infomercials)

Outdoor advertising (billboards, posters, cinema, vehicles)

Brochures, catalogs, specifications, manuals

Point-of purchase

Trade and consumer promotions

Sponsorships and event

Exhibitions and conferences

Public relations

E-commerce

Strategic alliances

Advertising budget

Total advertising cost for 1 paying costumer


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Development and barriers of entry

Chapter 7


Development strategy

Identify 5 to 10 key events that must take place for your venture to succeed. The focus should be over the next 2 to 3 years. For each step indicate the completion date. Consider the following:

Product and process development

Intellectual property

Marketing strategies, e.g. advertising launch, catalog mailing, website launch

Agreements with key customers, distributors or suppliers

Strategic alliances

Roll-out strategies, e.g. by regions, new products, new channels

Facility construction and equipment installation

Market and beta tests

Key hires, e.g. sales manager

Funding

[ 6. Development and barriers of entry ]

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Product improvement and new products

In order for your company to succeed, you will need to:

Respond to competition improvements

Take lead and impose new trends

Periodically impose new products

Plan the next improvements

Do not include all your ideas in the first phase

• Not economical feasible to include them all

• Harder to respond to competition responses if you do not have something prepared

Examples: the IPAD – apple did not include simple extra options / better hardware in the first versions in order to have a easy way to upgrade the next versions

[ 6. Development and barriers of entry ]


Management team and organization

Chapter 9


Organization structure

Describe how your company will be organized.

Organization chart.

Board of directors?

• Who will be on it?

• What will be their role?

Board of advisors?

• Who will be on it?

• What will be their role?

What is the ownership structure of your company?

• What percent of the company do each of the founders own?

[ 9. Management team and organization ]

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Key management personnel

Describe the founders and principal managers who will run your firm.

Write a short paragraph on each of the key managers? (Include resumes in the Appendix)

What will be their duties and responsibilities?

What unique skills do they bring to the venture?

How will they be compensated?

Is there a significant “hole” in the team? How do you propose to fill it?

[ 9. Management team and organization ]

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Financial Plan

Chapter 10


Important assumptions and risks

Explain the key financial drivers of the venture. What assumptions have you made that will determine the financial success of the business?

[10. Financial Plan ]

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What are the customer acquisition costs? Very important.

What minimum number of customers per day and average selling price is assumed?

What level of costs per unit must be achieved?

What level of discount is assumed for

the distribution channel?

What are the lease costs for the site?

What is the development cost and

timing of a new product


Important assumptions and risks

Market

Size of market

Competitor’s response

Long sales cycle

Price that customers are willing to pay

Closing window

Strategic

Establishing strategic partnerships

Operational

Large number of interrelated components

Costs

Quality level

Technology

Will it work?

Patentability

Time and cost to development

Scalability

Financial

Risk/return

Dilution

Macro-economic

Volatile industry

Government approval

New regulations and laws

Exchange rates

Interest rates


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Important assumptions and risks[10. Financial Plan ]


Startup founding requirements

Estimate the initial capital requirement

Start-up expenditures (legal, administrative)

Buffer money for all costs until sales completely cover expenditures

Investors do not like to invest all the money at once

If you need 100 units for the first 6 months, 100 units for the next 6 months and 100 units for the next 12 months, do not ask for 300 in month 1 (this would mean 200 units stuck in the bank)



Break-even analysis

Breakeven Point = Fixed Costs/(Unit Selling Price - Variable Costs) → units needed to sell



Sales Forecast

What growth rates are you expecting for the more important lines, and what growth rates in units, and in dollars?

Why are you projecting your sales at this level? Why not less or more?

What are the main driving forces behind the sales forecast?

How does it relate to your market analysis, your main target segments, your sales strategy and marketing strategy?

Is your sales forecast believable? Why?

What events might turn the sales forecast downward?

What kind of things are you assuming will happen to make sure the sales happen?


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Financial projections (details beyond the scope of this course) [10. Financial Plan ]

Projected Profit and Loss

Projected Cash Flow

Projected Balance Sheet

Business Ratios

Check an working example @

http://blog.guykawasaki.com//RedfinFictitiousModel.xls

http://blog.guykawasaki.com/RedfinFictitiousModel.xls


Financial projections (details beyond the scope of this course) [10. Financial Plan ]

Profit & Loss Statement:

Revenues & Expenses accruing over a period of time

Balance Sheet:

Assets & Financing at a point in time

Cash Flow:

A detailed look at actual cash inflows and outflows over a period of time


Profit & Loss (P&L) Statement

• Revenue (after discounts)

• Cost of Goods Sold (COGS)

•Direct product cost

•Mfg but NOT R&D

• Gross Margin or Gross Profit

• Departmental Expenses

• Operating Profit / Loss

•Earnings before interest and taxes (EBIT)

•EBITDA (Earnings before interest, taxes, depreciation, amortization)

Revenue 50.0$ 100%

Cost of Goods Sold 20.0$ 40%

Gross Margin 30.0$ 60%

Sales & Marketing 15.0$ 30%

R&D 5.0$ 10%

G&A 2.5$ 5%

Total Expenses 22.5$ 45%

Operating Profit 7.5$ 15%

How it looks



Practical Considerations

Chapter 11


Business Plan in a Slide[11. Practical Considerations]

What is the pain? What problem is being solved?

What is the market we shall be in?

What is our business model?

Who is going to hurt us and how bad?

How we are going to achieve our objectives?

How am I going to clone and complement myself?

How are we going to make money?


Reasons for Having a Business Plan[11. Practical Considerations]

Helps asking better questions

Helps with organizing the business

Helps drawing boundaries

Helps focus on the essentials

Helps keeping things untangled

Enhances communication

Offers a balanced perspective


Common Business Plan Temptations to Avoid[11. Practical Considerations]

Temptation to elaborate it too much

False sense of security

Temptation to create a too rosy future

Illusion of control, especially in the long run


Is It Worth the Whole Effort?[11. Practical Considerations]

It disciplines you

Leaving your emotions out of the equation. Keeping the score better though milestones, deadlines, KPIs.

It opens your eyes

Separate Real from Fantasy, Present from Future, Strategy from Tactics, Project from Operations.

It sells your business and your idea

Partners, Colleagues, Investors

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