Business Plan · Web viewThis Marketing Plan shows how the product/service will fit into the market structure discussed in the previous section (Industry, Marketplace, & Competitor

Business Plan, Page 1


Table of Contents1. Executive Summary................................................................................................................4

1.1. Brief introduction and description of the opportunity................................................41.2. Overview of Company...................................................................................................41.3. Product or service description......................................................................................41.4. Industry overview...........................................................................................................41.5. Marketplace and target market....................................................................................41.6. Competitive Advantage.................................................................................................41.7. Business model (with summary of financials)...........................................................41.8. Management (team)......................................................................................................41.9. Offering............................................................................................................................4

2. Company Overview.................................................................................................................52.1. Company description.....................................................................................................62.2. History and current status (stage of development)...................................................72.3. Mission Statement.........................................................................................................82.4. Market and products and service description............................................................92.5. Competitive advantage and market comparison....................................................102.6. Entry, growth, & exit strategies..................................................................................112.7. Proprietary rights..........................................................................................................12

3. Industrial, Marketplace & Competitor Analysis.............................................................133.1. Industry analysis...........................................................................................................143.2. Marketplace analysis...................................................................................................153.3. Competitor analysis.....................................................................................................16

4. Marketing Plan........................................................................................................................174.1. Target market strategy................................................................................................184.2. Product / Service strategy...........................................................................................194.3. Pricing strategy.............................................................................................................204.4. Distribution strategy.....................................................................................................214.5. Advertising and promotion strategy..........................................................................224.6. Sales strategy...............................................................................................................234.7. Marketing and sales expenses and forecasts.........................................................24

5. Operations Plan......................................................................................................................255.1. Operations strategy.....................................................................................................265.2. Scope of operations.....................................................................................................265.3. Ongoing operations.....................................................................................................275.4. Operational Expenses.................................................................................................27

6. Development Plan..................................................................................................................286.1. Development strategy.................................................................................................296.2. Development timeline..................................................................................................296.3. Development expenses..............................................................................................29

7. Management Team................................................................................................................307.1. Company organization................................................................................................317.2. Management team.......................................................................................................317.3. Ownership and compensation...................................................................................327.4. Administrative expenses.............................................................................................32

8. Critical Risks...........................................................................................................................338.1. Market, customer, financial risks...............................................................................348.2. Competitor retaliation..................................................................................................348.3. Management issues.....................................................................................................348.4. Legal risks.....................................................................................................................358.5. Other Areas of vulnerability........................................................................................35


8.6. Contingency plans.......................................................................................................359. Offering (Funding Request)................................................................................................36

9.1 Investment requirements............................................................................................379.2. Offer...............................................................................................................................38

10. Financial Plan.....................................................................................................................3910.1. Detailed financial assumptions..............................................................................4010.2. Financial forecasts...................................................................................................4010.3. Startup costs and capital requirements................................................................4110.4. Financial risks...........................................................................................................4110.5. Exit strategies...........................................................................................................4110.6. Financial statements................................................................................................42

11. Appendices..........................................................................................................................4311.1. Customer Survey and results.................................................................................4311.2. Product Specifications.............................................................................................4311.3. Team Resumes........................................................................................................4311.4. Sample Promotions.................................................................................................4311.5. Product Pictures.......................................................................................................4311.6. And other items........................................................................................................43


1. Executive SummaryMain Purpose: This section provides an exciting distillation of the entire plan and captures its essence.

Length: 2 to 3 pages

Tip: Write first and revise last.

Criteria: o Stands alone and does to refer the reader to other parts of the plan.o The reader's attention is immediately grabbed by some hook!o Sells the distinctive competence for executing the plan.o Sells the strategy for success.

1.1. Brief introduction and description of the opportunity 1.2. Overview of Company

1.3. Product or service description

1.4. Industry overview

1.5. Marketplace and target market

1.6. Competitive Advantage

1.7. Business model (with summary of financials)

1.8. Management (team)

1.9. Offering


2. Company Overview Main Purpose: This section introduces and describes the company. It also presents a clear idea where the company is now and where it is headed.

Length: 2 pages


2.1. Company description

Main Purpose: This subsection provides general description of the business.

Length: 1 paragraph.

Tips: o Consider undervalued existings that are easy to tweak (e.g., low-valued

brand that one could crank-up). Thinking stuff up is hard. Buy the best or something that can be made to be the best quickly and easily almost overnight.

o Consider sheet assets verses liability when purchasing a company and/or already made product/service. When looking at a business, look at financial and other assets of the business (assets do not necessarily equate to financials).

2.1.1. What is the name of the company?

2.1.2. Does the company currently exist or will it be forming?

2.1.3. Does a company exist that can easily be transformed to do your product?

2.1.4. Where is the best place in the world to have the business location?(think about local infrastructure--stable or unstable environment, region, country, local laws/culture--, regulatory issues, people talent, cost of raw materials, tax advantages, etc; remember that business location may not be operations location; and THINK GLOBALLY!)

2.1.5. Where or how will you grow?

2.1.6. How is the company organized (e.g. sole proprietorship, partnership, etc).

2.1.7. What is the product/service offering?

2.1.8. Does the company have a competitive advantage?


2.2. History and current status (stage of development)

Main Purpose: This subsection briefly describes the current status of your product or service.

Related Section: Development Plan (Section 6)

2.2.1. Where is the product in its lifecycle (early, growing, mature, declining?)

2.2.2. Is it ready for the market, or is it in development? (Don't start at Zero and reinvent the wheel!)

2.2.3. If in development, how far along is it and/or how soon until market ready?

2.2.4. What obstacles remain?


2.3. Mission Statement

Main Purpose: The mission statement inspires by an exciting, specific statement of the company's vision and goals.

Length: One sentence to one short paragraph.

Tip: Vision infuses life into any project or endeavor and the lack of vision infuses the dying process (Steven Scott's 5th Law of Extraordinary Success).

Criteria: o The mission statement is specific, not ambiguous (e.g., "employees are our

most valuable asset"). o The mission statement is EXCITING!


2.4. Market and products and service description

Main Purpose: Detailed, yet succinct, description of the products and/or services you will be selling.

Related Section: Marketing Plan (Sec. 4), Product Service Strategy.

Length: One or two paragraphs (details in "The Marketing Plan").

Criteria:o Product/service is carefully explained and described so that someone who is

unfamiliar with it can understand it after reading this subsection.o Product/service generates excitement.o Product/service description is both factual and enthusiastic.

2.4.1. What market(s) needs will your company address?

2.4.2. Who are your target customers? Why will they buy?

2.4.3. Describe the product/service in detail.

2.4.4. What are your current sales and products (if any)?

2.4.5. What are the boundaries of your business?

2.4.6. Explain the uniqueness of your product/service.

2.4.7. What are its features and benefits?


2.5. Competitive advantage and market comparison

Main Purpose: This subsection succinctly positions your product/service in its marketplace.

Related Sections: o Industry, Marketplace, and Competitor Analysis (section) o Marketing Plan (section), Product Service Strategy (subsection)

Length: One or two paragraphs (save details for later)

2.5.1. Who are your principal competitors?

2.5.2. What are their products?

2.5.3. Explain why your product/service is superior to and different from the competition (save details for later).


2.6. Entry, growth, & exit strategies

Main Purpose: This is the only place in the business plan where entry, growth, and exit strategies are detailed.

Criteria: o The entry strategy generates enough cash to 1) fund growth or 2) further

equity financing. Consider using other people's money to make money.o The growth strategy focuses on the scalability of the product.o The growth strategy also focuses on other revenue streams the company

will pursue.o An exit strategy is considered in this section (begin with the end in mind!).

2.6.1. Where are you going with the company?

2.6.2. What are your goals for the company (keep it small, grow it big, franchise)?

2.6.3. What is the exit strategy for the business and investors (sell to larger company, go public, buy out investors, etc)?


2.7. Proprietary rights

2.7.1. Patents, copyrights, trade secrets, non-compete agreements?

2.7.2. Any planned for the future?

2.7.3. Other proprietary knowledge or skills?


3. Industrial, Marketplace & Competitor Analysis

Main Purpose: This section dispassionately describes and outlines the industry and the marketplace in which you will compete.

Length: 3 - 6 pages.

Criteria: When finished with this section, the reader understands the dynamics, problems, and opportunities driving the industry and marketplace.


3.1. Industry analysis

Main Purpose: This subsection summarizes the industry in which you will compete.

Tips: o Most of this research will be in a library and come from government

statistics and trade organizations.o Great sources of industry information include 1) suppliers who sell to the

industry, 2) equipment manufacturers, 3) industry analysts.o Do not deal in industries where there are too many deciders, and you have

to get them together to make the decision.

Criterion: Presents a "big picture" overview of the industry's size and scope.

3.1.1. How do you define your industry? (e.g., what is its NAIC code? Do not include code in your plan.)

3.1.2. How is it segmented? How are the segments defined?

3.1.3. What are current trends and important developments in your industry?

3.1.4. Emerging or mature? Fragmented?

3.1.5. Who are the largest and most important players?

3.1.6. Is industry experiencing any problems?

3.1.7. What national and international events are influencing the industry?

3.1.8. What are growth forecasts?

3.1.9. What (if any) barriers are there to getting into the industry?

3.1.10. What perceptions do target customers currently have?


3.2. Marketplace analysis

Main Purpose: This subsection lays out for the reader the specific market in which you will compete.

Tips:o The market will probably be smaller than the entire industry (e.g., in

opening a restaurant, the marketplace will be limited to the city and perhaps a specific neighborhood where it is located).

o Much of the research done for this subsection will involve talking with experts in the marketplace, including potential customers, competitors, sales reps, wholesalers, distributors, and retailers.

Criteria:o Instead of presenting ideas and concepts, this analysis carefully and

analytically describes the larger environment in which your product/service will be participating.

o This analysis identifies voids in the market which are currently not served and which the product/service will fill.

3.2.1. How do you define the marketplace in which you are competing?

3.2.2. How large is it; how fast is it growing?

3.2.3. How is the marketplace segmented?

3.2.4. What (if any) barriers exist to getting in?

3.2.5. What motivates buying decisions?

3.2.6. What companies currently service?

3.2.7. What trends are important?

3.2.8. In what ways are customers dissatisfied with current offering?

3.2.9. What perceptions do target customers currently have?


3.3. Competitor analysis

Main Purpose: This subsection identifies potential direct and indirect competitors.

Related Sections:o Company Overview (section), Competitive Advantage and Market

Comparison (subsection)o Marketing Plan (section), Product Service Strategy (subsection)

3.3.1. Who are the potential competitors? Which are direct competitors? Which are indirect?

3.3.2. What are the attributes and characteristics of these competitors and their products/services?

3.3.3. What are their size, location, target market, and other important characteristics (such as market share?)

3.3.4. For their products or services, identify price, quality, features, distribution, and other important attributes.

3.3.5. What problems and concerns do customers have with these competitors?


4. Marketing PlanMain Purpose: This section ultimately demonstrates viability for your concept. It convinces first yourself, then the reader, that there is an eager market for your product/service. This plan shows how the product or service will fit into the market structure discussed in previous section (Industry, Marketplace, and Competitor Analysis).

Length: 4 pages

Tip: The Marketing Plan will make or break the prospects for your venture. A great idea is meaningless if you cannot find customers.

Criteria:o This Marketing Plan shows how the product/service will fit into the market

structure discussed in the previous section (Industry, Marketplace, & Competitor Analysis).

o There is sufficient customer research conducted for this section with customers and potential customers. It is convicing to potential investors that customers will indeed come flocking to buy the product or service.

o Customer research for this section included A) talking with potential customers to get reactions to product idea, B) conducting focus groups, C) undertaking walk-up or mailed surveys, D) putting up a mock demonstration of concept and soliciting customer feedback, and/or E) other creative ways to get honest customer input about product/service.

o The customer research used a neutral and factual tone to collect data. It did not inadvertently cook the books by projecting enthusiasm for the concept (customers will often pick up on enthusiasm and reflect that enthusiasm back, leading to erroneous conclusions about customer acceptance).


4.1. Target market strategy

Main Purpose: This subsection explains the strategy for defining your target market. It describes the unmet needs of target customers that your product or service satisfies or solves.

Tips:o Be diligent in considering other influencers who can sell product or service

directly or indirectly; e.g., in selling cameras to go on school buses, if the direct buyer (the school) says no, then one can go to the indirect buyers (PTA and parents).

o Make sure there are no insurmountable barriers to this target market.

4.1.1. What segment of the market are you targeting?

4.1.2. What characteristics define your target customers?

4.1.3. How big is your target market? What share of the market will you capture?

4.1.4. Who are your customers? End users? OEM's? Distributors? Retailers? Rich? Poor?

4.1.5. What customer needs does the product fulfill with target market? (products and services that will last, such as those things that people want and need--clothes, shelters, cheaper gas, electric, heating oil, energy, information and communication, healthcare and medical, transportation, etc—and •what people do not like to do, such as go to the doctor or dentist, put gas in their car, etc.)

4.1.6. What problems are you solving for the customers?

4.1.7. How does your product/service make life better or easier?

4.1.8. What evidence do you have that potential customers want your product offering?

4.1.9. How long does it take to convince the buyer to buy?

4.1.10. What is the combination/code to have buyer to buy?


4.2. Product / Service strategy

Main Purpose: This subsection describes how the product or service has been designed and tailored to meet target customer needs. It also describes how the product or service will compete in the target market.

Related Section: Company Overview (section), Market and Product/Service Description (subsection)

Tip: The company and its strategy should follow their founder (the founder continues to be central to his company's identity and has remained as an embodiment of the company's culture and values)

4.2.1. How will the product/service be positioned with customers?

4.2.2. What specific design characteristics of the product/service meet customer needs?

4.2.3. What differentiates it in the target market?

4.2.4. How does it differ from that of your competitors? Or how will you differentiate yourself?

4.2.5. What are its strengths? Weaknesses?

4.2.6. How easy is the product/service to adopt?

4.2.7. Why will customers in your target market buy your product rather than the competitions?

4.2.8. How does your product perfect what customers want? How does it find the most effective way to deliver it?

4.2.9. Are switching costs high or low? Why will customers switch to or select you?

4.2.10. How quickly and effectively can the competition respond to your business? What is your moat?

4.2.11. Does the product have diminishing value, constant, or growth?

4.2.12. Trendmatching

4.2.13. Does the product reflect the comparative advantage for today’s America? (e.g., a dramatic shift away from domestic manufacturing and toward an idea-driven, consumer-focused, value-added economy).


4.2.14. Is your product genuinely global? (e.g., blend more easily into their environments by allowing international customers to explore their own tastes and preferences)


4.3. Pricing strategy

Main Purpose: This subsection explains your strategy and illustrates its effectiveness with marketplace target customers.

4.3.1. What is pricing strategy? Why?

4.3.2. How does your pricing strategy compare with the competition?

4.3.3. What evidence is there that the target market will accept the price points?


4.4. Distribution strategy

Main Purpose: This subsection explains your distribution strategy and why it's best for the marketplace.

4.4.1. How will you distribute?

4.4.2. What distribution channels will be used? Why?

4.4.3. How will you gain access to these channels?

4.4.4. Strategic partnering. How ill you partner with the big boys without being eaten alive? http://goliath.ecnext.com/coms2/gi_0198-213168/Little-fish-big-pond-how.html

http://goliath.ecnext.com/coms2/gi_0198-213168/Little-fish-big-pond-how.html


4.5. Advertising and promotion strategy

Main Purpose: This subsection explains the strategy that will continually inform your target market about the availability of your product as well as its benefits.

Tip: This subsection does not include "word of mouth" as a strategy, which can be a very dangerous form of promotion.

Tip: Have a ubiquitous presence.

4.5.1. How will you advertise & promote?

4.5.2. Who decides what the target customer buys?

4.5.3. Who influences customers?

4.5.4. Who already has these customers and know these people?

4.5.5. How does the customer decide what to buy?

4.5.6. Why will this strategy be effective in reaching target customers?

4.5.7. How does the concept of building brand fit into this strategy? (Tiger Woods is a brand and gets paid a lot for endorsements. Trump is a brand and has made his name so valuable that when one puts "Trump" on the side of a building, condos are worth 20% - 25% more money. There are people who could become brands. The media makes brands. If the brand is strong, clean, and good, it can make other things strong, clean, and good by association.)

4.5.8. Strategic partnering. How ill you partner with the big boys without being eaten alive? http://goliath.ecnext.com/coms2/gi_0198-213168/Little-fish-big-pond-how.html

4.5.9. What reason will the customer have to help you promote the product? What will keep it "on their lips" (i.e. talking about the product or service)? We need to make them feel a certain way when they buy it. They need to feel a certain way to want to promote it - move it from their head to their heart (e.g., green, etc).

4.5.10. Examine and explain needs complements.

4.5.11. What is the combination/code to have the buyer to buy?

4.5.12. Buzz monitoring

4.5.13. Brand complement

http://goliath.ecnext.com/coms2/gi_0198-213168/Little-fish-big-pond-how.html


4.5.14. How will you engage consumers on an almost spiritual level? (e.g., tap into the passions of the customers, suppliers, communities and stockholders? Strive for social and even moral significance.)


4.6. Sales strategy

Main Purpose: This subsection formulates an effective sales strategy.

Tips:o An effective sales strategy is critically important for most manufacturers,

publishers, software firms, and many service providers. Remember, "nothing happens until a sale is made."

o Think about anatomy of the sale. Can it be done online or will it require people. People cost a lot of money; you have to find, acquire, train, motivate, and retain them.

o Consider alternative ways to sell product/service and ways that will generate other revenue streams.

o Consider other influencers who can sell your product or service directly or indirectly. E.g., When selling cameras to go on school buses, if the school (direct buyer) says no, then go to PTA's and/or parents (indirect buyer).

4.6.1. How will it be sold? Personal selling? TV infomericals? Direct mail? Online?

4.6.2. Who will do the selling? An internal sales force? Manufacturer's reps? Telephone solicitors? Online Website (make sure it meets the KISS test)?

4.6.3. How will you recruit, train, compensate your sales force? (Consider Sales personnel who already have relevant relationships with influencers and

buyers.)

4.6.4. Can the sales force sell an assortment of things?

4.6.5. Is there a customer service component to support sales efforts?

4.6.6. How will you support your sales effort? (internal staff, service operations, etc)


4.7. Marketing and sales expenses and forecasts

Main Purpose: This subsection develops marketing and sales expense, sales volume, and revenue forecasts for the planning horizon.

4.7.1. Based on your previous customer, competitor, and market analysis, develop marketing expenses.

4.7.2. Based on your previous customer, competitor, and market analysis, develop sales expenses.

4.7.3. Based on your previous customer, competitor, and market analysis, develop sales volume.

4.7.4. Based on your previous customer, competitor, and market analysis, develop revenue forecasts for your planning horizon (usually 3-5 years). Revenue forecasts can also include additional revenue streams (e.g., if you have a highly visited website, can charge for advertisers)


5. Operations PlanMain Purpose: This section ultimately demonstrates the feasibility of your concept, how value sold to the customer is efficiently produced, and how you will run your business.

Length: 2 pages

Definitions: Operations - the processes used so that your product or service is delivered to the marketplace. Operations can include manufacturing, transportation, logistics, travel, printing, consulting, after-sales service, etc.

Tips: In all likelihood, about 80% of your expenses, employees, and time will be spent worrying about operating problems and opportunities (source: Babson).

Criteria: This section carefully links operations design to the marketing plan (e.g., if high quality is a marketplace competitive advantage, then the operation design will deliver high quality, not low costs. It is impossible to simultaneously have lowest costs, highest quality, best on-time performance, and most flexibility).


5.1. Operations strategy

Main Purpose: This subsection describes how marketing strategies will be fulfilled by operations.

5.1.1. Where is the best place in the world to manufacture your product?(think about local infrastructure--stable or unstable environment, region, country, local laws/culture--, regulatory issues, people talent, cost of raw materials, tax advantages, etc; remember that business location may not be operations location; and THINK GLOBALLY!)

5.1.2. How will you use operations to add value for target customers in your target market?

5.1.3. How will you use operations & win in the marketplace on the dimensions of cost, quality, timeliness, and flexibility?

5.1.4. Which dimensions will you stress and which will you de-emphasize?

5.1.5. What competitive advantage do you have with your operational design?

5.2. Scope of operations

Main Purpose: This subsection describes the scope of operations, and includes details in an appendix, as necessary.

5.2.1. What will you do in-house and what will you purchase (make vs buy?) Why does this make sense for the business?

5.2.2. What will be your relationship with vendors, suppliers, partners, and associates?

5.2.3. What kind of people will you need to hire?


5.3. Ongoing operations

5.3.1. Describe how the company operates on an ongoing basis

5.3.2. Consider processes that need to be developed.

5.3.3. What is the easiest and quickest way to reproduce? (e.g., movies are easily reproducible; Oprah Winfrey became a billionaire by becoming syndicated and getting a percentage from every television station that broadcasted her show.)

5.4. Operational Expenses

5.4.1. Describe operating costs and assumptions that appear in your financial statements.

5.4.2. Discuss the marginal costs for replicating one more product. (e.g. hypothetically, Toyota has an internal cost of $15,000 for its Camry, which it sells for $20,000. This represents a 33 percent markup and gross potential of selling price of 25% margin--gross over selling price. Conversely, MicroSoft has an internal cost of $0.50 for its Windows Operating System Software, which it sells for $200. Looking at a 39,900% markup and gross potential of selling price of 99.75% -- gross over selling price).


6. Development Plan

Main Purpose: This section considers the critical milestones that must be achieved in order to "open the doors for business."

Length: 2 pages

Tips: o Only pay when it works. Do not invest in something where it is your job to make

it work; let someone make it work. You do not want giant think jobs!o Do not start at zero; start at something and make it better. Before you build

something, find out if you can buy it, and buy the company that is already making the product or service (preferably an undervalued company). Buy existing at break-even and then improve.


6.1. Development strategy

6.1.1. What work remains to launch the company and products?

6.1.2. What factors need to come together to make the concept work?

6.1.3. What are you doing to bring them together?

6.1.4. Is there any potential for vertical integration and synergy – high level product mergers (make sure the culture of the company will make that happen)?

6.1.5. What are the risks to the successful implementation of your development plans? Are there technological risks (e.g., we can't make our product work)? Cost risks (e.g., it costs more than we figured)? Competitive risks (e.g., we are preempted in the market by a competitor)?

6.1.6. How will you mitigate these risks? (You may want to address the details of the risks and associated contingency plans in the Critical Risks section.)

6.2. Development timeline

6.2.1. What is your timetable for launching company and products? (Consider adding a chart/table outlining critical milestones and time to complete. A Gnatt or Pert chart is recommended if you are focusing on the milestones needed to be met before the business can open. Go out as far in the future as you have plans (e.g. expansion plans, opening additional stores, etc.)

6.3. Development expenses

6.3.1. Describe the development costs and assumptions that appear in your financial statements.


7. Management Team

Main Purpose: This section convinces the reader that you have a great management team to complement a great business concept.

Length: 2 pages

Tips: o Venture capitalists assert the three important attributes for a successful start-up

businesses: management, management, and management. Many venture capitalists claim they will invest in a strong management team with a mediocre idea, but will decline to fund a weak management team with a great idea (Source: Babson).

o Must have a short-term and long-term incentive plan for partners and managers to join and stay with the company.

o Complete Management Team Checklist

Criterion: This section, while honest, highlights accomplishments/capabilities while mitigating obvious shortcomings/weaknesses (e.g., if you are young and inexperienced, accentuate your energy, capacity for hard work, and willingness to learn, while downplaying your lack of experience).

Master Strategy 8: Identify, Recruit, and Effectively Utilize Partners. Effective Partnering expands talent and compensates for lack of know-how and weaknesses. It is impossible to "shoot the moon" without the right partners. (Source: Steven Scott)


7.1. Company organization

7.1.1. How will you be organized? What does your organization chart look like?

7.1.2. Will you have a board of directors? Who will be on it? What will be their role?

7.1.3. Do you have advisors, strategic partners, and external members (lawyers, accountants, etc., used by the business? (see attachment: Management team descriptions)

7.2. Management team

7.2.1. Key managers: who are they? (Include resumes in the appendix or short bios in this section or both.)

7.2.2. Key managers: what will be their duties and responsibilities?

7.2.3. Key managers: what unique skills do they bring to the venture?

7.2.4. What additions to the management team do you plan? When?

7.2.5. Think about Bill’s concept of 11 or 12 people (the best in their fields).


7.3. Ownership and compensation

7.3.1. What is the ownership and compensation structure of the company? (Include a table of key team members by role, compensation, and ownership equity. Some entrepreneurs choose not to take a salary during the first year or so. This should be noted in the business plan.)

7.4. Administrative expenses

7.4.1. Include a description of administrative expenses that appear in your financial statements

7.4.2. Include company tithing at 10%


8. Critical Risks

Main Purpose: This section demonstrates an understanding of potential problems that could occur with the business and offers contingency plans that deal head-on with these risks. Realistically dealing with risks demonstrates understanding of the environment in which the business functions and that you have sufficiently planned for challenges.

Length: 2 pages

Definition: Critical risks are assumptions, factors, events, etc. that must be present or take place in order for your business to succeed. Critical risks are company specific, yet there are traditional categories such as market interest and growth potential, competitor actions and retaliation, time and cost of development, operating expenses, availability and timing of financing.

Tips: AVOID NEEDLESS RISKS (e.g., are you getting paid to assume the risk?)


8.1. Market, customer, financial risks

8.1.1. List market, customer and financial risks (e.g., obsolescence, cyclical trends in the market, seasonality of products/services, general economic factors, etc.)

8.2. Competitor retaliation

8.2.1. In what ways might your competition respond or try to block your efforts?

8.2.2. Are there cheaper products expected from competitors in the future?

8.2.3. How soon can they imitate?

8.2.4. What are the barriers to keep competitors away?

8.3. Management issues

8.3.1. What policies are in place to assure continuity of leadership?


8.4. Legal risks

8.4.1. Any inherent quality of Product/Service that lends itself to regulatory control or regulatory agency scrutiny?

8.4.2. How are you minimizing the potential for warranty claims?

8.5. Other Areas of vulnerability

8.5.1. Who can think of all the ways we can be taken advantage of in pursuit of this opportunity?

8.6. Contingency plans

8.6.1. How will you effectively respond to all listed risks?


9. Offering (Funding Request)Main Purpose: This section presents your pitch for money.

Length: 1/2 - 1 page

Criteria: o This section clearly spells out and sells the advantages of the proposal to the

investor, and makes it clear how investors can eventually get their money back from the venture

o This section persuades investors that the offered deal is fair to them and is supported by the facts.

o This section does not give away the farm on the first round!


9.1 Investment requirements

9.1.1. Using your cashflow analysis, what investments do you require to achieve your plans?

9.1.2. What is the timing?

9.1.3. Where will the money go? (Receive something good for every dollar you invest. Some of the money used for invested, once invested is gone forever (such as on insurance, rent, utilities, etc)!

9.1.4. State the main figures for start-up costs. Save details for later. Save the statement of startup costs for the financial plan, but you can touch on the main figures here and point the reader to the next section.


9.2. Offer

9.2.1. What is the structure of the deal you are offering or seeking?

9.2.2. How much money do you want?

9.2.3. How much of the company are you willing to give away?

9.2.4. How much interest are you willing to pay?

9.2.5. What collateral do you have for a loan?

9.2.6. What is the planned exit strategy for investors?

9.2.7. What is the date of investment to date of saleable product or service?

9.2.8. What is the anticipated return on investment for investors?

9.2.9. What is the date of investment to date of market penetration and growth? (Must

see quick results in every part of the idea.)

9.2.10. What is the net present value?

9.2.11. Timing: what is your net effect at the point of investment?

9.2.12. What does it take to double profilts?

9.2.13. What is the gross profit margin?

9.2.14. What is CTI, Concept to Income, in $?

9.2.15. What is CTI, Concept to Income, in days?

9.2.16. What is CTP, Concept to Profit, in $?

9.2.17. What is CTP, Concept to Profit, in days?

9.2.18. How much potential does this have in $?


10. Financial Plan

Length: ~ 2 pages of text + statements.

TIPS: o DO include statements within this section; DO NOT place statements in

the appendix.

o The financial plan should be frosting on the cake. You've outlined a great business concept, demonstrated a real need in the marketplace, shown how you will execute your ideas, proven that your team is just right to manage the venture, and now you will show how much money everyone is going to make. Note, however, that if your business concept is weak, or there is not a market, or if your execution is poor, or if your management team is incompetent, then your financial plans are doomed to failure. If you haven't convinced your readers by now in the strength of your concept, then they won't be convinced with your financials.

o Having said this, it is important that you have strong, well-constructed financials. If you can't show that your great concept is going to make (lots of) money, your readers will quickly lose interest. To construct your financials, it is highly recommend that you start with your development and operations plan to create a schedule or timetable of development and operational activities. From these development activities, you can then create cash-flow projections, income statements, and pro forma balance sheets for at least three years into the future, and sometimes five. As a rule of thumb, your financial projections should extend far enough into the future to the point where your business has achieved stable operations – typically five years.

o The Financial Plan should be a discussion and description of your financial projections -- put the actual financial spreadsheets at the end of this section. Describe the timing and amount of investment that you will require to achieve your plans. Then demonstrate that this investment is a good one by showing that profits, assets, and ROI are all favorable as the business progresses. Some of these issues may be covered in the offering section. You must determine the best structure of your plan that enables you to tell the most compelling story.

o Financial Plan checklist Do you have support for your assumptions, trends, and comparisons? Do we have support for your development plan? Have you included relevant financial projections? Cash flow statement Income statement Balance sheet Have you included breakeven analysis? ROI?


10.1. Detailed financial assumptions

10.1.1. What assumptions have you made in putting together your financial forecasts? (Summarize here - include detail in an appendix or footnotes to your spreadsheets, if required.)

10.2. Financial forecastsSummarize your financial forecasts. The detailed statements should be at the end of this section. The first year should include forecasts by month, the second year should include quarterly forecasts, and the final three years should be annual forecasts.

10.2.1. Summarize your financial forecasts.

10.2.2. Break-even analysis

10.2.3. Sensitivity analysis

10.2.4. Key ratios

10.2.5. Growth rates

10.2.6. Best case, expected case, worst case scenarios

10.2.7. How do you double it?

10.2.8. How do you cut expenses in half (half-it)?


10.3. Startup costs and capital requirements

10.3.1. How much money do you need to start the business?

10.3.2. How is this money allocated?

10.3.3. What is the timetable for new capital infusion?

10.3.4. Are you requesting funding? If yes, how much and from whom?

10.3.5. What will the investor receive in return?

10.3.6. Do you need to add in working capital as a cushion?

10.4. Financial risks

10.4.1. What financial risks are inherent in your plan?

10.4.2. How do you plan to minimize these risks?

10.4.3. How will you avoid financial pitfalls?

10.4.4. What is the worst case scenario and how will you respond?

10.5. Exit strategies

10.5.1. What is your preferred exit strategy? Go public? Sell out? Operate and grow?

10.5.2. What is your exit strategy if the business does not develop as you hope? How can you get out?


10.6. Financial statements

10.6.1. Develop a pro-forma financial model for your business.

This should include all of the following:

o A list of key assumptions that drive your financial model. It is strongly encouraged that you find comparable companies and use industry ratios to justify your assumptions.

o Year 1: Monthly and year-end income statements and cash flows; year-end balance sheet.

o Year 2: Quarterly income statements and cash flows; year-end balance sheet.

o Years 3-5: Year-end statements of income, cash flow and balance sheet.

o The first year of your financial statement projections should be month-by-month since cash flows are critical in the early stages of any startup.

o Second year financial statements should be quarterly, and years 3-5 should be annual.

o If possible, it is useful to include best case, expected case, and worse case scenarios with your financials. This allows you and your readers to explore the upside potential and downside risks of your venture.

o Be sure that your financial projections are in congruence with the other sections of your plan. For example, if you say you will open 3 stores in Year 2 and your financials showing you opening 5 stores, readers will quickly lose confidence in your plan.


11. Appendices

Length: No maximum

TIPS: o The appendices are where you should collect all of the documentation

that supports the body of your business plan. o As with the plan as a whole, it should be complete, but succinct. o Include those documents that are helpful (e.g, results of marketing

surveys), and those that assist in selling your idea (e.g., letters of interest from potential customers; menus; promotions).

o Don't include lots of tangential information such as newspaper clippings or tables of data unless they really serve to bolster your plan.

o One way to deal with information that is voluminous and/or lengthy (such as a large market research study) is to summarize it, and note in the plan that the complete document is available upon request.

11.1. Customer Survey and results

11.2. Product Specifications

11.3. Team Resumes

11.4. Sample Promotions

11.5. Product Pictures

11.6. And other items

Documents

Business Plan · Web viewThis Marketing Plan shows how the product/service will fit into the market structure discussed in the previous section (Industry, Marketplace, & Competitor