Business Plan

Business Description

1. The name of the venture with any special significance related (such as family name and technical name)

2. The industry background (both current status and future trends) - It is important to note any special industry developments that may affect the plan.

3. The new venture with its proposed potential (including functional specifications or descriptions, drawings, and photographs)

4. The potential advantages the new venture possesses over the competition (such as patents, copyrights, and trademarks, as well as special technological or market advantages)

SWOT Analysis

Critically examining an organization and its environment and identifying key elements that influence the organization’s current and future competitive position

Strengths such as financial resources, defendable patents, brand recognition, human-resource talent, and loyal customers

Weaknesses such as insufficient financial resources for some needed investments, a decreasing market share, old product lines, and poor corporate image

Opportunities such as new product or service lines, an unused customer base, and improved operational efficiencies for lower costs

Threats such as emerging technologies that make our products or services obsolete, new competitors entering our markets, and existing competitors introducing innovations that enhance their competitive position relative to ours

Mission

A mission statement broadly outlines the organization’s future course and communicate “who we are, what we do, for whom we do it, why we do it, and where we’re headed.”

Examples: Microsoft: To enable people and businesses thro

ughout the world to realize their full potential Google: To organize the world's information

and make it universally accessible and useful Intel: To d elight our customers, employees, and

shareholders by relentlessly delivering the platf orm and technology advancements that becom

e essential to the way we work and live

Objectives

An objective is a specific measurable result expected within a particular time period, consistent with the mission statement.

Examples: To achieve sales of €10 million in European

markets in 2010 To reduce operating costs 5 percent by 2009

through partnership To reduce customer complaints related to

communication from 20 per week to 5 per week To become the leading, innovative systems

company within the xx market segments by 2010

What i s a niche market?

A niche market is a homogeneous group with common characteristics-that is, all the people who have a need for the newly proposed product or service.

A niche market is a narrowly defined group that includes all of the following:

1. Individuals in the group have the same specialized interests and needs.

2. They have a strong desire for what you offer.3. You have (or you can create ) a compelling reason for

prospects in the group to do business with you instead of with someone else.

4. You can easily reach individual prospects within the group.5. The group is large enough to produce the volume of

business you need.6. The group is small enough that your competition is likely

to overlook it.

Marketing Strategy

1. The kinds of customer groups to be targeted by the initial intensive selling effort

2. The customer groups to be targeted for later selling efforts

3. Methods of identifying and contacting potential customers in these groups

4. The features of the product or service (quality, price, delivery, warranty, and so on) to be emphasized to generate sales

5. Any innovative or unusual marketing concepts that will enhance customer acceptance

6. The initial market size – national or regional7. Any seasonal trends and how to promote

contraseasonal sales

Pricing Strategy

Skim the cream of the market for high short-term profit (without regard for long term).

Slide down demand curve to become established as efficient manufacturer at optimum volume before competitors become entrenched, without sacrificing long-term objective (e.g., obtain satisfactory share of market).

Compete at the market price to encourage others to produce and promote the product to stimulate primary demand.

Market penetration to stimulate market growth and capture and hold a satisfactory market share at a profit through low prices. (Become strongly entrenched to generate profits over long term.)

Preemptive pricing to keep competitors out of market or eliminate existing ones

Competitive Analysis

The strengths and weaknesses of the competing products or services on the basis of price, performance, service, warranties, and other relevant features

The current advantages and disadvantages of competing products and services and why they are not meeting customer needs

Any knowledge of competitors’ actions that could lead to new or improved products and an advantageous position

A review of each competitor’s: Share of the market Sales Distribution and production capabilities Profitability and the profit trend

Who is the pricing leader, the quality leader, gaining, losing, entering or dropping out of the market?

Operations Segment

The location of the new venture in terms of: Labor supply, wage rates, and needed skilled positions Labor availability Wage rate Proximity to suppliers and customers (the transportation

costs involved in shipping materials) Community support

The facilities required to handle the new venture (plant, warehouse storage, and offices)

The equipment that needs to be acquired (special tooling, machinery, computers, and vehicles) – buy or rent or lease

The cost data associated with any of the operation factors

Management Segment

The key personnel, their positions and responsibilities, the career experiences, and technical capabilities that qualify them for those particular roles

The entrepreneur’s role in the venture Any advisors, consultants, or members of the board The structure of payment and ownership (stock

agreements, consulting fees, salary, compensation agreements, and so on)

The organizational structure using the organizational chart that includes management team and critical personnel, and board of directors and outside consultants and advisors

The Income Statement

A typical income statement has five major sections: (1) sales revenue, (2) cost of goods sold, (3) operating expenses, (4) financial expense, and (5) income taxes estimated.

The income statement: Illustrates the projected operating results based on

profit and loss. Presents the sales forecast (earnings projection),

production costs (based on the level of activity needed to support the projected earnings)

Considers the materials, labor, service, and manufacturing overhead (fixed and variable) as well as expenses as distribution, storage, advertising, discounts, and administrative and general expenses – salaries, legal and accounting, rent, utilities, and telephone

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The Balance Sheet

The balance sheet is divided into two parts: The financial resources owned by the firm The claims against these resources

Traditionally, these claims against the resources come from two groups: Creditors who have a claim to the firm’s assets and can sue

the company if these obligations are not paid Owners who have rights to anything left over after the

creditors’ claims have been paid The pro forma balance sheet:

Projects what the financial condition of the venture will be at a particular point in time

Should be prepared at start-up, semiannually for the first years, and at the end of each of the first three years

Details the assets required to support the projected level of operations

Shows how these assets are to be financed (liabilities and equity)

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Executive Summary

Many people who read business plans (bankers, venture capitalists, investors) like to see a summary of the plan that features its most important parts.

Such a summary gives a brief overview of what is to follow, helps put all of the information into perspective, and should be no longer than two to three pages.

The summary should be written only after the entire business plan has been completed.

In this way, particular phrases or descriptions from each segment can be identified for inclusion in the summary.

Since the summary is the first, and sometimes the only, part of a plan read, it must present the quality of the entire report.

Executive Summary (Cont.)

The summary must be a clever snapshot of the complete plan.

The statements selected for a summary segment should briefly touch on the venture itself, the market opportunities, the financial needs and projections, and any special research or technology associated with the venture.

And this should be done in such a way that the evaluator or investor will choose to read on.

If this information is not presented in a concise, competent manner, the reader may put aside the plan or simply conclude the project does not warrant funding.