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Transcript of Business Plans & Market Research
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The Successful Business Plan:Secrets & Strategies
by Rhonda Abrams
Fourth Edition
Published by
The Planning Shop
Palo Alto, California
Getting Your Plan Started
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Business Plan Process
Lay out concept
Gather data
Refine concept based on data gathered
Outline specifics of the business
(e.g., the sections of your business plan)
Put your plan in compelling form
Making Your Plan Compelling
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Questions most likely to be
asked by readers of your plan: Is the idea solid?
Is the market large enough?
Are the financial projections realistic andpositive?
Is management experienced and capable?
How will I get my money back?
The Executive Summary
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Executive Summary
The most important part of your plan
People read this section first and then goto the Financials
You may be asked to send just theSummary and Financials to someinvestors
Write it last when youve done the work
Company Description
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Company Overview
Objectives/mission statement
Legal issues
Products/services
Management
Location
Development stage/milestones
Financial status
Industry Analysis& Trends
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Factors to Consider to
Assess Industry Growth Total revenue
Total number of units/volume sold
Total employment
Maturity Level & Characteristics
New Industry
Expanding Industry
Stable Industry
Declining Industry
Very high growth, no
market leaders
High growth, emerging
market leaders
Low growth, fixed
market leaders
Little or no growth,
decreasing
competition
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Target Market
Understanding the Market
Define the market
Gather market data
Evaluate the market
Determine market readiness
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What kinds of changes
to anticipate? Technological changes new methods of production, distribution
Sociological change-- market changes due to demographic,
lifestyle, or trend changes
Competitive changes-- competitive landscape changes due to new
entrants, lower prices, more aggressivemarketing
Target Market Must Be:
Definable specific characteristics thatdefine what customers have in common
Meaningful characteristics mustmeaningfully relate to buying decisions
Sizable market must be large enough tosustain the business
Reachable methods (e.g., media outletsor sales channels) must exist to effectivelyreach market
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Characteristics:
Demographic
Geographic
Lifestyle/business-style
Psychographic/company culture
Purchasing patterns
Buying sensitivities
Market Size
Too small: possible lack of sufficientcustomers or unsustainable demand
Too big: market is very expensive tomarket to, probably lots of competition
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Market Trends
Is your market growing or shrinking in size?
Are customers changing their need/use of yourproduct/service?
Is the market changing in demographic orlifestyle make-up?
Are social values (e.g., the environment, healthconcerns) changing market values/demand?
Is technology changing market behavior?
The Competition
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Questions:
Who are your competitors?
On what basis do you compete?
How do you compare?
Who are potential future competitors?
What barriers to entry make it difficult fornew competitors?
Barriers to Entry
Intellectual property/patents
High start-up costs
Substantial expertise
Licensing, regulation
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Strategic Positioning& Risk Assessment
Strategic Position:
What unique role will yourcompany hold in the marketplace,giving it a defensible competitiveposition?
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Some Strategic
Positions/Differentiators: Customer perception factors
Market segment
Market share
Operational/technological advantages
Proprietary products
Sales channels
Customer Perception
Factors that make customerschoose your products/servicesover competitors:
Better, faster, cheaper
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Market Segment
Geography/location
Age
Income level
Gender
Specific needs
Types of Risk
Market risk
Competitive risk
Technology risk
Product risk
Execution risk
Capitalization risk
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SWOT Chart
Illustrates balance between companys:
Strengths
Weaknesses
Opportunities
Threats
Marketing Plan& Sales Strategy
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Marketing Plan Defines:
How you make customers aware of you
The message youre trying to convey
The specific methods you use to deliveryour message
How you make actual sales
Marketing vs. Sales
Marketing increases customersawareness and delivers a message
Sales direct actions to solicit andprocure orders
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Four Ps of Marketing
Product
Price
Place
Promotion
Operations
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Operations Include:
Facilities
Production planning
Inventory management
Supply
Distribution
Order fulfillment
Research & development
Financial control
As part of a Business Plan, this
section is not intended to be
an operations manual!
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Management &Organization
Management Team
Principals
Key employees
Board of Directors
Advisory Committee
Consultants
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Development, Milestones& Exit Plan
Company Development
Goals
Strategies
Priorities
Milestones
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The Financials
Numbers are merely
the reflection of
decisions you make
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Key Financial Documents
Income statement (profit & loss)
Cash-flow projection
Balance sheet
Some Key Terms:
Gross sales total sales before any costs
Net sales sales after commissions and returns
Cost of goods (COG) cost of inventory,materials
Gross profit -- income before operatingexpenses
G & A operating & administrative expenses Net Income/Net Profit income/profit after all
expenses/costs
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$25,000NET PROFIT
($5,000)(Provision for Taxes)
$30,000Net Income Before Taxes
($35,000)(Expenses)
$65,000GROSS PROFIT
($23,000)(Cost of Goods)
$88,000Net Sales($12,000)(Commissions)
$100,000GROSS SALES
Looking for Money
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Debt vs. Equity
Debt: loans, must be paid back, oftenrequires personal guarantee
Equity: investment, must share profits andownership
Convertible debt: loans that can beconverted to equity at lenders option
Funding Sources
Venture capitalists
Angel investors (private investors)
Government (SBIC/SBA)
Friends and family
Yourself
Sales
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The Plans Appendix
General Considerations
An Appendix is not necessary
Use the Appendix to keep the size of theBusiness Plan itself from getting too large
Put informative but not essential details in Appendix
Bind the Appendix separately if verylengthy
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What to Put In an Appendix?
Letters of intent/key contracts
Endorsements
Photos
Location list
Market research results
Managers resumes
Technical/operational information
Marketing material