ÅA

Business Plan Development:

Overview of Concept & Executive Summary

Based on Prof. Alan CarsrudThe Chapman Graduate School of

Business - Florida International University

ÅABasic 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?

ÅA

The Anderson School at UCLA

Business Plan Pert Chart

Mgmt & Org

Legal Org

Marketing

Concept Competition

Productor Service

Production Plan

Pricing

Contingency

Financial InvestmentExecutiveSummary

ÅA

THE CONCEPT

ÅAAnalyzing the Product- (Service-) Market Scope

improve market penetration; gain market share

develop new products; product diversification

market diversification; extend market scope (e.g. go international)

simultaneous product- and market diversification

existing (developed) new

Market

existing

new

Product

(Service)

Identifying Opportunities for Business Growth

ÅA Key Business Concepts

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?

Businessmodel

Revenuemodel

Valueproposition

ÅA

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

Businessmodel

Revenuemodel

Valueproposition

Key Business Concepts: Ikea Example

ÅA

Resources & Money

Distribution & Marketing

Products &Services

Customers Groups

Thinking About the Concept

ÅA

SUCCESS

COMPETITION ORGANIZATIONALSTRUCTURE

PSYCHOLOGICALCHARACTERISTICS

OF EMPLOYEES

FACILITIES &LOCATION

MARKETINGSTRATEGY

Drivers of New Venture Success

ÅA 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?

ÅA Developing The Concept –The Mission & the Vision as part

of the business concept

What will competitors do and what difference will this make?

What customer needs and customer groups should the organization be getting in position to serve?

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

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?

ÅA Characteristics of a Mission Statement

Describes the principal product or service areas and the primary customer needs the company will attempt to satisfy

Reveals the image the company seeks to project

Identifies the scope of its operations in product and market terms

Distinguishes the company from other firms of its type

An enduring statement of purpose

ÅA

THE CONCEPT CHECKLIST

ÅA

1. Define the important and distinct functions of the product / service. Domino’s 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 TheConcept Statement

ÅA

3. Describe any innovative technology involved with the product / service. What’s 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

ÅA

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)

7. How will the customer know you exist? How will they become aware of you?

Checklist For The Concept

ÅA

8. How will the product / service be sold to the customer? Retail stores, direct sales, manufacturers

representatives, telemarketing, distributors, franchising

9. Who will make the product or design the service? Subcontractor, in-house, homebase

contractors, etc.

Checklist For The Concept

ÅA

THE EXECUTIVE SUMMARY

ÅAPurpose 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

ÅA What to Include in an Executive Summary

A short description of the product or service offering

A brief background on founders and management

A short description of the market opportunity

Key financial data, including the amount of money needed and how it will be used

A concise statement of the corporate mission & concept

ÅA 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

Consider a topical rather than anarrative summary

Keep it as short as possible

ÅA

THE EXECUTIVE SUMMARY

CHECKLIST

ÅA Checklist For TheExecutive 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

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

ÅA Checklist For TheExecutive 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.

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

ÅA Checklist For TheExecutive 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

8. Describe your major competitors. Who is your direct

competition Who is your indirect

competition What are their strengths

and weaknesses9. How much money does the

venture need? For product development,

marketing, and operations Highlight how much

money is needed to get started and how it will be spent

ÅA Checklist For TheExecutive 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.

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.

ÅA Checklist For TheExecutive Summary

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

investment to date14. What potential

innovation of the product / service will ensure long-range growth? Specifically identify

what makes it difficult for competitors to enter

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.