business plans & market research

8/9/2019 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