feasibility and business planning chapter 5. developing a business concept once you have an idea for...
TRANSCRIPT
FEASIB
ILITY
AND
BUSINESS P
LANNIN
G
CHAPTER 5
DEVELOPING A BUSINESS CONCEPT
Once you have an idea for a new business, define it by writing a clear and concise business concept.
BUSINESS CONCEPT
a clear and concise description of a business opportunity; it contains four elements: the product or service, the customer, the benefit, and the distribution.
Its purpose is to focus your thinking.
BUSINESS CONCEPT
a clear and concise description of a business opportunity; it contains four elements: the product or service, the customer, the benefit, and the distribution.
Its purpose is to focus your thinking.
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
DEVELOPING A BUSINESS CONCEPT
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
Product or Service What is being offered? This is the solution to the problem
Customer Who is it? They pay for the product.
Benefits and Features Benefit- promotes or enhances the value of product.Feature – distinctive aspect, quality, or characteristic of a product
Delivery Retail, wholesales, mail order, Internet, door-to-door?
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
In developing a business concept, consider the features and benefits your product or service offers.
BENEFITS
things that promote or enhance the value of a product or a service to the customer
BENEFITS
things that promote or enhance the value of a product or a service to the customer
Developing a Business Concept
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
An entrepreneur can use a feasibility analysis in order to decide if there is enough demand for a product or service. FEASIBILITY ANALYSIS
the process that tests a business concept; it allows the entrepreneur to decide whether a new business concept has potential
FEASIBILITY ANALYSIS
the process that tests a business concept; it allows the entrepreneur to decide whether a new business concept has potential
Testing the Concept in the Market
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
A feasibility analysis can help an entrepreneur determine whether business conditions are appropriate to go forward with starting a business.
TESTING THE CONCEPT IN THE MARKET
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
FeasibilityAnalysisQuestions
industry
customers
product andservice
founding team
competitionstart-up needs
value chain
Testing the Concept in the Market
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
Testing the Industry
The broadest level of feasibility analysis looks at the industry in which the business will operate. INDUSTRY
a group of businesses with a common interest
INDUSTRY
a group of businesses with a common interest
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
TALKING TO THE CUSTOMER
The most important part of the feasibility analysis is testing customers to measure interest and identify the target customers. TARGET CUSTOMERS
people most likely to buy a business’s products and services
TARGET CUSTOMERS
people most likely to buy a business’s products and services
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITYTESTING PRODUCT OR SERVICE REQUIREMENTS
To consider all of the requirements of a product or service, create a prototype.
PROTOTYPE
a working model used by entrepreneurs to determine what it takes to develop their products or services
PROTOTYPE
a working model used by entrepreneurs to determine what it takes to develop their products or services
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITYTESTING PRODUCT OR SERVICE REQUIREMENTS
Need to design prototypes.
These types of prototypes are not physical, they are designs, blueprints, story boards, or flowcharts that map out the business and the processes that will take place at the business.
Intellectual Property – protect your prototype through patents, trademarks, copyrights, and trade secrets.
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
STUDYING THE COMPETITION
An easy way to evaluate the competition is to create a competitive grid.
COMPETITIVE GRID
a tool for organizing important information about a business venture’s competition
COMPETITIVE GRID
a tool for organizing important information about a business venture’s competition
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITYCompetitive
Customer Benefits Distribution S/W
Large gyms Individuals seeking to improve their fitness
Get fit,convenience
Direct through retail gym
S- Resources to enter O2 Max’s nicheW- no programs for teens
DVD Fitness Programs
Individuals seeking to exercise at home
Get fit,Convenience,Save money
Online and offline retail outlets
S-easy to use inexpensiveW- no on-site guidance
O2 Max Fitness
Parents Peace of mind
Direct through retail center
S- teens more likely to stay involvedW- costly in terms of building and equipment
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
LOOKING AT START-UP RESOURCES
A strong business model is important to investors.
BUSINESS MODEL
a description of how entrepreneurs plan to make money with their business concepts
BUSINESS MODEL
a description of how entrepreneurs plan to make money with their business concepts
ANALYZING THE VALUE CHAIN
A business can create a competitive advantage by improving the value chain or its products and services.The value chain includes manufacturers, distributors, and retailers.
FEASIBILITY ANALYSIS: TESTING AN OPPORTUNITY
VALUE CHAIN
the distribution channel through which a product or service flows from the producer to the customer
VALUE CHAIN
the distribution channel through which a product or service flows from the producer to the customer
THE BUSINESS PLANThe Business Plan: Your Road Map to Entrepreneurial Success
A business plan presents a strategy for turning a feasible business concept into a successful business.
Once you have a feasible business concept, the next step is to develop a business plan.
BUSINESS PLAN
a document that describes a
new business and a strategy
to launch that business
BUSINESS PLAN
a document that describes a
new business and a strategy
to launch that business
The Parts of a Business Plan Cover Page
Title Page
Table of Contents
Executive Summary
Management Plan
Company Description
Product and Service Plan
Mission and Vision Statements
Industry Overview
Market Analysis
Competitive Analysis
Marketing Plan
Operations Plan
Organizational Plan
Financial Plan
Growth Plan
Contingency Plan
Supporting Documents
The executive summary should include the most important information from each section of the business plan.
To save time, investors and lenders rely on the executive summary to help them decide whether the business plan is worth pursuing.
THE BUSINESS PLANExecutive Summary
executive summary
a brief recounting of the key points contained in a business plan
executive summary
a brief recounting of the key points contained in a business plan
The management team presents your qualifications and those of any partners.
You must describe how your management team has the capabilities to execute your business plan.
THE BUSINESS PLANManagement Team Plan
The company description section of the business plan outlines the company’s background information and basic business concept.
THE BUSINESS PLANCompany Description
In the product and service plan section of the business plan, you present the nature of your business and the unique features of the product or service.
THE BUSINESS PLANProduct and Service Plan
THE BUSINESS PLANVision and Mission Statements
The vision statement and mission statement state the guiding principles by which a company functions.
mission statement
a declaration of the specific aspirations of a company, the major goals for which it will strive
mission statement
a declaration of the specific aspirations of a company, the major goals for which it will strive
The industry overview section of the business plan presents your research into the industry, those companies providing similar, complementary, or supplementary products or services.
THE BUSINESS PLANIndustry Overview
The market analysis section of the business plan presents your research on the customer profile gathered from primary and secondary marketing research resources.
The results help you determine your overall marketing and sales strategies.
THE BUSINESS PLANMarket Analysis
The competitive analysis section of the business plan should demonstrate that the proposed business has an advantage over its competitors.
THE BUSINESS PLANCompetitive Analysis
A marketing plan discusses how a company plans to make its customers aware of its products or services.
A marketing plan also describes the market niche, pricing, company image, marketing tactics, a media plan, and a marketing budget.
THE BUSINESS PLANMarketing Plan
The operational plan describes all the processes involving the production and delivery of the product or service.
The operational plan describes the distribution channelof the product or service.
The operational plan describes the direct channel and/or indirect channel you will use to deliver your product or service.
THE BUSINESS PLANOperational Plan
distribution channel
the means by which a product or service is delivered to the customer
distribution channel
the means by which a product or service is delivered to the customer
direct channel
the means of delivering a service or product directly to the customer, such as via a Web site
direct channel
the means of delivering a service or product directly to the customer, such as via a Web site
The organizational plan section of a business plan looks at the people aspects and the legal form of the business.
It also describes the roles and compensation of key management personnel and important employment policies.
THE BUSINESS PLANOrganizational Plan
The financial plan presents forecasts for the future of the business.
The financial plan includes financial statements.
THE BUSINESS PLANFinancial Plan
The growth plan describes how the business will expand in the future.
Investors and lenders like to see that a business has plans to grow in a planned and controlled way.
THE BUSINESS PLAN
Growth Plan
The contingency plan section of the business plan looks at the risks to business, such as changing economic conditions and lower-than-expected sales.
It then suggests ways to minimize the risks.
THE BUSINESS PLANContingency Plan
Every business plan should have a cover page, a title page, a table of contents, and supporting documents.
THE BUSINESS PLANCover Page, Title Page, Table of Contents, and
Supporting Documents
Make a research plan and gather data.Set up a notebook to organize data.Write a first draft.
THE BUSINESS PLANDeveloping a Business Plan
THE BUSINESS PLANCommon Mistakes in Preparing Business
Plans
projecting exaggerated growth levels
trying to be have expertise in all areas
claiming performance above industry averages
underestimating the need for capital
SOURCES OF BUSINESS PLAN INFORMATION
Small Business Administration (SBA)
Service Corps of Retired Executives (SCORE)
Small Business Development Centers (SBDCs)
Chamber of Commerce
Trade Associations
To encourage entrepreneurship in our free enterprise system, the government operates the Small Business Administration (SBA).
The operational plan describes the distribution channelof the product or service.
THE BUSINESS PLAN
Small Business Administration (SBA)
the federal agency that provides services to small businesses and new entrepreneurs, including counseling, publications, and financial aid
Small Business Administration (SBA)
the federal agency that provides services to small businesses and new entrepreneurs, including counseling, publications, and financial aid
Small Business Administration (SBA)
THE BUSINESS PLAN
Trade associations supply information to entrepreneurs about start-up issues, operating costs, and analysis of trends.
trade association
an organization made up of individuals and businesses in a specific industry that works to promote that industry
trade association
an organization made up of individuals and businesses in a specific industry that works to promote that industry
Trade Associations
THE BUSINESS PLAN
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Bind the plan.
Use index tabs to separate sections.
Use an easily readable 12-point type.
Use bold subheadings and bullets.
Use the company logo at the top of every page.
Number each copy of the business plan and include a statement of confidentiality.
Include a statement on the cover page prohibiting copying of the plan.