seeing audiences and your business clearly
TRANSCRIPT
Chapter 08
McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
Business Plans
Seeing Audiences and Your Business Clearly
Objectives
LO1 Understand why and when to develop a business plan
LO2 Know how to tell the business plan storyLO3 Learn the major sections of the classic
business planLO4 Focus business plan sections to meet specific
needsLO5 Identify the major risks to business plan
successLO6 Master presenting your business plan to others
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Business Plan Background
Business plan – A document designed to detail the major
characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm’s present and future.
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Business Plan Background
External legitimacy– The extent to which a small business is
taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner’s family.
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Business Plan Background
Internal understanding– extent to which employees, investors, and
family members in the business know the business’s purposes and operations
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Starting Small and Building Up
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Figure 8.1
The Vision Statement
Vision statement– A very simple 5–10 word sentence or tagline
that expresses the fundamental idea or goal of the firm.
Tagline– Memorable catchphrase that captures the
key idea of a business, its service, product, or customer.
– also known as a slogan
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Question
A _____________ describes the firm’s goals and competitive advantages.
A.Vision statementB.TaglineC.Mission statementD.Executive summary
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The Mission Statement
Mission Statement– A paragraph that describes the firm’s
goals and competitive advantages– Talks in terms of how it will make a
difference in for the customer or the industry
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The Elevator Pitch
The Elevator Pitch– A 30-second action-oriented description
of a business designed to sell the idea of the business to another
– Leads with the hook, follows up with purpose of the service, ends with where business is now
– What makes firm unique or superior?
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The Executive Summary
Executive summary– A one- to two-page (250–500 words)
overview of the business, its business model, market, expectations, and immediate goals.
– Typically put at the start of a business plan and is the most popular summary form for a business plan.
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Strategizing for the Business Plan: 5-M Model
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Janexia Waterproofing:A 5-M Model Example
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Figure 8.2
Business Plan Outline
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Business Plan Outline
Cover letter– A one-page document on business
stationery that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan.
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Business Plan Outline
Title Page– contains introductory information– Company name– Contact information– Date this version of the plan was
completed– Proprietary statement to protect your
ideas
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Business Plan Outline
Table of contents– Lists major section headings
• Boldface type
– Sections underneath major sections• Normal type
– Put page numbers on every page of the business plan
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Business Plan Outline
Company background– brief description of the company, the
firm’s current status, and the history of the business
– Vision statement / mission statement– Specific goals, Business’ competitive
advantage
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Business Plan Outline
The Company: Product/service and industry– Describe firm’s product or service– Explain how the customer uses the
product– Proprietary technology– Industry descriptions
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Business Plan Outline
The Market: Market and target customer– Total population of people or firms you
plan to sell to– Target customer section: focuses
attention on who would buy– Demographics’ relation to the product,
how often they buy, and past experience
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Business Plan Outline
The Market: Competition and competitive advantage– Major competitors– Competing product or service: market
share, price, competitive advantages and disadvantages
– what makes product or service unique
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Business Plan Outline
The Market: Marketing strategy– Overall strategy your firm pursues in the
market– Sales plan that shows specific ways you
apply strategy to secure sales from your customers
– Longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you
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Marketing Strategy
Preselling – Involves introducing your product to
potential customers and taking orders for later delivery.
Research and development – The part of a business that is focused on
creating new products or services and preparing new technologies, ideas, products, or services for the firm’s market.
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Business Plan Outline
The Organization: Legal and organization structures– Legal form of the business– Organizational structure of the firm– Makes clear how many employees there
are and whether they are full time or part time, permanent or seasonal, family or non-family
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Business Plan Outline
The Organization: Key personnel– Sell the most important single element in
the business plan – you!– Who are your key personnel?– Talk about accomplishments rather than
just experience– Do not limit yourself to business
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Business Plan Outline
The Organization: Related service providers– Identify your bank and banker, attorney
and legal firm, accountant or bookkeeper, other consultants
– Major relationships established with well-known suppliers or customers
– Board of directors / board of advisors
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Business Plan Outline
The Organization: Location– Description of the facility– How it meets strategic and sales goal of
the business– Own, lease, or rent the property– Plan to expand the facilities
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Financials Layout for aTypical Business Plan
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Exhibit 8.2
Business Plan Outline
The Appendices– one-page version of owner’s resume– Product or service pictures or
specifications– Copies of signed contracts– Results from marketing studies or pilot
sales efforts– Industry reports
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Focusing Your Business Plan
Pioneering business– A firm whose product or service is new to
the industry or is itself creating a new industry.
Test marketing– Selling your product or service in a limited
area, for a limited time.
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Focusing Your Business Plan
New entrant business– A firm whose product or service is
established elsewhere, but is new to this market.
Screening plan– gives the basic overview of the firm and a
detailed look at the financials.– Also called a mini-plan
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Question
What type of plan is designed to be used internally for management purposes?
A.Informational plansB.Key employee/partner planC.Invention plan D.Operational plan
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Focusing Your Business Plan
Informational plans– Give potential customers or suppliers
information about the company and its product or service.
Proof-of-concept Web site– An Internet-based type of business plan
providing information or demonstration of a product or service designed to solicit information on customer interest.
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Focusing Your Business Plan
Key employee/partner plan– Provides information on the company,
product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.
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Focusing Your Business Plan
Invention plan – A business plan that provides information
to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.
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Focusing Your Business Plan
Operational plan– Business plans designed to be used
internally for management purposes.
Private placement memorandum– A specialized legal form of business plan
crafted by lawyers for the purpose of soliciting formal investments.
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The Most Common CriticalRisks in a Plan
Risks – The parts of a business or business plan
that expose the firm to any kind of loss—profits, sales, reputation, assets, customers, and so on.
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The Most Common CriticalRisks in a Plan
Overstated numbersUncertain salesOverlooked competitionExperience deficitsInadequate cushionInadequate payback
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Presenting Your Plan
The key things an influential person looks for in you are
1.Your passion for the business2.Your expertise about the business and the
plan3.How professional you are in your work, 4.How easy it would be to work with you.
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