Feasibility Plan Cover page Table of contents Executive summary Product/service The market Price and profitability Plan for further action Appendix Business Plan Cover page Table of contents Executive summary Management and organiz. plan Product/service plan Marketing plan Financial plan Operating and control plan Growth plan Appendix

Business plan Whaaaaaat? Audience New business mentor Not a marketing plan

Marketing plan Industry profile Competition profile Customer profile Marketing plan: –Target market –Pricing policies –Gross margin on products –Break-even analysis –Distribution channels –Sales and advertising strategy

Management and organization plan Management team Compensation and ownership Contracts and franchise agreements Board of directors Infrastructure Insurance, Employee ownership Organization charts

Financial plan Budget worksheets (sales forecast, initial investment, current expenses, cash requirements) Sources of financing Assumptions Cash flow statements (3 years, monthly) Income statements (3 years, monthly) Balance Sheets (3 years)

Operation and control system Administrative policies, procedures, and control Planning charts Risk analysis Salvaging assets

Discussion questions Given the difficulties in predicting the future, is a business plan useful? What makes an excellent business plan? If a business plan is to be used to raise capital, then why would the entrepreneur want to advertise the firm’s major risks by detailing them in the business plan?

Excellency Business concept Management team Financing Keys to success Understanding of challenges

Robinson Associates Does this Business Plan include all the major components of a business plan? What part would impress a potential investor most favorably? What part seems weakest? What additional information will strengthen the plan? What would be main points the founders of Robinson Associates Inc. would want to make to potential investors in a face-to-face presentation?

Back to Marketing plan Industry profile Competition profile Customer profile Marketing plan: –Target market –Pricing policies –Gross margin on products –Break-even analysis –Distribution channels –Sales and advertising strategy

Research Local sources 2. Trade associations and journals 3. Government reports 4. Demographic information 5. Computer searches 6. Competitive analysis 7. Customer surveys and informal focus groups Collect market informationDevelop concept Begin market research © 2004 Ewing Marion Kauffman Foundation Secondary Primary Secondary

Secondary Sources Local sources: Libraries, Colleges and universities, Chambers of commerce, Government agencies Trade associations and journals: Market statistics and industry trends, Trade magazine editors, National conventions, Financial information Demographic information: U.S. Census population data, State and county business patterns, American Demographics magazine, “Annual Survey of Buying Power” (Sales and Marketing Management magazine) Computer searches: Web sites such as Databases: lexis nexis, business premier, mergent; Online searches: google, ask jeeves, dogpilewww.entreworld.org

Research the Competition Additional Sources of information you should consider: Yellow Pages, local radio and press, observation (walking around the neighborhood) Think on preparing a table similar to the one next page © 2004 Ewing Marion Kauffman Foundation

Comparing with competition CompetitorsTarget marketMarketing strategy (e.g. price, quality, location) AdvantagesDisadvantages Direct Indirect Future

Research customers (primary) Identify customers classify into two or three groups: targeted primary, targeted secondary, walk-ins Define your customer profile, particularly of the primary customer Learn their buying behavior, particularly of the primary customer Test concept: see how potential customers perceive your business concept 18.1 © 2004 Ewing Marion Kauffman Foundation

Methods of primary research Short questionnaires (in person, telephone, mail, internet) Observation, networking Focus groups Experimentation © 2004 Ewing Marion Kauffman Foundation

Research (Questionnaires) Distribution: in person, , phone, mail Design tips for questionnaires Identify yourself at the beginning as a student working on a school project Demographic questions (age, income, etc.): ask ranges and ask at the end Keep them short (between 10 and 20 questions) Keep the answer options short (make then even numbers): 4 or 6 Simple questions (avoid asking two questions in one question) 17.11

Research (other primary) Observation: Spend time at model competitors (inside or at their door). Conversation with experts: -Competitors -Professors -Suppliers -Clients Focus groups (to use with clients) 18.3

Focus Groups Use current or potential customers Invite 6 to 10 customers Use outside facilitators Prepare list of questions Record responses Provide gift or money for participation Summarize results Design marketing strategy © 2004 Ewing Marion Kauffman Foundation

Marketing plan What is your Industry? What kind of info would help? NAICs SIC codes other Who is your customer? Who are your competition?

Pricing strategies Goal Maximize profit Ensure adequate cash flow Increase sales volume Increase market share Meet or beat the competition’s prices Maintain or create a certain image Improve customer relations Pricing strategy Skimming Penetration: discount pricing Competitive pricing Image pricing – perceived value Patronage discounts – quantity discounts Penetration: discount pricing Focus on payment terms, cash

Margin and break even point Gross margin = sales – direct (var.) cost –The margin includes what you take home as profit + what you have to pay on bills. –Percentage = (price – var. cost) / sales Break-even point Fixed costs BE = Sales price per unit – variable cost per unit