1. Primary Research Techniques  Customer surveys and questionnaires  Focus groups  Trade associations and business directories  Direct mail lists  Demographic data  Census data  Market research  Articles  Local data  Internet Ch. 4: Feasibility Analysis & Business Plan 4 - 1

2. Prototypes An original, functional model of a new product that entrepreneurs can put into the hands of potential customers so that they can see it, test it, and use it.  In-home trials Ch. 4: Feasibility Analysis & Business Plan 4 - 2

3. Elements of a Feasibility Analysis Ch. 4: Feasibility Analysis & Business Plan 4 - 3 Industry and Market Feasibility Product or Service Product or Service Feasibility Feasibility Financial Feasibility

4. Financial Feasibility Analysis  Capital requirements –an estimate of how much start-up capital is required to launch the business.  Estimated earnings – forecasted income statements  Return on investment – Combining the previous two estimates to determine how much investors can expect their investments to return. Ch. 4: Feasibility Analysis & Business Plan 4 - 4

5. The Business Plan  A written summary of: ► An entrepreneur’s proposed business venture ► The operational and financial details ► The marketing opportunities and strategy ► The managers’ skills and abilities  A business plan is the best insurance against launching a business destined to fail or mismanaging a potentially successful company. Ch. 4: Feasibility Analysis & Business Plan 4 - 5

6. The Business Plan: Two Essential Functions 1.Guiding the company by charting its future course and defining its strategy for following it. 2.Attracting lenders and investors who will provide needed capital. Ch. 4: Feasibility Analysis & Business Plan 4 - 6

7. A Plan Must Pass Three Tests 1. The Reality Test – proving that: ► A market really does exist for your product or service. ► You can actually build or provide it for the cost estimates in the plan. 2. The Competitive Test – evaluates: ► A company’s position relative to its competitors. ► Management’s ability to create a company that will gain an edge over its rivals. 3. The Value Test – proving that: ► A venture offers investors or lenders an attractive rate of return or a high probability of repayment. Ch. 4: Feasibility Analysis & Business Plan 4 - 7

8. Why Take the Time to Build a Business Plan?  Although building a plan does not guarantee success, it does increase your chances of succeeding in business.  A plan is like a road map that serves as a guide on a journey through unfamiliar, harsh, and dangerous territory. Don’t attempt the trip without a map! Ch. 4: Feasibility Analysis & Business Plan 4 - 8

9. Benefits of Creating a Business Plan Ch. 4: Feasibility Analysis & Business Plan 4 - 9

10. Key Elements of a Business Plan  Title Page and Table of Contents  Executive Summary  Vision and Mission Statement  Company History  Business and Industry Profile  Goals and Objectives Ch. 4: Feasibility Analysis & Business Plan 4 - 10 Our Business Plan

11. Mission, Goals, and Objectives Ch. 4: Feasibility Analysis & Business Plan 4 - 11

12. Key Elements of a Business Plan  Title Page and Table of Contents  Executive Summary  Mission Statement  Company History  Business and Industry Profile  Goals and Objectives  Business Strategy  Description of Products/Services Ch. 4: Feasibility Analysis & Business Plan 4 - 12 The Business Plan

13. Features vs. Benefits  Feature – a descriptive fact about a product or service: “an ergonomically designed, more comfortable handle”  Benefit – what a customer gains from the product or service feature: “fewer problems with carpal tunnel syndrome and increased productivity” Ch. 4: Feasibility Analysis & Business Plan 4 - 13

14. Key Elements of a Business Plan  Marketing Strategy  Document market claims  Show customer interest  Competitor Analysis  Description of Management Team  Plan of Operation  Projected Financial Statements  Loan or Investment Proposal Ch. 4: Feasibility Analysis & Business Plan 4 - 14 (continued) Our Business Plan The Business Plan

15. Guidelines for Preparing a Business Plan  Remember: No one can create your plan for you.  Potential lenders want to see financial projections, but they are more interested in the strategies for reaching those projections.  Show how you plan to set your business apart from competitors; don’t fall into the “me too” trap.  Identify your target market and offer evidence that customers for your product or service exist. Ch. 4: Feasibility Analysis & Business Plan 4 - 15

16. Tips on Preparing a Business Plan  Make sure your plan has an attractive cover. (First impressions are crucial.)  Rid your plan of all spelling and grammatical errors.  Make your plan visually appealing.  Include a table of contents to allow readers to navigate your plan easily.  Make it interesting. Ch. 4: Feasibility Analysis & Business Plan 4 - 16

17. Tips on Preparing a Business Plan  Your plan must prove that the business will make money (not necessarily immediately, but eventually).  Use spreadsheets to generate financial forecasts.  Always include cash flow projections.  Keep your plan “crisp” – between 25 and 40 pages long.  Tell the truth – always. Ch. 4: Feasibility Analysis & Business Plan 4 - 17 (continued)

18. What Lenders and Investors Look for in a Business Plan The “5 Cs” of Credit  Capital  Capacity  Collateral  Character  Conditions Ch. 4: Feasibility Analysis & Business Plan 4 - 18

19. Presenting the Plan  Demonstrate enthusiasm, but don’t be overemotional.  Know your audience thoroughly.  “Hook” investors quickly with an up-front explanation of the venture, its opportunities, and its benefits to them.  Hit the highlights; focus on the details later.  Keep your presentation simple – 2 or 3 major points. Ch. 4: Feasibility Analysis & Business Plan 4 - 19

20. Presenting the Plan  Avoid overloading your audience with technological jargon.  Use visual aids.  Close by reinforcing the nature of the opportunity.  Be prepared (with details) for potential investors’ questions.  Follow up with every investor to whom you make your presentation. Ch. 4: Feasibility Analysis & Business Plan 4 - 20 (continued)

21. 4 - 21 Ch. 4: Feasibility Analysis & Business Plan Conclusion  There are no guarantees for success.  Creating a business plan will be valuable primarily because of the process itself.  The business planning process may provide insight to increase the chances for success.  The business plan: Entrepreneurs benefit; lenders and investors demand it!

22. Ch. 4: Feasibility Analysis & Business Plan 4 - 22