1. Entrepreneurship 110
The Business Plan

2. Sections in a Business Plan
Cover Page
Table of Contents
Business Overview/Executive Summary
Management
Market Research
Marketing (the 4 Ps)
Suppliers
Employees
Operations
Financial
Appendix

3. The Life Cycle of a Business
All ventures go through a life cycle, or a series of stages that begin when the business idea is initially conceived.
An entrepreneur must recognize these stages in order to anticipate and address the problems that can occur within each one.

4. 1. Pre-Startup Stage Preparations for launching the business are made.
Generating ideas, doing research and identifying/solving problems.
At this stage you need to review resources, consider how best to allocate them, and write a business plan.

5. 2. Development Stage Research is complete.
Finalized your business plan, completed your market testing, reviewed the results, and made arrangements to get the funds you need.
Business opens/starts
Goal is to reach the break-even-point. Breaking even is not as easy as it may sound; you must manage your resources well in order to do so.
Break Even Point:
Total monthly revenue = Total monthly costs
Revenue = money that comes into the business from sales
Costs = all the money paid out by the business (i.e. wages, loan payments, etc.)

6. 3. Growth Stage Passed the break-even point and now making a profit:
Total revenue > Total Costs
May wish to expand your business:
new products/services
another location, etc.If this is the case, you should really write a new business plan.

7. 4. Comfort Stage
Venture is secure growing (although at slower rate of approx. 10% per year.)
Enjoying the benefits of success – a comfortable income and enjoyable lifestyle.
Assets (anything that a business or entrepreneur owns that has a cash value) of the business are worth more than the liabilities (a debt; a sum of money the entrepreneur owes).
This can be a dangerous stage for the entrepreneur who forgets that growth and change are essential to future success.

8. 5. Turnaround Stage
If you reach this stage, your venture is in financial trouble.
The financial records reflect losses for more than two years.
Your competition is attracting customers away from your business.
If you want to save the business, you must act now (eliminating nonproductive people, products and services – no matter how difficult this seems).
Liquidation (the sale of assets in order to raise funds) may be another option to generate cash.

9. Marketing – The 4 Ps The 4 Ps are:
Price
Promotion
Place
Product
An Entrepreneur must have an intense understanding of each as it applies to his or her business.
An entrepreneur must also have an intense understanding of how each of these pieces work together.

10. 4 Ps – Example Tim Horton’s
Product Coffee and related (food, appliances, transport, etc.)
Price Varies depending on product and portion size (small, medium, large)
Place Canadian and American locations
Various (hospitals, shopping malls, university campuses, etc.)
Promotion Various. Includes TV and radio spots, sporting events, community sponsorship, marketing campaigns (such as “roll up the rim to win”) etc.

11. Activity – The Dragon’s Den
This is a CBC show which gives Entrepreneurs the opportunity to pitch their venture, product, and/or service ideas to a panel of judges.
The goal is to get the judges, or dragons, to invest.
As you watch the following clips, take notes as to how well each entrepreneur knows or understands the 4 ps of their venture idea

12. Dragon’s Den YouTube - *atomic tea featured on cbc's 'dragon's den‘
YouTube - Dragons Den Season 2 Rasam Soup
YouTube - Dragons Den Season 2 Fanware

13. Marketing, continued The 4Ps are: product, price, place and promotion.
Today we will explore Price.

14. It should reflect what the customers are willing and able to pay.
Price is the process of determining what to charge for your product or service.
It should reflect what the customers are willing and able to pay.
It is assumed a profit is to be made.
It includes determining the:
cost of production (time, labor, ingredients, packaging, advertising, etc),
the state of supply and demand, and
the amount of profit to be made.

15. Assignment: Complete the assignment using the textbook.
This assignment will not be passed in, but marked together.

16. Wal-Mart Case Study Assignment
It has been determined that Wal-Mart is able to make so much PROFIT because they are able to cut costs so much.
Remember: Profit = Sales – Costs
Complete the chart below, explaining how Wal-Mart cut costs in each areas:
Area
Wal-Mart cut costs by…
Wages
Health Benefits
Overtime
Rubbermaid and similar suppliers
Outsourcing
Charity Donations
Security

17. Price and the Law
The Competition Act protects customers in Canada from:
1. Price Fixing -
businesses are not allowed to decide as a group what to charge consumers for a specific product. Why not?
2. Retail Price Management –
no company can force another independent company to charge a particular price for a product it has provided. A company can suggest a price (MSRP)
3. Deceptive Pricing Strategies:
A. Double Ticketing - refers to the placing of two prices on the same product and charging the customer the higher price.
B. Bait and Switch - occurs when a product is advertised at a low price to attract (bait) customers then the sales staff tries to disparage the customer in order to get the customer to buy a more expensive item.
C. False Sale Price - refers to the practice by some stores of advertising a regular price as a sale price.

18. Promotion
Letting people know about products and services in a positive way so they will want to make a purchase.
Promotion is used to tell potential customers about:
How to use a product or service and what it is used for
The quality of a product or service
Where the product or service is available
New products that are on the market
Other important information about the product
YouTube - Commercial - The Wait
Which of the above 5 is this commercial being used for?

19. Which is the following an example of? YouTube - TV Commercial
There are THREE MAJOR REASONS to use promotion. They are to INFORM customers about products, to REMIND customers of the product, and to PERSUADE customers to buy. For example:
To Inform: A TV commercial airs 10 times a day before product is released.
To Remind: A pizza restaurant gives away free refrigerator magnets with delivery information.
To Persuade: A company uses labels to emphasize that products are “new and improved,” “concentrated,” “extra strength,” etc.
Which is the following an example of?
YouTube - TV Commercial

20. There are Five TYPES OF PROMOTION used to help sellers get their message to customers.
ADVERTISING – paying to use the media to promote product (newspapers, TV, radio, magazines, billboards, etc.).
PUBLICITY - Free promotion (press releases or news reports describing how the company sponsored events or donated to a cause.)
SALES PROMOTION - Special things done to get customers interested in trying products or to come into a store (coupons, contests, rebates, free samples, displays, etc.)
PERSONAL SELLING - A salesperson assists each customer (a shoe salesperson helps a customer select the proper shoe size. A college student goes door to door selling children’s books.)
ENDORSEMENT – When a famous person is paid to promote a product or service (Tiger Woods and NIKE; Tiger Woods and ONSTAR).
YouTube - Gatorade Moon Shot Commercial

21. Worksheet - Jane’s Market
Complete and we will go over together

22. Type of Promotion 6. Product Placement
Using brand-name products as props: the practice of placing brand-name items as props in, e.g. movies, television shows, or music videos as a form of promotion.
Look for the Product Placment in this clip:
YouTube - Product Placement

23. Place

24. Place
It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.
You must decide what “channel” you will use to get your product/service to your customers.

25. Channel 1 - Wholesalers
Break down 'bulk' into smaller packages for resale by a retailer.
Provide storage facilities
Take on the some of the marketing responsibilities

26. Channel 2 - Agents Mainly used in international markets
Agent will typically secure an order for a producer and will take a commission

27. Channel 3 - Retailers
Retailers will have a much stronger personal relationship with the consumer.
The retailer will hold several other brands and products. A consumer will expect to be exposed to many products
The retailer will give the final selling price to the product.
Retailers often have a strong 'brand' themselves

28. Channel 4 - Internet
The main benefit of the Internet is that products reach a wider audience
Start-up costs are low.
Use e-commerce technology (for payment, shopping software, etc)

29. Assignment - Newtown
Please read the handout and complete.

31. Product

32. Life Cycle of a Product Introduction Growth Maturity Decline
Need for some level of immediate profit
Product is promoted
Limited number of products available
Most products that fail, do so during this stage
Growth
Competitors arrive with very similar products
Products make more profit
Maturity
The products that were the most successful during the earlier stages spend the longest time here.
Sales “stabilize”
Price wars might occur
Competition is fierce
Decline
There is likely a “downturn” in the market
Often, more innovative products are introduced, OR consumer tastes have changed
There may be intense price cuts