Business Plans

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					     Business Plans



“Good Business Plans are Practical”
Taken from http://www.bplans.com/hurdleonline
http://www.sba.gov/starting/indexbusplans.html



                                                 1
Planning is a Process




                        2
  Four Elements Supporting
Successful Plan Implementation

1. Is the plan simple, easy to understand and to act on? Does
it communicate its contents easily and practically?

2. Is the plan specific? Are its objectives concrete and
measurable? Does it include specific actions and dates of
completion, specific persons responsible and specific
budgets?



                                                                3
  Four Elements Supporting
Successful Plan Implementation
            (cont.)
3. Is the plan realistic? Are the sales goals, expense
budgets, and milestone dates realistic? Nothing stifles
implementation like unrealistic goals.

4. Is the plan complete? Requirements of a business plan
vary, depending on the context. There is no guarantee,
however, that the plan will work if it doesn't cover the
main bases.

                                                           4
         Use of a Business Plan
• Define and fix objectives, and programs to achieve those
  objectives
• Create regular business review and course correction.
• Support a loan application
• Define agreements between partners
• Set a value on a business for sale or legal purposes
• Evaluate a new product line, promotion, or expansion
• Define a new business (this will be our use)


                                                             5
             No Time to Plan?



“Not enough time for a plan. I can't plan. I'm too busy
getting things done.”

A business plan now can save time and stress later.

Too many businesses make business plans only when they
have to. The busier you are, the more you need to plan.
                                                          6
Business Plans Don’ts

    • Don't use a business plan to
      show how much you know
      about your business

    • Nobody reads a long-winded
      business plan: not bankers,
      bosses, nor venture
      capitalists (50 pages max)
                                     7
        Importance of Graphics
• Tables and charts present information in visual
  formats with greater impact than words alone
• Plan should include graphs, bar charts, and pie
  charts to illustrate
   – cash flow (single most important numerical analysis in
     a plan)
   – sales forecast with break-even info
   – profit and loss statements
   – projected balance sheet and business ratios
   – market analysis
                                                              8
                                                                     Examples
     Company - Global Sales
                                                                    Indust
                                                         Cons         12%
                                                         11%
                1999 Sales
                                                                                               Comm
                  1,190 M €                                                                     50%
                                                             Data
                                       +                     27%
                                           29
                                                %
                Indust                                                                             Global Top 15 Key Customers
         Cons     10%                                                                              (includes CEM derived demand)
         10%                                                        2000 YEF

                                Comm                                1,536 M €                                          300
                                                                                                                                                                                                                                         2000
                                                                                                                                                                                                                                         2001
         Data                    57%                                                                                                                         Std Margin%                              Top 15 = 64%
                                                         %




         23%
                                                        11




                                                                                                                                 34%
                                                    +




                                                                                                                       250
                                                                     Indust
                                                             Cons      9%
                 2001 Budget                                  11%


                                                                                                      Sales KK Euros
                                                                                                                       200             29%
CI                  1,709 M €
                                                         Data                                  Comm
                                                         21%                                    59%                                          38%
                                                                                                                       150
                                                                                                                                                       34%

                                                    4                               Electronics SBG - January 26, 2001
                                                                                                                       100

                                                                                                                                                             31%
                                                                                                                                                                       32%
                                                                                                                                                                             39%    45%              45%
                                                                                                                       50                                                                      29%                    15% 10%         25%
                                                                                                                                                                                                           34% 26%


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                                                                                                                                                                                       or
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                                                                                                                                                                                                                          All values in M EUROS



                                                                                                                                                                                   M
                                                                                                                                                                                         8                                Electronics SBG - January 26, 2001


                                                                                                                                                                                                                                                9
                                          More Examples
       Electronic Cabinet Packaging - Chassis

                                LEVEL 3
                                               LEVEL 4




                                                                   Segment Summary - Global Market

                                                         LEVEL 5
                                                                               10B


                                                                       Market                                                                      Mobile Comp
                                                                                                                                                            PC
                                                                        Size                   Instrumentation
                                                                                                                                         DATA           Servers
                                                                                               Process Control                                          Storage
                                                                                              Embedded Comp              I&I                        Peripherals
            LEVEL 1 & 2                                                                                Medical
                                                                                                  Office Equip
F CI
                                                                                                                                                  Telecom
                          INTERCONNECT LEVELS                                                                                              COMM   Datacom
                                                                                                                                                  Wireless Infrastructure


                                          11             Electronics SBG - January 26, 2001                       Mobile Phone
                                                                                                                  Mobile Equip
                                                                                                                  Set Top Boxes
                                                                                                                                  CONS
                                                                                                                  Modems
                                                                                                                  DSC
                                                                                1B



                                                 F CI                                                            5%                      10%           Growth
                                                                                                                                                        Rate

                                                                                     Source: Bishop, except Mobile Phone in Consumer, not Communications
                                                                                                                                    14                      Electronics SBG - January 26, 2001

                                                                                                                                                                               10
                      Still More Examples
       End User Applications




                                           Electronic Packaging - Handheld


                                                                                              RF- Integrated Antenna

                                                    LEVEL 5
                                                                                                                          LEVEL 5



                                                                 I/O + Accessory
F CI                                                                                           Battery


                                                                                                                         LEVEL 3
                                                LEVEL 5       Microphone
                               17          Electronics SBG - January 26, 2001


                                                                                               LCD


                                                                   BtB             SIM
                                                    LEVEL 3                                                               LEVEL 3
                                    F CI

                                                                                              LEVEL 3

                                                                                         62                Electronics SBG - January 26, 2001

                                                                                                                                      11
  Sample Business Plan Outline

1. Executive Summary: Write this last. It's just a page or
two of highlights.

2. Company Description: Legal establishment, history,
start-up plans, etc.
3. Product or Service: Describe what you're selling. Focus
on customer benefits.
4. Market Analysis: You need to know your market,
customer needs, where they are, how to reach them, etc.

                                                             12
Sample Business Plan Outline
 5. Strategy and Implementation: Be specific.
 Include management responsibilities with dates
 and budget
 6. Management Team: backgrounds of key
 members of the team, personnel strategy and
 details.
 7. Financial Plan: including profit and loss, cash
 flow, balance sheet, break-even analysis,
 assumptions, business ratios, etc.

                                                      13
     Description of the Business
• Legalities - business form: proprietorship, partnership,
  corporation. The licenses or permits you will need.
• Business type: merchandizing, manufacturing or service.
• What your product or service is.
• Is it a new independent business, a takeover, an expansion?
• Why your business will be profitable. What are the growth
  opportunities? When your business will be open (days,
  hours)?
• What you have learned about your kind of business from
  outside sources (trade suppliers, bankers, publications).
                                                           14
                   Time Frame
• Opinions vary - A business plan should normally project
  sales by month for the next 12 months, and annual sales for
  the following two years.

• This doesn't mean businesses shouldn't plan for a longer
  term than just three years. It does mean, however, that the
  detail of monthly forecasts doesn't pay off beyond a year,
  except in special cases.



                                                            15
                Product/Service

• What you are selling.
• How your product or service will benefit the customer.
• Which products/services are in demand; if there will be a
  steady flow of cash.
• What is different about the product or service your
  business is offering.




                                                              16
                   The Location

•   What are your location needs?
• What kind of space will you need?
• Why is the area desirable? The building desirable?
• Is it easily accessible? Is public transportation available? Is
  street lighting adequate?
• Are market shifts or demographic shifts occurring?



                                                               17
            The Marketing Plan
• Who are your customers? Define your target market(s).
• Are your markets growing? steady? declining?
• Is your market share growing? steady? declining?
• If a franchise, how is your market segmented?
• Are your markets large enough to expand?
• How will you attract, hold, increase your market share?
  how will you promote your sales?
• What pricing strategy have you devised?



                                                            18
               The Competition
• Who are your five nearest direct competitors?
• Who are your indirect competitors?
• How are their businesses: steady? increasing? decreasing?
• What have you learned from their operations? from their
  advertising?
• What are their strengths and weaknesses?
• How does their product or service differ from yours?




                                                          19
           The Management Plan
• How does your background/business experience help you in this
  business?
• What are your weaknesses and how can you compensate for them?
• Who will be on the management team and what are their
  strengths/weaknesses and duties?
• Are these duties clearly defined?
• Will this assistance be ongoing?
• What are your current personnel needs and what are your plans for
  hiring and training personnel?
• What salaries, benefits, vacations, holidays will you offer?



                                                                      20
              Pricing and Sales


• retail cost and pricing
• competitive position
• service costs and pricing (for service businesses only)




                                                            21
          Break-Even Analysis
• Need to know
  –   Average per-unit sales price
  –   Average per-unit cost
  –   Monthly fixed costs
  –   Projection of unit sales/month




                                       22
 Simplified Business Plan Outline

 •   Executive Summary
 •   Company Summary
 •   Product Description
 •   Market Analysis Summary
 •   Strategy and Implementation Summary
 •   Management Summary
 •   Financial Plan
Look at bplans.com for online examples!!!!   23
           Four Assignments
• #1 – Preliminary mini plan
  – Summaries for Objective/Mission, Keys to
    Success, Target Market, Competitive
    advantage, Basic Strategies
• #2 – Company Summary and Product
  Description
• #3 – Market Analysis Summary and
  Management Summary
• #4 – Executive Summary, Strategy and
  Implementation Summary, Financial Plan
                                               24
Simplified Business Plan Outline
•   Executive Summary #4
•   Company Summary #2
•   Product Description #2
•   Market Analysis Summary #3
•   Strategy and Implementation Summary #4
•   Management Summary #3
•   Financial Plan #4

Mini-Plan used to lay the groundwork #1
                                             25
       Assignment #1: Mini-Plan
• Mission – what’s the true nature of your business (don’t
   be too narrow), how will you build customer satisfaction,
   what is your workplace philosophy, what value to the
   customer do you offer
• Objectives – what you do wish to accomplish in the first three
   years of operation. Give one objective that is product oriented, and one
   that is company oriented.
• Keys to success – limit to three and focus on those
• Target Market – good educated guess
• Competitive Advantage – what distinguishes you
  and your product
• Basic Strategies – how will you develop the
  company and products
Should be at least two pages, use 11 pt font for main text –
these are summaries. Updated Spring 2009                                26
            Example: Objectives
“We want to sell a lot of products and dominate the
marketplace.”.

Should be specific and realistic, this is neither.

“Within three years, achieve name recognition of our
product with 50% of the buyers in our target market.”




                                                        27
               Example: Keys to Success
“Our keys to success are product reliability, customer
relations, and efficient management ”.

These are fairly generic, try to pick something that relates to
your product. Remember that you want to be SPECIFIC.
Assume a startup company that markets spare car parts to the
auto racing community. Then a key to success could be:

“Be an active member of the racing community; i.e., attend
functions at local race tracks, attend regional and national
trade shows. ”.
                                                                  28
source: bplans.com
              “Objectives” and “Keys to
               Success” are different!!!
Objectives are typically measureable “After three years we
want to have 10% market penetration”.
“Keys to Success” allow you to reach your objectives.




                                                             29
source: bplans.com
           Example:Target Market
   “Our target market are small companies.”

Again, this is not specific enough.
How small is small? ANY small company or just ones that
are in the XYZ business? Is there any particular region of
the country that you are targeting? What about other
countries?




                                                             30
 Example: Competitive Advantage
“Our competitive advantage is that we work harder, and
our product costs less!”
Not specific enough.

 “Our competitive advantage is that our product does the
 job in 1/100 the time of our competitors.”

 This is a somewhat outrageous claim – need to elaborate on
 exactly why you are able to make this claim, yet keep things
 simple enough so that they are understandable. If the
 rationality for your claims are not easily understandable, then
 you will be tougher to find backing.

                                                                   31
      Example: Basic Strategies
How will you fund the company startup?
How will the technical development be handled?
(or is there any technical development to be done?)
How will you market the product? (i.e, how will
you achieve product recognition?)
How do you plan to grow the company?



                                                      32

				
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