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Business-Plan-Lecture-Notes

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					Business Plan Outline
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1.0 Executive Summary
  1.1 Mission Statement
  1.2 The Enterprise
  1.3 Key Personnel
  1.4 The Market
  1.5 The Offering
  1.6 Marketing Strategy
  1.7 Competition
  1.8 Projections
  1.9 Resource Requirements
  1.10 Key Issues
2.0 The Enterprise
  2.1 Objectives
  2.2 History
  2.3 Organization
   2.3.1 Key Personnel
   2.3.2 Personnel Count
  2.4 Operations
  2.5 The Future
3.0 The Market
  3.1 Market Segments
  3.2 Prospects
  3.3 Prospect Objectives
  3.4 Segmentation
  3.5 Size
  3.6 Environment
  3.7 Alternatives
4.0 The Offerings
  4.1 Description
  4.2 Market Status
  4.3 Value
  4.4 Cost to Produce
  4.5 Support
5.0 Marketing Strategy
  5.1 Targets
  5.2 Image
  5.3 Promotion
   5.3.1 Internet Web Site
   5.3.2 Publicity
   5.3.3 Advertising
  5.4 Pricing
  5.5 Sales
  5.6 Distribution
  5.7 Logistics
  5.8 Support
6.0 Competitive Analysis
7.0 Development Program
  7.1 Objectives
  7.2 Organization
  7.3 Market Status
  7.4 Schedules
  7.5 Technology
8.0 Operations / Production
  8.1 Organization
  8.2 Suppliers
  8.3 Sub-contractors
  8.4 Technology
  8.5 Quality
  8.6 Inventory
9.0 Investment Capital
  9.1 Initial Funding
  9.2 Use of Funds
  9.3 Return on Investment
10.0 Historical Financials
  10.1 Income Statement
  10.2 Balance Sheet
  10.3 Cash Flow
11.0 Financial Projections
  11.1 Year One Income Statement
  11.2 Year Two Income Statement
  11.3 Five Year Income Statement
  11.4 Year One Cash Flow
  11.5 Year Two Cash Flow
  11.6 Five Year Cash Flow
  11.7 Balance Sheet
12.0 Financial Alternatives
  12.1 Best Case
  12.2 Worst Case
13.0 Financial Addendums
  13.1 Assumptions
  13.2 Ratios
  13.3 Income Statement Comparison
  13.4 Balance Sheet Comparison
1.0 Executive Summary

Explanation

The Executive Summary appears first in the final plan, but should only be written after you
have completed all other sections of the business plan.

The Executive Summary should include a concise presentation of those aspects of your
business that are critical to a potential investor or lender.

A prospective investor or lender will scan the Executive Summary to determine whether the
details which follow merits their time.

Factors to consider:
Objectives of the business plan (to raise capital, to guide the team)
Profile of your enterprise
Qualifications of the founders
Market Opportunity (what is missing in the market)
Proposed Offering
Strategy for success
Financial Projections
Requirements (finances, technology, key personel)



1.1 Mission Statement

Explanation

Provide a clear and concise statement of the long-term mission of your enterprise. This
should act as the "gospel" for your employees whenever they are asked to describe your
enterprise.

Sample from CitiLoc, Inc.

CitiLoc is committed to improving communications between government (city, state &
federal) and businesses seeking to relocate.



1.2 The Enterprise

Explanation

This topic should be written after you have completed section 2 containing the detailed
description of factors relevant to your enterprise. This topic should very concisely summarize
that description by stating primary objectives, a short description of origin and financial
achievements, key personnel and organization structure, current and projected size, facilities
locations, scope of activities and plans for changes in the future.
Sample from CitiLoc, Inc.

CitiLoc, Inc. is a newly established C corporation. We are located in Austin, Texas and are
presently working out of one of the principal's homes.

There are four principals who have formed CitiLoc; Mark Hanson, Jim Jones, Donald van
Pelt and Jessica Lane.

Our primary objective is to establish a presence on the Internet with a data base of
information about every city in the U.S. with a population over 50,000. This data base will be
of so much value to any business evaluating a move to a new city that it will be orders of
magnitude more cost effective than any alternative method of evaluation.

The CitiLoc service will be unique in that it will be the only service that offers a data base
specifically designed to help a business evaluate and locate the most appropriate city for their
expanded business. It will offer a quick and effective way to evaluate all of the cities in the
U.S. with populations over 50,000 on the basis of a wide variety of criteria.

There are about 570 cities in the U.S. with a population of 50,000 or more. We expect about
90% of these cities will be willing to pay a fee to be included in our data base.

There are an estimated 200,000 businesses in the U.S. large enough to consider expanding
their operation to a new city. On an annual basis 2% - 3% of those will actively consider such
a move. We project that more than half of these will choose to use our services in some
manner.

To initiate this business, the first year of operations will involve collecting information about
the cities, populating the data base and developing the web site. This will involve 40-45
permanent and temporary personnel. Following the initial development stage, the
organizational objective is to be "lean and mean". Because the business will be web based
and the majority of the prospect/customer interface will be achieved electronically there will
not be a need for a large organization. Starting in the second year we expect to conduct
business with twenty six personnel.

We are projecting a requirement for about 6,000 square feet of space for our operation. The
cost will be about $4,500 per month with a one-time finish out cost of about $10,000.
Additional equipment and software require a one time, up front expense of about $80,000.



1.3 Key Personnel

Explanation

List the key personnel in the enterprise, with name, position, responsibilities and a short
description of their experience. In the Executive Summary you are "selling" your key
personnel, so make a special effort to emphasize their past achievements.

Sample from CitiLoc, Inc.
Mark Hanson, age 33, has a masters degree in political science, and has been the marketing
director and chief operating officer of two successful businesses. His latest business was
recently sold to XYZ, Corp. and Mr. Hanson chose to leave his position there in favor of
starting CitiLoc. He is the president and COO of CitiLoc.

Jim Jones, age 30, has a masters degree in computer science and has participated in the
development of two major web sites. He is a vice president and will be responsible for the
initial development of our web site and thereafter the maintenance and expansion of the
services we will offer.

Donald van Pelt, age 28, is a vice president and will direct the effort of data collection and
population of the data base. Mr. van Pelt has a degree in economics and has worked with the
city of Austin, Texas for four years. For the last two years he has been involved in the area of
attracting and working with businesses that are considering locating a facility in the Austin
area.

Jessica Lane, age 31, is a vice president and will be responsible for marketing, sales and
public relations. Ms. Lane has a degree in public relations and has been working with an
established company for three years as their director of marketing. She helped this company
modify and expand their sales program from a field sales force orientation to a broader web
based approach.



1.4 The Market

Explanation

This topic should be written only after you have completed section 3 containing the detailed
description of a variety of factors relating to your market.

First, describe the market in terms of the need that is being addressed by your product or
service (don't discuss your product or service yet). Explain what is creating the need, what the
market is currently doing to address that need and the opportunity this need is providing for
the solution provided by your offering.

Then, provide a description of the overall market, how it breaks down into segments,
geographical distributions, sizes, growth expectations and the share of the market your
enterprise expects to capture.

Remember this is a summary and your objective is to convince the reader of the quality of
your market.

Sample from CitiLoc, Inc.

Our objective is to be recognized as the premiere data base for evaluating the pros and cons
of moving a business operation to any given city.
We expect our data base to be populated with information from over 500 U.S. cities and 50 to
100 international cities that will pay for the service. We also expect about 500 businesses to
pay to use the data base in the first year growing to about 2000 businesses in the fifth year.



1.5 The Offering

Explanation

This topic should not be written now, but only after you have completed section 4 containing
the detailed description of your product or service. Provide a description of your
products/services that will make the reader want to rush out and purchase them. The
important thing in the Executive Summary is to convince the reader that the market will be
excited about your products/services.

Factors to consider:
Name of your products/services
Benefit to user
Emotional/visual appeal
Ease of use
Return on investment for the user

Sample from CitiLoc, Inc.

CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities
attract new business and businesses determine which city is best for them.

This service is valuable to a city because it provides an opportunity for them to present their
information to a wide audience of potential new businesses. Businesses benefit by having
essential city information available in one data base. They will have the ability to specify
qualifying criteria and get a list of cities that meet those criteria.

Initially the collection, organization and entry of data about the cities will be very time and
people intensive. It will require about one year to construct a database with enough
information to be of interest to businesses.



1.6 Marketing Strategy

Explanation

Explain how you are going to sell your products/services by describing your channels of
distribution, your methods for generating publicity and your advertising plans with focus on
each market segment.

Once again, remember this is a summary and your objective is to convince the reader of the
efficacy of your marketing strategy.
Sample from CitiLoc, Inc.

We will promote our service using literature, links with other relevant web pages, a strong
push to gain publicity, advertising in strategic planning, financial and human resource
publications and a direct mail program.

Pricing for cities to be included in the data base will range from $1,000 to $2,500 per year
and for businesses to use the data base from $2,500 to $10,000 per year.

In addition to our web site being accessible through well indexed search engines, we will
have an initial staff of five personnel contacting businesses on a daily basis to locate the
person who would be involved in establishing a new business location. Their objective will
be to get the business prospect to visit our web site.

In addition to our own efforts to promote and distribute our services, there will be a
secondary distribution channel in the form of "links" to our web site from other web sites. We
will actively pursue the establishment of links with sites we believe will have a viewer base
that may be interested in our service.



1.7 Competition

Explanation

Create a concise analysis of your competitors as a group describing number of competitors,
whether the market is gaining or losing competitors, competitive profitability, any
manufacturing or marketing advantages competition may have and any pricing pressures
competition might create.

Then describe the main competitor's strengths and weaknesses and how you will address this
competitor.

Sample from CitiLoc, Inc.

At present there are two major forms of competition: consultants and information provided
by the individual cities.

Consultants range in size from individuals to large international firms. The minimum
consulting fee a business can expect to pay is $10,000 and it can easily reach $100,000. The
quality of information a business can expect to receive from our service will be equal to or
better than what they get from a consultant at a fraction of the cost and the information will
be available in a fraction of the time.

Most cities have a web page today. The information they provide is designed to help visitors
and citizens locate restaurants, parks, forms of entertainment, retail outlets and in some cases
city government contacts. It is not designed to be user friendly to the business considering a
move to the city. Cities that are aggressively trying to attract new business will often have a
contact point to provide information to prospective businesses. This usually comes in the
form of written literature and seldom addresses the majority of a business' concerns.
1.8 Projections

Explanation

Describe your expectations for profit (or loss) over the five year planning period. Be sure to
explain when you will start operating at a profit, when you expect to reach a break even point
and what the profit margins will be following the break even point. If you are proposing a
capital investment, explain your financial needs and how the investor can expect to achieve a
return on their investment.

Sample from CitiLoc, Inc.

There will be no revenue generated in the first year which will be dedicated to developing the
web site and creating the data base. We expect to achieve break even cash flow by the middle
of year two with a positive cash flow and a profit by the end of that year. Year three will see a
major increase in revenue, a complete recovery of our investment and positive retained
earnings at year end.

Years four and five will result in revenues of $5,485,000 and $7,885,000 respectively with
after tax profits of $2,793,000 and $4,368,000. Revenues per employee will approach
$225,000 by year five.



1.9 Resource Requirements

Explanation

Describe the resources you will need to achieve the objectives of this business plan. This
most likely will include:

Personnel
Equipment & materials
Access to technology
Access to distribution channels
Availability of external services

Sample from CitiLoc, Inc.

The primary resource requirement during the first year will be personnel who can contact
appropriate city employees and gather the information necessary to populate our data base. In
support of these personnel we will require phone lines and computers (25 each).

During the same period we will be developing our data base software technology. The
primary resources here are qualified programming personnel, support software and computers.
1.10 Key Issues

Explanation

Describe the steps that must happen to get your plan on the path to a successful
implementation. This might include acquisition of investment capital, technological
breakthroughs, establishment of relationships, hiring of key personnel, advertising and
publicity coverage or many other things. Be sure these really are the critical issues.

Include a spreadsheet listing the key milestones involved in implementing your business plan
including specific dates and responsible personnel. If you are using business plan software to
write your plan, this should be included for you automatically.

Sample from CitiLoc, Inc.

There are only a few issues to address as we begin the business. They are, in order of priority:

Find and lease facilities
Acquire the necessary hardware, software and communication capabilities
Hire the necessary personnel to collect the data and develop the software
Get development and data collection under way
Establish appropriate accounting procedures
Create the contracts we will use with our customers

                                Milestones
           What?                   Who?      When?        How much?
Web Site Registration              ELB 1/1/2009 1/10/2009        $0
Completion of DB Design            JAJ    1/1/2009 2/28/2009        $10,000
Data Gathering & DB Population DVP 1/1/2009 9/30/2009            $1,000,000
DB Search Technique Dev.           ELB    3/1/2009 5/30/2009        $10,000
Web Site Dev.                      KAG 3/1/2009 7/30/2009           $50,000
On-line Help Dev.                  KAG 3/1/2009 8/30/2009           $15,000
Web Site/DB Security               DVP 5/1/2009 7/30/2009           $10,000
Cross Browser Testing              ELB    5/1/2009 8/30/2009          $5,000
Search Engine Registration         ELB    5/1/2009 8/30/2009        $10,000
Web Site/Acctg. Interface          JAJ    7/1/2009 8/30/2009        $10,000
Install site Activity tracking S/W JAJ    8/1/2009 9/30/2009          $5,000
Web Site Beta Test                 ELB    9/1/2009 9/30/2009        $40,000
Web Site Promotion                 JL     7/1/2009 6/30/2010       $200,000


Totals                                    1/1/2009 6/30/2010     $1,365,000
2.0 The Enterprise

Explanation

This topic should concisely describe your enterprise by stating primary objectives, a short
description of origin and financial achievements, key personnel and organization structure,
current and projected size, facilities locations, scope of activities and plans for changes in the
future.

Other factors to consider:
Legal structure (partnership or corporation)
Enterprise ownership
Products/services
Critical operations
Patents, trademarks or proprietary technologies
Community relations
Ability to compete

Sample from CitiLoc, Inc.

CitiLoc, Inc. will be structured as a C corporation, located in Austin, Texas. There are four
principals who will all invest money in the enterprise and who will take primary
responsibility for the various operational aspects of the business.

As a new enterprise our primary objective will be to secure funding so that we can develop
the required data base and web site to provide service to our customers.

Our first year of operation will require 43 personnel, however, once the data base and web
site are complete we will reduce staff to twenty six personnel.



2.1 Objectives

Explanation

Describe short and long term objectives for your enterprise. The long term objective should
be somewhat philosophical, while the short term objectives should be more operational. For
example, a long term objective might be;
Our enterprise will strive to be recognized as the leader in the field of exploration and mining.

A short term objective might be:
Our AA-1000 boring machine will capture 60% market share within the next two years as
measured in the Exploration Monthly sales review.

Sample from CitiLoc, Inc.

To achieve our primary objective we must, in the short term, secure funding, collect the
necessary data and populate the data base and develop a high quality, professional looking
web site.
Longer term we must develop a strong base of business clients and as opportunities occur
expand the data base content to attract a wider range of business users.



2.2 History

Explanation

Describe the origin of your enterprise, who the key personnel were and their current status. If
previous investment capital was provided, explain how much, on what terms and what the
performance has been in providing a return for that investment. Describe what markets your
enterprise has been pursuing, what market penetration has been achieved and whether you
have been profitable.

Factors to consider:
Founder names
Years in business
Market share
Distribution channel relationships
Distribution channel costs
Experience with regard to offering: quality, durability, uniformity, pricing.
Reputation of enterprise, offerings
Customer relations
Financials

Sample from CitiLoc, Inc.

Since CitiLoc is a new enterprise, this section will not be included.



2.3 Organization

Explanation

Provide an organization chart that shows structure and size for each of the functional units in
The Enterprise.

If you are using a software program to write your business plan, it should provide a tool for
creating an organization chart.

In the text associated with the organization chart describe the current and planned staffing,
the skill levels available, and any internal or external factors that may influence your
organization.

Factors to consider:
General management philosophy
Completeness of current staffing
Management access to counsel
Management access to legal support
Labor union relationships
Operations sharing between projects
Employee benefits: Insurance, Retirement plan, Health & fitness program, Profit sharing plan,
Stock options, Stock purchase plan, Child care program

Sample from CitiLoc, Inc.

Following the initial development stage, the organizational objective is to be "lean and mean".
Because the business will be web based and the majority of the prospect/customer interface
will be achieved electronically there will not be a need for a large organization.

The two areas requiring the most personnel will be the web site support and improvement
group and the customer support and sales program. Starting in the second year we expect to
have a total of about twenty six employees.



2.3.1 Key Personnel

Explanation

For each of the key personnel describe their functional responsibilities, how their experience
prepares them for these responsibilities and their operational objectives for the next 12
months. The objectives should be measurable and the personnel prepared to review them at
any time.

Factors to consider:
Name
Age
Marital status
Children
Education
Work experience
Position title
Placement in organization structure
Management responsibilities
Achievements

Key positions that need to be filled within the next twelve months should be described with
an explanation of how you expect to fill the position.

Factors to consider:
Position title
Placement in organization structure
Experience level required
Management responsibilities
Staffing from inside or outside
Use of professional recruiters
Desired date for staffing
Drop dead date for staffing

Sample from CitiLoc, Inc.

Mark Hanson, age 33, has a masters degree in political science, and has been the marketing
director and chief operating officer of two successful businesses. His latest business was
recently sold to XYZ, Corp. and Mr. Hanson chose to leave his position there in favor of
starting CitiLoc. He is the president and COO of CitiLoc.

Jim Jones, age 30, has a masters degree in computer science and has participated in the
development of two major web sites. He is a vice president and will be responsible for the
initial development of our web site and thereafter the maintenance and expansion of the
services we will offer.

Donald van Pelt, age 28, is a vice president and will direct the effort of data collection and
population of the data base. Mr. van Pelt has a degree in economics and has worked with the
city of Austin, Texas for four years. For the last two years he has been involved in the area of
attracting and working with businesses that are considering locating a facility in the Austin
area.

Jessica Lane, age 31, is a vice president and will be responsible for marketing, sales and
public relations. Ms. Lane has a degree in public relations and has been working with an
established company for three years as their director of marketing. She helped this company
modify and expand their sales program from a field sales force orientation to a broader web
based approach.

During the first year of operation, we will contract with two outside agencies to help us with
the development program. One will supply 3-4 personnel to assist in the design and
development of the web site. The other will supply about 25 personnel to collect information
about the cities and enter it into the data base.

We will need to hire one other key manager prior to the end of the first year, responsible for
finance and accounting. Mark Hanson will handle these responsibilities until such a person is
hired.



2.3.2 Personnel Count

Explanation

Include a spreadsheet listing the headcount projected for every department in your enterprise
for each of the next five years.

The total number of personnel in this list must be used to calculate the Revenue & Profit per
Employee later in this document. If you are using business plan software to write your plan,
this will be done for you automatically.

Sample from CitiLoc, Inc.
                   2009 2010 2011 2012 2013
Engineering/Development
Management         1    1                 1        1        1
Non-management          3        5        5        5        5
Production/Service Delivery
Management
Non-management
Marketing
Management              1        1        1        1        1
Non-management                   1        1        1        1
Sales
Management
Non-management          1        5        6        7        8
Customer Support
Management              1        1        1        1        1
Non-management          5        9     10      11        12
General & Administrative
Management              1        1        1        1        1
Non-management          1        1        2        3        3
Other
Management              1        1        1        1        1
Non-management         27                 1        1        1


Total Personnel 42          26       30       33       35




2.4 Operations

Explanation

Describe the material assets of your enterprise including buildings, equipment, inventories,
proprietary technologies, etc. If your plan is for a start-up business you will have little to
describe. If your plan is for an on-going business your description should be consistent with
the information provided in your historical balance sheet.

Describe what functions of your business are considered appropriate for performing in-house
and those that could be or are done by sub-contractors.

Factors to consider:
Buildings
Office equipment
Production equipment
Inventories
Proprietary technologies
Company vehicles

Sample from CitiLoc, Inc.

We do not currently have any facilities. However, we will quickly have to lease an estimated
6,000 square feet of space for our operation. We are aware of two new commercial office
space areas where we can get a three year lease of that much space for about seventy five
cents a square foot per month (about $4,500 per month). There will be a one-time finish out
cost of about $10,000.

In addition to the space we will need desks, office equipment, communication lines and
equipment, computers and software. This will require a one time, up front expense of about
$80,000.



2.5 The Future

Explanation

Project any organizational changes, growth in personnel count and changes in material assets.
Discuss any new product or business concepts that have some likelihood of affecting your
enterprise. Explain new technologies on the horizon that could influence your way of doing
business.

Sample from CitiLoc, Inc.

Technology associated with the Internet is changing at a rapid pace. Our web site is designed
to isolate the various aspects of the process so that if new technology affects a portion of our
design we can incorporate it without impacting the total design. Isolated areas include the
browser interface, the e-commerce process, security measures, the data base processes and
the report generation and return to the customer.

Our data base is designed to be modified or extended with minimal impact on existing
processes and we fully expect that as the service matures this will happen.
3.0 The Market

Explanation

Describe the general characteristics of the distinct segments of prospects that make up the
market for your offerings.

Factors to consider:
Extent of market (local, regional, national, international)
General description of segments
Current versus new customers
Size of the typical prospect
Prospect profitability
Current ability of prospects to use your offerings
Prospect's incentive to buy
Prospect's decision process

Sample from CitiLoc, Inc.

Our market involves two segments; cities and businesses. The cities will provide about 10%
of our service income with businesses providing the rest.

Cities will find this of value because they will be able to present their information in a format
specifically designed to assist and attract businesses. Businesses will derive great value from
the service because, from a single source, they will be able to evaluate all of the major cities
in the United States against a wide variety of selection criteria.

Our objective is to have over 500 cities represented in our data base and between 1,000 and
2,000 businesses using the data base annually to assist in their location of a new operations
site.

The modern business world is focusing on communications and information technology as
the driving force for growth. Support for this growth involves production of communications
equipment, data storage equipment, computers (and related technologies such as chips,
monitors, etc.), software and much more. Because these businesses are accustomed to using
high-tech solutions for their business, we believe they will embrace our service when
planning their expansion.



3.1 Market Segments

Explanation

Create a spreadsheet containing a list of descriptive names for each of the current market
segments and the percent of the total industry market that segment represents. The total of the
percentages should be 100% of the available market. If you are using business plan software
to write your plan, this will be handled for you automatically.
Include all segments of the market whether you will be selling to them or not. It is just as
important to understand the segments you will not address as those that you will. For example,
if you are planning on a fine dining restaurant you will not be attracting the fast food segment
but you should understand that segment as a part of the overall market. Choose the segments
most important to the market and group the remaining segments into an "Other" category.

For example, if you were AMTRAK, you might describe yourself as being in the
transportation business and offering your services to two market segments, recreational and
business travelers.

If you were DELL Computer, you might say you were in the PC, Server and ISP markets
addressing the business and individual consumer communities. Each of these would then be
broken down into segments. EG: the PC market might segment into individual consumers,
small business and large business.

If you are selling to other businesses (B2B) some examples might be:

Industry by SIC code
This is especially beneficial for vertical market offerings.
Size - revenues, # employees, # locations
In general if your offering is highly sophisticated, requires significant resources or provides
greater value based on volume, then the target should be the larger enterprises.
Climate
Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in
northern areas.
Language
An example of a language specific service is a Spanish TV channel.
Status in the industry
You might want to target businesses that are the technology leader or revenue leader or
employee satisfaction leader, etc.
Accessibility
To minimize promotion and sales expense you may want to target urban rather than rural or
local rather than national prospects.
Access (or lack of access) to competitive offerings
Cable TV business's significant investment in their service delivery system has allowed a
near monopoly for some time. IBM's service reputation insured minimal competition during
the mainframe days.

If you are selling to individual consumers some examples might be:
Creation of or response to a fad
Examples are hula hoops, Jurassic Park T-shirts, pet rock, physical fitness, etc.
Geographic location
Marketers take advantage of location by selling suntan lotion in Hawaii, fur coats in Alaska,
etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or
commuters at 7AM.
Social status
This could include country club memberships, philanthropic contributions, etc.
Education
Product and service examples are encyclopedias, scientific calculators, learning to read tools
and financial counseling.
Avocation
This could include products for hunting, fishing, golf, art work, knitting, etc.

Sample from CitiLoc, Inc.

Our market is segmented by the size of the cities we will serve.
Small cities         75%
Medium cities        15%
Large cities         4%
International cities 6%




3.2 Prospects

Explanation

Create a spreadsheet containing a list of descriptive names for each of the specific market
segments you will be targeting for your marketing efforts. Show the percent of your total
revenue that each segment represents. They may be some of the same segments you
described earlier or you may plan to create a new segment. The total of the percentages
should be 100% of your revenue. If you are using business plan software to write your plan,
this will be handled for you automatically.

If you are selling business to business (B2B) some examples might be:
Job position/responsibility
Examples of offerings might be planning software for managers or cleaning agents for
maintenance managers.
Future potential
A good example is how Apple Computer supplied products to schools at all levels to
condition students graduating into the marketplace.
Ability to make a quick purchase decision
Targeting individual purchasers (EG: product manager or HR manager) versus business
committees can significantly reduce marketing expense and increase the probability of a
quick close.
Need for customization
Offerings such as police cars or busses to city governments or specialized computer systems
for specific departments fall into this category.
Product or service application to a business function
Examples are specific departments responsible for data processing, accounting, human
resources or plant maintenance.

If you are selling to individual consumers some examples might be
Physical Size
Offerings might be big men's clothing, golf clubs for shorter players, etc.
Time related factors
You may be able to target vacationers in summer, impulse buyers during the holidays or
commuters at 7AM.
Demographics/culture/religion
Ethnic products would fall into this category.
Gender
Product examples are scarves for women, ties for men, etc.
Age
Product examples are toys for children, jewelry for women, etc.
Special Interests
You could target cat lovers, science fiction readers, jazz music collectors, etc.
Accessibility
Because the individual is more difficult to reach you may want to segment by urban versus
rural, train commuters, people who read Wall Street Journal, etc.
Need for specific information
Based on features or content of your offering you can target a market segment. A product
might be books on how to start a business or a service might be seminars on how to quit
smoking.

Sample from CitiLoc, Inc.



3.3 Prospect Objectives

Explanation

Describe who the prospective buyer is, why they want an offering like yours and what their
objectives are with the use of your offering.

Factors to consider:
Individual consumer description or if a business, purchaser's job title
Secondary influencers of the purchase decision
Does offering improve prospect's financial situation or day to day operations?
Is "prestige" involved in the purchase?
Can the prospect measure the benefits?
Does the prospect require a customized offering?
Will prospect purchase more than one unit of your offering?
What are prospect's requirements for: Dependability, Durability, Economy, Efficiency,
Reliability, Productivity, Uniformity?

Sample from CitiLoc, Inc.

We have two market segments for our services.

A city (city manager) interested in attracting new businesses to their locale.

Businesses looking for a city where they can establish a new site to expand their operations.
Longer term we will probably have others who would like to be included in our service (for a
fee) such as real estate agents, attorneys and a variety of local vendors wanting to attract the
attention of new businesses moving to their city.



3.4 Segmentation

Explanation

Describe the distribution and characteristics of the various prospect segments. Segments may
have descriptions like government versus commercial or homeowners versus large businesses.
Market distribution might be described as local versus international or urban versus rural.
Characteristics include factors such as profitability, growth rates, knowledge of your industry,
whether they are past customers, etc. You should be exhaustive in these descriptions whether
or not you intend to address all of the segments.

This is a critical factor in your marketing strategy, so close attention should be given to
insuring accurate and detailed descriptions.

Factors to consider:
Geographic locations
Concentrations of prospects
Accessibility
Segments that require different marketing strategies
Purchasing power by segment
Numbers by segment
Segments with past customers
Segments with greatest need for the offering
Segments with shortest purchase decision cycle
Segments more willing to take risks to use a new concept
Segments impacted by external factors such as unions or buyer protection groups

Sample from CitiLoc, Inc.

The content of our data base consists of information about cities. We will start the process of
populating the data base by gathering information for cities having a population of 500,000 or
more. The next stage will be cities between 250,000 and 500,000 population. Finally we will
add cities with populations between 50,000 and 250,000.

We realize there are a number of international cities where a business may wish to locate a
part of their operation. After completing the U.S. portion of the data base we will include
selected cities from around the world.

Each of these cities will be approached with a request to provide information to be included
in the data base at no charge for the first year. At the end of that year, if they find the
inclusion of their information to be of value, they will be asked to pay an annual "exposure
fee". We expect that over 90% of the cities will be willing to pay the fee.
The other market segment will be the businesses wanting to gather information about
potential sites for an expanded operation. These are usually well established businesses in
high growth industries that have outgrown their current facilities or for strategic reasons wish
to establish multiple operating sites.



3.5 Size

Explanation

Using the breakdown provided in the market segmentation topic, for each segment show the
past and present sizes. Then make a growth projection for each with a rationale in support of
the projections. When specifying market sizes, include supporting information from sources
that will be credible to an investor.

Some investors like to see numbers that represent the Total Available Market (TAM) and the
Served Available Market (SAM). The TAM represents all of the buyers that could potentially
use your offering while the SAM represents the number who will actually buy an offering
like yours in any given time period. Your sales, represented as "market share", will be some
percentage of the SAM.

Factors to consider:
Number of buyers
Number of units (yours or competitors) to be purchased by each buyer annually
$$ value of the market
Size projections over time
Special considerations that could cause projections to change

Sample from CitiLoc, Inc.

The number of cities that will be represented in our data base (based on 2008 U.S. Census
bureau reports) includes:
       Population Number
          >500,000        26
250,000 - 500,000         41
  50,000 - 250,000      505
International cities    100

It is estimated that over 4,000 businesses establish a new operation or move their operation to
a new city each year. We expect that the majority of these will use our data base to evaluate
that move.

The following are announcements of businesses locating new facilities, taken from a January,
2008 edition of CC NEWS, a small customer support publication.

Boise Express opens second call center - Boise Express is in the process of investing $5
million to open its newest sales facility in Norman, OK.
Directory assistance opens Boston Center - Metro One Telecommunications Inc., .... has
opened a new call center here.

RightNow Technologies opens Dallas center - RightNow Tech. (of Bozeman, Mont.)
announced the opening of its new sales office in Dallas, TX.

Financier brings center to Knoxville - Associates Housings Finance LLC announced the
opening of its new collections center in Knoxville, TN. The facility will house 250 employees.

Rockwell Electronics expands worldwide - Rockwell Electronics is opening five new
offices.

EGain opens office in Australia - EGain Communications, a provider of customer
communications solutions for e-commerce, is launching operations in Australia.



3.6 Environment

Explanation

Discuss environmental factors influencing the sale of your products/services. These might
include factors such as new government regulations, fuel oil shortages, an aging population,
greater health consciousness, etc. You should be very specific as to why these factors are
positive or negative for your enterprise and how you expect to use that knowledge.

Factors to consider:
Changing technologies
Changing social values
Resource limitations
Taxes
Fashion trends
Life style trends
Age of the society
Government price controls
Government subsidies
Licensing requirements
Safety regulations
Education changes
Changes in geographic preference
Changes in usable income

Sample from CitiLoc, Inc.

We are experiencing a strong period of growth and expansion in nearly all areas of our
economy. While the future is open to debate, most economists are predicting continued
growth for several years.

The modern business world is focusing on communications and information technology as
the driving force for growth. Support for this growth involves production of communications
equipment, data storage equipment, computers (and related technologies such as chips,
monitors, etc.), software and much more. Because these businesses are accustomed to using
"high-tech" solutions for their business, we believe they will embrace our service when
planning their expansion.




3.7 Alternatives

Explanation

In most cases, the prospect has a variety of alternatives to solve their problem. First you
should explain the prospect's motivation for solving the problems your products/services
address. Then explain the alternative solutions. For instance, if you are selling chain saws, the
prospect could buy your product, a competitive chain saw product, an axe, or a tree saw.
They could also be influenced by tree conservationists and decide to purchase nothing. This
description should explain the prospect's alternatives and why they would choose your
offering.

Sample from CitiLoc, Inc.

Most cities now have some sort of presence on the Internet. Some of the information of
interest to a business considering the city as an expansion location is probably available on
the Internet site. It will however, be sporadic and organized differently for each city.

Also, most of the larger cities have an information packet available to any business that
requests it. However, many businesses would prefer to conduct their preliminary evaluation
in private, contacting the city personnel only after they have determined that the city is a
viable location for their operation.
4.0 The Offerings

Explanation

Address capabilities relative to competition, industry standards, environmental influences and
the impact on the user's day-to-day operations.

Factors to consider:
Benefit to user
Comparison to competition
Patent/trademark
Adherence to industry standards
Emotional/visual appeal
Environmental influences
Ease of use
Impact on user operations
Use of proprietary technology
Pricing

Sample from CitiLoc, Inc.

CitiLoc will provide, via the Internet, a service to both cities and businesses that helps cities
attract new business and businesses determine which city is best for them. Getting started will
involve setting up a web site, finalizing data base design, contacting city management,
collecting city data and entering it into the data base, developing the user interface, insuring
the security of the data and making sure that our web site is properly indexed in all of the
most popular search engines.

This service is valuable to a city because it provides an opportunity for them to present their
information to a wide audience of potential new businesses. Businesses benefit by having
essential city information available in one data base. They will have the ability to specify
qualifying criteria and get a list of cities that meet those criteria.

Initially the collection, organization and entry of data about the cities will be very time and
people intensive. We estimate that each new city we add to the data base will require about
two man weeks (on the average) of effort. It will require about one year to construct a
database with enough information to be of interest to businesses. Once the data base is on-
line, a primary service objective will be to review the information on every city no less than
once every six months. In addition we encourage the cities to provide us with updated
information anytime a change occurs (especially personnel changes).



4.1 Description

Explanation

This is a technical description of each product or service that will be offered by your
enterprise.
If it is a product, describe the function performed, the physical characteristics, operational
characteristics, technological factors of import and unique aspects that make it more desirable
to the market than competitive products.

If it is a service, describe the purpose, content, method of delivery and unique aspects that
make it more desirable to the market than competitive services.

Factors to consider:
Function(s) performed
Sizes
Tolerances
Quality
Durability
Special/unique abilities
New/proprietary technology
Product or service family relationships

Sample from CitiLoc, Inc.

Businesses are regularly faced with the problem of expanding their operation. In many cases
it is strategically appropriate to do so in a new city. When they make this decision they must
then select a city. CitiLoc will provide, via the Internet, a service to both cities and businesses
that helps cities attract new business and businesses determine which city is best for them.

Businesses will have access to information about every city in the United States with a
population of over 50,000. City management can get a regular report comparing what they
offer a business with every other city in the data base.

The data base will contain a wide range of information. The types of information include:

Demographics: work force size, % unemployment, salary ranges
Major forms of transportation: highways, trucking, bus lines, air lines
Direct access to major cities by each form of transportation
Communication: phone lines, digital/optical lines, newspapers (affiliations)
Commercial real estate: quantity, occupancy rates, prices, expected growth
Housing: quantity, occupancy rates, prices, expected growth
Educational institutions: availability, occupancy, grade levels, planned growth
Breakdown of major businesses by industry and size
Three year history of businesses that have located in the city
Availability and cost of utilities and water
Taxes of all forms, any tax abatement programs for new businesses
Any limitations on the types of industries allowed to locate in the city
Review of all EPA conformance issues
Geographic boundaries of the city, including ETJ's
City government structure and contacts



4.2 Market Status
Explanation

Explain whether the product or service is ready for the market or still in development. If still
in development, provide a schedule for delivery that includes a "PERT" chart showing critical
decision and completion points. You should also include the projected cost to complete the
development.

Sample from CitiLoc, Inc.

This service concept has been thoroughly thought out, several city managers have been
interviewed with an almost universal positive response to the concept and a prototype data
base has been developed. A number of strategic planning managers from various businesses
have also been contacted. Their response has been positive and in some cases they have
offered good advice on the kind of features they would like the service to have. The basic
features of the user interface for the Internet have been defined, however, additional work is
required in this area.

From start-up to initial market entry will require about one year. This will involve setting up
a web site, finalizing data base design, contacting city management, collecting city data and
entering it into the data base, developing the user interface, insuring the security of the data
and making sure that our web site is properly indexed in all of the most popular search
engines.

As the service matures, new sets of information will be collected that will be of value to the
customer and of financial benefit to CitiLoc. For example, real estate agents capable of
meeting the needs of a business looking for property could include their information in the
data base. The same would be true for many other services such as attorneys, parts suppliers
and numerous other vendors of products or services



4.3 Value

Explanation

Explain why the product or service is of value to a purchaser and attempt to present the value
in measurable terms. For example, a product might "reduce rejects by 20% and eliminate one
person from each assembly line". A service might "educate middle management in personnel
review techniques, thus significantly reducing employee dissatisfaction". Your explanations
should be specific and detailed.

Factors to consider:
Trial usage
Measurable results
Impact on buyer's operation/product
Time required to benefit
Return on investment
$$$ savings
Useful life of offering
Installation considerations
Education of purchaser or purchaser's employees
Maintenance requirements
Technical assistance requirements

Sample from CitiLoc, Inc.

This service is valuable to a city because it provides an opportunity for them to present their
information to a wide audience of potential new businesses. If they so choose they can also
get information comparing what their city has to offer a new business with all other cities in
the data base.

Businesses benefit by having essential city information available in one data base. They will
have the ability to specify qualifying criteria and get a list of cities that meet those criteria.
When they have chosen their target cities they will have access to the information necessary
to contact the appropriate city personnel to begin discussions. For each business a
"customized" and secure interface will be created at the time they begin their city search.
Each time they re-enter the web site they will have access to all the information they
collected in prior visits.



4.4 Cost to Produce

Explanation

If you offer a product, itemize the typical bill of materials and other expense factors in
manufacturing the product. If you expect to improve manufacturing costs as you gain
experience, explain and show specific numbers.

If you offer a service, while you may not have a manufacturing operation, you will still
probably deliver materials which will need to be inventoried and organized prior to delivery
to the customer, all of which involves costs. For example, if you were a consultant offering a
seminar your production costs might include hand out materials, facilities for the seminar,
presentation slides, lunch or refreshments for the attendees, etc.

Factors to consider:
Part numbers
Part cost
Labor costs
Sub-contractor costs
Benefits of volume purchases
Effect of experience on labor costs
Total cost to produce
Change in costs over time

Sample from CitiLoc, Inc.

Essentially all production costs for the CitiLoc service will be personnel costs. There will be
costs for communication and for data storage, but these represent a small portion of the total.
Initially the collection, organization and entry of data about the cities will be very time and
people intensive. We estimate that each new city we add to the data base will require, on the
average, about two man weeks of effort (more for larger cities, less for smaller). Thereafter,
we will accept updates to the data base (as provided by a member city) on a daily basis. In
addition we will initiate a regular (once every six months) review of each city's data by our
personnel and the city's personnel.

As the service matures we will be expanding the data base with new information content and
with new ways for the businesses to search, review or print the information.



4.5 Support

Explanation

If you are selling a product, indicate whether the customer will expect maintenance of the
product and who will provide the service. Project the Mean Time To Failure "MTTF" for the
product and show a chart that projects the growth of support demand over time. If hands on
repair will be required, show most probable parts requirements, cost to customer, personnel
and inventory requirements. If on-site maintenance will be required, show travel and living
expenses as well.

For a service you are always in a support situation. You should concentrate on how to insure
that the on-going quality and content of the service is meeting your customer's needs.

Factors to consider:
Warranty commitments
Most likely part(s) to fail
How critical is offering to customer's day to day business?
Repair time requirements
Location of maintenance/service sites
Contract with an another enterprise to maintain your products
Customer's ability to maintain product
Spare parts availability
Is maintenance operation a profit center?

Sample from CitiLoc, Inc.

The information in the data base is of no use to our customers unless it is current. Therefore,
a primary service objective will be to review the information on every city no less than once
every six months. In addition we encourage the cities to provide us with updated information
anytime a change occurs (especially personnel changes). We will back our data base up on a
daily basis and, if and when necessary, rebuild the data base to eliminate any fragmentation
problems.

We know that providing information to us will be far down on a city manager's priority list so
we must regularly maintain contact and present a positive service image. To this end we will
assign an individual the task of preparing a monthly newsletter and a set of data base statistics
to send to each of the city contacts.
5.0 Marketing Strategy

Explanation

Describe your strategy for achieving your goals. Explain why this strategy will succeed.

Factors to consider:
Pricing strategy
Promotion strategy
Market shares
Type of sales force
Sales support activities
Critical dependencies
Channels of distribution
Advertising commitment
Promotional commitment
Use of outside agencies

Sample from CitiLoc, Inc.

Our objective is to be recognized as the premiere data base for evaluating the pros and cons
of moving a business operation to any given city.

We expect our data base to be populated with information from over 500 U.S. cities and 50 to
100 international cities that will pay for the service. We also expect about 500 businesses to
pay to use the data base in the first year growing to about 2000 businesses in the fifth year.

We will promote our service using literature, links with other relevant web pages, a strong
push to gain publicity, advertising in strategic planning, financial and human resource
publications and a direct mail program.

Pricing for cities to be included in the data base will range from $1,000 to $2,500 per year
and for businesses to use the data base from $2,500 to $10,000 per year.

In addition to our web site being accessible through well indexed search engines, we will
have an initial staff of five personnel contacting businesses on a daily basis to locate the
person who would be involved in establishing a new business location. Their objective will
be to get the business prospect to visit our web site.

In addition to our own efforts to promote and distribute our services, there will be a
secondary distribution channel in the form of "links" to our web site from other web sites. We
will actively pursue the establishment of links with sites we believe will have a viewer base
that may be interested in our service.

We will provide customer support to city personnel in maintaining the integrity of the
information in the data base and to business customers using the data base.



5.1 Targets
Explanation

Describe each of the target segments described in the Market Description section and why
you believe they are appropriate.

Factors to consider:
Immediate need for your offering
Purchasing power
Accessibility
Willingness to make a decision

Sample from CitiLoc, Inc.

There are about 570 cities in the U.S. with a population of 50,000 or more. We expect about
90% of these cities will be willing to pay a fee to be included in our data base.

There are an estimated 200,000 businesses in the U.S. large enough to consider expanding
their operation to a new city. On an annual basis 2% - 3% of those will actively consider such
a move. We project that more than half of these will choose to use our services in some
manner.

As we grow, a third market segment will be services and vendors within each of the cities
that want to attract the attention of new businesses. A special section that presents their
business will be available for a fee.



5.2 Image

Explanation

Describe how your enterprise is perceived in the market today and how you want it to be
perceived in the future. If you are changing the image, explain why and how you expect to
achieve the change. If the image change requires operational changes explain them and the
impact they will have on your day to day operations.

Factors to consider:
Product/service quality
Past promotional objectives
Past ad contents
Sales organization
Service organization
Industry peer perception
Customer/prospect perception
Past market segments

Sample from CitiLoc, Inc.
CitiLoc is a new service and therefore currently has no image. Our objective is to be
recognized as the premiere data base for evaluating the pros and cons of moving a business
operation to any given city.

Through the process of constant communication with city management, regular exposure of
our service offerings to the business community and consistently excellent service to our
customers we expect to build our image.



5.3 Promotion

Explanation

There are two basic promotion strategies, PUSH and PULL.

The PUSH strategy maximizes the use of all available channels of distribution to "push" the
offering into the marketplace. This usually requires generous discounts or commissions to
achieve the objective of giving the channels incentive to promote the offering, thus
minimizing your need for advertising.

The PULL strategy requires direct interface with the end-user of the offering. Use of channels
of distribution is minimized during the first stages of offering promotion and a major
commitment to advertising is required. The objective is to "pull" the prospects into the
various channel outlets creating a demand for the offering the channels cannot ignore.

Describe your promotion strategy. Factors to consider:
Offering price
Offering quality
Relationships with channels
Competitors relationships with channels
Channel discount requirements
Potential for publicity
Avenues for advertising
Kind of offering

Sample from CitiLoc, Inc.

There are a number of ways we will promote our service, all basically being a PULL strategy.
These include:

A CitiLoc employee acting as the personal coordinator for each city in the data base.
A one page flyer in each city's packet of literature sent to prospective businesses.
A link from each city's web page (if one exists) to our web page.
Links with other relevant web pages throughout the Internet.
Each search engine on the web will be fully indexed to find our site.
A strong push to gain publicity about our web site.
Advertising in strategic planning, financial and human resource publications.
A direct mail program to inform top level business management of our service.
5.3.1 Internet Web Site

Explanation

It is very important in today’s market to have a presence on the Internet. Some sites actually
allow the viewer to purchase products or services directly while others act only to supply
information and promote products or services. If you plan to have a web site, describe the
objectives for the content. While it is not essential that you document the implementation and
support considerations for your site in the plan it is critical that you understand them if you
are planning on presenting your plan to a venture capitalist.

Factors to consider:
Domain name simplicity and relevance to the product/service
A description of your web site content
How you will get registered with the search engines?
What key word search criteria you want to locate your site?
Links with other web sites
Will you provide e-commerce capability?
Integration concerns between Internet sales and field/direct sales
Understand the relationship between web site access and revenue
How you plan to keep web site information current
Requirements for and ability to support web site customers
Will site content and projected traffic attract advertisers?
Your ability to insure security for viewers

Sample from CitiLoc, Inc.

Our web site will be professionally constructed with respect to presentation, content,
navigation, security and usability across browsers. The business customer will immediately
feel comfortable with the interface, because it will be customized to his or her needs. All of
the customer's analysis will be stored in a secure entry in the data base and will be instantly
available for as long as the business is a customer.



5.3.2 Publicity

Explanation

Describe what media you are targeting for publicity, how you intend to generate the interest,
what form the publicity will take and when the publicity will occur.

Factors to consider:
New offering announcements
Offering update announcements
Offering application articles
Press conferences
Endorsements from customers or experts
Trade show presentations
Local/national news articles
Talk shows - TV/radio

Sample from CitiLoc, Inc.

We will aggressively pursue as much free publicity as we can get.

To address the city market segment, starting in the fourth month of the development project
we will be sending press releases to a wide range of city planning publications. This should
cause the publicity to appear in the various publications during months six through nine.

We will be contacting every city manager of the cities we want in our data base, describing
our service, providing them an access code to a secure sight describing the service in more
detail and, of course, asking them to provide us with the desired information.

In addition, there is a national Governor's conference being held in Miami, FL in the month
of May and a national Mayor's conference being held in Phoenix, AZ in the month of June.
Because our service is Internet based (the hot topic these days), we would expect to be
included on the agenda of each of these conferences to present the concepts of our service.

To address the business market segment, starting in month nine we will send press releases to
about 500 strategic planning, accounting and business publications. To complement the press
release, we will conduct a press tour in New York City, Chicago, San Francisco and Los
Angeles making personal visits to appropriate editors and writers of key publications.

We will also offer a white paper to several fall and winter business conferences describing
the concepts of our service. Again, because of the Internet hook, we expect to be included on
the agenda of a number of these conferences.



5.3.3 Advertising

Explanation

Advertising can take many forms, from calendars to coffee mugs to billboards to magazine
ads to radio and TV spots. In most cases advertising is expensive, so you should plan
carefully, making sure that the advertising is well focused on your target markets with a high
exposure per dollar invested.

Describe each form of advertising planned, specifying the market it is aimed at, the form it
will take, what it will cost and the expected return.

Factors to consider:
Literature:
Article reprints
Competitive comparisons
Feature explanations
Benefits explanations
Concepts education
Advertising thrust:
Corporate image
Product/service family
Product/service features
Competitive comparisons
Media:
Magazines
Trade journals
Newspapers
User letters
Television
Radio
Trade shows
Conferences
Direct mail
Card decks
Media focus on your market segment
Cost to expose each prospect to your message

Sample from CitiLoc, Inc.

We will judiciously use advertising to promote our service. There are a few key publications
that we believe will reach the right management personnel in businesses that might use our
service. These include Harvard Business Review, CEO, Red Herring, two or three financial
and accounting publications, The Wall Street Journal, The Christian Science Monitor and
some major city newspapers. Beginning in the eleventh or twelfth month we will begin
placing ads in these publications.

Beginning in the first month of year two we will begin a direct mail campaign directed at
CEO's, COO's and CFO's in high growth industries. The mailings will be followed up with a
phone contact and where available an e-mail contact.

We will also pay major Internet search engines such as Yahoo and Google to display our ad
whenever specific search criteria is used.



5.4 Pricing

Explanation

Your pricing strategy is heavily influenced by whether your objective is cash generation or
market penetration.

Cash generation is possible if you can price the offering significantly higher than your cost to
produce. To achieve this there must be minimal competition. This could be because you are
the first to the market, you have a monopoly on the market or because you are the only one
willing to offer such an offering due to market decline, liability, social pressures, market
location, etc.

Significant market penetration is usually only feasible in the early stages of an offering form's
life cycle and is often accompanied with very competitive pricing. In later life cycle stages,
market penetration might be feasible if you are able to offer much greater value for the same
price or you have been able to substantially reduce your cost to produce as compared to the
competition.

Describe your pricing strategy in terms of dollars per unit and how that compares to the
competition. If you plan pricing specials or volume discounts, describe them. If you intend to
use dealers or distributors, discounts or commissions will be required and should be described.

The mix of sales from full price to your deepest discount will result in an average selling
price (ASP) that is lower than your retail price. You should project this mix and the resulting
ASP.

Factors to consider:
Cash requirements
Long term staying power
Market penetration objectives
Competitive pricing
Competitor's objectives
Strength of competitors
Average selling price considering all channel discounts
Prospect's sensitivity to price versus product value
Use of pricing specials or trade allowances
Impact on sales organization

Sample from CitiLoc, Inc.

We will generate revenue by charging each city to be listed in the data base, by charging
businesses to search the data base and by charging vendors to advertise their services on the
data base.

There will be two pricing levels for cities. The basic level, priced at $1,000 per year, will
include our effort of accumulating and storing the city data on our data base and keeping the
data current. The advanced level, priced at $2,500 per year, will include quarterly reports
comparing the data for all cities in the data base plus a listing of businesses that have made a
commitment to locate in a specific city.

There will also be two pricing levels for businesses wishing to use the data base. The basic
level, priced at $2,500, will allow a business to access and search the data base for up to one
year using the search tools provided by our system.

For example, the business could search for all cities that offer a tax abatement program, have
an average price per foot for commercial space of less than $1.75/month, have an occupancy
rate of less than 90%, have direct airline connections to San Jose and have a major university
within 50 miles.
The advanced level, priced at $10,000, will provide extensive analysis tools plus evaluations,
written by our staff, for up to three cities. The evaluations will review over fifty important
factors to consider before making a commitment to a new city.

We may also offer to provide consulting support to businesses. If so, we will make proposals
on request from the prospect. Minimum consulting rates will be $1,200 per day.

In addition, we expect that service and product vendors in the various cities will be interested
in promoting their business in the data base. We have not established pricing for this as yet,
but, in any case, do not expect it to be a substantial portion of our revenue.



5.5 Sales

Explanation

Whether you are offering a product or a service you have to convince the prospect to buy it.
This requires a sales organization in some form. Describe your sales organization with
respect to structure, personnel, experience, size and location. Show how this relates to your
target markets. Explain how the sales personnel will sell the product or service and how they
will be compensated.

Factors to consider:
Sales method:
   Full service retail
   Self service retail
   Wholesale
   Mail order
   Field sales force for on-site sales
Management experience
Current sales personnel
Sales personnel recruiting
Motivation techniques
Commissions
Education of sales personnel
Technical support for sales
Demonstrations of offering
Sales offices
Generation of leads
Ability to contact prospects

Sample from CitiLoc, Inc.

Selling an Internet service is not much different than selling any other service. However, we
have an edge over traditional services. Prospects can find us more easily by searching the
Internet. (The key here is to insure that the search engines have our site indexed in a way that
will position us in the top one or two pages of the search results.)
However, we can't depend on that alone. We will have an initial staff of five personnel
contacting businesses on a daily basis to locate the person who would be involved in
establishing a new business location. When that person is reached, our personnel will explain
the basic features of our service and how they can get more information by looking at our
web site. A primary objective will be to get their e-mail address so we can follow up the call
with an e-mail that will link them directly to our web site.

As can be determined from the above, a very critical part of the sales process is the content of
our web page. It will be designed to educate the prospect, lead them through a decision
process and then propose a closure. The prospect can make a commitment "on the spot" using
the e-commerce capabilities. They can pay using a credit card, enter a purchase order number
and a phone number for verification or request that a representative contact them.

If they pay with a credit card, the card will be verified and an access code will be provided to
the new customer. If they provide a purchase order number or request to be contacted, our
personnel will receive the information within seconds after the e-commerce transaction. Their
response will be to take whatever steps are necessary to close the sale.



5.6 Distribution

Explanation

Often products or services are sold through channels other than direct sales to the customer.
Describe the channels of distribution you will use, their reputation, financial stability, ability
to address your target markets, the discounts or commissions they expect and the volume of
sales you expect to achieve through each channel. Make some assessment of how your
success depends on each of the channels.

Factors to consider:
Competitors use of channels
Channel's locations
Channel's reputation
Channel's financial stability
Channel's discounts as compared to alternative channels
Channel's access to desired market segment
Channel's experience with your kind of offering
Conflict between in-house sales and selected channels

Sample from CitiLoc, Inc.

We and our web site represent the major distribution channel for our services. There is a
secondary distribution channel in the form of "links" to our web site from other web sites. We
will actively pursue the establishment of links with sites we believe will have a viewer base
that may be interested in our service. These sites will be defined as "Referral Partners". If a
prospect links to our site from a Referral Partner and contracts for our service within a 10 day
period, we will pay a "referral fee" to the partner. Our objective is to establish over 100
Referral Partners by the time we put the data base on-line.
5.7 Logistics

Explanation

Once a product or service is sold, whether direct to a customer or to a channel of distribution,
it must be delivered to them.

If your offering is a product, describe your ability to inventory, ship, warehouse and deliver
product when and where needed.

If your offering is a service, describe your ability to deliver the service when and where
needed and especially how you handle peak demands.

Factors to consider:
Access to transportation
Use of transportation services versus in-house service
Size of offering
Fragility of offering
Delivery time expectations of customer
Alternative methods of delivery
Offering availability when ordered
Warehouse locations and space
Implications of late or lost deliveries
Delivery prices part of offering price or additional
Requirement for insurance

Sample from CitiLoc, Inc.

For the most part, our service consists of making the data base and its search tools available
to the customer. This is all done through our web site and does not require any intervention
by our personnel.

For advanced city subscribers we will distribute a quarterly report via e-mail.

For advanced business customers there will be e-mail communication to request and deliver
customized city reports



5.8 Support

Explanation

There is always a need to provide customer support. Describe your policy for product or
service warranty and what form of support will be required to meet the warranty
commitments including organization structure, personnel, experience, size and location.
Factors to consider:
Warranty commitments
In-house versus on-site support
Service after warranty
Proof of purchase
Delivery to and from service area
Parts sales
Parts inventories
Service site locations
Service personnel experience requirements
Education of service personnel

Sample from CitiLoc, Inc.

Support falls into two categories.

Cities who wish to add or modify information stored in the data base will interface with one
of our personnel who has been assigned as their personal representative. New or changed data
will be reviewed with the customer to confirm its validity and then entered into the data base,
usually on the same day it is provided. City personnel can contact their personal
representative at any time with questions or data changes. We will initiate contact with each
city at least every six months to determine if the data base needs any changes.

Business users may have problems using the search tools or have questions regarding the data.
If so, there is an on-line help facility that will answer most questions. There will also be an e-
mail facility that allows the user to pose a question via e-mail. Our commitment will be to
respond to all e-mail queries within 24 hours. If neither of those methods satisfy the user, we
will also have a 1-800 customer support line that will be available during normal working
hours (7AM to 7PM CST).
6.0 Competitive Analysis

Explanation

Provide a summary of the competition as a group. Factors to consider:
Number of competitors
Is market gaining or losing competitors?
Are competitors profitable?
Do competitors have manufacturing or marketing advantages?
Do you expect more or less pricing pressure from the competition?

Describe each competitor and their offering and why they are such strong competition.
Describe how your enterprise is positioned as one of the competitors.

Factors to consider:
Image
Names of key competitors/offerings
Leader or follower
How long have they been in business?
Employee relations
Pricing record
Growth record
Manufacturing/marketing experience
Record of response to competition
Record of technological innovation
Market share
Record in other markets
Offering
Price
Price versus value
Ease of installation
Ease of use
Education requirements
Technical support requirements
Reliability
Operating costs
Proven return on investment
Proprietary technology
Offering differences
Service/warranty record
Marketing
Marketing organization
Promotional techniques
Financials
Return on investment record
Profitability record
Current level of profitability
Liquidity
Cash requirements
Commitment to the market
Investment in specialized equipment
Strategic importance to competitor's business objectives
Percent of total income derived from competitive offering
Commitment to channel relationships
Labor contracts involving termination costs
Responsibility to installed customer base

Sample from CitiLoc, Inc.

At present there are two major forms of competition: consultants and information provided
by the individual cities.

Consultants range in size from individuals to large international firms. The minimum
consulting fee a business can expect to pay is $10,000 and it can easily reach $100,000. The
quality of information a business can expect to receive from our service will be equal to or
better than what they get from a consultant at a fraction of the cost and the information will
be available in a fraction of the time.

Most cities have a web page today. The information they provide is designed to aid visitors
and citizens locate restaurants, parks, forms of entertainment, retail outlets and in some cases
city government contacts. It is not designed to be user friendly to the business considering a
move to the city. Cities that are aggressively trying to attract new business will often have a
contact point to provide information to prospective businesses. This usually comes in the
form of written literature and seldom addresses the majority of a business' concerns.

Once again, our service provides more relevant information on any given city and, in addition,
the business has immediate access to "every other" city that might be a candidate.

Another service could pursue the same business model as CitiLoc, however, we will be first
and have at least a year's head start. The commitment by all of the cities to our service will
make them reluctant to enter into a second agreement with another service and the high up-
front development investment for a "me-too" business will represent a significant barrier to
entry.

				
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