Seeing Audiences and Your Business Clearly

Chapter 08

McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Business Plans

Seeing Audiences and Your Business Clearly

Objectives

LO1 Understand why and when to develop a business plan

LO2 Know how to tell the business plan storyLO3 Learn the major sections of the classic

business planLO4 Focus business plan sections to meet specific

needsLO5 Identify the major risks to business plan

successLO6 Master presenting your business plan to others

8-2

Business Plan Background

Business plan – A document designed to detail the major

characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm’s present and future.

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External legitimacy– The extent to which a small business is

taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner’s family.

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Internal understanding– extent to which employees, investors, and

family members in the business know the business’s purposes and operations

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Starting Small and Building Up

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Figure 8.1

The Vision Statement

Vision statement– A very simple 5–10 word sentence or tagline

that expresses the fundamental idea or goal of the firm.

Tagline– Memorable catchphrase that captures the

key idea of a business, its service, product, or customer.

– also known as a slogan

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Question

A _____________ describes the firm’s goals and competitive advantages.

A.Vision statementB.TaglineC.Mission statementD.Executive summary

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The Mission Statement

Mission Statement– A paragraph that describes the firm’s

goals and competitive advantages– Talks in terms of how it will make a

difference in for the customer or the industry

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The Elevator Pitch

The Elevator Pitch– A 30-second action-oriented description

of a business designed to sell the idea of the business to another

– Leads with the hook, follows up with purpose of the service, ends with where business is now

– What makes firm unique or superior?

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The Executive Summary

Executive summary– A one- to two-page (250–500 words)

overview of the business, its business model, market, expectations, and immediate goals.

– Typically put at the start of a business plan and is the most popular summary form for a business plan.

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Strategizing for the Business Plan: 5-M Model

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Janexia Waterproofing:A 5-M Model Example

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Figure 8.2

Business Plan Outline

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Cover letter– A one-page document on business

stationery that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan.

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Title Page– contains introductory information– Company name– Contact information– Date this version of the plan was

completed– Proprietary statement to protect your

ideas

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Table of contents– Lists major section headings

• Boldface type

– Sections underneath major sections• Normal type

– Put page numbers on every page of the business plan

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Company background– brief description of the company, the

firm’s current status, and the history of the business

– Vision statement / mission statement– Specific goals, Business’ competitive

advantage

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The Company: Product/service and industry– Describe firm’s product or service– Explain how the customer uses the

product– Proprietary technology– Industry descriptions

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The Market: Market and target customer– Total population of people or firms you

plan to sell to– Target customer section: focuses

attention on who would buy– Demographics’ relation to the product,

how often they buy, and past experience

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The Market: Competition and competitive advantage– Major competitors– Competing product or service: market

share, price, competitive advantages and disadvantages

– what makes product or service unique

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The Market: Marketing strategy– Overall strategy your firm pursues in the

market– Sales plan that shows specific ways you

apply strategy to secure sales from your customers

– Longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you

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Marketing Strategy

Preselling – Involves introducing your product to

potential customers and taking orders for later delivery.

Research and development – The part of a business that is focused on

creating new products or services and preparing new technologies, ideas, products, or services for the firm’s market.

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The Organization: Legal and organization structures– Legal form of the business– Organizational structure of the firm– Makes clear how many employees there

are and whether they are full time or part time, permanent or seasonal, family or non-family

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The Organization: Key personnel– Sell the most important single element in

the business plan – you!– Who are your key personnel?– Talk about accomplishments rather than

just experience– Do not limit yourself to business

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The Organization: Related service providers– Identify your bank and banker, attorney

and legal firm, accountant or bookkeeper, other consultants

– Major relationships established with well-known suppliers or customers

– Board of directors / board of advisors

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The Organization: Location– Description of the facility– How it meets strategic and sales goal of

the business– Own, lease, or rent the property– Plan to expand the facilities

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Financials Layout for aTypical Business Plan

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Exhibit 8.2


The Appendices– one-page version of owner’s resume– Product or service pictures or

specifications– Copies of signed contracts– Results from marketing studies or pilot

sales efforts– Industry reports

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Focusing Your Business Plan

Pioneering business– A firm whose product or service is new to

the industry or is itself creating a new industry.

Test marketing– Selling your product or service in a limited

area, for a limited time.

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New entrant business– A firm whose product or service is

established elsewhere, but is new to this market.

Screening plan– gives the basic overview of the firm and a

detailed look at the financials.– Also called a mini-plan

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Question

What type of plan is designed to be used internally for management purposes?

A.Informational plansB.Key employee/partner planC.Invention plan D.Operational plan

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Informational plans– Give potential customers or suppliers

information about the company and its product or service.

Proof-of-concept Web site– An Internet-based type of business plan

providing information or demonstration of a product or service designed to solicit information on customer interest.

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Key employee/partner plan– Provides information on the company,

product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

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Invention plan – A business plan that provides information

to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.

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Operational plan– Business plans designed to be used

internally for management purposes.

Private placement memorandum– A specialized legal form of business plan

crafted by lawyers for the purpose of soliciting formal investments.

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The Most Common CriticalRisks in a Plan

Risks – The parts of a business or business plan

that expose the firm to any kind of loss—profits, sales, reputation, assets, customers, and so on.

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The Most Common CriticalRisks in a Plan

Overstated numbersUncertain salesOverlooked competitionExperience deficitsInadequate cushionInadequate payback

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Presenting Your Plan

The key things an influential person looks for in you are

1.Your passion for the business2.Your expertise about the business and the

plan3.How professional you are in your work, 4.How easy it would be to work with you.

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Documents

Seeing Audiences and Your Business Clearly