CHAPTER 11 Crafting a Winning Business PLAN

CHAPTER 11 Crafting a Winning

Business PLAN

MAN 470 – Berk TUNCALI

What is a Business Plan?

It is a written summary of an entrepreneur’s proposed

business venture, its operational and financial details, its

marketing opportunities and strategy, and its managers’

skills and abilities.

VIDEO

BUSINESS PLAN

PRESENTATION

Never forget;

 It is not about coming up with an idea.

It is about those who take these ideas to the market, test them out and make profit.

 It doesn’t matter who came up with

the idea first, but it matters who first

started a business with it.

Why design a Business Plan?

 REALITY TEST

- Proving that the market for the product or service exist.

 Focus on market size, potential customers

 Is it different from the existing competiton?

 Can the company build at the projected cost estimates?

- Does it offer value to customers?

 COMPETITIVE TEST

 Relative position according to key competitiors

 How do the strengths and weaknesses match with competitors?

 Do comparisons threaten the company’s success or survival?

 Plan must prove quality, skill and experience

of the management team

 VALUE TEST

 Convince lenders and investors that the business offers value and profitability.

 Smoke and mirrors do not replace financial basics (Dot-com boom)

 Venture must have long term strategic vision and practical focus on operations.

- Demonstrate knowledge;

a) supplies and cost of goods b) Unit labour cost

c) Selling price and gross profit margins

d) Break even point

The Elements of a Business Plan

 THE EXECUTIVE SUMMARY

 MISSION STAMENT

 COMPANY HISTORY

 BUSINESS AND INDUSTRY PROFILE

 BUSINESS STRATEGY

 DESCRIPTION OF FIRM’S PRODUCT/SERVICE

 MARKETING STRATEGY

 COMPETITOR ANALYSIS

 DESCRIPTION OF THE MANAGEMENT TEAM

 PLAN OF OPERATION

 FORECASTED OR PRO-FORMA FINANCIAL STATEMENTS

 LOAN OR INVESTMENT PROPOSAL

THE EXECUTIVE SUMMARY

 Summarize the presentation. (max 2 pages.)

 This is the written version of the Elevator Pitch

 Must capture the readers attention (in order to read the rest)

 First impression is important

MISSION STAMENT

 Entrepreneurs vision for the company

 Very broad expression of purpose

 Set the broad direction that the company will move

COMPANY HISTORY

 If the company is pre-existing, a brief history

should be included.

BUSINESS AND INDUSTRY PROFILE

This part should enlighten the investor in regard to the industry in which the compnay will take part in.

Therefore, state the Goal of the business. (The long range, broad statements that the company plans to achive)

Also state the objectives of the business by which the

goals will be accomplished. (short term, measureable,

performance targetted, attainable and controlable)

BUSINESS AND INDUSTRY PROFILE

This part should enlighten the investor in regard to the industry in which the company will take part in.

Therefore, state the Goal of the business. (The long range, broad statements that the company plans to achive)

Also state the objectives of the business by which the

goals will be accomplished. (short term, measureable,

performance targetted, attainable and controlable)

BUSINESS STRATEGY

This part focusses on how the company will achieve its

goals and objectives.

How the entrepreneur will gain competitive edge and set

its business apart from the rest?

What makes the company unique?

DESCRIPTION OF FIRM’S PRODUCT/SERVICE

 Describe the overall product line.

 Overview of how the customer uses goods or services

 Product lifecycle – where is the product in this stage

 Patents/copyrights from competitors?

 Final honest comparison

Feature: a descriptive fact about a product or service.

Benefit: what a customer gains from the product or

service.

MARKETING STRATEGY

A target market should be identified. A company should not try to become everything for everybody! The odds of success is higher if focused on a specific market niche.

Eg: MTV, ESPN, CNN, Cartoon Network,

Finding your target market is the first step in an effective marketing strategy.

• Who are the most promising customers?

• Where do they live?

• Why do they buy?

• Age/Gender/Characteristics

• When do they buy?...etc.

MARKETING STRATEGY Customer Interest;

If your service or business is already available, then it will be easy to guess the customer interest. However, if you are going to offer a new product or service,

Finding your target market is the first step in an effective

marketing strategy.

• Who are the most promising customers?

• Where do they live?

• Why do they buy?

• Age/Gender/Characteristics

• When do they buy?...etc.

MARKETING STRATEGY

Documenting Market Claims:

In general, busines plans rely on generalizations which usually turn out to be either wrong or unexpected. There are easy ways to avoid these. Some of these are;

• Surveys/Questionnaires

• Demographic studies

• Market size and growth rates with facts

• Business prototyping

Business prototyping: a process in which entrepreneurs test

their business models on a small scale before commiting serious resources to a business that may or may not

work.

THANK YOU