Business Plan Components

Final Exam

Department of Manufacturing Systems Engineering and Management

MSE 602

By: Munaff Ahmad Khan

Student ID: 105981250

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Outline

• Executive Summary

• Company Description

• Industry Analysis & Trends

• Target Market

• The Competition

• Strategic Position & Risk Assessment

• Marketing Plan & Sales Strategy

• Operations

• Technology Plan

• Management & Organization

• Social Responsibility & Sustainability

• Development, Milestones & Exit Plan

• The Financials

• Appendix

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Executive SummaryChapter 4

“ If they don’t get it a first, they won’t get it at all.”

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Executive Summary - Crucial

Sometimes only the Executive Summary is

preferred by the investors.

Unquestionably, the single most

Important portion of the business plan.

Should give a sense of why

the business is an interesting

venture to invest in.

Should be written last

after careful consideration of

all aspects of the business.

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What to Convey in the Executive Summary?

A clear cut market exists.

The management is capable.

Your financial

projections are realistic.

Your basic business concept makes sense.

Your business itself has

been thoroughly planned.

Your business

incorporates major

competitive advantages.

Investors or Lenders have an

excellent chance to

make money.

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Targeting the Summary

Do a little homework on the recipients.

Try to find out which “buttons” to PUSH.

Determine the audience of the business plan.

Don’t tailor the summary for a particular person.

Address institutional concerns not individual preferences.

Types of Executive Summaries

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Relatively Straightforward, communicates in abbreviated fashion the conclusions of each section of the business plan.Comparatively easier to prepare and less dependent on a technical writer, however, the tone of the synopsis summary tends to be rather dry. Equal although brief focus on each aspect of the business plan.

More like telling the reader a story, communicates the necessary information, engenders enthusiasm and yet does not cross the line into hyperboleRequires a technical writer to prepare and is useful for new businesses and new markets.Greater emphasis on business’ concept and distinctive features & less attention to operational details.

The

Syno

psis

Sum

mar

y

The Narrative Sum

mary

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Writing the Summary Should be short but clear and precise.

Should be expected to be read in about 5 minutes.

Not more than 2 or 3 pages, even a one page summary is perfectly acceptable.

A dynamic, logical writing style can make the difference - Considered or Discarded.

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Company DescriptionChapter 5

“ The reason most businesses fail is that they don’t understand the business they are in.”

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Company Description Contents

Company Name

Company’s Objectives/Mission Statement

Legal Issues

Products and Services

Management/Leadership

Business Location

Development Stage and Milestones Achieved to Date

Financial Status

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Your Own Name.

Brand Name(s).

Model Name(s).

Domain Name(s).

A ”dba” (doing business as)

Subsidiary Company name(s).

The legal corporate or company name.

Names Associated with a Business.

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Mission Statement

The basic objective and philosophy of a company in

a few sentences.

Main goal of the internal

planning process - Articulating the

“philosophy”.

Provides focus for a

company and is the

defining concept of a business for

coming years.

Not just words,

principles & objectives

that guide all other aspects & activities of the business.

One statement should

encapsulate the nature of the

business, business

principles, financial goals,

“corporate culture” and how

a company should be viewed

in the market place.

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Legal Issues

Which type of legal entity to choose?

In what state will you incorporate?

What form of corporation will you choose?

Legal Issues have a profound impact on the future of a company.

How many shares in your corporation will be issued, and to whom?

Investors are usually more comfortable dealing with an incorporated entity.

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Development Stage & Milestones Achieved to Date

Development Stage• When the company was

founded.• Phase of development• a seed company• a start-up• expansion• retrenchment• established

Milestones Achieved to Date• Has the product been developed

or tested?• Have orders been placed or the

product shipped?• Are leases signed or suppliers

secured?• What have ben the past

milestones and successes of current operations?

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Industry Analysis & TrendsChapter 6

“ A company must know both how it is like and how it is unlike, other businesses.”

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Focus on

A description of your industry

Trends in your industry

Strategic opportunities that exist in

your industry

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Your Economic Sector

The four general sectors are• Service• Manufacturing• Retail• Distribution

The business may belong to more than one

sector.

Understand past

performance and growth projections.

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Your Industry

Size and Growth Rate of Your Industry• Pay particular attention to the rate at

which your industry is expanding.• How does the growth rate of your industry

compare with the growth of the GDP.• Evaluation can also be done based on

largest companies in that field.

Industry Maturity• New• Expanding• Stable• Declining

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Sensitivity to Economic Cycles

Crucial to identify how vulnerable your industry is to economic conditions.

Discount department stores, used car-dealerships are counter-cyclical.

Construction, large consumer items (autos, furniture) & tourism, all prosper when he economy is healthy.

Personal care products and low cost entertainment are fairly immune to economic cycles.

Helps to anticipate and plan for growth in good times and belt tightening in difficult times.

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Many industries fluctuate based on holidays.

Tourism related businesses usually depend heavily on summer.

Spring is an important season for any wedding-associated industry.

Halloween is now the second largest holiday in the U.S. in terms of retail sales

For many industries, certain times of the year produce higher revenues than others.

Imperative to understand and account for the seasonal factors that have an impact on your income and expenses.

Seasonality

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Technological Change

Technological advances affect every industry.

Impossible to imagine all technological developments.

Useful to take note of the trends of the last five or 10 years

Internet has changed many aspects of even the most traditional industries.

Technology changes the way products are made and sold, how information and communication is managed and how costs are reduced.

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Regulation/Certifications

Some regulatory measures

actually create strategic

opportunities.

Certain industries are

particularly affected by the

action of government authorities.

Regulation, licensing and

certification can dictate in large

part how certain industries conduct business.

Consider action of government at

all levels – national, state,

count, municipal or special

regional bodies.

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Supply and Distribution Channels

Crucial In determining

company’s success.

It may be notoriously difficult

to gain access to distribution sometimes.

Be cautious entering industries

with extremely limited supply or

distribution systems.

Sometimes industries or

businesses can itself control the

supply or distribution channels.

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Example – Mobile Phones in the US

• TRENDS• Volume sales of smartphones reached 97.7 million handsets in the US 2012, with volume sales increasing by

26%. The smartphone has emerged as a vital tool for personal and business communications, quickly replacing basic feature phones as an essential purchase for the majority of US consumers. 2012 saw the advent of low cost, affordable smartphones as the ownership of handsets based on the Android operating system expanded rapidly.

• COMPETITIVE LANDSCAPE• Apple remained the leading player in smartphones in the US in 2012 with a 34% retail volume share. The

company’s iPhone brand was rejuvenated with the launch of the iPhone 5 in September 2012 and the iPhone 5S in September 2013. The iPhone remains the single most desirable smartphone band available in the US and this is the basis for Apple’s status as the leading company in the category. Apple is able to command high unit prices for its consumers, even after wireless subsidies.

• PROSPECTS• Having recorded staggering growth over the course of the previous decade, the rapidly maturing category of

mobile phones in the US is set to achieve maturity at some point during the forecast period. Growth rates in mobile phones overall are expected to remain very low, with new launches and short two-year replacement cycles the most likely drivers of new acquisitions among the vast majority of US consumers who are existing mobile phone consumers.

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Research Conclusion

The Mobile Phones in USA market research report includes:• Analysis of key supply-side and demand

trends• Detailed segmentation of international

and local products• Historic volumes and values, company

and brand market shares• Five year forecasts of market trends and

market growth • Robust and transparent market research

methodology, conducted in-country

The market research reports answer questions such as:• What is the market size of Mobile

Phones in USA?• What are the major brands in USA?• What is the growth rate for Mobile

Phones in country?• How many 3G mobile phones were

sold last year?• How will the introduction of 4G

mobile phones impact the mobile phone market?

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Target MarketChapter 7

“ It’s easier to get a piece of an existing market than it is to create a new one.”

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Know Your Customers

Is Your Company Market Driven?

Success depends on your being able to meet customers’ needs and desires.

Essential to identify your customers to asses whether you are meeting their needs.

Vital to have knowledge of who they are, what they want, how they behave, what they can afford?

Define Your Target Market

• The definition of your target should meet these criteria:

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Specific characteristics identifying what the potential customers have in common.

DefinableCharacteristics must implicitly relate to the decision to purchase

MeaningfulBe Large Enough to profitably sustain your business.

SizableBoth the definition and the size should lead to affordable effective ways to market to your potential customers

Reachable.

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Demographic DescriptionMost basic, objective aspects of the customer base.Specific and observable traits that define your target market.Particularly useful when devising your marketing plan.Define those characteristics of your target market that meaningfully relate to the interest need, & ability of the customer to purchase your product or service.

Geographic Description• Define the primary

geographic area(s) you intend to serve.

• A concrete definition of whether your business serves a particular neighborhood, city, state, region, nation or portion of international market.

• Look at the density of the area, whether urban, suburban or rural.

• Internet is tempting but has issues like fulfilment, language, licensing or legal issues.

Market Description

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Lifestyle/Business-Style Description

Psychographic Description. • Aspects of self image:

how customers see, or want to see, themselves

• Customers as well as consumers can be described in psychographic terms.

• Marketing experts segment consumers into different psychographic and lifestyle groups like “Early Adopters”.

Purchasing Pattern

Description

Important to understand the patterns

of your customers.

Buying Sensitivities Description

What factors are the most important to

your customer when deciding

to buy?

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Market Size

Important to ensure your customer base is large enough to sustain your business.

Target market should be Neither Too Small Nor Too Large.• Markets that are too small wont have enough customers.• Large markets invite numerous well-financed competitors, and require

extremely expensive marketing campaigns.

For some business like smaller retail operations, determining whether your market is sufficiently sizable will be mostly a matter of intuition and observation.

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Important to evaluate the

trends that may affect the market

in the coming years.

Preparing for change is a matter of

analyzing the recent past.

Analysis can be based on

changes in demographics and customer

behavior.

Gives a sense of

your company’s continuing viability,

the strategic opportunities the market presents,

and how the company

must plan to respond to

changing behavior of customers?

Market Trends

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Example of How to Select a Target Market • A manufacturer of sports shoes who has identified four market segments,

Sport Shoe Market

Elites

Keeping Fit

Daily Comfort

Fashion

These are professional sports people or consumers who compete in sports at a top level. There are after the latest technology and features in a sports shoe for specifically

designed for their chosen sport.

This segment consists of consumers who regularly exercise or play sports at a social level. They want a good quality shoe

that provides reasonably good value.

These are people who wear sports shoes on an everyday basis, simply because they are comfortable. They sports

shoes for walking, going to the shops, around the house, and so on.

This group of consumers are very interested in the fashion elements of sports shoes. They wear the shoes as part of

their fashion and dress sense.

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SEGMENT ASSESSMENT FACTOR

ELITES SEGMENT

DAILY COMFORT SEGMENT

FASHION SEGMENT

Financial Issues

Segment size

Likely to be a relatively small segment

Would be the largest segment of the three

Probably a small to medium-sized segment

Rating: Poor Rating: Good Rating: Fair

Segment growth rate

Would be a fairly stable segment with limited growth

Would be a mature market as well

Probably has reasonable growth prospects

Rating: Poor Rating: Poor Rating: Good

Profit margins

Higher profit margins are likely, as consumers would not be overly price sensitive

Moderate profit margins, as significant competition exist, with a number of budget offerings

Likely to have higher profit margins, as price is a minor attribute in the purchase decision

Rating: Good Rating: Poor Rating: Good

Structural Attractiveness

Competitors

Would have a number of specialist competitors, who would have a strong brand and loyal customers

This segment would be targeted by an array of competition including many indirect competitors

Fairly competitive segment as well, mainly from traditional fashion shoe providers

Rating: Poor Rating: Poor Rating: Poor

Distribution channels

Would have a good degree of channel overlap with current target market, but would need to access some specialty retailers

Would be able to meet this shopping preferences of some of the target market, it would probably have to move into Department stores and discount stores

May have some exposure to the target market, but would have to look at more fashion oriented stores

Rating: Good Rating: Fair Rating: Poor

Example (Contd.)

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Example (Contd.)

Strategic DirectionStrategy Would assume

that the brand reputation of competing in this target market would align to strategy

Probably a relatively easy market development approach for the firm

Is a move into an unrelated market segment and may not be part of their core strategy

Rating: Good Rating: Good Rating: Poor

Goals Would assume that they have growth goals and enhancing the credibility of their brand

Would assume growth goals, but they may be concerned about being seen as a generalist shoe

Access to the target market would help the company grow, but it is quite divergent from their current operations

Rating: Good Rating: Good Rating: Fair

Marketing ExpertiseResources Would require is new

products to be designed and developed, so a reasonable level of cost

Could market to this segment with your existing product range and some existing retailers, so relatively low-cost

Would require new products, potentially new designers in the firm, and the establishment of new distribution channels so relatively high-cost

Rating: Fair Rating: Good Rating: Poor

Capability May be concerned whether they have the technical ability to produce a range of elite sports shoes

Minor concern of the challenge of accessing department stores and discount channels

The major skill set challenge here is their ability to produce fashionable designs on a regular basis

Rating: Poor Rating: Good Rating: Poor

Role of brand Brand reputation is important and they will be competing against established specialists. They may have trouble in gaining credibility with some of the target market audience

Their existing brand would be easily leveraged into this more general market, but there is a concern that their existing brand equity may be eroded in their traditional target market

Leveraging the brand into a fashion segment may dilute the value of their existing brand equity, or alternatively they would need to build a new brand for this segment

Rating: Fair Rating: Fair Rating: Poor

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OVERALL ASSESSMENT

Rating: Fair-Good Rating: Good Rating: Poor

SEGMENT ASSESSMENT

FACTORELITES

SEGMENTDAILY COMFORT

SEGMENT FASHION SEGMENT

The firm would most likely select the ‘daily comfort’ segment to become their

next target market.

They may also select the ‘elite’ segment as another

target market (perhaps now or in the future).

And finally, it is likely that the organization would rule

out competing in the fashion/sports shoe market at this time, (however, they

may revisit that decision sometime in the future).

Example - Conclusion

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3 BLATANT EXAMPLES OF TARGETED MARKETING

• What do the following three scenes have in common?

• Valvoline airs a commercial for its synthetic motor oil during a NASCAR Sprint Cup Series race.

• Viewers of Bravo's pseudo-realities series, The Real Housewives of Orange County, are treated to short-form infomercials for the contraceptive, Yaz.

• Saturday morning cartoons are saturated with TV spots for the sugary-goodness that is Captain Crunch.

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The CompetitionChapter 8

“ It is not enough just to build a better mousetrap; you have to build a better mousetrap company”

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Know What You’re Up Against

Learn from your competition.

Evaluating your competition will

help in understanding

your own product.

Enables to know how best to

distinguish your company in the

customers’ eyes.

Points to opportunities in

the market

Identify• Who your major competitors

are?• On what basis you compete.• How you compare?• Potential future competitors.• Barriers to entry for new

competitors.

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Customer Perception Factors

• Inherent merit of the product or service at the time it I provided.Quality

• If key features are particularly important, list separately.Product/Service Features

• Costs other than the actual purchase price, such as installation, or additional equipment required.Indirect/Peripheral Costs

• Quality of product/service over time; ease of maintenance and service.Durability/Maintenance

• Added values derived from design features, attractive packaging or presentation and other intangibles.Image/Style/Perceived Value

• Established customer base and customer loyalty.Customer Relationships

• Perception relative to issues such as environment, civic involvement and the like.Social Consciousness

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Internal Operational Factors

Financial Resources

Economics of Scale

Product Line Breadth

Strategic Partnerships

Operational Efficiencies

Marketing Program/Budget

Company Morale/Personnel

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Other Factors Affecting your Ability to Compete

First Mover Advantage

In new Industries or newer market

segments, the first company to gain a

reasonable foothold in the market can

often leverage being early into a significant

competitive advantage

Installed User Base

If a sizable portion of the market currently uses a product that performs as similar function or is incompatible with your new product or service, customers may resist the cost and inconvenience of making the transition.

The Web

Using the web substantially lowers barriers to entry in

many industries, and in some cases it

allows competitors to operate at very

narrow profit margins.

Inertia

Customers don’t do what they should do;

they do what they have to or want to

do

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Market Share Distribution

Companies that generate a significant portion of all sales to the target market must be carefully considered because they:• Generally define the standard features of the product and service;• Substantially influence the perception of the product or service by

customers; and • Usually devote considerable resources to maintaining their market share.

How Will You Obtain Sufficient Market Share?

Take time to understand the companies that dominate the market, if only to better distinguish yourself from them.

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Barriers to Entry

Patents, which provide a measure of protection

for new products or processes.

High start up costs, which effectively protect

against small competitions entering

the field.

Substantial expertise required, or

manufacturing and engineering

complexities, making it less likely for

competitors to have the knowledge to compete.

Market saturation, which reduces the

possibility of competitors gaining

meaningful foothold.

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Examples of Competition

Monopoly • A single seller-large

no of buyers, There is no alternate product.

• Ex: Indian railways.

Duopoly• Two sellers shares

the maximum market share

• Ex: PepsiCo and Coco-cola

Monopolistic• No. of sellers

produces a similar product.

• Ex: Juice points, Hotels, Rice (Chawal) etc.

Perfect competition• Large no of buyers,

and large no of sellers present in a particular market area Ex: We can see large no of sellers in a vegetable market..

Oligopoly• The sellers command

the over all industry to increase the product price etc. The sellers produces an identical product like same features with same inputs. Ex: Mobile networks like airtel, Vodafone, DoCoMo etc.

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Strategic Position & Risk AssessmentChapter 9

Strategy is destiny.

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Strategy Defines What You Do

Your strengths and

interests

Industry trends and

developments

Market Changes and opportunities

Competitive changes and

opportunities

Changes and opportunities

brought through new technologies

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Kinds of Strategic Position

Market Share

Sales Channels

Market Segment

Customer Perception Factors

Operational and/or Technological Advantages

Proprietary Products, Technology, Abilities, or Relationships

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Kinds of Strategic Position (Contd.)

• Price• Quality• Features• Convenience• Societal Impact• Customer

Service

Consumer Perception

Factors

• Geographic Locations• Customers’

specialized need.• Age, income,

interests, family size• Age, size and/or

industry of business served

Market Segment

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Risk

• That the product wont materializeProduct Risk.• That the market will not respond to your product.Market Risk• That the competitive situation will change dramaticallyCompetitive Risk• That the technology or product design and engineering wont workTechnology Risk• That you’ve badly underestimated costs or over estimated incomeCapitalization Risk• That you wont be able to effectively manage the rollout and growth of the companyExecution Risk.• That, while doing business internationally, you may encounter unanticipated situations Global Risk.

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Marketing Plan & Sales StrategyChapter 10

“ Tell them what they get, not what you do.”

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Reaching and Capturing Your Customers

How you make customers aware of

your product or service.

What message are you trying to

convey to customers about

your product, service, or company.

Specific methods you use to deliver and reinforce that

message

How you secure actual sales.

Marketing and sales, although

closely related, are two different

things.

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The Four P’s of Marketing

Product• The tangible aspects of the products and services

Price• The cost advantage.

Place• The location’s convenience and decor

Promotion• The amount and nature of marketing activities

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What Customer’s Want: The Five F’s

Functions• How does the

product or service meet their concrete needs?

Finances• How will the

purchase affect their overall financial situation?

Freedom• How convenient

is it to purchase and use the product or service?

• How will they gain more time and less worry in other aspects of their lives?

Feelings• How does the

product or service make the customer feel about themselves.

Future• How will they

deal with the product or service and company over time?

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Marketing Strategy

How do you reach potential

customers?

Do you advertise? If so,

where?

Do you send an email

newsletter? If so, to what mailing

lists?

Do you optimize your website for

a search engines?

Do you participate in

trade shows? If so, which ones

and how frequently?

Fit. Your marketing vehicles must reach your actual target customer and be

appropriate to your image.

Mix. Use more than one method so customers get

exposure to you from a number of

sources.

Repetition. It takes many exposures

before a consumer becomes aware of a

message.

Affordability.

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Marketing Vehicles

Brochures Company Website Print Media Broadcast Media

Social Networking

Online Advertising

Advertising Specialties Direct Mail

Email mailings Public Relations SamplingInformal

Marketing/Networking

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Traditional Marketing Tactics

Strategic Partnerships

• Cooperative Advertising• Licensing• Distribution Agreement• Bundling

Media Advertising. Customers expect to learn about products and services from ads in newspaper and magazines, on the radio or television, or online.

Customer Based Marketing. Often neglected, this is one of the most fruitful form of marketing

Special Offers/Promotions. Enable to increase sales revenue and build market share by offering customers special values.

Premiums. Encouraging sales and creating goodwill through gifts, sweepstakes, discounts, and other perceived added values.

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Online Marketing TacticsSo

cial

Net

wor

king

Si

tes

Spread the word and create buzz.Advertise with campaigns designed to target your specific audience.Create your own group/community to get feedback from customers.Build referral sources and networking connections.Enhance your credibility by contributing meaningful content to sites of positive recommendations or reviews

Blog

s

Build name and brand recognition.Establish you as an expert.Attract customers and clients.Create links to your website.Generate buzz around a new product.Tap into a committed market. SE

O a

nd S

EM

With Search Engine Optimization you design a website that is optimized for search engines to find you quickly and easilyWith Search Engine Marketing, you buy keywords so that your advertisement appears every time a user searches and Internet using them.

Emai

l New

slett

ers

Offer an extremely effective way to build your business and stay in front of your customers and prospects.You can include, information and tips your customers can use, short articles, business updates, special announcements or coupons and special offers.

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Online Advertising

Portal Sites/directories

Website Advertisements Sponsorships

Online Classifieds Affiliate Auction Affiliate

Programs

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Marketing Globally

Using social media.

Making an attempt to understand cultural norms.

Making your website friendly for international customers.

Buying ad words to appear when searches are from a specific country.

Creating special websites or landing pages for each country or region you’re marketing to.

Create a local presence if the opportunity in as specific country is large enough to warrant it.

Your Sales Structure

• The Heartbeat of your Sales Force.

• Employee Compensation and Training

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Sales Activities

Inside Sales Personnel

Outside Sales Personnel Online Sales

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Sales Process

Methods to achieve actual sales• On-site Sales• Mail order Sales• Telephone Sales• Online Sites• Off-site Sales• Third Party Sales

Aspects to consider while evaluating• Cold-Calling• Leads• Productivity• Order-Fulfilment• Goals• Follow-up Efforts• Optimize your website

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Example - Why Apple Is a Great Marketer

Hire customer-obsessed, empathetic

employees.

Iterative customer involvement.

Protect against scope creep and feature bloat.

Build compatible experiences.

Enable customer discovery and differentiation

through Apple Stores.

Build a moat.

Devise a business model that creates ongoing customer

value.

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Example - Samsung Strategy

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OperationsChapter 11

“ Ninety percent of success comes from properly executing the fundamentals.”

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What an Operations section should cover?

Issues that• Are essential to

the nature and success of the company.

• Provide a distinct competitive edge

• Overcome a frequent problem in business of your type.

Distribution should be

explained in detail if the business is related to

manufacturing as compared

to if it is retail.

Need to explain each

aspect of technology if

the business is dependent on

it.

Describe the advantages,

disadvantages and resources

available at the business

location.

Talk about the plant and

manufacturing design and

identify sources of

equipment.

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FacilitiesLo

catio

n

Company headquarters, retail store(s), branch offices, plants, distribution centers, mobile facilities, parking

Leas

eWhat are the Terms and Length of the lease?

Impr

ovem

ents

What additions have been made?

Util

ities

/Mai

nten

ance

Cost of gas, water and electricity.

Key

Fact

ors

What aspects of your facilities are most likely to affect a company’s success?

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Assessing your Production Plan

Labor/Variable Labor• What kind and How many employees required?

Productivity• How long and How many people?

Capacity• How much work can be handled?

Quality Control• Measures to ensure that the same standards with each product or service are maintained.

Equipment and Furniture• Manufacturing equipment, transportation vehicles, store fixtures and office equipment and

furniture.

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Supply and Distribution

Reliable Distribution is a Must.

Select Suppliers that Understand your Needs.

Try not to be dependent on just one supplier or distributor.

Work to develop excellent relationships with suppliers and distributors.

Explore the abilities, flexibilities, and alternatives of current suppliers and distributors.

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Customer Service

Need to know that the Customer is

Satisfied.

An unhappy customer who

doesn’t complain is a lost customer.

Job to make sure that customers

have little reason to complaint.

Surprisingly, many companies pay relatively little

attention to order fulfilment.

Order fulfilment is part of any current sale and customer service is part of any future sale.

Need to ensure that the product

reaches the customer in a good condition and in a

timely fashion.

Train all employees and build sufficient

flexibility in your policies to handle

unusual or difficult requests.

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Global Operational Issues

With Internet and VOIP its

both easy and inexpensive to

do business internationally.

Take advantage of more

connected global business world

to source supplies,

inventory or raw materials to have

products manufactured.

Outsourcing – Having another

company or vendor provide a business service or component

product.

Offshoring – Having some of the company’ s operations or

functions performed in

another country.

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Technology PlanChapter 12

“ Computers are useless. They only give you answers.”

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Why a Technology Plan?

Always better to plan first than regret later.

Look for vendors offering Specialized Software.

Hiring a technology consultant might be a good idea.

Choose a technology that is flexible enough to grow with time.

Technologies maybe difficult and time consuming to understand.

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What do you Use Technology For?

Mailing List Internet Sales Internet Marketing Inventory Management

Order fulfillment/shipping

Accounting, Taxes, Finances

Personnel/human resource

Management System

Presentations Internal Communication

Order taking and tracking

Desktop Publishing/Graphs

Database Management

System

Communication with Customers

Production Design, Cost Tracking,

Supply Management

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How to Choose Technology?

Cost

Security

Functions

Ease of Use

Ability to be upgraded and expanded

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Ask Yourself?

What features would be helpful?

What features do you absolutely need?

Find out if replacement supplies are readily available?

How often will you need to change or update the software?

Does your equipment have to be compatible with other equipment & software?

Do you perform tasks like design, desktop publishing, presentations?, then go for latest equipment.

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Management & OrganizationChapter 13

“ No matter what you sell, you’re selling your people.”

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Your Management Team

Key Employees/Principal

s

Board of Directors

Advisory Committee

Consultants & Other Specialists

Key Management Personnel to be

Added

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Key Employees/Principals

Top Decision makers: President, CEO, division presidents

Key production personnel: COO, plant manager, technical director

Key technology personnel: CTO, MIS director, systems administrator

Principal marketing staff: director of marketing, director of sales

Primary human resources staff: personnel director,

training director

Head of research and development

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Management Compensation & Incentives

Salary

Bonuses

Commissions

Profit Sharing

Equity

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Board of Directors

Incorporated businesses must have boards of directors.

In large organizations

board may include

members outside of

management.

Investors serve on board to

protect their money.

Should include

members that bring specific

business expertise.

Hold legal responsibility and authority

for the corporation.

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Consultants & Other Specialists

Management Consultants• To help plan your business.

Technology Specialists• To help identify technology needs & solutions.

Designers• To add perceived value and improve your company’s image.

Industry Specialists.• To have special knowledge or specific technical skills.

Marketing Consultants• To design ways to position your company in the market.

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Social Responsibility & SustainabilityChapter 14

“ At the point in your life where talents meet the needs of the world is where God wants you to be.”

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What’s in it for you?

Visibility

Stronger Team

Recruitment Tool

Positive Corporate Image

Greater Employee Satisfaction

Contacts with Other Companies

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Being a good “Corporate Citizen”

Being honest and fair to your customers and suppliers as well as advertising and marketing

Being involved in your community and concerned about the well being of others.

Being a cognizant of the impact your actions have on the environment.

Obey the law, act ethically and be honest and responsible.

Treating employees fairly and with respect.

Social Responsibility

Triple Bottom Line• People• Planet• Profit

Social Ventures• Socially responsible

companies• Social Venture (or social

enterprise)

Major Strategies• Provide Services• Invent Something• Create new services• Adapt an existing product• Bring something to market

Certifications• LEED• Organic• Fair trade• Energy Star• Humane Certified

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Development, Milestone & Exit PlanChapter 15

“ You can’t reach a goal you haven’t set.”

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Goals

Exploiter - Take

advantage of the trends

Steady Provider – Maintain a

stable level of profit

Niche Leader – Carve out a narrow place in the market

Innovator – Produce new and different products & services

Market or Industry Leader –

Dominate the market in terms of

sales

Quality Leader –

Produce the product or

service everyone

would buy

International Market or Worldwide

Market Seller – Sell on a

global level

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Strategies

Go Global – Find a

exploit a foreign market

Diversify – Add new

product or service

lines

Increase Focus –

Narrow the scope of activities

Market Penetration

– Gain a foothold in the market

Expansion – Add

products or services to

existing lines

Refocus – Modify the

essential nature of

the company

Promotion & Support –

Intensify the marketing

and development

of your current product

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Milestones

Achieved to Date• Inspires confidence in your company • Demonstrate ability to set and meet

goals• Indicates the level of commitment

you’ve made to your business.• Gives the potential investors a sense of

the financial and time expenditures

Future• Indicator that you are making sufficient

progress towards your goal.• A reminder that you have, in fact, been

going forward.• Allows you and your financing sources

to see what you specifically plan to accomplish.

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Exit Plan

Close • End Operations

Sale • Bought by Individuals

Merger • Join with existing company

Franchise • Sell concept to others or replicate

Hand Down • Give company to next generation

Acquisitions • Bought by another existing company

Go Public • Sell shares in the company to the public

Buyout • One or more stockholders buy out the interests

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The FinancialsChapter 16

“ Numbers are merely the reflections of decisions you make.”

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Getting Control of Your Finances

Numbers represent your decisions.

Read your financial Statements.

Set Policies and Stick with them.

Cash-Basis Accounting

Accrual-Basis Accounting

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Globalization: Financial Considerations

Foreign Currency exchange

Currency fluctuations

Differing standard

payment terms

Differing finance laws and terms

Additional taxes or tariffs

Customs charges

Banking costs and practices

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Types of Financial Forms

Shows how much a company is worth overall.Balance Sheet

Shows whether your company is making a profitIncome Statement

Shows where you will get financing for your business.Sources and Use of Funds

Shows whether the company has the cash to pay the bills.Cash-Flow Projections

Shows the point at which sales exceed costs and you begin to make profitsBreak-even Analysis

For a new business shows the initial investment necessary to begin operationsStart-up Costs

Shows those reading your financial statements how you determined the figures usedAssumption Sheet

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Guidelines For Preparing Your Financial Forms

Be honest

Be consistent

Be conservative

Don’t be creative

Get your accountant’s

advice

Follow the practices

used in the industry

Choose the appropriate accounting

method

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Income Statements

Gross Sales

Employee Benefits

Depreciation and Amortization

Office Supplies

Marketing

Travel

Entertainment/Meals

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Cash Flow Projections

Cash Sales Sales made for immediate payment or prepayments

Collections Income Collected from sales made in previous period

Interest Income Income paid from bank and other interest bearing accounts

Loan Proceeds Income from bank loans and other credit line

Cost of Goods Actual payments made on items in this category

Operating Expenses Actual payments made on items in this category minus depreciation

Reserve Money put into accounts for future unanticipated expenses

Owner’s Draw Money paid to owner in lieu of salary in a proprietorship, money distributed to owners

Net Cash Flow Money left over after all disbursements have been deducted from all cash received

Opening Cash Balance Amount of money in the bank at the beginning of the month being evaluated.

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Balance Sheet

The balance sheet accounts for all the company’s assets minus all the company’s liabilities.

The remaining amount is figured to be the net worth of the company.

Additionally, note that the balance sheet uses these terms:

Land Facilities Short-term notes payable

Other current liabilities

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Sources and Uses of Funds

Funding Rounds Total Amount Equity

FinancingPreferred

StockCommon

Stock

Debt Financing

Long Term Loans

Mortgage Loans

Short-Term Loans

Convertible Debt

Investment from

Principals

Capital expenditures

Working Capital

Debt Retirement

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Break-Even Analysis

To determine an actual break even point, you must know your• Fixed expenses• Gross Profit margin

(average percentage of gross income realized after cost of goods)

Amount of total sales needed to break even • Fixed Expenses =Total

Sales x Gross Profit Margin (GPM), or

• Fixed Expenses/GPM = Total Sales

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The Plan’s AppendixChapter 17

“ It’s not over till it’s over, and even then it’s not over.”

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Guidelines

Keep it SHORT.

Make a PLAN that stands

out.

DON’T put totally

irrelevant information.

Add ONLY if additional

information Is required.

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Appendix Content Option

Photos

Floor Plan

Endorsement

Work Schedule

List of Locations

Marketing Material

Technical Information

THANK YOU