Feasibility Plan Business Plan Cover page Table of

Feasibility Plan Business Plan • Cover page • Table of contents • Executive summary • Management and organiz. plan • Product/service plan • The market • Marketing plan • Price and profitability • Financial plan • Plan for further action • Appendix • • • Operating and control plan Growth plan Appendix

Business plan • • Whaaaaaat? Audience New business mentor Not a marketing plan

Marketing plan • • Industry profile Competition profile Customer profile Marketing plan: – – – Target market Pricing policies Gross margin on products Break-even analysis Distribution channels Sales and advertising strategy

Management and organization plan • • Management team Compensation and ownership Contracts and franchise agreements Board of directors Infrastructure Insurance, Employee ownership Organization charts

Financial plan • Budget worksheets (sales forecast, initial investment, current expenses, cash requirements) • Sources of financing • Assumptions • Cash flow statements (3 years, monthly) • Income statements (3 years, monthly) • Balance Sheets (3 years)

Operation and control system • Administrative policies, procedures, and control • Planning charts • Risk analysis • Salvaging assets

Discussion questions • Given the difficulties in predicting the future, is a business plan useful? • What makes an excellent business plan? • If a business plan is to be used to raise capital, then why would the entrepreneur want to advertise the firm’s major risks by detailing them in the business plan?

Excellency • • • Business concept Management team Financing Keys to success Understanding of challenges

Robinson Associates • Does this Business Plan include all the major components of a business plan? • What part would impress a potential investor most favorably? What part seems weakest? • What additional information will strengthen the plan? • What would be main points the founders of Robinson Associates Inc. would want to make to potential investors in a face-to-face presentation?

Back to Marketing plan • • Industry profile Competition profile Customer profile Marketing plan: – Target market – Pricing policies – Gross margin on products – Break-even analysis – Distribution channels – Sales and advertising strategy

Research Collect market information Develop concept 1. Local sources 2. Trade associations and journals Secondary 3. Government reports Secondary 4. Demographic information 5. Computer searches 6. Competitive analysis Primary 7. Customer surveys and informal focus groups Begin market research 17. 2 © 2004 Ewing Marion Kauffman Foundation Primary

Secondary Sources • Local sources: Libraries, Colleges and universities, Chambers of commerce, Government agencies • Trade associations and journals: Market statistics and industry trends, Trade magazine editors, National conventions, Financial information • Demographic information: U. S. Census population data, State and county business patterns, American Demographics magazine, “Annual Survey of Buying Power” (Sales and Marketing Management magazine) • Computer searches: Web sites such as www. entreworld. org; Databases: lexis nexis, business premier, mergent; Online searches: google, ask jeeves, dogpile

Research the Competition • Additional Sources of information you should consider: Yellow Pages, local radio and press, observation (walking around the neighborhood) • Think on preparing a table similar to the one next page. 17. 9 © 2004 Ewing Marion Kauffman Foundation

Comparing with competition Competitors Direct Indirect Future Target market Marketing strategy (e. g. price, quality, location) Advantages Disadvantages

Research customers (primary) • Identify customers classify into two or three groups: targeted primary, targeted secondary, walk-ins • Define your customer profile, particularly of the primary customer • Learn their buying behavior, particularly of the primary customer • Test concept: see how potential customers perceive your business concept 18. 1 © 2004 Ewing Marion Kauffman Foundation

Methods of primary research • Short questionnaires (in person, telephone, mail, internet) • Observation,

Research (Questionnaires) l Distribution: in person, email, phone, mail l Design tips for questionnaires l l l 17. 11 Identify yourself at the beginning as a student working on a school project Demographic questions (age, income, etc. ): ask ranges and ask at the end Keep them short (between 10 and 20 questions) Keep the answer options short (make then even numbers): 4 or 6 Simple questions (avoid asking two questions in one question)

Research (other primary) • Observation: Spend time at model competitors (inside or at their door). • Conversation with experts: - Competitors - Professors - Suppliers - Clients • Focus groups (to use with clients) 18. 3

Focus Groups • Use current or potential customers • Invite 6 to 10 customers • Use outside facilitators • Prepare list of questions • Record responses • Provide gift or money for participation • Summarize results • Design marketing strategy 17. 12 © 2004 Ewing Marion Kauffman Foundation

Marketing plan • What is your Industry? What kind of info would help? NAICs SIC codes other • Who is your customer? • Who are your competition?

Pricing strategies Goal Pricing strategy Maximize profit Skimming Ensure adequate cash flow Focus on payment terms, cash Increase sales volume Penetration: discount pricing Increase market share Penetration: discount pricing Meet or beat the competition’s prices Competitive pricing Maintain or create a certain image Image pricing – perceived value Improve customer relations Patronage discounts – quantity discounts

Margin and break even point • Gross margin = sales – direct (var. ) cost – The margin includes what you take home as profit + what you have to pay on bills. – Percentage = (price – var. cost) / sales • Break-even point Fixed costs BE =------------------------Sales price per unit – variable cost per unit