business plan

Conchur De Barra

HOSPITALITYENTREPRENEUR

Homework • For your homework your Business Plans as we left in class

today, it should now contain: - Cover Page

- Executive Summary Page with comments you learned in class

- Table of Contents page referring correctly to the location of the other BP sections.

- Management Team section with an introduction to you, the entrepreneur and why you are such a good person to be launching this project, give, if possible, an excerpt from your life to date of anything that drives you to lead a project through difficulty to launch/completion.

- Other sections of the BP with some brief initial comments.

• You will not be allowed to join Thursday's class until you have sent me this work.

BA3 Business Plan Sections

• Cover • Executive Summary • Table of Contents • Management Team i.e.

You!!

• Industry, Customer & Competition Analysis

• Company & Product Description

• Marketing Plan • Operations Plan • Development Plan • Critical Risks • Offering • Financial Plan • Appendix

Business Plan The Cover

Needs to include the following: • Company name • Tagline • Logo (Go to http://tinyurl.com/hy99gjx & logomaker.com) • Contact person • Company address • Contact telephone number • Email address • Date • Disclaimer and copy number.

Should be eye-catching and relevant

Business Plan The Cover

Executive Summary

Key Insights • In many instances an investor will ask for a copy of a firm’s executive summary and will ask for a copy of the entire plan only if the executive summary is sufficiently convincing. • The executive summary, then, is arguably the most important section of a business plan.

Executive Summary

Executive Summary

• Most important section of the BP. If reader is not impressed by the Executive Summary then may not read further.

• Hook the reader: 1st sentence/paragraph needs to encapsulate the potential of the business idea.

• Sub sections can include: Description of the opportunity, business concept, industry overview, target market, competitive advantage, business model and economics, team and offering, financial snapshot. An image is not lost here e.g. revenues, expenses, profit graph etc..

• All of these are covered throughout the Business Plan, so keep them brief and to the point. Even though is 1st for the reader, should be finished lastly as you will need complete overview of your business before completing.

Table of Contents

• Is the roadmap for the reader to know where to look for each section.

• Depending on the reader, different sections of the BP will appeal differently so may skip over ‘irrelevant’ sections so make it as easy as possible for the reader to navigate.

• Sub-section where relevant.

Management Team. 1 Of 3

• Team Bios and Roles: Remember you’re writing a story and the entrepreneur and the team are the main characters.

• Depending on your reader it may be necessary to list any board members, advisory boards, external members and their roles in the business.

• Compensation and ownership: as entrepreneurs are expected to take lower salary initially they will be compensated in the future, the investor will eagerly want to read this section.

Industry, Customer and Competitor Analysis

The purpose of this analysis section of the Business Plan is to explore the industry background, identify demands and determine the strengths and weaknesses of the competitors within your market.

It is to set out strategies that will provide you with a distinct advantage, expose the barriers that can be developed in order to prevent competition from entering your market, and any weaknesses that can be exploited within the product development cycle

Industry Attractiveness 1 Of 2

• Industry Attractiveness • Industries vary in terms of their overall

attractiveness. • In general, the most attractive industries have the

characteristics depicted on the next slide. • Particularly important—the degree to which

environmental and business trends are moving in favor rather than against the industry.

Industry Attractiveness 2 Of 2

• Are young rather than old.

• Are early rather than late in their life cycle.

• Are fragmented rather than concentrated.

• Are growing rather than shrinking. Are not crowded.

• Are selling products and services that customers “must have” rather than “want to have.”

•Have high rather than low operating margins. Discuss the business models used, not necessarily your business model.

• Are not highly dependent on the historically low price of key raw materials.

Characteristics of Attractive Industries

Studying Industry Trends

• Environmental Trends • Include economic trends, social trends, technological

advances, and political and regulatory changes. • For example, industries that sell products to seniors are

benefiting by the aging of the population.

• Business Trends • Other trends that impact an industry. • For example, are profit margins in the industry

increasing or falling? Is innovation accelerating or waning? Are input costs going up or down?

Customers Analysis Break your customers into 3 categories:

• Primary Target Audience: Needs most of your attention. Most likely to buy your ‘product’ at the price that preserves your margins and with the frequency your require.

• Secondary Target Audience: In decreasing order but still of significance needs attention. May not share the same frequency as PTA’s or/and likely to be affected by price offering.

• Tertiary Target Audience: Requires least attention at launch but may emerge post launch as having more potential than you realized pre launch. Need to keep eyes & ears open during operations helps you define and refine where the opportunities occur.

• Define who your customer(s) will be by using demographic and psychographic information. By having a clear understanding of your customers, you will convince the reader your product will succeed. You need to get into the mind-frame of the buyer you understand what makes them tick, and more importantly what will make them want and not walk away from your product.

• This section should also mention how these customers are reachable currently and how you intend to reach them.

Customers Analysis Behavioural Analysis (Purchase Process and Patterns)

• Occasionally, customer behaviour analysis requires a more in- depth understanding of the actual decision-making process of the customer purchase. This may be especially true in an industrial marketing scenario. Examples of purchase process questions to be answered here include:

• What steps are involved in the decision-making process? • What sources of information are sought? • What is a timeline for a purchase (e.g., impulse vs. extended

decision-making)? • Will the customer consult others in their organization/family

before making a decision? • Who has the authority to make the final decision? • Will the customer seek multiple bids? • Will the product/service require significant modifications?.

Opportunity Checklist Creating Customer Profiles

• Demographics:

Age

Gender

Household Income

Family Size/family life cycle

Occupation

Education Level

Religion

Ethnicity/heritage

Nationality

Social Class

Marital Status

 Psychographics:

Social Group (e.g. white collar, blue collar, etc.)

Lifestyle (e.g. mainstream, sexual orientation, materialistic, active, athletic, etc.)

Personality traits (worriers, type A’s, shy, confident etc)

Competition Analysis Competitive Profile Matrix

• After analysing the customers you will be familiar with the competition currently serving the market.

• Where possible start with a Competitive Profile Matrix, shows where your company is in relation to the competition. CPM allows business owners, stockholders and other interested parties to see the strengths and weaknesses of all major competitors in an industry on a single page. This helps visualize and communicate the competitive landscape

• The same factors are used to compare the firms. This makes the comparison more accurate.

• The analysis displays the information on a matrix, which makes it easy to compare the companies visually.

• The results of the matrix facilitate decision-making. Companies can easily decide which areas they should strengthen, protect or what strategies they should pursue.

Competitive Profile Matrix

Competitive Profile Matrix 1. Identify the Critical Success Factors

Chose your list of Critical Success Factors and include as many factors as possible. In addition, following questions should be helpful identifying industry’s CSF: • Why consumers prefer Company A over Company B or

vice versa? • What resources, capabilities and competences firms

possess? • What sustainable competitive advantages companies have

in the industry? • Why some companies succeed and others fail in the

industry?

Competitive Profile Matrix 2. Assign the weights and ratings

The best way to identify what weights should be assigned to each factor is to compare the best and worst performing companies in the industry.

Well performing companies will usually undertake activities that are significant for success in the industry.

They will put most of their resources and energy into those activities as compared to low performing organizations. Weights can also be determined in discussion with other top-level managers.

Ratings should be assigned using benchmarking or during team discussions.

Competitive Profile Matrix 3. Compare the scores and take action

You should compare the scores on each factor to identify where company’s relative strengths and weaknesses are.

In our first example, Target had relative strength in ‘advertising’, but weaker on ‘market share’ and ‘international expansion’.

Therefore, Target should protect the positive areas while trying to improve its weaknesses. The company should also improve its strategy to become more successful in the industry.

Market Share Union relations

Product Quality Skilled workforce

Clear strategic direction

Location of facilities

Customer service Production capacity

Customer loyalty Added product features

Brand reputation Price competitiveness

Customer satisfaction Low cost structure

Financial position Variety of products

Cash reserves Complementary products

Profit margin Level of product integration

Inventory turnover Successful product promotions

Employee retention Superior marketing capabilities

Income per employee Superior advertising

Power over suppliers

Access to key suppliers

Efficient supply chain

Supply chain integration

On time delivery

Strong online presence

Effective social media management

Experience and skills in e-commerce

Management qualification and experience

Innovation in products and services

Innovative culture

Efficient production

Lean production system

Competition Analysis Some Critical Success Factors

Innovations per employee

Superior IT capabilities Strong supplier network

Cost per employee Size of advertising budget

Strong distribution network

R&D spending Effectiveness of sales distribution

Product design

Strong patent portfolio

Employee satisfaction Level of vertical integration

New patents per year Effective planning and budgeting

Effective corporate social responsibility programs

Revenue per new product

Variety of distribution channels

Sales per outlet

Successful new introductions

Power over distributors Parent company support

Competition Analysis Some Critical Success Factors

Competition Analysis

Company Description 1 of 2

• Company Description • This section begins with a general description of the

company. • Items to include in this section:

• Company description. • Company history. • Mission statement. • Products and services. • Current status. • Legal status and ownership. • Key partnerships (if any).

Company Description should answer the following questions:

• What is the name of the company?

• What product or service are you offering?

• Where is it located?

• Is this a start up or an existing business?

• How will it be organized?

• Will it be a sole proprietorship, partnership, or corporation?

• Is the company a manufacturer, retailer, or service business?

• What customers is it attempting to serve? (brief reference)

Company Description: Headings-Breakdown Company Ownership

Who will own the company? Will it be a sole proprietorship? Partnership? Corporation? Your reader wants to know who will own the company and who's involved.

Current Status And Business History Outline the history and the current status of your company. Is it just starting up? Is it an existing business?

Objectives When completing the written company description, it is important to state your business objectives. Perhaps your company is seeking a certain level of sales or geographical distribution or it hopes to become a publicly traded company or an attractive acquisition candidate. Stating your objectives is important to the reader since it will generate more interest.

Company Description Headings-Breakdown

Mission Statement

The mission statement should be short (usually a couple of sentences) that states the vision and goals you have for your company. A good mission statement should accurately explain why your organization exists, and what it hopes to achieve in the future. It articulates the organizations nature, it's values. The mission statement should excite your reader.

The best mission statements define a company's goals in at least three dimensions: what the company does for its customers, what it does for its employees, and what it does for its owners.

See examples and research.

Mission Statement examples:

Short example

“At IKEA our vision is to create a better everyday life for the many people. Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”

IKEA

Product(s)/Service(s)* Description

• Highly detailed or technical descriptions are not necessary and definitely not recommended. Use simple terms and avoid industry buzzwords so your readers can easily understand.

• Describing how the company's products and services will differ from the competition is critical. Also why your products and services are needed if no market currently exists.

• Patents, copyrights, and trademarks you own or have applied for should also be listed in this section.

• If your business is product-focused, you will want to spend more time describing those products.

Product Description should answer the following questions:

• Are products or services in development or existing (and on the market)? What is the timeline for bringing new products and services to market?

• What makes your products or services different? Are there competitive advantages compared with offerings from other competitors? Are there competitive disadvantages you will need to overcome? (And if so, how?)

• Is price an issue? Will your operating costs be low enough to allow a reasonable profit margin?

• How will you acquire your products? Are you the manufacturer? Do you assemble products using components provided by others? Do you purchase products from suppliers or wholesalers? If your business takes off, is a steady supply of products available?

Customer Value Proposition why should potential customers buy this product and not the competition, what makes it stand out?