Business Plan Preparation

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Business Plan Preparation

• Frank MoyesLeeds School of BusinessUniversity
  of ColoradoBoulder, Colorado

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Tonights Agenda

• Topics
• Opportunity/Need
• Market Analysis
• Segmentation
• Financial Comp
• Model Company
• Evaluate MRP Hecho en Casa business plans
• Hand-in Interview List

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Next Week

• Topics
• Industry Analysis
• Competitive Advantage
• Value Chain
• Business Model
• Read
• BP pp 11-13, 27
• Business Model Assignment
• In the Fire
• Opportunity/Need
• Value Proposition

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Opportunity/Need

• What is the pain?
• What problem is being solved?
• Dissatisfaction with current products/services
• Poor quality or service
• Must be compelling
• Must be easily understood by TM

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Market Analysis

• Market group of current and potential customers
  having the willingness and ability to buy
  product/services to satisfy a need.
• Industry group of sellers that offer
  product/services that are similar and close
  substitutes for one another.

JW Mullins, New Business Road Test
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Market Analysis Sections

• Market size growth
• Trends
• Target Market
• Channels of distribution

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Market Analysis (Macro)

• What is the size growth potential?
• Historic and future
• Must indicate sources
• Segment your market
• Lots of numbers show in tables

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Market Segmentation (Macro)

• Groups of customers demographics
  psychographics
• Products features, benefits, prices
• Geography see Hecho en Casa
• Distribution channels
• Sector industrial (see MRT), consumer,
  government
• Objective is to identify potential entry points

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Trends

• What changes are taking place economic,
  socio-cultural, political/legal, global,
  environmental, demographic, technological
• Positive and negative trends
• Dissatisfied groups
• Must provide your sources

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Target Segment (Micro)

• Best point of entry
• What is the size growth potential?
• Consumer - demographics psychographics
• Business types of organizations, buying
  decisions
• Understand customer behavior
• How are products used?
• How are buying decisions made?
• Its not about you!

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Target Market (Micro)

• Benefits are understood, compelling
  differentiated
• Potential to grow expand to other segments
• Evidence that the customer wants to buy
• Customer research is key
• Surveys provide credibility
• Lurk Listen

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Channels of Distribution

• What is normal for your market?
• Distributors, wholesalers, dealer, retailer,
  internet, system integrator, Value Added Retailer
  (VAR) Original Equipment Manufacturer (OEM)
• How are buying decisions made

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Value Proposition - 3 Elements

• What are the features?
• Who is the target market?
• What are the benefits?

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Value Proposition
XYZ is a_______describe company. By its
_______feature(s), it provides ______ unique
benefit(s) to ______target market
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Simple Value PropositionSST Corporation
SST is a stainless steel toothbrush company. By
its one bristle brush made of high tensile
stainless steel, it provides an exhilarating
tooth cleaning experience to thrill-seeking
X-gen consumers
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Simple Value PropositionDell Computer
Dell Computer sells personal computers to
consumers. Our build-to-order manufacturing and
customer-direct sales enable us to offer custom
built computers at very competitive prices. Our
customers get the computer that they have always
imagined and save money.
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Simple Value PropositionVics Coffee
Vics Coffee is a Boulder based coffee house.
Its gourmet coffee, convenient and fast service,
provide a welcoming environment for people who
want to meet with their friends or a stimulating
morning coffee for on-the-go business people.
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Value Proposition

• Proflowers serves the price sensitive and
  convenience oriented customers with the
  freshest cut flowers at a competitive price,
  because of their unique sourcing and Fed/Ex
  shipping arrangements.
• FTD.com serves the mid-to high-end market by
  providing the easiest way to send flowers and
  gifts because of their strong brand name, market
  communications and supplier network.

e-Commerce Rayport Jawroski
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Financial COMPs

• Company in your marketplace.
• NAIC code
• Publicly traded
• Industry ratios see Selected Resources Guide
  Library
• Key financial measures to compare when developing
  strategy and projections
• Reality test

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Financial COMPs
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Model Company

• Identify company in your marketplace
• Different segment, products, target market
• Done just what you want to do
• Provides credibility

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Business Plans

• Metal Removal Technology
• Hecho en Casa

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Features

• Describe the product or service - range,
  environment, employees
• What are the key product/service attributes
  (performance, cost, quality, social,
  availability, service, and environment)?
• How is the product/service produced and
  delivered? Does the process provide a competitive
  advantage?

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Target Market

• Who is the target market? Why?
• Demographics
• Psychographics or life style
• Social status infers certain behavior
• How are buying decisions made? What are the
  criteria? Who makes the decision? Who influences
  the decision?

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What Are the Benefits?

• Emotional ambition, power, independence,
  achievement, ambition, pride of ownership,
  comfort, love, friendship, security, style, self
  Improvement, etc.
• Social status, image, popularity with friends or
  family members, reputation of brand, personal
  relationships, style, fashionable, etc.
• Health stress, fitness, mental capacity,
  strength, sex life, quality of life, muse, etc.
• Financial revenue, costs, savings, productivity,
  pricing, profitability, market share, save time,
  productivity, etc.
• Life style convenience, saves time