Business Plan Preparation

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Business Plan Preparation

• Frank MoyesLeeds College of Business
• University of ColoradoBoulder, Colorado

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Tonights Agenda

• Topics
• Features Benefits
• Margins
• Elevator Speech
• Investor Presentations
• Read BP pp 6-7
• Practice Elevator Speech
• In the Fire team meetings, last hour
• Preliminary Market Industry Analysis Results
• Preliminary Interview Results

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Next Week

• Marketing Plan
• Revenue Model
• Customer Surveys
• Read BP pp 14-18

• In the Fire
• Prelim Industry Analysis
• Model company description
• Hand in
• 10 Call Reports
• Preliminary Competitive Matrix
• Model company

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In the Fire Grading
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Business Plan Elements

• Executive Summary
• Company Overview
• Market Industry Analysis
• Product/Service Description
• Marketing Plan
• Operations Plan
• Development Plan
• Management
• Competitive Advantage
• Financial Plan
• Funding

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Product/Service Sections

• Features
• Benefits
• Proprietary Rights
• Stage of Development

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Features

• Detailed description
• Attributes
• Environment
• What is unique?
• What is evidence that customers want these
  features?
• How produce deliver systems approach
• Dont assume people know or understand your
  product/service

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Attributes
0

• Performance durability, quality of materials,
  defect levels, tolerances, construction,
  dependability, functional performance
  (acceleration, nutrition, taste), efficiency,
  safety, styling, packaging, etc.
• Cost purchase price, quantity discounts,
  operating costs, repair costs, cost of extras or
  options, cost of installation, trade in
  allowance, likely resale value, etc.
• Availability carried by local stores, credit
  terms, quality of service available from local
  dealer, delivery time, credit card, on-line
  transactions, etc.
• Service hours, warrant, guarantee,
  return/replacement policy, upgrades, maintenance,
  training, installation, repair service, spare
  parts, customer support, tech support, training,
  product design, make to order, level of
  inventory, quotation response time, lead time,
  quality certification, employee capabilities,
  etc.
• Environment location, atmosphere, layout,
  fixtures, aesthetics, style, sound, lighting,
  color, etc.

Bad Slide
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Benefits

• Describe major benefits - be specific
• What is the evidence that benefits are understood
  by the market?

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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.
• Convenience?
• Objective is distinguish between benefits and
  features, not put into categories

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Feature vs. Benefits
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Net Dog
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Amari
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Product Service Conclusions

• Make it real
• Photo, rendering, specs
• Prototype
• Evocative description
• Make it exciting
• Sell your concept

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Product/Service Competitive Matrix

• Product/Service offering breadth and depth
• Quality (define the type quality)
• Detailed analysis of the key features
• Obtain samples of the competitors products,
  specifications drawings
• Retail go to competitors locations, observe the
  environment and how customers interact with the
  business.
• Internet businesses evaluate the websites.
• Strengths and weaknesses
• Location

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Product/Service Competitive Matrix
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Quality Dimensions I

• Performance - the primary operating
  characteristics of the product or service
• Features - the characteristics that supplement
  the basic functioning of the product or service
• Reliability - probability of the product or
  service failing within a specified period of time
• Conformance - the degree to which a product or
  service meets acknowledged standards

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Quality Dimensions II

• Durability - a measure of product life (both
  technical and economic)
• Serviceability - the speed, courtesy, competence,
  and ease of repair or recovery
• Aesthetics - how a product or service looks,
  feels, sounds, tastes, or smells
• Perceived Quality - various tangible and
  intangible aspects of the product from which
  quality is inferred

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Service Quality Dimensions

• Reliability - ability to perform service
  dependably accurately
• Responsiveness - willingness to help customers
  provide prompt service
• Assurance - knowledge courtesy of employees and
  ability to convey trust and confidence
• Empathy - provision of caring, individualized
  attention to customer
• Tangibles - appearance of physical facilities,
  equipment personnel and communication material

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The Elevator Pitch
Based on material developed by
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Elevator Pitch
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• What is the objective?
• Who are you talking to? What motivates them?
• Must be exciting and compelling
• This is a conversation, not a speech

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The Elevator Pitch

• Goal Buy-in
• Investors
• Employees
• Customers and partners
• Critical Attribute Focus
• What do you want remembered?
• Result Motivate
• Listener wants to hear more

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The Elevator Pitch

• What market are you in?
• What urgent problem are you solving?
• What is the size of the opportunity?
• Value proposition
• Why will you win?
• Where is the validation (customers, investors,
  etc.)?
• The order is flexible

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Elevator Pitch Communication Imperatives

• Show passion, energy, and enthusiasm
• Use appropriate eye contact when face-to-face
  
• Slow down and speak clearly
• Be brief (target 30 seconds)
• Be confident
• Use understandable vocabulary

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Elevator Pitch Example

• P1 Diamond develops proprietary thin film diamond
  products and equipment that dramatically improve
  heat dissipation on microprocessors, solving one
  of the highest priority pain points in the
  industry.
• We address growing markets that will exceed 1.5B
  by 2006 and will become the dominant supplier
  with the best team having the most comprehensive
  patent position in the industry. Intel is our
  largest current investor, and we are actively
  engaged with other top target customers and
  partners who provide very strong references.

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How Do You Get Immediate Attention?

• Reduce to one sentence or question what is
  unusual, interesting, exciting or dramatic.

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Elevator Pitch Exercise

• Your name and the name of your firm
• Your pitch
• Evaluation by class on a scale of 1 to 10
• Urgent pain
• Large growing market
• Unique, defensible position
• Validation
• Communication skills
• Desire to hear more

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Be Prepared to Answer Questions About

• Product and technology
• Marketing strategy
• Market research
• Revenue and profitability
• Funds required
• Valuation

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Financial Dynamics

• Every entrepreneur must know part of your DNA
• All your decisions have a financial impact
• Not accounting
• Language of business

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Financial Dynamics 4 Key Elements

• Revenue
• Margins
• Assets
• Cash Flow

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Margins
Revenue COGs Revenue

• Gross Profit Margin
• Contribution Margin
• Net Profit Margin
• Operating Expenses

Revenue Variable Costs Revenue
Net Earnings Revenue
Sales, General Admin Revenue
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Margins