Transcript Slide 1

BUSINESS PLANS &
FEASIBILITY PLANS
Feasibility Plan is a decision
document
• Will my idea work?
Business Plan is a pitch for support
and a “roadmap” towards success for
the firm
• Targeted toward investors, key employees
and strategic partners
PLANS ARE PACKAGES
• Narrative
• Work in progress; “living document”
• Expect to make changes as business conditions
change
• Should be regularly updated to reflect new
strategies
• Supporting materials
• Competitive landscape / industry analysis
PLANS ARE FOR AUDIENCES
Who is your audience?
• Venture capitalist? Potential executive? Yourself?
What is important to them?
• ROI? Exciting work & control? Careful planning?
Why might they be interested in your idea?
What is the goal of your pitch?
• A second meeting? A referral? Buy-in? Leads?
• MONEY?
BUSINESS PLAN CHECKLIST
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What does your business do?
What is the opportunity?
How big is the opportunity?
How will you address the opportunity?
What is the competitive situation?
How is the competitive situation shaped by industry trends?
What are your key & sustainable advantages/defenses?
What is your business model?
How will you turn a service or product into profit?
Do you have the team to execute your plan?
How will you use the investment?
What return on investment do you offer?
BUSINESS PLAN OUTLINE
• Executive Summary
• Company Description
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Including product/service &
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technology/core knowledge
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• Industry Analysis & Trends
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• Target Market
• Competition
• Strategy/Business Model
• Marketing and Sales Plan
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• Production/Operations Plan
Technology Plan
Management & Organization
Social Responsibility
Development & Milestones
Financials
• Including Capital
Requirements & Financial
Statements
Appendix
MARKET vs. INDUSTRY
• MARKET: The organized exchange of goods,
services, or resources between buyers and sellers
within a specific geographic area and during a given
period of time.
• A buyer gives up money and gets a good, while a
seller gives up a good and gets money
• INDUSTRY: One or more business firms that produce
similar products
MATCHING PRODUCTS & SERVIVES
WITH CUSTOMERS
ENVIRONMENTAL TRENDS
MARKET
• Customer & Benefits
• Segment, Size Channels
• Perceptual Space
• Value Proposition
INDUSTRY
• Industry Structure
• Competitive Space
• Competitive Dynamics
• Positioning
REMEMBER
WHO
PAYS!
• The key to success is falling in love with your
customers
You must know them, study them, honor them,
serve them…
• The single most crucial step towards starting a
successful business is discovering and articulating
what you can provide that your customers want
enough to pay for
KNOW
YOUR
CUSTOMERS!
1. Why do your customers want your product or service?
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What do you provide?
What are your customers really buying?
How much will they pay?
2. Who, exactly, are your customers?
3. How do your customers buy?
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When do they buy?
Where do they buy?
What rules or expectations govern their buying?
REMEMBERING THAT…
• There can be many that influence
purchasing decisions
• The people who use or consume the
product may not be the one who
actually makes the purchase
• Especially true in business and in
families
EXERCISE
WHY PEOPLE AND BUSINESS BUY…
• ALCOHOL
• PUBLIC RELATIONS SERVICES
WHY CUSTOMERS BUY
• People and businesses have different requirements
• Both people and businesses buy benefits
They buy solutions to their problems and
satisfaction of their needs and wants
• People and businesses do not buy features
Like torque or braking power or acceleration
• Products or services are a means to an end
And people or businesses may not buy what you
think you sell
WHY CUSTOMERS BUY
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Meet biological needs
Increase security
Gain status or recognition – to belong
Live out fantasies
Reduce anxiety or other strong emotions
Save time or money
Solve problems
Can be irrational, more emotional
WHY BUSINESSES BUY
• Provide their own goods or services
more cost effectively
• Save money
• Cement relationships
• Position themselves strategically
• Improve public relations
• Solve problems
• More rational, logical
WHAT DO BUSINESSES CARE ABOUT?
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Quality
Dependability
Cost
Customization
Market exclusivity
Delivery schedules
Guarantees
Strategic relationships
FORCES THAT AFFECT
BUYING BEHAVIOR
• Demographics
• Social Change
• Economics
• Politics/ Regulations
• Technology
• Environmental Change
CUSTOMERS
*Each arrow is a force, with lengths indicating relative strength
BUYERS BUY BENEFITS
• A benefit is the value a customer places on a
function and/or feeling the product produces
through its features
• Identify - through testing - the few, crucial
benefits that will affect customers’ buying
decisions...
• Use these to drive marketing strategy,
packaging, pricing, branding, and sales plans
FEATURES SPORT BENEFITS
• Features are what make up the product’s or
service’s ability to perform functions for customers
• Some features are more equal than others:
Of the dozens of features an iPhone may have,
perhaps only two or three – such as a high res
camera or downloadable apps – might be
important to customers
• Which differentiate you from the competition?
Are they protected or protectable by copyrights,
patents or trademarks?
EXERCISE
COMMUNICATE BENEFITS
BENEFIT
FEATURES THAT
SUPPORT BENEFIT
METHOD TO
COMMUNICATE BENEFIT
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KNOW
YOUR
CUSTOMERS!
1. Why do your customers want your product or service?
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What do you provide?
What are your customers really buying?
How much will they pay?
2. Who, exactly, are your customers?
3. How do your customers buy?
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When do they buy?
Where do they buy?
What rules or expectations govern their buying?
WHO WANTS YOUR
PRODUCT OR SERVICE?
• Develop an intimate knowledge of who buys
• Customers’ behavior
• Personal and institutional motivations
• The key words, concepts, associations that trigger
behavior
• Segment who buys
• Identifiable, organized, or organize-able &
reachable subgroups of customers.
• Marked by demographics, behaviors, location,
interests
CONSUMER COSTUMER PROFILE
Describe your ideal customer or client by answering the
questions below. The questions take you from specific
characteristics to a definition of a market or market segment:
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How will they use your product or service?
Why might they buy it?
What will they pay for it?
Are they men, women, or both?
What is their age group?
What is their approximate average income?
What is their employment type (blue-collar, white-collar, managerial,
professional, homemaker, etc.)?
• What is their lifestyle (personality, self-image , etc.)?
CONSUMER COSTUMER PROFILE
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Where are they (local, state, national and globally)?
How many of them are there?
How many do you expect to get as customers?
What percentage of the market do you expect to get?
What’s the growth trend of your target market?
What are their buying habits?
What magazines do they read?
What organizations do they belong to?
What conventions or events do they attend?
Is there a directory that lists them?
Are there mailing lists of them available?
What is the best way to reach them?
BUSINESS CUSTOMER PROFILE
Describe your ideal customer or client by answering the
questions below. The questions take you from specific
characteristics to a definition of a market or market segment:
• How will the firm benefit from buying your product or service?
• How much are the benefits worth to them – in savings, increased
market share, profile, etc.
• Who buys? Who influences? Who facilitates? Who decides? What
buying procedures are in place? What controls?
• What level of service to they expect?
• How are they used to buying? Salesperson? Directly? Other?
BUSINESS CUSTOMER PROFILE
• How is the transaction started, facilitated, completed?
• What industry norms govern the transaction? Discounts,
payment terms, warranties, types of contracts.
• Where are they located ?
• What piece of the market are you aiming for?
• How many of target firms are there?
• How many do you expect to get as customers?
• What’s the growth trend of your target market?
• What are their buying habits?
• What organizations do they belong to?
• What conventions or events do they attend?
• Is there a directory that lists them?
• Are there mailing lists of them available?
• What is the best way to reach them?
SEGMENT ANALYSIS
• Talk to customers!
Interviews & surveys
• Observe customers using/buying similar items
Read what they read, go where they go
• Talk to others who serve the same customers
How do they segment, communicate, etc?
• Examine how competitors’ segment
• Define segments and estimate size
WHAT IS MARKET SEGMENTATION?
Process of dividing a market into subsets
of consumers with common needs or
characteristics
TARGET SEGMENTS
[ CONSUMERS ]
• DEMOGRAPHIC:
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Age
Gender
Marital Status
Income Level
Occupation
Education
www.demographics.co
m
• GEOGRAPHIC:
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Country
Region
State
County
City/Town
Size of Population
Climate
Population Density
www.census.gov
www.oscda.missouri.ui
c.uicapps.xtabs3.html
o www.geocode.com/eag
le.html-ssi
TARGET SEGMENTS
[ CONSUMERS ]
• PSYCHOGRAPHIC
o Leader or follower
o Extrovert or introvert
o Achievement-oriented or
content with status quo
o Independent or Dependent
o Conservative or liberal
o Traditional or experimental
o Socially-conscious or selfcentered
• BEHAVIORAL
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Rate of usage
Benefits sought
Methods of usage
Frequency of usage
Frequency of purchase
Travel patterns
TARGET SEGMENTS
[ CONSUMERS ]
• SOCIOCULTURAL
o Cultures (Chinese, Spanish,
Brazilian)
o Religion (Moslem, Catholic,
etc.)
o Subcultures (African American,
Asian, Caucasian)
o Social class (lower, middle,
upper)
o Family life cycle (single, young
marrieds, empty nesters)
• USE-RELATED
o Usage rate
o Awareness status
o Brand loyalty
MORE MARKET SEGMENTATION
• Use-Situation
Time, objective, location & person
• Benefit Segmentation
Convenience, social acceptance, value, economy
• Hybrid Segmentation
• Demographic/psychographic
• Geodemographics www. claritas.com, PRIZM
• SRI VALS – Innovators, thinkers, believer, achievers,
strivers, experiencers, makers survivors
TARGET SEGMENTS
[ BUSINESSES ]
• BUSINESS MARKETS
o Type of business (manufacturer,
retail, wholesale, service)
o SIC / NAICS Code
o Size of Business
o Financial Strength
o Number of Employees
o Location
o Structure
o Sales Level
o Special Requirements
o Distribution Pattern
o www.imarketinc.com,
www.findsvp.com, Lexis/Nexis,
Business Source Premier,
Business and Company
Resource Center, Business
Industry Database
EXERCISE
CUSTOMER PROFILE
• Define your customer
• Define his/her segment
• What channels would you use to
reach your customer?
KNOW
YOUR
CUSTOMERS!
1. Why do your customers want your product or service?
•
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What do you provide?
What are your customers really buying?
How much will they pay?
2. Who, exactly, are your customers?
3. How do your customers buy?
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When do they buy?
Where do they buy?
What rules or expectations govern their buying?
EXCHANGE ANALYSIS
• What changes hands?
• Why? What is the value proposition to the buyer?
What dimensions of value matter?
• Who sells? Who buys? Who influences? Who
facilitates? Who holds the most power?
• When does the exchange happen? How long is the
sales cycle?
• How are transactions started, facilitated, completed?
• What rules, regulations, norms shape the exchange?
• What norms govern the exchanges?
– Discounts & payment terms, warranties, types of
contracts, style & culture
PERCEPTUAL SPACE
• How does your product or service stack up
against competitors?
• What mind space do you occupy?
• What unique value can you offer?
• What will be your unique selling proposition?
PRODUCT COMPARISON CHART
• List competitive products/services – the
from customers’ point of view
• Note crucial dimensions of value
Price Quality Segment Channel
Product1
$$$
Sales
H
A
Product2
$
Web
L
B
Product3
Direct
M
C
$$
Substitute1
$
Sales
L
D
Shows
$
M
E
Substitute2
Notes
PRODUCT COMPETITIVE ANALYSIS:
COMPETITIVE OFFERINGS MATRIX
Differentiation
L
H
Attractiveness
H
L
Product B
Product Y
Product C
Product Z
Product A
Product X
PRODUCT COMPETITIVE ANALYSIS:
PERCEPTUAL MAP
Quality
Cost
Map key products or services along dimensions most important
to buyers & influencers
WHAT IS A VALUE PROPOSITION?
• Or “unique selling proposition”
• One of two essential elements for effective
positioning (communicating benefits is the other)
• Distinct benefit or point of difference for the
product or service
• Consequences of poor/ineffective value
proposition?
• Little or no market uptake = failure
• Perception of product or service as “me too”
“WHAT’S IN IT FOR ME?”- CUSTOMER
SEGMENTATION
MARKET
PSYCHOLOGICAL
POSITION
TARGET SEGMENT
VALUE
PROPOSITION
VALUE PROPOSITION
• Define what you provide/will provide
• As simply and concretely as possible, emphasizing function,
not form
• Describe your customer
• As precisely as possible, emphasizing why they care, i.e.,
the type and magnitude of the problem they have that you
solve
• Define precisely the value you provide to your customer in
terms of benefits they will receive
• Quantifying you claim when possible, especially for
businesses, and supporting it with testimony
VALUE PROPOSITION
[ EXAMPLES ]
• iPod: “best digital jukebox”
• Lexus: “quality, zero defects”
• Dell: “customized PCs made quickly and sold
economically”
• Southwest: “friendly, fun customer service at
economical prices”
• Gap: “wearable, affordable, hip American style”
WHAT’S THE VALUE PROPOSITION?
• Dove Soap
• V-8 Juice
• McDonald’s Happy Meal
EXERCISE
WRITE YOUR VALUE PROPOSITION
“Our company provides x that does y
(solves y problem) for z in a way that. . . .”
“Automsoft’s RapidPharma provides 100% accurate and reproducible data
at the finest level to help pharmaceutical firms bring new production
processes to scale, while providing batch assurance and full compliance
with CFR Chapter 21 Part 11.”
BIBLIOGRAPHY
Matching Products & Services with Markets
• Tony diBennedetto lectures
• Jaine Lucas lectures
• Jeffrey Dobkin, How to Market a Product for under $500!, (Danielle
Adeams Publishing Company, 1995).
• Craig Fleisher & Babette Bensoussan, Strategic and Competitive
Analysis (Prentice-Hall, 2003).
• TL Hill lectures
• Jill Kapron, BizPlan Express, (South-Western College Publishing
Company, 1998).
• Philip Kotler, Marketing Management, 9th Edition, (Prentice-Hall,
1997).
• Small Business Development Center business planning program –
2000.
• Barbara Wright presentations
SOURCES OF CONSUMER DATA
• www.fedstats.gov – economy, business and all
demographics of US population
• www.census.gov – data on age, education, income and
occupation of US residents by state and region
• World Fact Book – key stats on any country worldwide
www.cia.gov.publications.factbook
• Claritas – demographic and lifestyle profiles
• Yankelovich – consumer lifestyles and consumption
patterns
• Mediamark Research – segmentation studies of consumers’
leisure activities and buying cycles
BUSINESS PLAN WORKSHOPS
THURSDAYS [ 4:30- 6PM ]
September 16
September 23
September 30
October 7
October 14
October 21
October 28
November 4
November 11
November 18
Overview of Business Planning
Legal 101 for Entrepreneurs
Idea Creation & Opportunity Assessment
Matching Products & Services with Markets
Competitive Analysis
Strategy & Business Model
Sales & Marketing
Management & Ownership
Financial Forecasting for Start-Ups
Investment Pitches for Emerging Firms