Chapter 8 SB&F

Path to a Business Plan

Business Plan Executive Summary (put int he beginning) Elevator Pitch Mission Vision

Proof-of-concept Web site

An Internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest.

Test marketing

Selling your product or service in a limited area, for a limited time.

Due diligence

The process of investigating a business to determine its value.

The Market: Competition and competitive advantage

Major competitors Competing product or service: market share, price, competitive advantages and disadvantages What makes product or service unique

Tagline

Memorable catchphrase that captures the key idea of a business, its service, product, or customer, slogan

The Market: Marketing strategy

Overall strategy your firm pursues in the market Sales plan that shows specific ways you apply strategy to secure sales from your customers Longer-term competitive plan that shows how you protect your firm from efforts of the competition to unseat you

External legitimacy

The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family.

Screening plan

gives the basic overview of the firm and a detailed look at the financials, also called a mini-plan

Private placement memorandum

A specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments.

The Elevator Pitch

A 30-second action-oriented description of a business designed to sell the idea of the business to another Leads with the hook, follows up with purpose of the service, ends with where business is now

Business Plan

A document designed to detail the major characteristics of a firm— its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm's present and future.

New entrant business

A firm whose product or service is established elsewhere, but is new to this market.

Pioneering business

A firm whose product or service is new to the industry or is itself creating a new industry.

Executive summary

A one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. Typically put at the start of a business plan and is the most popular summary form for a business plan.

Cover letter

A one-page document on business stationery that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan, also called letterhead

Mission Statement

A paragraph that describes the firm's goals and competitive advantages Mission statements fell out of favor as they became too much like one another and too full of business jargon Who you are, Why are you doing it, and What are you doing?

Vision statement

A very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of the firm.

Data room

An online repository for the documentation that back ups and details the specifics of your business and business plan contents of the data room are very similar to those of the three-ring binder personal edition of the plan held and used by the founder.

The Appendixes

Copies of signed contracts, letters of intent or commitment, or contingency contracts Results of marketing studies or pilot sales efforts Industry reports Price lists for products or services Floor plans of the location, if it is central to the business Advertising copy, such ads, logos, catalog pages, brochures, sales letters, or press releases. Customer or spokesperson testimonials

Components of a Business Plan

Cover Letter Title Page Table of Contents Executive Summary The Company The Industry The Market The Organization The Financials The Appendixes

The Company: Product/service and industry

Describe firm's product or service Explain how the customer uses the product Proprietary technology Industry descriptions

Informational plans

Give potential customers or suppliers information about the company and its product or service.

The Organization: Related service providers

Identify your bank and banker, attorney and legal firm, accountant or bookkeeper, other consultants Major relationships established with well-known suppliers or customers Board of directors / board of advisors

Crafting your Pitch Deck

Introductory slide Company purpose slide Problem slide Solution slide Product slide Why Now slide Market Size slide Business Model slide Competition slide Team slide Financials slide The Ask and the Deal slide Closing slide

Preselling

Involves introducing your product to potential customers and taking orders for later delivery.

The Organization: Legal and organization structures

Legal form of the business Where it is formally registered and located Licenses or certifications along with the firm's intellectual property protections, like patents, trademarks and trade secrets.

Common Critical Risks in a Plan

Overstated numbers Numbers that are wrong Inadequate cushion Inadequate payback Narrative and financials do not fit No direct customer connection Uncertain sales Overlooked competition Experience deficits "What" problems Deadly aggravations

Key employee/partner plan

Provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

The Organization: Key personnel

Sell the most important single element in the business plan - you! Talk about accomplishments rather than just experience Don't limit yourself to just business

Pitch

The name given to the formal presentation of a slideshow summarizing your business plan given before judges or potential investors or partners.

Pitch deck

The name of a slideshow presentation that summarizes a business or more often a business plan.

Research and development

The part of a business (and a business plan)that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm's market.

Risks

The parts of a business or business plan that expose the firm to any kind of loss—profits, sales, reputation, assets, customers, and so on

The Market: Market and target customer

Total population of people or firms you plan to sell to Target customer section: focuses attention on who would buy Demographics' relation to the product, how often they buy, and past experience

The key things an influential person looks for in you are:

Your passion for the business Your expertise about the business and the plan How professional you are in your work, How easy it would be to work with you.

Title Page

company name, contact info, date of version plan was completed, proprietary statement to protect your ideas

Internal understanding

extent to which employees, investors, and family members in the business know the business's purposes and operations

Operational plan

Business plans designed to be used internally for management purposes.

Table of contents

Lists major section headings Sections underneath major sections Put page numbers on every page of the business plan

Invention plan

A business plan that provides information to potential licensees. focuses on the details of an invention, including intellectual property rights.