entrep 7-8

Executive summary

A one- to two-page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. It is 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 (also called letterhead ) that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan.

Proprietary technology

A product or service or an aspect of one that is kept as a trade secret or is protected legally using patent, copyright, trademark, or service mark.

Signature block

A snippet of text (or text and images), typically inserted at the bottom of an email, that contains contact information for the sender of the email.

External legitimacy

One is when outsiders expect it. When you are seeking outside support—whether financial or expert—you do a business plan to signal your professionalism and how serious you are about the business.

Passionate customers

People who are not just loyal but are likely to rave about your business are likely to generate more potential customers than any other type.

1. Screening Plan 2. Informational Plan 3. Proof-of-Concept Website 4. Key employee/Partnership Plan 5. Invention Plan 6. Operational Plan 7. Private Placement Memorandum (PPM)

The seven other special-purpose types of plan are the following:

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.

Pure Innovation or Blue Ocean Strategy

The process of creating new products or services, which results in a previously unseen product or service. A strategy based on creating a new product or service that has no competitors.

Competition and Competitive Advantage

The table identifies the major competitors for your market by name.

Maturity stage

The third life cycle stage, marked by a stabilization of demand, with firms in the industry moving to stabilize or improve profits through cost strategies.

rivals, entrants, substitutes, suppliers, and customers

There are five aspects of your industry that can change your profitability and give an edge to any of the many types of competitors you face.

1.As owner, what do you expect out of the business? 2.What is your product or service idea (and its industry)? 3.For your product or service, how innovative or imitative will you be? 4.Scale: Whom do you plan to sell to—everyone or targeted markets? 5.Scope: Where do you plan to sell—locally, regionally, nationally, globally?

There are five initial key goal decisions:

internal understanding.

This is when you want to get all the aspects of the business clear in your mind and the minds of others in the business, such as your partners or your key employees.

The Market

This section talks about your customers—who they are and what they are like, who else is pursuing them, and how you plan to get and keep your customers.

Local customers

This was originally true because as the owner you could keep tabs on the satisfaction of his customers more easily than distant ones; but in the digital age, it is less about geographic proximity than about you taking the time to stay in touch with your customers.

1. Company name 2. Contact information 3. Date this version of the plan was completed. 4. Proprietary statement to protect your ideas

Title Page - typically contains the following information:

1. External legitimacy 2. internal understanding

Two circumstances under which creating a business plan is absolutely necessary:

Company Description

Typically this paragraph gives the vision or tagline of the company and a brief description of the business

Industry analysis (IA)

is a research process that provides the entrepreneur with key information about the industry, such as its current situation and trends.

marketing

is the actions of a business related to promoting and selling goods or services.

market

is the business term for the population of customers for your product or service.

Good strategy

leads to greater chances for survival and higher profits for a small business.

Supply shortages

occur when a new product is in demand.

Favored purchasing

occurs because government agencies, government- sponsored commercial contracts, and many big businesses have policies that provide for set-asides or quotas for purchases from small businesses.

Customer contracting

occurs when a customer, most often a business, is willing to sign a contract with a small business to ensure a product or service. Because big businesses frequently downsize, they have ongoing needs to outsource work.

Market relinquishment

occurs when business firms leave a market.

cost benefits

refer to the ways by which a firm can keep costs low for the customer. These include scale and scope savings.

value benefits

refer to what the customer senses in the product or service

Industry

refers not only to your product or service, but also to all the firms selling that product or service; in other words, your competitors.

Business Plan

remains the standard for describing the business in detail. It takes all the elements introduced so far and includes them in a complete description of the major elements of the business.

Second sourcing

seeks out customers who are already being serviced by another firm.

Entry Wedges

when opportunities pop up unexpectedly, and suddenly you can find yourself trying to decide if the opportunity is the right business and industry for you.

Government rules

when the Environmental Protection Agency let small construction firms out of some of the water pollution treatment requirements that large firms must face, it gave the small businesses a savings, which made them more competitive.

the scope of the market

which defines the geographic range covered by the market—from local to global.

scale of the market

which is the size of the market—whether you plan to aim for a mass market or a niche market.

Operational Plan

A business plan designed to be used internally for management purposes and serve as working documents within a business.

Informational Plan

A business plan that gives potential customers or suppliers information typically consist of company and organization sections.

Elevator Pitch

A 30-second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another.

Scale: Mass market

A customer group that involves large portions of the population.

Cost strategy

A generic strategy aimed at mass markets in which a firm offers a combination of cost benefits that appeals to the customer.

Focus strategy.

A generic strategy that targets a portion of the market, called a segment or niche.

Decline stage

A life cycle stage in which sales and profits of the firm begin a falling trend.

Scale: Niche Market

A narrowly defined segment of the population that is likely to share interests or concerns.

Proof-of-Concept Website

A special form that based on Internet-based, and it is a business plan that provides information or demonstration of a product or service designed to solicit information on customer interest.

Private Placement Memorandum (PPM)

A specialized legal form or the other type of plan that adds to a business plan crafted by lawyers for the purpose of soliciting formal investments.

Key Employee/Partner Plan

A summary plan that provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees including the all materials of an informational plan.

Differentiation strategy.

A type of generic strategy aimed at clarifying how one product is unlike another in a mass market.

Boom

A type of life cycle growth stage marked by a very rapid increase in sales in a relatively short time.

Shake-out

A type of life cycle stage following a boom in which there is a rapid decrease in the number of firms in an industry.

Screening Plan

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

Parallel competition

An imitative business that competes locally with others in the same industry.

Growth stage

An industry life cycle stage in which customer purchases increase at a dramatic rate.

Data room

An online repository (e.g., Drop box, Box, Share Vault) for the documentation that back ups and details the specifics of your business and business plan.

Retrenchment.

An organizational life cycle stage in which established firms must find new approaches to improve the business and its chances for survival.

Incremental Innovation.

An overall strategic approach in which a firm patterns itself on other firms, with the exception of one or two key areas.

Strategic actions

Competitive responses requiring a major commitment of resources.

Tactical actions

Competitive responses with low resource requirements.

· Problem: need for the product or service. · Product: product or service and how it is used. · Market: size and characteristics of the customer group a · Competitive advantages: what makes the product or service unique · Business/team: current stage of the business, the timeline, and the team behind the product. · Financial summary: Gives sales, growth, and profitability information

Executive summaries are usually organized in a series of short paragraphs (three or four sentences) and typically cover five key topics. These topics are:

Vision Statement Elevator Pitch Executive summary Business Plan

Four types of business planning presentations:

1.Parallel competition 2.Incremental Innovation 3.Pure Innovation or Blue Ocean Strategy

Imitation and Innovation Approach

Product/Service and Value Proposition

In many ways this is the most important section of the plan because it is where readers come to understand what your business is all about—the product or service.

industry dynamics

In setting strategy you need to look at your competitors in order to best position your firm, but you also want to look at the changes in competitors, sales, and profits in your industry.

The Organization

In this section you lay out the components and supports for the firm itself.

Scope: Local or Global

It can be local (like a neighborhood or a city), regional (e.g., a metropolitan area or a state), national, international (usually meaning two to a few countries), or global (meaning everywhere).

mission statement

Related to the vision statement which is typically longer (20-50 words) and often adds the firm's competitive advantage.

1. Supply shortages 2. Unutilized resources 3. Customer contracting 4. Second sourcing 5. Market relinquishment 6. Favored purchasing 7. Government rules

Retired entrepreneurship professor Karl Vesper named these opportunities entry wedges, and he identified seven that come up again and again:

Corporate customers

Selling to other businesses may produce greater profits.

pitch decks.

Silicon Valley investor claim they don't have time to deal with business plans. So savvy Silicon Valley entrepreneurs give the Silicon Valley investors what they want—

1. Overstated numbers 2. Numbers that are wrong 3. Inadequate cushion 4. Inadequate payback 5. Narrative and financials that do not fit 6. No direct customer connection 7. Uncertain sales (especially conversion rates) 8. Overlooked competition 9. Experience deficits 10. "What" problems 11.Deadly aggravations:

The Most Common Critical Risks in a Plan

Working capital

The cash immediately available to the firm for the day-to-day expenses and operations of the firm

The Appendixes

The financial statements expected include (1) income statements (also called a P&L for profit and loss) and its assumptions; (2) cash flow and its assumptions; and (3) balance sheet and its assumptions.

Company, Product/Service, and Industry

The first section of a business plan tells the story of your product or service, and the company that will deliver it.

(1)your passion for the business, (2) your expertise about the business and the plan, (3) how professional you are in your work, and (4) how easy it would be to work with you.

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

Introduction stage

The life cycle stage in which the product or service is being invented and initially developed.

The Financial Summary

The one-page financial summary section starts with a paragraph (often with a summary table) showing the overall financial results (in sales and profits).

Vision Statement

a very simple 5- to 10-wordsentence or, better yet, a tagline that expresses the fundamental idea or goal of the firm.

Unutilized resources

can be a physical resource like gravel in a farm field or even entire inner cities. It can also be a human resource.

consignment process

create the product or service and have agents find firms to use it

Loyal customers

customers who return and are already presold, making your life easier. They also refer friends, another source of revenue.

Invention Plan

focus on the plan that focus on the details of an invention, including intellectual property rights

1. goals 2. customer and benefits 3. industry dynamics and analysis 4. strategy selection

four key types of decisions you make about your firm.

1. Introduction stage. 2. Growth stage. 3. Boom. 4. Shake-out. 5. Maturity stage. 6. Decline stage. 7. Retrenchment.

industry life cycle stage

business plan

is 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.

imitation plus or minus one degree of similarity

the extent to which a product or service is like another. It would be the business equivalent of cloning.

Pitch

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

Strategy

the idea and actions that explain how a firm will make its profit. It may be a blueprint for planning or a standard to compare actions against.

magic number

the income you personally seek from the business

1. Differentiation strategy. 2. Cost strategy 3. Focus strategy.

three classic strategies for businesses of all types. Because they are so widely applicable, they are called generic strategies.

scale of the market scope of the market

two strategic decisions about your market in general that you need to make early in the process of going into business.

Corporate customers. Loyal customers. Local customers. Passionate customers.

types of customers often seen as particularly attractive.