Chapter 8

Invention plan

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

Tagline

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

Private placement memorandum

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

Mission Statement

A paragraph that describes the firm's goals and competitive advantages Talks in terms of how it will make a difference in for the customer or the industry

Vision statement

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

Internal understanding

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

Informational plans

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

Screening plan

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

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 What makes firm unique or superior?

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.

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.

Operational plan

Business plans designed to be used internally for management purposes.

Scalable Business

Businesses that can produce the same product at a fraction of the cost

Title Page

Company name Contact information Date this version of the plan was completed Proprietary statement to protect your ideas

Classic Business Plan

Cover letter Title page Table of contents Executive Summary The Company The Industry The Market The Organization The Financial The Appendixes The business plan remains the standard for describing the business in detail. The business plan takes all the elements introduced so far and includes them in a complete description of the major elements of the business. The nine parts of the full business plan are outlined in Table 8.2 . The full (or classic) business plan contains a maximum of single-spaced pages of text and 15 pages of financials and appendixes.

The Company: Product/service and industry

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

The Organization: Location

Description of the facility How it meets strategic and sales goal of the business Own, lease, or rent the property Plan to expand the facilities

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

Proof-of-concept Web site

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

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 Organizational structure of the firm Makes clear how many employees there are and whether they are full time or part time, permanent or seasonal, family or non-family

Table of contents

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

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

Company background

Overall description of the company, the firm's current status, and the history of the business Vision statement / mission statement Specific goals, Business' competitive advantage

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

The Most Common CriticalRisks 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! Who are your key personnel? Talk about accomplishments rather than just experience Do not limit yourself to business

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.

Presenting Your Plan

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.

Research and development

The part of a business 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

Start small and build up

Vision (10 words), Mission (20-50 words), Elevator Pitch (60-100 words), Executive summary (250-500 words), Business Plan (40 pages)

The Appendices

one-page version of owner's resume Product or service pictures or specifications Copies of signed contracts Results from marketing studies or pilot sales efforts Industry reports

Industry

tells the reader about the other firms producing this product or service—the competition. goal is to position your firm so that it looks like a potentially solid competitor in an industry with potential.

Measures:

These are business goals given as measurable results, in terms of sales, market share, employment, locations, profits, growth, etc. It is typical to have multiple measures, and they are typically given in quantitative form. This section should reflect the Mission.

Method:

These are the activities which would make your business successful over the time period given in the Mission section.

Mission:

This also follows the approach described earlier focusing on competitive advantage and goals, with a definite time period in mind.

Mantra:

This follows the Vision/Tagline/Mantra model discussed earlier in this chapter. Aim for 3-4 words, or 6 at most.

Mechanics:

This last section ties into everything above, and gives several specific tasks the business needs to do to accomplish what is mentioned in the Method and Measures.

Value Proposition

Three sentences or less explaining why a customer needs your product

Pioneering business

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