Management Final Exam - Chapter 8

2. numberts that are wrong:

Ex. Balance sheets that don't balance

Mechanics

Last section, ties into all four above, gives specific tasks the business needs to do to accomplish what is mentioned in the method/measures. Often given as 1 line project descriptions

Mission Statement

a paragraph that describes the firms goals and competitive advantages.

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.

Private placement memorandum-

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

screening plans

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

6. no direct customer connection:

if it sounds like you haven't talked to your customers about your product, it's a problem

1. overstated numbers:

include sales or profits that are too optimistic

Proof of concept website-

internet based type of business plan providing info or demonstration of a product or service designed to solicit info on customer interest.

Preselling

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

-product

Describes the product or servie and how its used

Test Marketing

selling your product or service in a limitied area, for a limited time

4. inadequate payback:

shows how your investment is worth the risk

Vision Statement

simple 5-10 word sentence that expresses the fundamental idea or goal of the firm

9. The Financials

starts with page on critical risks and one on the deal being offered to investors.

Location

(1/2 page) - Other major organizational asset of a business is its location

Related Service providers

(1/2-1page) - Small businesses are rarely alone and the quality of the professionals surrounding you tells people a lot about how good you might be

Legal and Organization Structures

(1/2-1page) -Describes the legal form of the business

Key Personnel

(1/2-3paragraphs) Goal is to inspire that confidence in your reader

6. Industry

-1-4 paragraph -tells the reader about other firms producing this product or service (completion)

Mission statement example

-> BabyGenie.com (FL) "The mission of BabyGenie is to become on of the best online resources for young mothers and repeat parents."

Classic Business Plan

-Remains the standard for describing the business in detail -Describes the major elements of the business

Elevator Pitch description

-leads with hook; followed by purpose of service; additional details about how it works; conclusion (either talk about where the business is now if it has been operating, or ask for investors) -sounds a lot like a sales pitch, and that is intentional b/c the goal is to sell them on the idea and their need for it.

Presenting your plan

-show passion for the business -show expertise about the business and the plan -show how professional your work is -show how easy it would be to work with you

1.Cover letter-

1 page document on business stationary (aka 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.

4.Executive summary-

1 to 2 page (250-500 word) 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.

Executive Summary

1 to 2 page (250-500 word) 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.

Company discription

1-2 paragraphs -Vision statement -mission statement of the business -Company Background -Competitive advantage of the company

Competition and Competitive advantage

1-2 pp -Table identifies the major competitions for your market by name and location

Market and target customer

1-3 pp -Refers to the total population of people or firms to whom you plan to sell. -Usually described in terms of their size and scope.

Marketing strategy

1-3pp -Focuses on 3 ideas 1. Overall strategy your firm pursues in the market 2. The sales plan that shows the specific ways you apply strategy to secure sales from your customers 3. The longer term competitive plan that shows how you protect your firm from efforts of the competition to unseat you

Product/Service

1-4 paragraphs -Descrive your firms product or service in order to help the reader understand what you are selling and how it could help your target customers

Family and friend investors concerns

1. Amounts and schedules for returns 2. Stability of the firm 3. Funds use 4. Your investment

Bankers Concerns

1. Cash flow and cash cycle 2. Asset/collatoral base 3. Long term prospects

Government Agencies and institutions concerns

1. Compliance with regulations and laws 2. Monitoring compliance

Joint venture partners concerns

1. Fit between the firms 2. Competitive advantage 3. Benefits 4. Intellectual property protections 5. R&D

Silent Partners/Angel concerns

1. Growth Rate 2. Market 3. Business team 4. Amounts and schedules for returns

Financial Statements are expected to include

1. Income Statement 2. Cash flow and its assumption 3. Balance sheet and its assumption

Potential customers concerns

1. Service/product quality 2. Benefits 3. Competitive advantage 4. responsiveness to customers

Vision Pyramid

1. Vision (10 words) 2. Mission (20-50 words) 3. Elevator Pitch (60-100 words) 4. Executive Summary (250-500 words) 5. Business Plan (40 pages)

Greatest problems

1. helping people understand how it works 2. showing them how they would use it 3. Estimating how many people would want it 4. Estimating how much they would be willing to pay for it

Key employees

1. stability of firm 2. growth (as applies to increased opportunities within the firm) 3. Long - Term prospects

Mantra

3-4 words, 6 at most used as a tagline

Method

Activities that will make your business successful over the given time period. Should tie in with above sections.

Strategizing the Business Plans

Business plans brings together every aspect of your business including your product and service, and your market and your strategy

5.The company

First section of business plan tells the stor of your company. -It should sell the reader on the cmopany and ideas and people behind it.

Mission

Follows approach described earlier focusing on competitive advantage and goals, with a definite time period in mind. Typically state business name and product name as well as customer/market. Also states major business goal, but always with a time period or date.

8. The Organization

Goal is to convince the reader that the business will be successful because it has access to high-wuality people both within the firm and within the larger business community and the organization itself is structured to make the best use of those people

Plans a business with significant government involvement

Some businesses depend on governemnt approvals to go forward Ex. Salvage yards, garbage

Business Plan Story

Starting Small and Building Up

Plans for an existing business

When writing a plan for an exisiting business you have the benefit of knowing the history, the existing market, and the financial track record of the firm

Elevator Pitch

a 30 second (<100 words) action oriented description of a business designed to sell the idea of the business to another.

Focusing your business plan

a business plan needs to match the needs of the reader

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, and its financial outcomes with an emphasis on the firms present and future.

Plans for Pioneering business

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

10. The Appendixes

approximately 5 pages, include one page version of owners resume.

Invention plan-

business plan that provides info to potential licensees. Focus on the details of the invention including property rights.

Operational plan

business plans designed to be used internally for management purposes

business:

describes the current stage of the business and when major milestones of starting, sales, or profitability will be met.

finances:

describes the deal being offered investors and the schedule for payouts.

management:

describes the entrepreneur and start-up team in terms of expertise and track record.

-market:

describes the size and characteristics of the customer group and how it will buy the product or service

competitive advantages:

explains what makes the product or service unique, often in terms of an entry wedge.

5. narrative and financials don't fit:

financials need to be in check with marketing plan

Plans for a new entrant business

firms whose product or service is established elsewhere, but is new to the market.

Informational plans

give potential customers or suppliers info about the company and its product/service.

3. inadequate cushion:

having enough cash to survive 3 months and avoid this risk

2.Title Page

lists company name, contact information, date this version of the plan was completed, and proprietary statement to protect your ideas.

11. deadly aggravations:

make sure there are no typos and always look/sound professional

Tagline

memorable catchphrase that captures the key idea of a business, its service, product, or customer. Ex. -> Book Pasage (CA) "The Bay Area's Liveliest Bookstore."

10. what problems:

product expination needs to be simple enough anyone could read it

7. uncertain sales:

prove sales estimate

9. experience deficits:

prove your experience or how you plan on gaining it

Key employee/partner plan-

provides info on the company, product, market, and critical risks to prospective business or marketing partners or to prospective key employees.

3.Table of Contents

table of contents typically puts the major section headings in boldface type and the sections underneath each in regular type. Page numbers on every component. Including financial statements and appendixes.

7. The Market

talks about your customers, who they are and what they are like, who else is pursuing them, and how you plan to get or keep your customers. -market and target customer -competition and competitive advantage -marketing strategy

External legitimacy

the extent to which a small business is taken for granted, accepted, or treated as viable by people outside the owners family.

Internal understanding

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

Research and Development

the part of a business that is focused on creating new procucts or services and preparing new technologies, ideas, products or services for the firms market.

Risks-

the parts of a business or business plan that expose the firms to any kind of loss.

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. Should reflect mission section

8. overlooked competition:

you don't want to overlook a major player in your industry