Biz plan/ chapter 6

Executive summary

(Overviews/ synopsis/ narrative) Description of opportunity, explanation of biz concept,industry overview, target market, competitive advantage to be achieved in the market,economics and opportunity,management team description,amount and purpose of the money being requested ( the offering) if seeking financing.

Understanding the investor's perspective

- entrepreneur's are optimists,investors are skeptics. - investors seek to maximize return through cash flow while minimizing exposure at risk. - bad information and poor preparation causing investors to lose interest quickly

Factors that help determine the content of a biz plan

- the opportunity - critical resources - the entrepreneurial team - the financing structure - the the context or external factors

Key elements of biz plan

-A logical statement of a problem and its solution. -A significant amount of cold, hard evidence. -Candor about risks, gaps and assumptions that might be proved wrong.

Writing Biz plan advice

-Analyze the market throughly. - provide solid evidence for claims. - think like an investor. - identify potential flaws,don't hide weaknesses. - maintain confidentiality. - pay attention to details.

Plans that speak the investor's language

-Are market- oriented in meeting identifiable customer needs; are not product- oriented. - show evidence of target customers acceptance of the proposed product or service. - present credible and not overly optimistic financial projections. - are not a formal prospectus or offering memorandum.

Industry description

-Broader industry in which the firm will compete.industry size, growth rate,trends and competitors. - different segments of the industry - niche in which the firm plans to participate

Resources for biz plan preparation

-Computer aided biz planning--- word processors,spreadsheets,specialized biz plan software packages. - professional assistance --- accountants, marketing specialists, attorneys, investment banker,financial intermediary.

Factors affecting extent of biz plan?

-Cost in time and money to prepare the plan. - management style and ability - preference of the management team - complexity of the business. - competitive environment - level uncertainty.

Good biz plans

-Do not ensure success.effective implementation is what succeeds. -Writing a biz plan is an ongoing process only secondarily the means to an outcome. - process is as important as finished product.

Mistakes to avoid in preparing a biz plan

-Failing to provide solid data. - failure to describe product in layman terms. - failure to throughly analyze the market, financial statements that r overly detailed or incomplete. - hiding weaknesses/ overlooking fatal flaws - using bad grammar. - making the overall plan to long.

Outsiders

-Potential customers -lenders -suppliers - investors( fam,friends,private investors,venture capitalists)

Professional assistance

-Small business development centers ( SBDCs). - incubator organizations. - regional and local economic development offices. - service corps of retired executives (SCORE). - Fast tract entrepreneurial training program.

Revenue model types

-Volume or unit- based revenue model. - subscriptions/ membership revenue model. - advertising- based revenue model. - licensing revenue model.

The investor's short attention plan

A business plan must be an effective marketing document that quickly captures investors interest.

The comprehensive plan

A complete plan that provides in depth analysis of the critical factors that will determine a firm's success or failure, along with all underlying assumptions

Business model risk-

A component of the business model that identifies risks in the model eg.( changing economic circumstances) and how the model can adjust to them

Limited partnership

A partnership with one or more general partners and one or more limited partners.

The short plan

An abbreviated form of a traditional business plan that presents only the most important issues and projections

Business model

Analysis of how a firm plans to create profits and cash flows given its revenue sources, it's cost structure, required size of investment and sources of risk.

Cover page

Company name, address,phone number, fax number and website. Tag line and company logo, name and contact information of contact person, date on which the biz plan was prepared. Confidentiality disclaimer, number of copy.

Fixed cost

Costs that do not vary at all with volume,such as rent expenses.

Major section of business plans.

Cover page, table of contents, executive summary, industry, target customer and competitor analysis,company description,product service plan, marketing plan,operations and development plan, management team, critical risks, offering, exist strategy, financial plan, appendix of supporting docs.

The revenue model

Defines he nature and types of firms' sources of revenues

Target customers

Demographics ans psychological variables - values, attitudes and fears.

Management team

Describes the firm's organizational structure and the backgrounds and qualifications of key personnel

Product/ service plan

Describes the product and or service to be provided and explains the merits

Marketing plan

Describes the user benefits of the product or service and type of market that exists

Biz factors key factors of success

Entrepreneurial team Context Financing structure Resources ( opportunity)

Insiders

Entrepreneurs and management team. Employees.

Semi- variable costs

Expenses that include both variable costs and fixed costs which vary, but not proportionately, with increased or decreased activities of the firm.

Variable costs

Expenses that vary directly and proportionately with changes in activities of the firm's.

Operations and development plan

How product will be produced or services provided

Business model risk

Identifies risks in the model and how the model can adjust to them.

Critical risk

Identifies the potential risks that may be encountered by an investor

Offering

Indicates to an investor how much money is needed and when and how it will be used

Contents of blueAvacado biz plan

Introduction,the company,market opportunity,product overview,laurenconrad partnership,tech initiatives, supply chain,marketing sales plan, financial overview,people,sustainability issues, conclusion / contract. Appendices

Exist strategy

Lists the possible options for equity investors to recover the principal investment and any returns through cashing out their investment.

Biz plan

Outlines basic concept underlying a business, what problem will be solved and describes how the biz will execute its plan to solve the problem

Competitor analysis

Product or service attributes that are or are not provided by competitors.

Pro for a statements

Projections of a company's financial statement for up to five years,including balance sheets,income statements and statements of cash flows ,cash budgets.

Financial plan

Projects the company's financial position based on well- substantiated assumptions and explains of how the figures have been determined

Suggestions for writing a biz plan

Provide table of contents and sections tabs. Use a loose- leaf binder in case of revisions,. Use visual aids- graphs,exhibits and tabular summaries. Indicate that all information is confidential. Number copies of the plan and require written receipts. Be careful about divulging competitive information or proprietary designs/ technology. - ask other entrepreneurs to review the plan

Table of contents

Provides a sequential listing of the sections of the plan,with page numbers.

Maximum investment

Provides estimates of the types and amounts of investment required to achieve positive profits and cash flows. - hard assets ( equipment and buildings). - amount of working capital- operating cash. - accounts receivable - inventory

Zoning ordinances

Regulate real property and stem from the exercise of the police power. Normally, divide a city or town into various districts and specify or limit the uses to which property in those districts may be put. Contain requirements and restrictions regarding improvements built on the land.

The biz model revenue streams

Single stream. Multiple streams. Interdependent streams. Loss leader.

Appendix of supporting documents

Supplementary ate rials and attachments to expand the readers understanding of a plan:- ----resumes of key investors & owner managers. - professional references - photographs of products,facilities and buildings - marketing research studies - pertinent published research - signed contracts of sales

The cost structure

That drive the company's cost and expenses.

The maximum investment

That will be required to make the business profitable and cash flows positive.

Issues critical in biz plan preparation

The content and basic format of the plan. -----factual support for the concept in the form of strong supporting evidence. The effectiveness of the written presentation. ----Clear writing that effectively communicates.

C corporation

The most common form of corporation. It protects the entrepreneur from being personally sued for the actions and debts of the corporation.

Business model elements

The revenue model The cost structures The maximum investment Business model risk

Biz plan primary functions

To provide clearly articulated statements of goals and strategies for internal use. Imposes discipline on the entrepreneur and management team. Serves as selling doc to be shared with outsiders. Helps secure favorable credit terms from suppliers. Opens approaches to lenders and other sources of financing

Making an effective written presentation

Use good grammar, limit the presentation to a reasonable length, go for an attractive, professional appearance, provide solid evidence for any claims, describe the product in layman terms.emphasize the qualifications of the management team. Analyze the market throughly. Include financial statements that r neither overly detailed nor incomplete.dont hide weakness- identify potential fatal flaws, maintain and insist on confidentiality.

Biz plan represents

What is and has been anticipated; a good entrepreneur adapt the plan to fit the unexpected

Analyze market throughly

What is target market,size of target market,problems concerning target market, are any of these problems greater than the ones u r addressing, how does your product or service fix the problem, who will be buy the service or product,price they r willing to pay, why they need it, why buy from me,competitors? ,their strengths and weaknesses.

Company description

When,where biz started, history of company, firm objectives,changes in structure and in ownership,in what stage of development is the firm,what has been achieved to date,firm!s distinctive competence,nature and activity of biz,primary product and service,what customers will be served, firms form of organization,projected economic states of the industry,ownership structure.

Forecasting future revenues

Who r you're most likely customers, why r they different from the general population. What events will trigger the need or desire to that product/ service. When will trigger occur? Can it predicted? How will customers make decisions on whether or not to buy your product or service. Key decision factors?. How will your product or service compare to competition.will these differences be meaningful to customer, r diff know to customer?. How can product or service be exposed to potential customers.

A corporation is

common stock holders and preferred stockholders Separate legal entityk

Corporate bylaws

the basic rules governing how a corporation is organized and how it conducts its business