ÅA Business Plan Development: Overview of Concept & Executive Summary Based on Prof. Alan Carsrud The Chapman Graduate School of Business - Florida International University

ÅA Basic Questions a Plan Answers What is the business of your firm? What is your business really? What will your business become? What is your firm trying to accomplish? What do your customers think your firm is trying to accomplish? Do you know how you are doing?

ÅA

ÅA THE CONCEPT

ÅA Analyzing the Product- (Service-) Market Scope improve market penetration; gain market share develop new products; product diversification market diversification; extend market scope (e.g. go international) simultaneous product- and market diversification existing (developed) new Market existing new Product (Service) Identifying Opportunities for Business Growth

ÅA Key Business Concepts What is the basic principle behind the business? How do you plan to make money? What are your sources of income? How do you plan create value? What is the commercial proposition? What is the customer going to pay for? Business model Revenue model Value proposition

ÅA Ikea is a low-cost retail service provider Sells home furnishing items at retail directly to the public Provides low-cost, easy-to-assemble items in a pleasant shopping environment Business model Revenue model Value proposition Key Business Concepts: Ikea Example

ÅA Resources & Money Distribution & Marketing Products & Services Customers Groups Thinking About the Concept

ÅA SUCCESS COMPETITION ORGANIZATIONAL STRUCTURE PSYCHOLOGICAL CHARACTERISTICS OF EMPLOYEES FACILITIES & LOCATION MARKETING STRATEGY Drivers of New Venture Success

ÅA Developing The Concept Statement What customer needs and wants are presently going unsatisfied? How will the requirements of present customers change? What new end-use applications are likely to emerge? What new technologies will be used to meet which needs of customer groups?

ÅA Developing The Concept – The Mission & the Vision as part of the business concept What will competitors do and what difference will this make? What customer needs and customer groups should the organization be getting in position to serve? A mission statement will help a company to make consistent decisions, to motivate, to build organizational unity, to integrate short-term objectives with long-term goals, and to enhance communication If you could wave a “magic wand” and create anything or everything, what would you create and what would your organization be like after implementing that creation? Where do you see your concept and firm one year, three years, and five years from now?

ÅA Characteristics of a Mission Statement Describes the principal product or service areas and the primary customer needs the company will attempt to satisfy Reveals the image the company seeks to project Identifies the scope of its operations in product and market terms Distinguishes the company from other firms of its type An enduring statement of purpose

ÅA THE CONCEPT CHECKLIST

ÅA 1.Define the important and distinct functions of the product / service.  Domino’s distinct feature was its delivery not its pizza. 2.What are the unique or proprietary aspects of the product / service?  patents, formula, brand name, copyright, trademark, etc. Checklist For The Concept Statement

ÅA 3.Describe any innovative technology involved with the product / service.  What’s new or different! (i.e., electric toothbrush, unique organizational structure, new production techniques) 4.Describe the position the concept plays in the industry.  Manufacturing, Distributor / Wholesaler, Retailer, etc. Checklist For The Concept

ÅA 5. Who is the intended customer or customer group?  Who will pay for the products or services?  Who will use the products or services? 6.What benefits will be delivered to the customer?  What problems are you solving for your customer? (i.e., people buy 1/4” holes, not 1/4” drill bits) 7. How will the customer know you exist?  How will they become aware of you? Checklist For The Concept

ÅA 8. How will the product / service be sold to the customer?  Retail stores, direct sales, manufacturers representatives, telemarketing, distributors, franchising 9.Who will make the product or design the service?  Subcontractor, in-house, homebase contractors, etc. Checklist For The Concept

ÅA THE EXECUTIVE SUMMARY

ÅA Purpose of an Executive Summary (a) To give the reader a succinct summary of the crucial information about the business plan that follows (b) To supply the information the reader needs to quickly determine whether continued reading is warranted

ÅA What to Include in an Executive Summary A short description of the product or service offering A brief background on founders and management A short description of the market opportunity Key financial data, including the amount of money needed and how it will be used A concise statement of the corporate mission & concept

ÅA Tips on Preparing an Executive Summary Write it first, continually, and last Keep the main theme in mind More risk means more proof Avoid hype Consider a topical rather than a narrative summary Keep it as short as possible

ÅA THE EXECUTIVE SUMMARY CHECKLIST

ÅA Checklist For The Executive Summary 1.State the purpose of the business.  Retail, manufacturing, distributor, service, etc. 2.Describe the current stage of development for the venture.  Start-up, initial operations, expansion, rapid growth, stable operations, turnaround, new product 3.Describe what is unique about the product / service.  List any proprietary rights the business has (patents, licenses, royalties, distribution rights, franchise agreements, etc.) 4.What form of organization will the business operate under?  Proprietorship, partnership, LLC, limited partnership, S- corporation, or corporation

ÅA Checklist For The Executive Summary 5.Define and highlight the key management personnel.  What are their skills that will help the new venture?  List existing and potential management team members.  Complete resumes of existing management team members should be placed in the appendix. 6.Describe and highlight the key support groups for your management team.  Accountants  Attorneys  Consultants  Board of Directors  Advisory Council

ÅA Checklist For The Executive Summary 7.Describe briefly the following:  Industry  Customer  Customer Needs  Product Benefits  Target Markets  Market Penetration Plan Give the reader on overview of the marketing plan 8.Describe your major competitors.  Who is your direct competition  Who is your indirect competition  What are their strengths and weaknesses 9.How much money does the venture need?  For product development, marketing, and operations  Highlight how much money is needed to get started and how it will be spent

ÅA Checklist For The Executive Summary 10.How long will it take for the business to break-even?  Explain how long it will take this venture to turn a profit.  Break-even is the level of sales at which total revenue equals total costs incurred and number of units sold  Profit is not a bad work. 11.What kind of financing will the company need?  From where will it come from  What type of financing - - debt or equity 12.How will the money that the company needs be paid back  Stocks, warrants, loan payment schedules, etc.

ÅA Checklist For The Executive Summary 13.How much money has been invested in the business to date and where did it come from?  Indicate monetary investment to date 14.What potential innovation of the product / service will ensure long- range growth?  Specifically identify what makes it difficult for competitors to enter 15.Describe any unusual contracts or relationships which the company is or may become involved in.  Include employee contracts, non-compete agreements, buy / sell agreements, off-shore relationships, etc.