Creating an E-Business Plan Chapter 4

E-Business Plan Organization Used to seek funding for a new or existing e- business Serves as a “Blueprint” for operations after the business is founded Develop a plan, taking time, effort, and thought – View is critical, objective, & unemotional Sources of help for the e-entrepreneur 3 to 5 year outlook

Business Plan Help Sources Small Business Administration (SBA) Service Corps of Retired Executives (SCORE) Small Business Advancement National Center (UC Arkansas) Commercial Sources, i.e., BizPlanit.com, bplans.com

Small Business Administration

Startup Help

Elements of a Plan Coversheet TOC Executive summary Description of idea Information about products or services offered

Industry analysis, target market, & competition Operating, marketing, financial and management plans Identification of critical risks Exit strategy Elements of a Plan (cont’d)

Cover Sheet and Title Page Identifies the name of the business and author May identify the addressee of proposal Hints: – # each copy – Keep list of who has a copy – Clearly mark confidential & no coping allowed

Table of Contents Lists all sections and subsections by page number. Must be well organized and accurate. Can come at the beginning or the end of the process Common mistakes: – Missing sections/sub-sections – Too much detail – Sloppy layout – Incorrect page numbering

Executive Summary An overall view of the entire plan May be used to screen plans by bankers and investors Should highlight key points including the idea, the competitive situation, the financials and the “players” May be easier to write after the plan is complete Similar to what other type of document you should be or will be familiar with?

Vision and Mission Statements An overall statement of the business's goals and philosophy Vision – Long-term dreams/goals – Should inspire, guide, & encourage people toward achieving goals Mission – Challenging but achievable actions to achieve the vision

Vision and Mission Statements Interchangeable with “goals”, “aims”, “philosophy” and “direction” Should consider: – Define your purpose of the statement – Audience (customers, shareholders, staff, competitors, government, press, & public) – Who benefits from the statement Focus on themes (p. 122)

A Vision Statement

A Mission Statement

Business Description Provides the reader with an outline of the e- business’s background and concept P. 124

Products and Services A description of each product or service you plan to offer Level of detail is important Enough for the reader to understand and not be confused Include high-quality pictures or graphics, where appropriate Products vs. Services

Industry Analysis An analysis of the business environment Focus on the basic industry segment – What are some “industries”? Info should be based on verifiable data and market research by: – Government agencies – Industry trade associations – Qualified studies from reliable organizations

Marketing Plan Critical elements of the plan Target market description Demographic, geographic, and psychographic characteristics of market Competitive analysis Objectives, tactics, and strategies Budget and timeframe

Marketing Objectives should be clearly stated, measurable, and lead to sales Marketing Strategies describe the features of the products, services offered, and pricing strategies – 4Ps – product, price, promotion, & place (distribution) Marketing Budget is an estimate of the costs for all activities described in the marketing strategies portion of the plan Marketing Plan (cont’d)

Marketing Plan Common Mistakes Defining the target market too widely Not specifically identifying advertising and promotion activities Omitting details about when, where, and how to reach the target market and cost

Operations Plan Description of the business: – Location, equipment needs – Labor needs – Manufacturing – Logistics – Integration of Internet services GroceryWorks example – p. 131

Financial Plan Shows the reader how all the ideas, concepts and strategies described elsewhere come together in a profitable (hopefully) way. The plan should include pro forma: – Balance sheet – Income statement – Cash flow statement

Financial Plan Common Mistakes Failing to include projections Presenting unrealistic sales and profit projections Underestimating Failure to plan for unexpected costs

Management Plan A strong management team is critical as many investors base their decision on this factor. – Typically 3-5 people The plan should list and describe the experience base and background of the key individuals who will be involved in the day-to-day operation of the firm. Board of advisors – outside advisors The plan should detail those areas that will be outsourced. – Typically accountants, attorneys, bankers, insurance agents, and technology experts.

Issues, Analysis, and Critical Risks Identifies threats or opportunities faced from outside influences. These include economic outlook, innovations, environmental and governmental factors.

Exit Strategies How will investors get their money back? Describe long term plans – Public Offering (IPO) – Acquisition/merger – Sale to others Discussion of these issues adds credibility

Legal Forms of Organization There are three basic forms of legal organization for a firm – Sole Proprietorship – Partnership – Corporation – “C”, “S”, and “LLC” Complex legal and tax issues are involved; form chosen is highly contingent on individual circumstances. Seek counsel from attorney and accountant.

E-Business Partnerships Many e-businesses establish partnerships with firms in their value chain. Potential partnerships should be detailed in the business plan. – PartsAmerica.com – Toys ‘R’ Us