Virtual Enterprise: Developing a Business Plan Marcus Catsouphes and Nicholas Giglia October 17, 2008
Agenda Business Planning Overview Defining the Business Market Analysis SWOT Analysis Marketing Plan Operating Procedures Financial Analysis
Who Prepares a Business Plan?
It is NOT necessarily a new business.
Business plans can be prepared by:
Companies seeking start-up capital
Established companies with new initiatives.
Borrowers from a bank
Companies going public
A division within a larger business
Any business owner or manager
Why Prepare a Business Plan? A good business plan connects the facts of the present with a vision of the future.
Business Plan Recipe
Why will people buy from you?
Unique Selling Point
Include funding requests here
Attracting and retaining customers
Research in a business plan is crucial – but where can you find the information?
Company Data Previous Plans Financial Statements Competitor Business Plans Government Reports Public Filings Trade Publications Online Sources
Elements of a Business Plan Note: Percentages are rounded INTRODUCTORY Statement of Purpose Objective Company Description Personnel MARKET ANALYSIS MARKETING PLAN OPERATING PROCEDURES SWOT ANALYSIS FINANCIAL DATA PRESENTATION DISCUSSION OF RISKS FEASIBILITY WRITING SKILLS SUPPORTING DOCUMENTS 15% 8% 8% 8% 15% 8% 23% 8% 8%
Structure of a Business Plan Company Description (Products and Services) Strategic Objectives MARKET ANALYSIS SWOT ANALYSIS MARKETING PLAN OPERATING PROCEDURES FINANCIAL ANALYSIS Statement Of Purpose DISCUSSION OF RISKS
Intro – Defining the Business SHARED VALUES What type of organization do we seek to be? VISION What do we want the business to look like 5 years from now? STRATEGY How do we make profits and beat the competition? MISSION Why are we in business? Vision: An idealized view of an organization’s future state. Where or what an organization would like to be in the future. Mission: An enduring statement of purpose. An organizations reason for being. Describes what an organization does, who it does it for, and how it does it. Strategy: An expression of the manner in which the organization will achieve the goals necessary to accomplish its mission and fulfill its vision. Values: A set of commonly held fundamental beliefs that describe the type of behavior it will take to realize the organization’s vision.
Intro – Company Description
Stage of the Business
Pioneer, Growth, Mature
Alliances or Joint Ventures
Customer Profiles (vs. Company Offering)
Remember the Budget…
Pricing & Margin
INDUSTRY OVERVIEW MARKET ANALYSIS MARKETING PROGRAM Analysis of market segments and customers will drive the marketing program … as well as the financial plan. MARKET SEGMENT CUSTOMER PROFILES MARKET SIZE & SHARE
Elements of SWOT Analysis Opportunities INTERNAL / FACTUAL EXTERNAL / POTENTIAL NEGATIVE POSITIVE Threats Strengths Weaknesses
More Relevant for Existing Companies
May Reflect Strategic Choices
Provides Insight for Business Plan
SWOT Analysis brings a strategic element to the planning process: how well can this company compete?
Primary Benefit of SWOT is Company’s Response
Address Results of Each Quadrant
Actions to Exploit or Remedy
Explanation of Other Items
Intended Future Action
Explanation of Mitigating Factors
Time Horizon for Significant Items
How does our SWOT compare with competitors?
How will we manage risk?
Remember the Budget…
Sales Impact (Indirect)
Cost Impact (Direct)
The detailed customer understanding gained from market analysis helps to select the right marketing tools.
Raw Materials, Finished Goods, Other Supplies (Maintenance, Administration)
Production / Preparation
How? When? How Much?
Sales and Marketing Process
Distribution / Delivery
How? Where? How Fast? How Often? Channels?
Customer Service and Quality Control
Remember the Budget… What Will It Cost?
Breakeven Point = Fixed Costs/(Unit Selling Price – Variable Costs)
Tells a business how many units it needs to sell to make a profit. It is not an indicator of demand
The projected cost of running your business
Tells a business the things on which it spends money, and the ways it makes money
Shows how and from where money flows into and out of a company
Shows how changes in the Balance Sheet and Income Statement affect cash
Shows how easily a company can pay its bills
Funding & Capital Structure
Debt – amount of money borrowed by the firm (debtor) from a creditor, to be re-paid at a later date with interest (loans)
Equity – the amount of funds contributed by the owners (stockholders) of the business, or trading a percentage of the business for a specific amount of money
Capital Structure is how a firm finances its overall operations and growth by using different sources of funds (debt, equity)
Composition of a firm’s liabilities
Why It Matters: Tells you how much more $$$ you need to obtain to run your business!
Results of Financial Analysis
Based on the financial analysis management may:
Decide whether to continue or discontinue certain aspects of their business
Make or purchase certain items for the manufacture of company products or delivering of services
Assist in negotiating with obtaining additional funding
Provide information that will assist management in making decisions for conducting their business
Why It Matters: Ensures that you know what is going on with your business!
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