Business Plan Training Series Section1: Product/Business Chuck Behn 7 July, 2011
People Over 35 Launched 80% Of Startups in 2009 …. Global Entrepreneurship Monitor People over 55 are nearly twice as likely to launch startups in "high-growth" industries -- including aerospace, defense, health care, and computer and electronics … Kaufmann Foundation “… companies started by older workers don't get much recognition because they don't generally produce hot Web apps or other easily understood products. Instead, they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth." Entrepreneur Headlines
“Good service keeps this customer happy”Fort Worth Star-Telegrampg 19A, 7/4/11E.B. Holschuh III Restaurant Dentist Mechanic
Executive Summary Product/Business Market opportunity definition Competition Marketing & Sales Management Finance/Risks Appendices Components of a Business Plan
Do I Have a Product or Business Idea? Product Business Provides a solution to a question/problem Can become a profitable business unto itself if market is large enough If successful, is differentiated and efficient in delivering its solution Sustainable Scalable Creates competitive advantage A grouping of products and/or services A successful transition of product to business: Vitamin Water differentiated itself from all other water products using flavor and ingredients – sold for $4.2B
Business and/or Product Business Product/Services What does your business do? What are your long term goals/objectives? How is your business different from competition? What will make people want to buy from you? Description of products & services Positioning Competitive evaluation Product/Service rollout plan
Who is your customer? What customer problem(s) do you solve? What value do you provide? How do you make money? What are your costs? How profitable will you be? What Does Your Business Do?
Music Publisher – rights exploitation business Search Engines – web portals Financial Advisor – selling time Cake/cookies Bakery – gift shop Concise Business Descriptions What is yours?
Goal 1: Build business to $x Revenue and SELL! Objective 1: Achieve in Y years Objective 2: % Profit Goal 2: Excel in xxxx Systems Personnel Training Differentiate Method 1 Method 2 Become innovation leader in zzzzzzz Method 1 Method 2 What are your goals/objectives?
Compared to: Competition Parallel businesses in other industries Your industry Substitute products and services How is your business different?
Differentiation Examples In a crowded personal computer marketplace, Dell sold direct to order, and stood out. When other fast food chains were getting “healthy,” Hardee’s reinvented itself with the Thickburgers. (Unapologetically, the Monster Thickburger contains 1,420 calories!) Ignored airports and focused on suburban locations and the “insurance replacement” market Barbie is an all-American children’s doll, while Bratz is a hip, modern doll with attitude. When Crest and Colgate fought over market share for cavity and tartar control, Tom’s advertised all-natural ingredients (and Colgate bought them out for a cool $100 million).
Unique products/services Customer niche Inventory Unique distribution Price Service Guarantee Reputation Why would someone buy from YOU?
Walmart vs. Nordstrom’s Ford vs. Chevrolet McDonalds vs. Jack-in-the-Box Dell vs. Apple TXU vs. Reliant Energy Tom Thumb vs. Kroger Geico vs. Allstate Centex vs. David Weekley Why would someone buy from the following companies?
Physical description Pictures, drawings, diagrams are also helpful Uses/benefits What problem(s) are you solving? What extra benefits are provided? Stages of development Concept development Beta testing Technical implementation Commercialization Product/ServiceDescription
Product/ServiceDevelopment Tools/Methodologies DFSS – Design for Six Sigma QFD – Quality Function Deployment Stage Gate Process Target Costing Integrated Product Teams
Direct competitors Potential competitors Buyers Suppliers Substitute products Strengths/Weaknesses/Opportunities/Threats (SWOT) analysis on company and product(s) Product/ServiceCompetitive Evaluation
Product/ServicePositioning – Separation from competitors Potential Positioning Strategies Does your Positioning: Against/Away from competitors (Avis, we’re #2) Emphasis on benefits (Volvo, safety) Product Attribute (Motel 6, economy) How used (Jeep, off road) Users (_____ for Dummies books) Have one clear message? Connect with/pertinent to the target audience? Contrast your strengths against the competition? Resonate with customers into the future? Is it believable and can you substantiate all claims?
What product is coming out when and with what features Planned future releases by product Product life cycle Allocated resources Planned results (financial, market share, etc.) Product/ServiceRollout Plan
Business Concept Example Morning Star Espresso Company is a new espresso business that is scheduled to begin operations on January 1, 2003. The reservation based, Indian owned enterprise will be managed and operated by Kim Smart, sole proprietor.
Service Description Example JavaNet will provide its customers with full access to the Internet and common computer software and hardware. Some of the Internet and computing services available to JavaNet customers are listed below: Access to external POP3 email accounts. Customers can sign up for a JavaNet email account. This account will be managed by JavaNet servers and accessible from computer systems outside the JavaNet network. FTP, Telnet, Gopher, and other popular Internet utilities will be available. Access to Netscape or Internet Explorer browser. Access to laser and color printing. Access to popular software applications like Adobe PhotoShop and Microsoft Word. JavaNet will also provide its customers with access to introductory Internet and email classes. These classes will be held in the afternoon and late in the evening. By providing these classes, JavaNet will build a client base familiar with its services. The computers, Internet access, and classes wouldn't mean half as much if taken out of the environment JavaNet will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide JavaNet customers with a home away from home. A place to enjoy the benefits of computing in a comfortable and well-kept environment.