business plan training session 1: defining the business

Business Plan Training Series

Section1: Product/BusinessChuck Behn7 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-Telegram

pg 19A, 7/4/11E.B. Holschuh III

1. Restaurant2. Dentist3. Mechanic

1. Executive Summary2. Product/Business3. Market opportunity definition4. Competition5. Marketing & Sales6. Management7. Finance/Risks8. 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?

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). 

Differentiation Examples

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

QFD – Quality Function Deployment

DFSS – Design for Six Sigma

Stage Gate ProcessTarget CostingIntegrated 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

BlackberryRollout 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.