Transcript Successful Business Plan

Successful Business Plan
Chapters: 4-6
Kathryn Hacking
Chapter 4: Executive Summary
• The single most important part of your business plan is the Executive
Summary
• Ann Winblad stated, “A good Executive Summary gives me a sense of why
this is an interesting venture. I look for a very clear statement of their longterm mission, an overview of the people, the technology, and the fit to
market. Answer these questions: ‘What is it? Who’s going to built it? Why
will anyone buy it?’”
• https://youtu.be/UZatLRjHt2E
What to Convey in Your Executive Summary
• Executive Summary gives the reader a chance to understand the basic concept,
highlights your business quickly and to decide whether to commit more time to
reading the entire plan.
• Your goal is to motivate and entice the reader.
• Things to let the reader know:
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Your basic business concept makes sense.
Your business itself has been thoroughly planned.
The management is capable.
A clear-cut market exists.
Your business incorporates significant competitive advantages.
Your financial projections are realistic.
Investors or lenders have an excellent chance to make money.
Target the Reader
• Ask yourself, “Who will be reading this?”
• Do homework on your potential recipients
• Then organize the issues in the order that is most important to them
• Caution: don’t individualize it too much, make it more institutional rather
than personal preferences because chances are, more than just one person
will see it.
Two Types of Executive Summary
• Synopsis Summary
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More simple of the two, simply relates an abbreviated conclusion of each section of the
completed business plan.
Advantages: Covers every aspect of the business plan
Disadvantage: tends to be a bit dry
• Narrative Summary
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This is more like telling the reader a story; it can convey greater drama and excitement in
presenting your business.
It takes a capable writer to prepare one; it must communicate the necessary information,
engenders enthusiasm, and yet does not cross the line into hyperbole.
With narrative summary you are trying to get the reader excited about your company; you
do this by taking the one or two most impressive features of your company and giving the
reader an understanding of how those features of your company will lead to business
success.
Writing the Summary
• Clear strong writing
• Dynamic, and logical writing can make the difference between a plan’s
being considered or discarded.
• Some even hire someone to write it.
• If writing ability is limited write a synopsis not a narrative style summary.
Length and Design of the Summary
• It is short, it should be able to be read in less then 5 minutes.
• Thus, should not be more than 2-3 pages in length-even 1 page is acceptable
• Chapter 18 has info on layout
• Bullets can also be used effectively
• Make sure to keep margins it makes it less intimidating
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Summary of Chapter 4
https://www.youtube.com/watch?v=98kRe3Oc5bg
Things to summarize in an executive summary:
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Company description
Statement of mission
Stage of development
Product and services
Target market(s)
Marketing and sales strategy
Competitors and market distribution
Competitive advantages and distinctions
Management
Operations
Financials
Long-term goals
Funds sought and exit strategy
Chapter 5 Company Description
• Conveying the basics of your business
• Preparing the company description section of your business plan
• Chapter summary
Conveying the Basics of Your Business
• The object of this section is to convey information such as your legal status,
ownership, products or services, company mission, and milestones achieved
to date.
• Some portions may be hard to write/complete, especially if you are a startup
company and don’t have a legally incorporated. At that point write what you
WILL do.
Company Name
• Many times, the name of your company or corporation is not the
same as the name(s) you use when doing business with the
public.
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You may have a number of different “names” associated with
your business including:
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Your own name: Annie Matthews
The legal company name: : AAA, Incorporated
A dba (doing business as): Arnie’s Diner
Brand name(s):Arnie’s Atomic
Model name(s): Atomic Hot Sauce
Subsidiary company name(s): Rosie’s Catering Service
Domain name(s): www.arniesatomic.com
Company’s Objectives/Statement of Mission
• https://youtube/LJhG3HZ7b4o
Legal Issues
• Type of legal entity?
• Licensing and distribution agreement?
• Have you secured trademarks, patents,
copyrights or other legal instruments to
protect proprietary business assets?
• Ways to protect Intellectual property (IP)
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Copyrights
Trademarks
Products and Services
• This part can be relatively short or a section all by itself
• If your products or services are particularly technical, complicated,
innovative, or proprietary, you will want to spend considerable time
describing them.
• Clearly identify and describe the nature of the product and services you
provide
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Be careful in describing, you want to provide enough info that they understand, but not
too much that you disclose sensitive information.
Management/Leadership
• Include the name of the chairperson of the Board of Directors, president,
and/or chief executive officer.
• List other key members of management, especially if the investors may
know someone.
• Also board of Directors, Advisory Committee, or other governing entity
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If the names are impressive include them, otherwise only state how many are on the
committees and how often they meet.
Business Location
• List the location of headquarters
• Main place of business (if different)
• Branch locations
• If you don’t have a location yet, put the area you are striving to get
• Describe the geographical area your company serves
Development Stage and Milestones Achieved to Date
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Someone reading your business plan should be able to get a clear sense of how far
along your company is in its development and what progress you have made in
building the company.
Begin by stating when the company was founded
Next indicate your phase of development: a seed company (with a business concept
but without a product or service finalized); a start-up (in early stages of operation);
expansion (adding new products, services, or branches); retrenchment
(consolidating or repositioning product lines); or established (maintaining market
share and product positioning)
Indicate how far along your plans have progressed
List the achieved milestones
For example some achieved milestones in a start-up company is:
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Developed technology
Raised seed funding
Lined up strategic partnerships
Secured indications of interest from key customers
Financial Status
• Give a brief idea of the financial terms
• Readers/investors will want to know how have you been funded to date and
any major financial obligations
• Indicate any loans or investments you have received and on what terms
• If you are seeking funding, briefly indicate how much money you seek and
the purpose
Chapter 6: Industry Analysis & Trends
• In your plan you want to focus on:
• A description of your industry
• Trends in your industry
• Strategic opportunities that exist in your industry
Naturally you will need to do some research to get this information
Your Economic Sector
• You can belong to more than one of the following.
• Economic sectors experience trends, you need to understand its past
performances and growth projections
• The Four Economic Sectors are:
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Service
Manufacturing
Retail
Distribution
Your Industry
• Your business may intersect 2 or more industries
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You may produce electronic devices used in new and used automobiles. Thus you are
apart of 3 industries: electronics, new automobiles, and the used automobile.
• Size and growth rate of your industry
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How does the growth rate for your industry compare with the growth of the gross
domestic product (GDP), which measures the national economy?
For example: if your industry is growing at 2% a year, and the GDP at 5% a year, your
industry is losing ground, and opportunities will be few. However, if your industry is
growing at 15% a year, while the GDP is at 5%, you are in an industry with far greater
potential.
If info for your overall industry is hard to find, estimate the approx.. size and growth by
evaluating the largest companies in your field.
Industry Maturity
• Industries change over time, generally, the life cycle of an industry
comprises of 4 phases:
1. New
2. Expanding
3. Stable
4. Declining (this phase is not inevitable; many long-standing, stable
industries show no signs of declining)
Things to consider about your industry
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Is it vulnerable to economic industry?
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Construction, auto, furniture prosper in good economy, whereas discount department
stores, used car dealership prosper in poor economy.
Is it seasonal?
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Summer: the big season for bathing suit manufacturers
What technological changes could affect your industry?
What are some regulation/certification your industry?
What are the supply and distribution channels?
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Financial Patterns
Normal Retail Markup of Goods
Normal Distributor markup of goods
Typical sales commission percentage
Standard credit terms
Days of inventory maintained
Average percentage of return on sales
Other financial patterns on note
Percentage of merchandise price due to
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Cost of labor
Cost of materials
Energy
Fixed costs
Shipping
To Prep for Your Industry Analysis Section
• Have 3 sections of summary:
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Industry Description
Industry Trends
Strategic Opportunities