- Executive Summary
We suggest that you make it two pages or fewer.
Include everything that you would cover in a five-minute interview.
Explain the fundamentals of the proposed business: What will your product be? Who will your customers be? Who are the owners? What do you think the future holds for your business and your industry?
Make it enthusiastic, professional, complete, and concise.
If applying for a loan, state clearly how much you want, precisely how you are going to use it, and how the money will make your business more profitable, thereby ensuring repayment.
2. General Company Description
What business will you be in? What will you do?
Mission Statement: Many companies have a brief mission statement, usually in 30 words or fewer, explaining their reason for being and their guiding principles. If you want to draft a mission statement, this is a good place to put it in the plan, followed by:
Company Goals and Objectives: Goals are destinations—where you want your business to be. Objectives are progress markers along the way to goal achievement. For example, a goal might be to have a healthy, successful company that is a leader in customer service and that has a loyal customer following. Objectives might be annual sales targets and some specific measures of customer satisfaction.
Business Philosophy: What is important to you in business?
To whom will you market your products? (State it briefly here—you will do a more thorough explanation in the Marketing Plan section).
Briefly describe your industry. Is it a growth industry? What changes do you foresee in the industry, short term and long term? How will your company be poised to take advantage of them? (Note – you will do an in-depth industry and market analysis in the next section)
Describe your most important company strengths and core competencies. What factors will make the company succeed? What do you think your major competitive strengths will be? What background experience, skills, and strengths do you personally bring to this new venture?
Legal form of ownership: Sole proprietor, Partnership, Closed Corporation, Pty (Ltd), Section 21 Co.? Why have you selected this form?
3. The Industry, Market and the Opportunity
Describing the opportunity
Describe the gap that exists in the market. What has given rise to this gap and how can it be filled?
Describing the industry and the market
A deeper understanding an opportunity involves systematic research. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the business planning process as your opportunity to uncover data and ensure that there is a realistic gap in the market for your product or service and that you can be competitive in providing that product or service. Your time will be well spent.
Market research
There are two kinds of market research: primary and secondary.
Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies.
Start with your local library. Most librarians are pleased to guide you through their business data collection. You will be amazed at what is there. There are more online sources than you could possibly use. Your chamber of commerce has good information on the local area. Trade associations and trade publications often have excellent industry-specific data.
Primary research means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus-group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research themselves.
In your market analysis, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important sales projection.
Facts to communicate about the about the market:
• What is the total size of your market?
• What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.)
• Current demand in target market.
• Trends in target market—growth trends, trends in consumer preferences, and trends in product development.
• Growth potential and opportunity for a business of your size.
Industry Analysis
Analysis of barriers to entry:
What barriers to entry do you (and others) face in entering this market? Some typical barriers are:
- High capital costs
- High production costs
- High marketing costs
- Consumer acceptance and brand recognition
- Training and skills
- Unique technology and patents
- Unions
- Shipping costs
- Tariff barriers and quotas
Analysis of buyer power:
Who are the buyers and do they have significant power or influence over the prices they pay?
Do they have significant choice when buying the product or service?
Analysis of supplier power
Who are the suppliers and do they have significant power or influence over the prices they charge.
Are there a limited number of suppliers
Analysis of substitutes
Are there substitute offerings for the product or service? What is the likelihood that customers will switch to the substitute? i.e. will you have important indirect competitors? (For example, video rental stores compete with theaters, although they are different types of businesses.)
Analysis of competitive rivalry
What products and companies will compete with you?
List your major competitors:
Will they compete with you across the board, or just for certain products, certain customers, or in certain locations?
How will your products or services compare with the competition?
Use the Competitive Analysis table below to compare your company with your two most important competitors. In the first column are key competitive factors. Since these vary from one industry to another, you may want to customize the list of factors.
In the column labeled Me, state how you honestly think you will stack up in customers' minds. Then check whether you think this factor will be a strength or a weakness for you. Sometimes it is hard to analyze our own weaknesses. Try to be very honest here. Better yet, get some disinterested strangers to assess you. This can be a real eye-opener. And remember that you cannot be all things to all people. In fact, trying to be causes many business failures because efforts become scattered and diluted. You want an honest assessment of your firm's strong and weak points.
Now analyze each major competitor. In a few words, state how you think they compare.
In the final column, estimate the importance of each competitive factor to the customer. 1 = critical; 5 = not very important.
Now, write a short paragraph stating your competitive advantages and disadvantages.
Changes affecting the industry
How could the following affect your company?
- Change in technology
- Change in government regulations
- Change in the economy
- Change in your industry
No comments:
Post a Comment