Economics of the Business

· Describe the pricing, costs, and resulting margins for the products and/or services

· Describe how willing and able the customer is to pay for the product.  How is he better off economically (time and/or money) than he is now?

· Describe the competitive prospects now and in the future and how they compare economically to the business’ opportunity and how they affect the customer economically

· Describe how the business grows to be significant in the market place – dominance in share, economies of scale, etc.

Marketing and Sales Plan

· Who are your sales prospects – how will you identify them?

· How will you sell to them?

· What are your four P’s

à Position

à Placement within a market segment (which segments do you target?)

à Placement of the product relative to other products categories and application

à Placement versus competitors' products

à Placement of the product in terms of features and benefits

 

à Price – What is your pricing strategy

à Promotions – How will you get your message to the customers?

à Products – What are your plans for products initially and in the future?

· What are the Unique Selling Points (USP’s)?

· How long does it take to achieve a sale and what are the actions necessary to do so?

· What are the actions and conditions necessary to gain increased share at customers and to gain new business?  What are the conditions and actions necessary for a customer to buy the products and/or services again?

Development Plan

· What are the strategies for developing the products and/or services?

· What is the present state of that development?

· What is the schedule for development?

· What are the key actions necessary to achieve that schedule?

· How will the products and/or services be tested with customers – who are the test customers, why were they selected, what information will be expected from them, how is this being gathered?

· What is the cost of development?

· What are the risks to realizing the product, the schedule, and the cost?

· What steps are being taken to mitigate this risk?

Manufacturing and Operations

· What is the short term and long term strategy for manufacturing the product or providing the service?

à Outsourcing – what was the process for selecting suppliers?

à What are the economics of internal sourcing?

· What are the inventory assumptions?

· How will the product be installed, what services are necessary for installation and maintenance, and how will these be provided?

· What facilities, resources, and personnel are necessary?

· What are the key raw materials needed and how is continuity of supply being assured?

Actions and Schedule

· Summarize the key milestones

· Describe the necessary actions – the What, Who, and When for each to realize the business plan

· What are the risks to this plan and what are the actions taken to mitigate the risks?

· What regulatory approvals are needed and what are the actions necessary for these?

Assumptions and Risks

· Summarize the key assumptions and risks of the plan for each of the following areas

à Market

à Development

à Management

à Financial

Financial Plan

· Important Assumptions – What are the key financial assumptions embedded in the plan – interest rates, inflation, tax rates, outside services?

· Key Financial Indicators – What are the financial metrics that indicate success?  What are the goals by year for each?

· Break-even Analysis - Given fixed overhead, product cost, and product pricing, what is the breakeven quantity and revenue for each segment by year?

· Projected Profit and Loss – Given the revenue plan, what are the expenses expected?  These are placed in an income statement format.

· Projected Cash Flow – Given accounts payable and accounts receivable, and all cash transactions, what is the cash flow and cash balance by quarter for five years?  This is presented in a cash flow statement.

· Projected Balance Sheet – Given all assets and liabilities, what is the resultant balance sheet?

· Business Ratios – For key indicators, and business ratios, how does the company compare to the competition and market?

Summary

· Summarize the opportunity for financial return

· Summarize the funds required

· Detail the proposed structure

· Describe the exit strategy – how do investors get their share of the return?

à Sell

à Merger

à IPO

 

Back to Business Plan—Part 1