Business and
Financial Planning
Strategic Project Plan
• Business Description – the purpose of the
business, the product or service provided, an
industry analysis, and the business model.
• Market Analysis – a description of the venture’s
target consumers, market and key competitors.
• Preliminary Financial Plan – cost/benefit
analysis, financing required and sources, profit
and cash flow projections.
Vision and Mission Statements
• An overall statement of the business's goals and
philosophy
• Define your purpose
• Know your intended audience
A Vision Statement
A Mission Statement
Products and Services
• A description of each product or service you plan
to offer
• Level of detail is important
• Enough for the reader to understand and not be
confused
Industry Analysis
• An analysis of the business
environment
• Focus on the basic industry segment
• Based on verifiable data and market
research
Business Model
• The method by which a firm builds and uses
its resources to offer its customers better
value than its competitors and to make
money doing so!
Two major parts of the business model:
• Value Proposition
• Financial Model
Value Proposition
• The value your company adds that would
make customers switch to you from their
current provider.
Concepts involved in Value Proposition
• Choice of Segments
• Choice of Focal Customer Benefits
• Choice of Unique and Differentiating
Capabilities
Value Proposition
• Choice of Segments
– market size or growth
– unmet customer needs
– weak or no competition
• Choice of Focal Customer Benefits
– One or two KEY benefits based on the marketing mix
variables
– Ex: fast delivery, high quality products, customer
service, low-prices, unique product
• Choice of Unique and Differentiating Capabilities
– Also known as : Core Competencies or Unique
Resources
– Tangible assets (location), Intangible (Brand name) or
corporate skills and capabilities (knowledge of
customers)
Financial Models
• There are four revenue models:
– Advertising (sell ads, site sponsorships, interstituals)
– Product sales (income from the sales of products,
services, or information)
– Transaction (revenue from charging a fee or a taking a
% of a transaction)
– Subscription (subscriber fees for magazines,
information, services, …)
– Or a combination of these
Revenue Model - Advertising
Revenue Model – Product Sales
Revenue Model – Transaction
eBay fee Structure
http://pages.ebay.com/help/sellerguide/selling-fees.html
Revenue Model – Subscription
Marketing Plan
• Target market description
• Demographic, geographic, and psychographic
characteristics of market
• Competitive analysis
Financial Plan
• Shows the reader how all the ideas, concepts and
strategies described elsewhere come together in a
profitable way.
• The plan should include pro forma:
– Balance sheet
– Income statement
– Cash flow statement
• Financing required and sources
Financial Plan
• Balance Sheet
– Assests
– Liabilities
– Equity
• Income Statement
– Revenues – Cost of Goods Sold = Net Income
• Cash Flow Statement
– Operating Activities
– Investing Activities
– Financing Activities
Startup Financing
• As an entrepreneur starting a new ebusiness, you must be prepared to invest
time, effort, and your own money to get
your new e-business off the ground.
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Personal Assets
Friends and Family
Venture Capital
Business Incubators
Personal Assets
• Sweat Equity: putting in time and effort
• Mortgage Personal Assets: put up property as
collateral to a bank
• Personal loans: taking a loan without collateral
(higher interest rate)
• Credit card/credit line advance: similar to a
personal loan (usually a high interest rate)
Friends and Family
• Friends and family investors are family members
or friends who invest in a business.
• Many entrepreneurs successfully solicit startup
money from their network of friends and family.
• A network of potential friends and family
investors extends beyond immediate family
members and friends, to their families and
friends, to their families and friends, and so on.
Advantage: It might be the easiest money you’ll
ever get.
Disadvantage: Putting their money at risk.
Venture Capital Investors
• Venture Capital (VC) firms are organized to
invest specifically in new business startups.
• Typically take a significant equity interest in the
firm with in exchange for providing startup
capital.
• May also provide expertise.
• Typically do not invest for the long term but
expect to “cash out” after the business establishes
a successful track record and can be sold or
acquired by others.
• There are many established VC firms
Venture Capital Investors
Business Incubators
• Have traditionally been government- or
university-supported nonprofit organizations that
nurture new businesses
• Provide startup companies with management
advice, office space, networking opportunities,
and other critical startup services
• May take an equity interest as well as charge for
services
• Not-for-profit incubators may use returns from
equity to reinvest
http://www.digitalrhine.com/
Commercial Business Incubators
• Offer startup e-businesses access to the same
services offered by nonprofit incubators
• Are primarily interested in high-technology
businesses that can become financially viable
quickly and leave the incubator within six months
to a year