NAME of company (Logo if available) (Slogan if available) Business Plan Date Directions: Use charts provided. Replace all BLUE copy in italics with your own comments relevant to your company and your analysis Prepared by: Name(s) Email Address 1 Name of Company Executive Summary Business Concept Insert an abbreviation of your new business concept here. Two or three sentences which state: Who will buy, why they will buy (what is the customer benefit) and how is this product/service differentiated from competition Organization Plan Identify the legal structure of the organization and why chosen Key manager roles and who will fill them (if known); otherwise identify key characteristics you want in those individuals Summary of proprietary position (patent, first mover, single source, other) Marketing Plan Key demographic and psychographic definitions of end users (if B2C); buyer and influencers (if B2B) Channels of distribution (how will product service reach buyers/end users) Primary market strategy (vehicles to generate awareness, trial and usage of product/service) Budget (both $ and % of sales, initially and ongoing) Financial Plan Sales estimates for Years I and V (in $) Net Profits in Years I and V (in $) Gross Profit Margin (% of sales) in ongoing year Year when Breakeven is achieved Cash needed (assume 1.25 * total of startup expenses) Source and uses of cash needed ROI % 2 Name of Company Product/Service Concept Insert your complete new business concept here. Social Benefit of Product/Service Every venture must provide a return to its stakeholders (owners, investors, employees, suppliers). But it must also produce a value to society. How will your new venture benefit society? Include specifically who will benefit, why that group and how this will make a difference in their lives. Addressable Market Identify the industry, size and trends in which you will compete, relevant to your marketing/geographic area. Use charts like those below. Cite source and date of data. Total Addressable Market (in $) Number of consumers in TAM (000’s) Number of customer who will buy my new product/service (000)’s Via your own secondary research, build your own chart exemplifying trends in your industry. Identify what, if any, barriers to entry exist and you plan to address them. Barrier to Entry Plan to Address 3 Name of Company Competitive Analysis Identify primary direct competitors. Research (from customer interviews) key drivers of customer purchase decisions (purchase reasons in below chart are examples only, find relevant purchase motivators for your category). Rate (from customer interviews and self-analysis) perceived performance of your offering (as described in concept) vs. key competition, on 5 point rating scale (5 high, 1 low) on the drivers of customer purchase decisions Provide conclusions of your assessment (competitive strengths you’ve identified in this analysis which you’ll use in your marketing positioning for your new business). Competitive Evaluation Model Your Offering/Key Competitors Your New Venture Competitor A Competitor B Competitor C Competitor D Totals Primary Reasons for Customers to Purchase Products/Services in this Industry (you choose the purchase drivers relevant to your competitive space) Reputation Variety Location Uniqueness Customer Total Scores Service *a *b *c *will be used as input in Pricing Model Business Model Canvas Use the canvas provided at the link on page 5 to identify your hypotheses (guesses) for each component. Conduct customer and secondary research to confirm, reject your hypotheses. Keep refining until you have developed a business model which you believe maximizes the likelihood of new venture success. Insert a one or two word summary of your approach in each of the nine canvas segments. Show your original hypotheses (guesses) and each pivot (change) you make based on your interviews with potential customers, using a strikethrough to show the evolution of your input based on your progressive customer discovery learning. Use the page following the canvas page to more fully explain your evolved thinking. 4 Name of Company Business Model Canvas (continued): Click on this link to open writable Business Model Canvas template: Business Model Template.docx Value Proposition o Identify the overall deliverable of your product/service (pain: what primary customer problem is the product/service solving; gain: how is the product/service solving that problem) Customer Segment o Buyer/user target defined; identify if more than one segment target is required (ie: multi-sided) Customer Relationship o Determine how your product/service will interact with its customers and/or users before and after the sale Channels o Identify how will you reach your buyers and/or users to generate awareness, interest and deliver sales Revenues o Identify pricing strategy and sources of revenue (ie: asset sale, subscription, licensing, leasing, brokerage, advertising, other) and how will scalability be achieved Key Activities o Identify what is required to insure optimal delivery of the Value Proposition Key Resources o Identify how those activities will be provided Key Partners o Determine your core competencies and the partner outsource for those you don’t have internally Costs o Identify the most important costs in the business model (which are fixed vs. variable; which are cost vs. value driven) Marketing Plan Target Market (this should be an expansion of the customer segment section of the business model canvas) What problem are you Geographic, demographic, Quantify segment size, solving for this target? behavioral, psychographic growth rate, value descriptors Primary Secondary Your positioning statement (the single-minded message that you want your users/buyers to know about your product/service, based on the unique benefit/feature you provide): ________________________________________________________________________________________________________________ ________________________________________________________________________________________________________________ _________________________________________________________________________ 5 Name of Company Marketing Plan (continued): Marketing Objectives, Strategies & Tactics (complete chart below) Plan should reflect: o The behavior of your users/buyers. Select the marketing tool / medium (ie: internet, print, radio, TV) that is the most efficient delivery vehicle to reach your target audience o Your communication message needs (visualization, long explanations, reminders) o Your budget: in year 1 and 2 marketing budget should = at least 7%-10% of sales; out years at least 5% of sales o Remember, social media is not free: websites cost $3K to $100K to design, $1K$5K/month to maintain; web ads cost $2 to $7 for each 1000 impressions; social media requires someone or agency to supervise and respond to tweets/placements Objective 1 Strategy 1 Tactic 1 Should be specific, measurable and time bound Longer term approach to achieve the objective and unifies the tactics Activities used to execute the strategy Strategy 2 Objective 2 Strategy 1 Strategy 2 Objective 3 Strategy 1 Strategy 2 Cost Metric Tactic 2 Cost Metric Tactic 1 Cost Metric Tactic 2 Cost Metric Tactic 1 Cost Metric Tactic 2 Cost Metric Tactic 1 Cost Metric Tactic 2 Cost Metric Tactic 1 Cost Metric Tactic 2 Cost Metric Tactic 1 Cost Metric Tactic 2 Cost Metric 6 Name of Company Marketing Plan (continued): Pricing: Pricing your new venture’s product/service will depend on several factors (degree of competitive pressure, variability of supply and demand, costs and breakeven goals) and strategies (skimming, penetration) all of which should be integrated into your price point selection. The following relative product performance chart can help guide you and identify your pricing approach. Example (calculation) Your New Venture Scores from Competitive Evaluation You Comp Comp A Avg 20 15 10 (a) (b) (c) Superiority/Inferiority vs Comp A or Comp Average (you/comp) Comp Comp A Avg 1.33 2.00 (20/15) (20/10) Current Pricing Comp A $150 Suggested Average Pricing for Your New Venture Comp Avg $125 $200-$250 ($150*1.33 or $125*2.00) Financial Plan Prior to taking ENTR 302 use these guidelines: Cost of Goods for a product should ideally not exceed 40% of Sales. Most business only achieve breakeven in Year 1 (profits=$0). So to calculate Year 1 sales using the bottom up method: sales = Expenses + .4(Sales) and profits will be $0 in year 1. For calculating sales in years 2-5 use the3,2,1,1 multiplier projection approach (ie: Yr2=Yr1*3; Yr3=Yr2*2; Yr4=Yr3*1.5; Yr5=Yr4*1). This will produce a normal sales curve where sales increases at a declining rate. Input Pre-Launch expenses from your Start Up Expenditures form. After completing ENTR 302 update these numbers with the forecasts from your financial model. Pre-Launch Year I Year II Year III Year IV Year V Sales Cost of Goods/Services Gross Profit Margin GM % (GM/Sales) Expenses Net Profit 7 Name of Company Calculate your company’s cash flows using both your Income Statement (P&L) and Balance Sheet. For the first year you will use the Start-Up Expense Schedule you created. Your beginning cash position for each year is equal to the Net Cash Flow of the prior year. Your cash flow calculation shows the net of all inflow and outflows of cash for any given year to evidence your business’ ability to meet its obligations. Cash Position Pre-Launch A Beginning Cash Position B Revenue C Expenses D Year I Start-Up Cash from Capital Structure N/A H From Previous Year Expenses from P&L (including Depreciation, taxes and interest) Depreciation Expense Start-Up Expenses (including inventory, PP&E, etc.) N/A E Repayment of Principal N/A F Change in Net Working Capital N/A G Capital Expenditures N/A H Net Cash Flow A-C Year II Year III Year IV Year V Revenues from P&L Add back Depreciation expense from P&L From Loan Amortization Schedule Change in NWC (calculated from Balance Sheet) Any $ in or out on PP&E (CapEx) A+B-C+D-E-F-G 8 Name of Company Identify from where you will source the capital you need (TFN) to start your business, how much you will obtain from each source (Capital Structure chart) and then what use (TFU) you will make of the capital raised (Uses chart). The Sources and Use listed in the charts are only examples, change them or add to them if needed to make them relevant to your business. Capital Structure (TFN) Source Dollars ($) % of Total $ $ $ $ % % % % Personal, Family, Friends Debt Equity Total Funds Needed (TFN) Uses (TFU) Marketing R&D Personnel Total Funds Used (TFU) (TFU must =TFN) $ $ $ $ Provide the shareholders’ Return On Investment (Year V profits * 3/Amount of Equity Investment):____ROI% Reasons for Investment Provide at least three compelling reasons why someone should invest in this new venture: 1)___________________________________________________________________________________ 2)___________________________________________________________________________________ 3)___________________________________________________________________________________ 9 Name of Company Appendix Milestones/Next Steps: What are you going to do next to commercialize your venture? Provide timetable for key next steps, in following chart: Activity: Date: Start-Up Expenditures and Expenses Item Amount Capital Expenditures: Equipment Computer Equipment Other Equipment (specify) Furniture and Fixtures Leasehold Improvements to Rental Space Vehicles Buildings Other Expenditures (of significant cost) Sub Total Capita; Expenditures Pre-Opening/Pre-Launch Expenses: Salaries and Wages Payroll Taxes (assume 10% of wages) Benefits (assume 25% of wages) Insurance Premiums Beginning Inventory Legal and Accounting Fees Rent Deposits Utility Deposits Supplies Pre-Launch Advertising & Promotion Licenses Working Capital (Cash on Hand) Other Start-Up Expenses Total Start-Up Expenses Total Start-Up Expenditures and Expenses FYI: Capital Expenditures are differentiated from Expenses on the Start-Up Schedule so that their value can be capitalized or depreciated over time 10 Income Statement Item Pre Launch Year I Year II Year III Year IV Year V Net Sales Cost of Goods Sold Gross Margin ($) Gross Margin (%) Operating Expenses: Advertising Promotion Other Marketing Bad Debt Expense Bank Charges (if credit sale) Depreciation Expense Dues/ Subscriptions Insurance Licenses/Fees Meals/Entertainment Miscellaneous Office Supplies Contract Labor Payroll Expenses Salaries & Wages Payroll Taxes (10% of wages) Benefits (assume 25% of wages) Professional Fees Property Taxes Rent Repairs/Maintenance Shipping/Delivery Telephone Training/Development Travel Utilities Vehicle Other Expenses Other Expenses Total Operating Expenses Operating Income (EBIT) Interest Expense (from new venture start up debt on Loan Amortization schedule) Income Before Taxes Taxes (if C Corp only; no taxes to firm if LLC, partnership, other) Net Income Note: Expenses are for example only, you may not have all of these or you may have others: just use relevant expenses. 11