Entrepreneurship
110
The Business Plan
Sections in a Business Plan
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Cover Page
Table of Contents
Business Overview/Executive Summary
Management
Market Research
Marketing (the 4 Ps)
Suppliers
Employees
Operations
Financial
Appendix
The Life Cycle of a Business
All ventures go through a life cycle, or a
series of stages that begin when the
business idea is initially conceived.
 An entrepreneur must recognize these
stages in order to anticipate and address
the problems that can occur within each
one.
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1. Pre-Startup Stage
Preparations for launching the business
are made.
 Generating ideas, doing research and
identifying/solving problems.
 At this stage you need to review
resources, consider how best to allocate
them, and write a business plan.
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2. Development Stage
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Research is complete.
Finalized your business plan, completed your market
testing, reviewed the results, and made arrangements to
get the funds you need.
Business opens/starts
Goal is to reach the break-even-point. Breaking even is
not as easy as it may sound; you must manage your
resources well in order to do so.
Break Even Point:
Total monthly revenue = Total monthly costs
 Revenue = money that comes into the business from sales
 Costs = all the money paid out by the business (i.e. wages,
loan payments, etc.)
3. Growth Stage
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Passed the break-even point and now
making a profit:
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Total revenue > Total Costs
May wish to expand your business:
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new products/services
another location, etc.If this is the case, you
should really write a new business plan.
4. Comfort Stage
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Venture is secure growing (although at slower
rate of approx. 10% per year.)
Enjoying the benefits of success – a comfortable
income and enjoyable lifestyle.
Assets (anything that a business or entrepreneur
owns that has a cash value) of the business are
worth more than the liabilities (a debt; a sum of
money the entrepreneur owes).
This can be a dangerous stage for the
entrepreneur who forgets that growth and
change are essential to future success.
5. Turnaround Stage
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If you reach this stage, your venture is in
financial trouble.
The financial records reflect losses for more than
two years.
Your competition is attracting customers away
from your business.
If you want to save the business, you must act
now (eliminating nonproductive people, products
and services – no matter how difficult this
seems).
Liquidation (the sale of assets in order to raise
funds) may be another option to generate cash.
Marketing – The 4 Ps
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The 4 Ps are:
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Price
Promotion
Place
Product
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An Entrepreneur
must have an
intense
understanding of
each as it applies to
his or her business.
An entrepreneur
must also have an
intense
understanding of
how each of these
4 Ps – Example
Tim Horton’s
Product
Coffee and related (food, appliances,
transport, etc.)
Price
Varies depending on product and portion
size (small, medium, large)
Place
Canadian and American locations
Various (hospitals, shopping malls, university
campuses, etc.)
Promotion Various. Includes TV and radio spots,
sporting events, community sponsorship,
marketing campaigns (such as “roll up the rim
to win”) etc.
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Activity – The Dragon’s Den
This is a CBC show which gives
Entrepreneurs the opportunity to pitch
their venture, product, and/or service
ideas to a panel of judges.
The goal is to get the judges, or dragons,
to invest.
As you watch the following clips, take
notes as to how well each entrepreneur
knows or understands the 4 ps of their
venture idea
Dragon’s Den
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YouTube - *atomic tea featured on cbc's
'dragon's den‘
YouTube - Dragons Den Season 2
Rasam Soup
YouTube - Dragons Den Season 2
Fanware
Marketing, continued
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The 4Ps are: product, price, place and
promotion.
Today we will explore Price.
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Price is the process of determining what to
charge for your product or service.
It should reflect what the customers are
willing and able to pay.
It is assumed a profit is to be made.
It includes determining the:
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cost of production (time, labor, ingredients,
packaging, advertising, etc),
the state of supply and demand, and
the amount of profit to be made.
Assignment:
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Complete the assignment using the
textbook.
This assignment will not be passed in,
but marked together.
Wal-Mart Case Study Assignment
It has been determined that Wal-Mart is able to make so much PROFIT
because they are able to cut costs so much.
Remember: Profit = Sales – Costs
Complete the chart below, explaining how Wal-Mart cut costs in each areas:
Area
Wages
Health Benefits
Overtime
Rubbermaid and
similar suppliers
Outsourcing
Charity Donations
Security
Wal-Mart cut costs by…
Price and the Law
The Competition Act protects customers in Canada from:
1. Price Fixing businesses are not allowed to decide as a group
what to charge consumers for a specific product.
Why not?
2. Retail Price Management –
no company can force another independent company to
charge a particular price for a product it has provided. A
company can suggest a price (MSRP)
3. Deceptive Pricing Strategies:
A. Double Ticketing - refers to the placing of two prices on
the same product and charging the customer the higher price.
B. Bait and Switch - occurs when a product is advertised at a
low price to attract (bait) customers then the sales staff tries to
disparage the customer in order to get the customer to buy a
more expensive item.
C. False Sale Price - refers to the practice by some stores of
advertising a regular price as a sale price.
Promotion
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Letting people know about products and services in a
positive way so they will want to make a purchase.
Promotion is used to tell potential customers about:
1.
2.
3.
4.
5.
How to use a product or service and what it is used for
The quality of a product or service
Where the product or service is available
New products that are on the market
Other important information about the product
YouTube - Commercial - The Wait
Which of the above 5 is this commercial being used for?
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There are THREE MAJOR REASONS to use
promotion. They are to INFORM customers about
products, to REMIND customers of the product,
and to PERSUADE customers to buy. For example:
1. To Inform: A TV commercial airs 10
times a day before product is released.
2. To Remind: A pizza restaurant gives
away free refrigerator magnets with
delivery information.
3. To Persuade: A company uses labels to
emphasize that products are “new and
improved,” “concentrated,” “extra
strength,” etc.
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There are Five TYPES OF PROMOTION used to help sellers get
their message to customers.
1. ADVERTISING – paying to use the media to promote product
(newspapers, TV, radio, magazines, billboards, etc.).
2. PUBLICITY - Free promotion (press releases or news reports
describing how the company sponsored events or donated to a
cause.)
3. SALES PROMOTION - Special things done to get customers
interested in trying products or to come into a store (coupons,
contests, rebates, free samples, displays, etc.)
4. PERSONAL SELLING - A salesperson assists each customer (a
shoe salesperson helps a customer select the proper shoe size.
A college student goes door to door selling children’s books.)
5. ENDORSEMENT – When a famous person is paid to promote a
product or service (Tiger Woods and NIKE; Tiger Woods and
ONSTAR).
YouTube - Gatorade Moon Shot Commercial
Worksheet - Jane’s Market
► Complete
and we will go over together
Type of Promotion
6. Product Placement
► Using
brand-name products as
props: the practice of placing brand-name
items as props in, e.g. movies, television
shows, or music videos as a form of
promotion.
► Look for the Product Placment in this clip:
 YouTube - Product Placement
Place
Place
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It is the mechanism through which
goods and/or services are moved from
the manufacturer/ service provider to
the user or consumer.
You must decide what “channel” you
will use to get your product/service to
your customers.
Channel 1 - Wholesalers
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Break down 'bulk' into smaller packages
for resale by a retailer.
Provide storage facilities
Take on the some of the marketing
responsibilities
Channel 2 - Agents
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Mainly used in international markets
Agent will typically secure an order for a
producer and will take a commission
Channel 3 - Retailers
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Retailers will have a much stronger
personal relationship with the
consumer.
The retailer will hold several other
brands and products. A consumer will
expect to be exposed to many products
The retailer will give the final selling
price to the product.
Retailers often have a strong 'brand'
themselves
Channel 4 - Internet
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The main benefit of the Internet is that
products reach a wider audience
Start-up costs are low.
Use e-commerce technology (for
payment, shopping software, etc)
Assignment - Newtown
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Please read the handout and complete.
Product
Life Cycle of a Product
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Introduction
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Growth
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Competitors arrive with very similar products
Products make more profit
Maturity
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Need for some level of immediate profit
Product is promoted
Limited number of products available
Most products that fail, do so during this stage
The products that were the most successful during the earlier stages spend
the longest time here.
Sales “stabilize”
Price wars might occur
Competition is fierce
Decline
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There is likely a “downturn” in the market
Often, more innovative products are introduced, OR consumer tastes have
changed
There may be intense price cuts