Wednesday, 30 May 2012

Starting New Bussiness


You may have heard about the famous “business plan on a napkin” idea? Keep that in mind. This assignment is not to write a business plan. It is to write a description of your business opportunity. Explain your business opportunity in a single letter-sized page.  This one-page overview demonstrates best with illustrations as well as text. You can draw it yourself and write it yourself; you can use PowerPoint or some other drawing program.  Here are a couple of examples: College Prep Information Business and Australian Firefighter Business.
Your  business opportunity should cover the following three points:
  1. Identify and explain a problem or need that your business idea would solve. Remember you don’t have to limit yourself to physical needs, because wants and intangibles – prestige, good looks, business success, etc. – are also valid.
  2. Explain how your new business idea fills the need or satisfies the want.
  3. Describe the ideal customer, or target market company. Ideally you want to invent or dream up an image of a specific person, (with age, gender, economic stratum, job, preferences) or a company (with industry type, size, location) who would buy your product or service.
This assignment reinforces the discussions  from Session 4: Market Analysis. The image (below) shows the portion of your plan outline which you will be working on. Unless otherwise specified by your instructor, this assignment should be completed in preparation for the next sequence, Session 5: Marketing Strategy.
NOTE: If you have not already downloaded the MinimumBusinessPlan.bpdx file, please follow these instructions.  You will use this file to complete assignments 2 through 7 during the course:
  • Download MinimumBusinessPlan.bpdx
  • Open this file in Business Plan Pro
  • Use the “Save as” command to save a copy of the file as yourname_businessplan.bpdx
  • Follow the instructions to complete the exercise using your business plan file
NOTE: Saving under a different file name preserves the original file, in case you decide to create a second business plan using this customized outline.
ASSIGNMENT STEPS
Each topic should include a paragraph describing the key points for that topic:
Market Analysis Summary: The main chapter level topic should be a summary of its sub-topics. If you finish the sub-topics first, it will be easier to create a summary paragraph of the most important points.
Ideal Target: Create a profile of one ideal target customer (or organization). Use your imagination. Describe the ideal target customer including why he or she buys, what his or her problem is, how old, economic status, family status, favorite media, where you find this person to send a message, and more.  A picture is a good idea.
Market Segmentation: Most markets divide into meaningful groups. For a local restaurant, segments might include families, university students, high school students, older people. Create a table showing how the market divides into segments, as suggested by this illustration:
The Market Analysis table is a simple spreadsheet, with projected years along the top, segment names on the side, and totals along the bottom. For this assignment you are looking at larger general market segments, so make educated guesses, as long as they make sense.
There is a detailed explanation of the table and how it shows segments, including even the Compound Average Growth Rate formula in the last column, in the online version of Hurdle: The Book on Business Planning, in the section called Your Target Market Forecast.
Business Plan Pro includes a pie chart of your Market Analysis table. Here is an example:
You can probably see how this chart links directly reflects the present year market segmentation, the first annual column in your market forecast table.
Market Growth: Ideally you cite experts: a market expert, market research firm, trade association, or credible journalist. This isn’t a class in market research. For this assignment, you have only three pages total, including the table and chart, so be specific and be brief.
Market Trends:  Market trends could be changes in demographics, changes in customer needs, a new sense of style or fashion, or something else. It depends on what business you are in.
  • What factors seem to be changing the market, or changing the business?
  • What developing trends can make a difference?
Here are a few examples:
  • A building supply store might note the trend toward remodeling older homes instead of buying new homes, or a trend toward more rooms in larger houses, despite smaller families, because of home offices, dens, and exercise rooms.
  • A grocery store might note a trend toward Asian foods or spicier foods, or toward fresher, healthier foods, or development of a new shopping area in a different part of town.
  • A credit and investment counselor might note demographic trends, such as baby boomers aging, leading to a greater need for estate planning and retirement planning.
Look to market trends as a way to get ahead of the market, to know where it is going before it gets there.
Market Needs:  For each market segment included in your strategy, explain the market needs that lead this group to buy your product or service:
  • Did the need exist before the business was there?
  • Are there other products or services or stores that offer different ways to satisfy this same need?
  • Do you have market research related to this market need?
It is always a good idea to try to define your retail offering in terms of target market needs, so you focus not on what you have to sell, but rather on the buyer needs you satisfy. As a shoe store, for example, are you selling shoes or are you satisfying the customer needs for covered feet? Are there additional underlying needs, such as style and prestige for fashion footwear, or padding for runners, or jumping for basketball players, that relate to selling shoes? Are kids buying status with their basketball shoes?
Competition: Mention the main competitors, and the strengths and weaknesses of main competitors. You might consider:
  • Their products, pricing, reputation, management, financial position, channels of distribution, brand awareness, business development, technology, or other factors that you feel are important.
  • What segment of the market do they operate in? What seems to be their strategy?
  • How much do they impact your products, and what threats and opportunities do they represent?
Before you begin…
Re-open the Business Plan Pro minimum outline .bpdx file that you saved as part of Assignment 2:  Market Analysis. You will continue to build into this .bpdx file with each assignment.
Assignment Steps
Your Startup Plan should contain a text explanation of what your startup costs and startup funding numbers are, plus two tables, the Startup Costs and the Startup Funding tables. The table explanations can be found here:
  1. Startup costs, as explained on pages 161-165 of The Plan-As-You-Go Business Plan book. Or you can click here for the online version of the book.
  2. Startup funding, as explained in the online example from the online version of The Plan-As-You-Go Business Plan.
  3. The online version of Hurdle: The Book on Business Planning also has sections covering Starting Costs and Startup Funding in Chapter 6: Describe Your Company.
This assignment will be completed using the Business Plan Pro .bpdx file outline that you downloaded and saved as part of Assignment 2: Market Analysis, and updated for Assignment 3: Startup Plan.
Assignment Steps
Your Sales Forecast assignment should include the following:
  1. A text explanation. You should include at least a paragraph or two explaining the main assumptions. Why your forecast is this amount and not double, or half of that? For example, if you built your Sales Forecast based on some assumptions (good idea), such as the number of chairs and tables and occupancy in a startup restaurant, then please describe those assumptions.
  2. Sales by month for the first 12 months of your plan, summed into a total for the first year, and then projected by year for the second and third years. These should usually (but not always) be broken into units and price (revenue) per unit.
  3. Direct costs of those sales estimated by month for the first 12 months of your plan, summed into a total for the first year, and then projected by year for the second and third years.
You can find examples of the Sales Forecast table in these places:
  • The chapter on Sales Forecast in The Plan-As-You-Go Business Plan book, beginning on page 131, continuing through page 154. Remember, this book is also online, just click here.
  • The Forecast Your Sales chapter in Hurdle: the Book on Business Planning. Also online, just click here.
And don’t forget that there are about 500 sales forecast examples in the sample business plans free online at www.bplans.com. You can do a key-word search to look for different types of businesses to find a sample similar to your business type.
This assignment will be completed using the Business Plan Pro .bpdx outline file that you downloaded and saved as part of Assignment 2: Market Analysis, and which you have been adding to as you complete each assignment.
Assignment Steps
This assignment includes two tables and text explanations for each table. The tables are:
  1. Personnel plan: This table should list your projected salaries and wages for the first year, broken into 12 months and then summed for the year, and then annually for the second and third year.
  2. Profit & Loss: Once you have completed the Sales Forecast and the Personnel plan tables, Business Plan Pro automatically transfers the totals to the Profit and Loss table.  Within the P&L table, you will need to list ongoing expenses. Each expense row should include estimates for the first 12 months, then summed for the first year; and then annual estimates for the second and third year.
You can find examples of the Personnel table in these places:
  • The section on Spending Budgets in The Plan-As-You-Go Business Plan book/ Remember, this book is also online, just click here.
  • The Management Team chapter in Hurdle: the Book on Business Planning discusses Personnel tables. Also online, just click here.
You can find examples of the Profit & Loss table in these places:
  • The section on the Income Statement (P&L) in The Plan-As-You-Go Business Plan book/ Remember, this book is also online, just click here.
  • The Bottom Line chapter in Hurdle: the Book on Business Planning discusses the Profit & Loss tables. Also online, just click here.
A summary memo is a 2-5 page document that you could present to a potential investor. It should summarize the business opportunity, the strategy, the market, the business model, startup costs, startup funding plan, and initial sales numbers.
If you have been updating your own Business Plan Pro .bpdx file with each previous assignment, all of the information you need to create a Summary Memo is now completed. To select specific areas of your outline to include in the Summary Memo:
  • Choose the Export option from the File menu in Business Plan Pro.
  • From the Export dialog, chose to export to Adobe Acrobat PDF Format.
  • From the outline display in the dialog, choose “Export only selected items” button, then click the boxes for each item to be included.
For more on the Summary Memo, read pages 228-233 of The Plan-As-You-Go Business Plan book. Or you can click here for the online version of the book.
All assignments should be completed using Business Plan Pro and saved as a .BPDX file or exported to a .PDF file.
Must Have:
Your business plan must include as a minimum the following components, identified here as either text topic or table. Most of these were separate assignments throughout the course, and should now combine into a single business plan document.
  • Summary (could also be called “Executive Summary”). This is a text topic. It should include all of the information detailed in Assignment 1: The Business Opportunity. Business Plan Pro automatically includes the Highlights Chart. You could also use what you did for Assignment 6: Summary Memo and bundle that into the plan. Edit this portion, so it isn’t redundant; you probably used your assignment 1 as a beginning draft for assignment 4.
  • Market Analysis. Text topics and at least one table. Should include all of the information detailed in Assignment 2: Market Analysis. Pictures and pie charts and bar charts are welcome.
  • Strategy. One of more text topics. Ideally you’ve got something along the lines recommended in the reading, strategy as a combination of identity, market, and strategic focus. There’s an outline example here, and you can click on it to jump to the Heart of the Plan material available online, which you also have in that Heart of the Plan section of The Plan-As-You-Go Business Plan book in the readings. In addition, the Heart of the Plan video included in class 11 videos also covers that same material.
  • Competitive Edge. This is a text topic. It’s also called Secret Sauce. This would have been discussed in class 5, Marketing Strategy. And you can also, read The Secret Sauce on the Web.
  • Startup Plan: This is exactly as in Assignment 3: Startup Plan. That’s at least one text topic and two tables, one for startup costs and another for startup funding. The best way to handle the text topic is to make sure that it includes the most important assumptions and explains how you intend to raise the money required (loans, investors, personal savings, etc.)
  • Sales Forecast. Exactly as in Assignment 4: Sales Forecast. That’s sales and cost of sales estimated for the first 12 months and then added up into year 1, and then a larger more general projection for years 2 and 3 of the plan as well. And it includes a text topic that explains your assumptions, and, ideally, a couple of business charts as well.
  • Projected Profit & Loss. Exactly as in Assignment 5: Projected Profit & Loss. At least one text topic and a table; business charts would also be nice. If it’s obvious how you make money then you don’t need to elaborate, but for some of the more innovative new technology plans, if how you make money isn’t obvious, then please make sure you talk about the business model.
Nice to have:
You’ve got a lot of resources here on this website, including two complete online books, so you can see that there’s potentially a lot to add. Use outlines recommended in the readings, or some other order. Here are some specific suggestions, in more-or-less order of desirability — but not the order they appear in the plan:
  • Cash flow. That requires some interaction between the profit and loss, which you already have, and the balance sheet, which you don’t necessarily have. With Business Plan Pro, it’s almost automatic. There’s a lot of detail available in the appropriate sections of The Plan-As-You-Go Business Plan book and Hurdle: The Book on Business Planning ebook found within the software resources.
  • Business offering (describing your product or service). This goes well after the summary and before the market analysis.
  • Company description: ownership, facilities, and so on. Goes well right after the summary, before the business offering section.
  • Business model (as noted in the Projected Profit & Loss point above, only if it isn’t obvious).
  • Financial plan: description of funding sources, return on investment for investors, exit strategy.
Remember that business planning requires a lot of flexibility. Every business plan is unique to the business and its specific situation.
Business Plan Pro 15th Anniversary Edition produces a file format with an extension, .bpdx. This format is used by Business Plan Pro to keep a business plan. Assignments for class will use a customized .bpdx file created especially to work with The Plan-As-You-Go Business Plan.  The file can be downloaded from the step 2 link below.
Step-by-step
  1. Install Business Plan Pro. Notice the video tutorials, and the extensive help, and the technical support available for free by email or telephone.
  2. You can use this link to get the MinimumBusinessPlan.bpdx file. How you actually download depends on which browser you use. For example, in Internet Explorer you right-click the mouse and use the “save target as” option to download a file. Get the file downloaded and saved on your disk.
  3. Open this minimum business plan file from within Business Plan Pro.
  4. VERY IMPORTANT: use the Save-As command to save the file with a different name. You don’t want to work with the original, because then you can never start over; and you’ll run the risk of having a classmate using the same name.
  5. VERY IMPORTANT: Don’t use the tasks view option provided in the software. Instead, use the Outline view to work on your business plan. This starting file has a customized outline directly associated with The Plan-As-You-Go Business Plan approach to creating a business plan. All assignments have been written for this custom outline; working in the Outline view will guarantee that you see what is being discussed during the class sessions.
  6. VERY IMPORTANT: Use the Plan Setup to make sure you’re set for the standard plan: not the simple, and not the more detailed. If you don’t, then the wrong outline points show up.
Your screen should look something like this, with instructions showing on the upper left, an action window in the lower left (for text or tables), and the outline in the right.
If you have questions about this, you can use the Business Plan Pro help facility — search for bpdx — or call Business Plan Pro Technical Support at 1-800 229-7526 (international callers, use 1-541-683-6162). Phone support is available for registered customers from 8:30 a.m. to 4:30 p.m.,  Monday through Friday, Pacific Time.
While this isn’t a class in writing, and not even in business writing, it is about starting a business and that, like it or not, includes being able to communicate well. Here are some tips:
Simple is better. Simple writing makes the same impression as a clear and uncluttered room when you enter it.
Bullet points are fine. When a thought is so completely obvious that nobody could ever want more explanation, then you can get away without more explanation. Most bullet points, however, need dressing. Don’t just tick off an entire topic and think you’ve covered it.
The following are common errors in word usage. Think of the feeling you get with fingernails on a chalk board:
  • Then and than. Then is sequential, than is comparison. If we have more of this than that, only then can we move forward.
  • It and its. It’s annoying when an apostrophe shows up where it’s none of its business.
  • Apostrophes.
    • Showing possession: Susan’s book, Bill’s book
    • Showing contraction: don’t, please, didn’t, won’t.
    • Apostrophes don’t have anything to do with plural except for their natural look when it’s the boys’ book, for example. Or the cars’ problems. You have a plural word ending in s, like so many plurals do, and then you add an apostrophe to show possession.
  • Common misspellings. Buisiness makes me unhappy. Use spell check to catch these.
  • Their, there, they’re. Their problem, they’re going to fix it, but not until after they get there.
  • There is, there are. Unless there is just one item, then there are more than one items. Unless there is a set of problems, or a number of problems.
It’s not hard to avoid most of the very common mistakes. If you’re not sure, take a look at this quick Google search for common writing mistakes.
PDF files are like electronic documents, easily transferable, easy to send as attachments to email, easy to view on the web. The acronym stands for “portable document format” files. The classic way to produce PDF files is by having an Adobe software product called Adobe Acrobat. There are lots of other ways these days. Business Plan Pro automatically produces PDF files as one of the export formats. The Mac produces PDF files as an alternative to printing.
If you’re not familiar with the various tools to create the right kind of files, find out from friends, check Wikipedia on PDF or Google  creating a PDF file. Business Plan Pro exports anything to a PDF format too, so you can create the PDF file automatically.
Macintosh Users
If you’re using a Macintosh, at least if it’s a relatively new Macintosh, there is an automatic facility to print your documents to PDF files. It’s related to the Preview application on Macintosh. Use the Print command on the file menu and you’ll get something like the one shown here, which is taken from the Print dialog that comes up with PowerPoint 2007.
Move your mouse over the PDF button on the lower left, and push to open a drop down menu.
Select “Save to PDF” and use the Finder to set a file name.
That will be the PDF file you can use to send to me as an attachment to your email.

"The plan is useless, but the planning is essential." -- Dwight Eisenhower
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