New Venture Feasibility Analysis
TECHNOLOGY-BASED BUSINESS IDEA BLUEPRINTFORMAT &
CONTENTSCOVERTABLE OF CONTENTSTHE BODY OF BUSINESS BLUEPRINT
1.EXECUTIVE SUMMARY
2.PRODUCT/SERVICE DESCRIPTION3.TECHNOLOGY DESCRIPTION4.MARKET
ANALYSIS AND STRATEGIES5.MANAGEMENT TEAM
6.FINANCIAL ESTIMATES7.PROJECT
MILESTONES8.CONCLUSIONS9.APPENDICESBLUEPRINT OUTLINE
Note:
Before you begin writing within this section make sure that you
have done some research. Blueprint research helps you make informed
decisions and create a successful direction for your blueprint.
Gather information sources
Record relevant information
Analyze the information you have gathered and note the
associated opportunities and risks
If you are going to submit the blueprint to investors, research
what types of investment opportunities are available to you, why
you need investment (banks, government, private equity investors,
etc.)
1.EXECUTIVE SUMMARY
The executive summary is usually short and concise. The summary
articulates what the opportunity conditions are and why they exist,
who will execute the opportunity and why they are capable of doing
so, how the company will gain entry and market penetration; it
answers the questions: for what reason does this venture exist and
for whom?
Essentially, the executive summary needs to reflect the criteria
presented in the Business Opportunity Analysis Exercises. This is
your chance to clearly articulate how your business is durable and
timely, and how it will create or add value to the end user. This
summary is usually prepared after the other sections of the
blueprint are completed. 1.1. Brief description of the business and
product concepts
1.2. The target market and projections
1.3. The competitive advantages
1.4. The profitability
1.5. The management team
2.PRODUCT OR SERVICE DESCRIPTION2.1.Describe in some detail the
product or service to be produced/sold.
2.2.Discuss the application of the product or service and
describe the primary end use as well any significant secondary
applications.
2.3. Emphasise any unique features of the product or service and
how these will create or add significant value; also, highlight any
differences between what is currently on the market and what you
will offer that will account for your market penetration.
2.4.Define the present state of development of the product or
service and how much time and money will be required to fully
develop, test, and introduce the product or service. Provide a
summary of the functional specifications and photographs, if
available, of the product.
2.5.Describe any patents or other proprietary features of the
product or service.
2.6.Discuss any opportunities for the expansion of the product
line or the development of related product or service.
3.TECHNOLOGY DESCRIPTIONAreas to be covered are the key
components related to the product/service or technology, the
intellectual property involved, specialized knowledge, experience
and skills involved and regulations that may govern the use of the
technology to deliver the product/service. It should also cover
research & development (which outlines your plans for the
future), and future technology trends that you and the market can
foresee.
2. PROCESS FLOW
THE TARIK
PROCESSMATERIALSMACHINES/EQUIPMENTSMAN
Boil the waterTap WaterKettleCook
4.MARKET RESEARCH AND ANALYSISInformation in this section needs
to support the assertion that the venture can capture a substantial
market in growing industry and stand up to competition. Because of
the importance of market analysis and the critical dependence of
other parts of the blueprint on this information, you are advised
to prepare this section first. 4.1.Customers
a.Discuss who the customers for the product or service are or
will be. Potential customers need to be classified by relatively
homogeneous groups having common, identifiable characteristics
(e.g., by major market segment).
b.Show who and where the major purchasers for the product or
service are in the market segment. Include national regions and
foreign countries, as appropriate.
c.Indicate whether customers are easily reached and receptive,
how customers buy (wholesale, through manufacturers representative,
etc.).
4.2.Market Size and Trends
a.Show for three years the size of the current total market and
the share you will have, by market segment, and/or region, and/or
country for the product or service you will offer, in units,
ringgit, and potential profitability.
b.Describe also the potential annual growth for at least three
years of total market for your product or service for each major
customer group, region or country, as appropriate.
c.Discuss the major factors affecting the market growth (e.g.
industry trends, socio-economic trends, government policy, and
population shifts).
4.3.Competition and Competitive Edges
a.Make a realistic assessment of the strengths and weaknesses of
competitors.
Competitors
Strengths
Weaknesses
b.Compare competing and substitute products or services on the
basis of market share, quality, price, performance, delivery,
timing, service warranties, and other pertinent features.
c. Compare the fundamental value that is added or created by
your product or service, in terms of economic benefits to the
customer and to your competitors.
d.Discuss the current advantages and disadvantages of these
products or services and say why they are not meeting customers
needs.
4.4.Estimated Market Share and Sales
a.Based on your assessment of the advantages of your product or
service, the market size and trends, customers, competitors and
their products, estimate the share of the market and the sales in
units and ringgit that you will acquire in each of the next three
years. Remember to show assumptions used.
Product/service Market Share and Sales
Year
Market share (%)
Total sales in units
Total sales in RM
4.5.Marketing Strategy
a.Overall marketing strategy. Describe the specific marketing
philosophy and strategy of the company, given the value chain and
channel of distribution in the target market. Include, for example,
a discussion of the types of customer groups that you are targeting
for initial intensive selling effort those that you are targeting
for later selling efforts.
b.Pricing. Discuss the pricing strategy, including the prices to
be charged for your product and service, and compare your pricing
policy with those of your major competitors.
c.Sales tactics. Describe the method (e.g., own sales force,
sales representatives, direct mail, or distributors) that will be
used to make sales and distribute the product or service.
d.Service and warranty policy. If your company will offer
product that will require service, warranties, or training,
indicate the importance of these to customers purchasing decisions
and discuss your method of handling service problems; also,
highlight the kind and term of any warranties to be offered,
whether service will be handled by company service people,
agencies, dealers and distributors, or return to the factory.
e.Advertising and promotion. Describe the approaches the company
will use to bring its product or service to the attention of
prospective buyers.
f. Distribution. Describe the methods and channels of
distribution you will employ.
5.MANAGEMENT TEAMThis section includes a description of the
function that will need to be filled, a description of the key
management personnel and their primary duties, an outline of the
organisational structure for the venture, a description of the
board of directors, a description of the ownership position of any
other investors, and so forth. You need to present indications of
commitment, such as the willingness of team members to initially
accept modest salaries, and of the existence of the proper balance
of technical, managerial, and business skills and experience in
doing what is proposed.5.1.Organisation
a.Present the key management roles in the company and the
individuals who will fill each position. Key Management Roles
Name
b.If it is not possible to fill each executive role with a
full-time person without adding excessive overhead, indicate how
these functions will be performed (e.g., using part-time
specialists or consultants to perform some functions), who will
perform them, and when they will be replaced by a full-time staff
members.
5.2.Key Management Personnel
a.For each key person, describe in detail career highlights,
particularly relevant know-how, skills, and track record of
accomplishments that demonstrate his/her ability to perform the
assigned role.
Names & Positions Career Highlights
b.Describe the exact duties and responsibilities of each of the
key members of the management team.
Names & Positions Duties & Responsibilities
5.3.Management Compensation and Ownership
a.State the salary to be paid, the share ownership planned, and
the amount of equity investment (if any) of each key member of the
management team.Names & PositionsMonthly salaryShare of
ownershipAmount of Equity Invested
5.4.Supporting professional advisors and servicesa.Indicate the
supporting services that will be required.
a. Indicate the names and affiliations of the legal, accounting,
advertising, consulting, and banking advisors selected for your
venture and the services each will provide.
Name of Professional AdvisorsServices Provided
6.FINANCIAL PLANSound financial management is one of the best
ways for the business venture to remain profitable and solvent. In
this section think through some of the general issues you will have
to address in your formal business plan.
To effectively manage your venture finances, plan a sound,
realistic budget by determining the actual amount of money needed
to start your venture (start-up costs) and the amount needed to
keep it open (working capital or operating costs).
6.1Start-up Cost
Estimate the costs incurred in conjuction with one-time
activities that the venture undertakes when it opens a new
facility, introduces a new product or service, conducts business in
a new territory or with a new class of customer or beneficiary,
initiates a new process in an existing facility or commences some
new operation after considerable research and discussion.
6.2 Working Capital
Working capital represents the amount of initial expenditure
required to finance the daily operation until the business gets its
first sale. The amount of working capital is therefore dependent
upon the period until the firm can generate enough sales to cover
its short-term expenditure.
6.3Start-up Capital and Financing
Total start-up capital incorporates both start-up cost and
working capital needed to start a project. The most common source
of finance for new venture is the entrepreneurs own equity
contribution. The equity contribution can be in the form of cash or
assets. The next most common source of finance is term loan. This
is a form of long term financing offered by most commercial banks.
The term loan can be used to finance fixed assets as well as
working capital requirements. The interest rate and the loan period
depend on the current interest rate and the amount of loan required
respectively.
6.4 Cash Flow Statement
A cash flow pro-forma statement refers to the projected
statement of cash inflow and outflow throughout the planned period.
Under normal circumstances, the pro forma cash flow statement is
prepared between three to five consecutive years. However, longer
periods are sometimes needed depending upon the projects
undertaken. The pro forma cash flow statement must be able to show
the following information:
Cash inflows the projected amount of cash flowing into the
company.
Cash outflows the projected amount of cash flowing out of the
company.
Cash deficit or surplus the difference between cash inflows and
cash outflows.
Cash position the beginning and ending cash balances for a
particular period.
6.5 Income StatementThe next step in developing a financial plan
is to prepare the pro forma income statement which shows the
expected profit or loss for the planned period, usually for three
to five consecutive years. Generally, the pro forma income
statement consists of the following elements:
Cost of good manufactured (production cost) Gross profit
Net profit
Cost of goods manufactured (also known as production costs)
refers to the total production cost involved in producing the
finished goods. It includes all costs such as direct materials,
direct labour, manufacturing overheads and the differential value
between the beginning and ending balances of the work-in-progress
(if any). Gross profit is the gross margin realised after deducting
the cost of goods sold from sales. It represents the amount of
profit before deducting other operating expenditure. Net profit (or
net loss) is defined as the difference between gross profit and
operating expenses for the planned period.
6.6Balance Sheet
While the pro forma income statement shows the financial
performance of the company for the planned period, the pro forma
balance sheet shows the financial position of the company at a
specific point in time in terms of assets owned and how those
assets are financed. The pro forma balance sheet is prepared for a
period between three to five years.
7.PROJECT MILESTONESThis section includes a month-by-month
schedule that shows the deadlines or milestones of activities
critical to the ventures success. Examples of activities that are
critical to the success of the venture are: Incorporation of the
venture, completion of design and development, completion of
prototypes, obtaining of sales representatives, signing of
distributors and dealers, ordering of materials in production
quantities, starting of production or operations, receipt of first
orders, delivery of first sales.
ActivitiesDeadlines
8.CONCLUSIONS9.APPENDICES
22