busfinplan.ppt

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

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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 e-business, you must be prepared to invest time, effort, and your own money to get your new e-business off the ground.

• 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