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Business Plan Preparation. Frank Moyes Leeds School of Business University of Colorado Boulder, Colorado. Tonight’s Agenda. Topics Opportunity/Need Market Analysis Segmentation Financial Comp Model Company Evaluate MRP & Hecho en Casa business plans Hand-in Interview List. Next Week.

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Business Plan Preparation

Frank MoyesLeeds School of BusinessUniversity of ColoradoBoulder, Colorado

Market Analysis

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Tonight’s Agenda

  • Topics

    • Opportunity/Need

    • Market Analysis

    • Segmentation

    • Financial Comp

    • Model Company

  • Evaluate MRP & Hecho en Casa business plans

  • Hand-in Interview List

Market Analysis

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Next Week

  • Topics

    • Industry Analysis

    • Competitive Advantage

    • Value Chain

    • Business Model

  • Read

    • BP pp 11-13, 27

    • Business Model Assignment

  • In the Fire

    • Opportunity/Need

    • Value Proposition

Market Analysis

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  • What is the pain?

  • What problem is being solved?

    • Dissatisfaction with current products/services

    • Poor quality or service

  • Must be compelling

  • Must be easily understood by TM

Market Analysis

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Market Analysis

  • Market: “group of current and potential customers having the willingness and ability to buy product/services to satisfy a need.”

  • Industry: “group of sellers that offer product/services that are similar and close substitutes for one another.”

JW Mullins, New Business Road Test

Market Analysis

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Market Analysis Sections

  • Market size & growth

  • Trends

  • Target Market

  • Channels of distribution

Market Analysis

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Market Analysis (Macro)

  • What is the size & growth potential?

  • Historic and future

  • Must indicate sources

  • Segment your market

    Lot’s of numbers – show in tables

Market Analysis

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Market Segmentation (Macro)

  • Groups of customers – demographics & psychographics

  • Products – features, benefits, prices

  • Geography – see Hecho en Casa

  • Distribution channels

  • Sector – industrial (see MRT), consumer, government

    Objective is to identify potential entry points

Market Analysis

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  • What changes are taking place – economic, socio-cultural, political/legal, global, environmental, demographic, technological

  • Positive and negative trends

  • Dissatisfied groups

  • Must provide your sources

Market Analysis

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Target Segment (Micro)

  • Best point of entry

  • What is the size & growth potential?

    • Consumer - demographics & psychographics

    • Business – types of organizations, buying decisions

  • Understand customer behavior

    • How are products used?

    • How are buying decisions made?

      It’s not about you!

Market Analysis

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Target Market (Micro)

  • Benefits are understood, compelling & differentiated

  • Potential to grow & expand to other segments

  • Evidence that the customer wants to buy

    • Customer research is key

    • Surveys provide credibility

    • Lurk & Listen

Market Analysis

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Channels of Distribution

  • What is normal for your market?

  • Distributors, wholesalers, dealer, retailer, internet, system integrator, Value Added Retailer (VAR) Original Equipment Manufacturer (OEM)

  • How are buying decisions made

Market Analysis

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Value Proposition -3 Elements

  • What are the features?

  • Who is the target market?

  • What are the benefits?

Market Analysis

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Value Proposition

“XYZ is a_______[describe] company. By its _______[feature(s)], it provides ______ [unique benefit(s)] to ______[target market]”

Market Analysis

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Simple Value PropositionSST Corporation

“SST is a stainless steel toothbrush company. By its one bristle brush made of high tensile stainless steel, it provides an exhilarating tooth cleaning experience to thrill-seeking X-gen consumers”

Market Analysis

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Simple Value PropositionDell Computer

“Dell Computer sells personal computers to consumers. Our build-to-order manufacturing and customer-direct sales enable us to offer custom built computers at very competitive prices. Our customers get the computer that they have always imagined and save money.”

Market Analysis

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Simple Value PropositionVic’s Coffee

“Vic’s Coffee is a Boulder based coffee house. Its gourmet coffee, convenient and fast service, provide a welcoming environment for people who want to meet with their friends or a stimulating morning coffee for on-the-go business people.”

Market Analysis

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Value Proposition

  • Proflowers serves the “price sensitive and convenience oriented customers” with the “freshest cut flowers at a competitive price”, because of their unique sourcing and Fed/Ex shipping arrangements.

  • serves the “mid-to high-end market” by providing the “easiest way to send flowers and gifts” because of their strong brand name, market communications and supplier network.

e-Commerce; Rayport & Jawroski

Market Analysis

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Financial COMP’s

  • Company in your marketplace.

    • NAIC code

    • Publicly traded

    • Industry ratios – see Selected Resources Guide Library

  • Key financial measures to compare when developing strategy and projections

  • Reality test

Market Analysis

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Model Company

  • Identify company in your marketplace

  • Different segment, products, target market

  • Done just what you want to do

  • Provides credibility

Market Analysis

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Business Plans

  • Metal Removal Technology

  • Hecho en Casa

Market Analysis

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  • Describe the product or service - range, environment, employees

  • What are the key product/service attributes (performance, cost, quality, social, availability, service, and environment)?

  • How is the product/service produced and delivered? Does the process provide a competitive advantage?

Market Analysis

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Target Market

  • Who is the target market? Why?

    • Demographics

    • Psychographics or life style

    • Social status: infers certain behavior

  • How are buying decisions made? What are the criteria? Who makes the decision? Who influences the decision?

Market Analysis

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What Are the Benefits?

  • Emotional: ambition, power, independence, achievement, ambition, pride of ownership, comfort, love, friendship, security, style, self Improvement, etc.

  • Social: status, image, popularity with friends or family members, reputation of brand, personal relationships, style, fashionable, etc.

  • Health: stress, fitness, mental capacity, strength, sex life, quality of life, muse, etc.

  • Financial: revenue, costs, savings, productivity, pricing, profitability, market share, save time, productivity, etc.

  • Life style: convenience, saves time

Market Analysis