Business Plan Preparation

1. Business Plan Preparation Frank MoyesLeeds School of BusinessUniversity of ColoradoBoulder, Colorado Market Analysis

2. 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

3. 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

4. Opportunity/Need • 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

5. 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

6. Market Analysis Sections • Market size & growth • Trends • Target Market • Channels of distribution Market Analysis

7. 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

8. 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

10. Trends • 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

11. 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

12. 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

13. 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

14. Value Proposition -3 Elements • What are the features? • Who is the target market? • What are the benefits? Market Analysis

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

16. 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

17. 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

18. 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

19. 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. • FTD.com 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

20. 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

21. Financial COMP’s

22. Model Company • Identify company in your marketplace • Different segment, products, target market • Done just what you want to do • Provides credibility Market Analysis

23. Business Plans • Metal Removal Technology • Hecho en Casa Market Analysis

24. Features • 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

25. 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

26. 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