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Business Plan Preparation. Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado. Tonight’s Agenda. Topics Features & Benefits Margins Elevator Speech Investor Presentations Read BP pp 6-7 Practice Elevator Speech In the Fire – team meetings, last hour
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Business Plan Preparation Frank MoyesLeeds College of Business University of ColoradoBoulder, Colorado Product & Service, Elevator Speech
Tonight’s Agenda • Topics • Features & Benefits • Margins • Elevator Speech • Investor Presentations • Read BP pp 6-7 • Practice Elevator Speech • In the Fire – team meetings, last hour • Preliminary Market & Industry Analysis Results • Preliminary Interview Results Product & Service, Elevator Speech
Marketing Plan Revenue Model Customer Surveys Read BP pp 14-18 In the Fire Prelim Industry Analysis Model company description Hand in 10 Call Reports Preliminary Competitive Matrix Model company Next Week Product & Service, Elevator Speech
Business Plan Elements • Executive Summary • Company Overview • Market & Industry Analysis • Product/Service Description • Marketing Plan • Operations Plan • Development Plan • Management • Competitive Advantage • Financial Plan • Funding Product & Service, Elevator Speech
Product/Service Sections • Features • Benefits • Proprietary Rights • Stage of Development Product & Service, Elevator Speech
Features • Detailed description • Attributes • Environment • What is unique? • What is evidence that customers want these features? • How produce & deliver – systems approach • Don’t assume people know or understand your product/service Product & Service, Elevator Speech
0 Attributes • Performance: durability, quality of materials, defect levels, tolerances, construction, dependability, functional performance (acceleration, nutrition, taste), efficiency, safety, styling, packaging, etc. • Cost: purchase price, quantity discounts, operating costs, repair costs, cost of extras or options, cost of installation, trade in allowance, likely resale value, etc. • Availability: carried by local stores, credit terms, quality of service available from local dealer, delivery time, credit card, on-line transactions, etc. • Service: hours, warrant, guarantee, return/replacement policy, upgrades, maintenance, training, installation, repair service, spare parts, customer support, tech support, training, product design, make to order, level of inventory, quotation response time, lead time, quality certification, employee capabilities, etc. • Environment: location, atmosphere, layout, fixtures, aesthetics, style, sound, lighting, color, etc. Bad Slide Product & Service, Elevator Speech
Benefits • Describe major benefits - be specific • What is the evidence that benefits are understood by the market? Product & Service, Elevator Speech
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. • Convenience? • Objective is distinguish between benefits and features, not put into categories Product & Service, Elevator Speech
Feature vs. Benefits Product & Service, Elevator Speech
Net Dog Product & Service, Elevator Speech
Product & Service Conclusions • Make it real • Photo, rendering, specs • Prototype • Evocative description • Make it exciting • Sell your concept Product & Service, Elevator Speech
Product/Service Competitive Matrix • Product/Service offering – breadth and depth • Quality (define the type quality) • Detailed analysis of the key features • Obtain samples of the competitor’s products, specifications & drawings • Retail go to competitor’s locations, observe the environment and how customers interact with the business. • Internet businesses evaluate the websites. • Strengths and weaknesses • Location Product & Service, Elevator Speech
Product/Service Competitive Matrix Product & Service, Elevator Speech
Quality Dimensions I • Performance - the primary operating characteristics of the product or service • Features - the characteristics that supplement the basic functioning of the product or service • Reliability - probability of the product or service failing within a specified period of time • Conformance - the degree to which a product or service meets acknowledged standards Product & Service, Elevator Speech
Quality Dimensions II • Durability - a measure of product life (both technical and economic) • Serviceability - the speed, courtesy, competence, and ease of repair or recovery • Aesthetics - how a product or service looks, feels, sounds, tastes, or smells • Perceived Quality- various tangible and intangible aspects of the product from which quality is inferred Product & Service, Elevator Speech
Service Quality Dimensions • Reliability - ability to perform service dependably & accurately • Responsiveness - willingness to help customers & provide prompt service • Assurance - knowledge & courtesy of employees and ability to convey trust and confidence • Empathy - provision of caring, individualized attention to customer • Tangibles - appearance of physical facilities, equipment personnel and communication material Product & Service, Elevator Speech
Financial Dynamics • Every entrepreneur must know – part of your DNA • All your decisions have a financial impact • Not accounting • Language of business Product & Service, Elevator Speech
Financial Dynamics 4 Key Elements • Revenue • Margins • Assets • Cash Flow Product & Service, Elevator Speech
Margins Revenue – COG’s Revenue • % Gross Profit Margin • % Contribution Margin • % Net Profit Margin • % Operating Expenses Revenue – Variable Costs Revenue Net Earnings Revenue Sales, General & Admin Revenue Product & Service, Elevator Speech
The Elevator Pitch Based on material developed by: Product & Service, Elevator Speech
0 Elevator Pitch • What is the objective? • Who are you talking to? What motivates them? • Must be exciting and compelling • This is a conversation, not a speech Product & Service, Elevator Speech
The Elevator Pitch • Goal: Buy-in • Investors • Employees • Customers and partners • Critical Attribute: Focus • What do you want remembered? • Result: Motivate • Listener wants to hear more Product & Service, Elevator Speech
The Elevator Pitch • What market are you in? • What urgent problem are you solving? • What is the size of the opportunity? • Value proposition • Why will you win? • Where is the validation (customers, investors, etc.)? • The order is flexible Product & Service, Elevator Speech
Elevator Pitch Communication Imperatives • Show passion, energy, and enthusiasm • Use appropriate eye contact when face-to-face • Slow down and speak clearly • Be brief (target 30 seconds) • Be confident • Use understandable vocabulary Product & Service, Elevator Speech
Elevator Pitch – Example P1 Diamond develops proprietary thin film diamond products and equipment that dramatically improve heat dissipation on microprocessors, solving one of the highest priority pain points in the industry. We address growing markets that will exceed $1.5B by 2006 and will become the dominant supplier with the best team having the most comprehensive patent position in the industry. Intel is our largest current investor, and we are actively engaged with other top target customers and partners who provide very strong references. Product & Service, Elevator Speech
How Do You Get Immediate Attention? Reduce to one sentence or question what is unusual, interesting, exciting or dramatic. Product & Service, Elevator Speech
Elevator Pitch • http://www.youtube.com/watch?v=Tq0tan49rmc Product & Service, Elevator Speech
Elevator Pitch Exercise • Your name and the name of your firm • Your pitch • Evaluation by class on a scale of 1 to 10 • Urgent pain • Large growing market • Unique, defensible position • Validation • Communication skills • Desire to hear more Product & Service, Elevator Speech
Be Prepared to Answer Questions About • Product and technology • Marketing strategy • Market research • Revenue and profitability • Funds required • Valuation Product & Service, Elevator Speech