Business Plan Preparation

1. Business Plan Preparation Frank MoyesLeeds College of Business University of ColoradoBoulder, Colorado Product/Service

2. Today’s Agenda Product/Service • Topics • PRODUCT/SERVICE • Margins • Read BP pp 6-7 • Elevator Speech • In the Fire • Hand-in • 3 alternative value propositions • Model company description

3. Next Week Product/Service Is This a Real Business? (max 10 slides) Interim Peer Evaluation Make an appointment with instructor for a 30 min meeting about where you are.

4. In the Fire Grading Product/Service

5. Business Plan Elements Product/Service Executive Summary Company Overview Market & Industry Analysis Product/Service Description Marketing Plan Operations Plan Development Plan Management Competitive Advantage Financial Plan Funding

6. Product/Service Sections Product/Service Features Benefits Proprietary Rights Stage of Development

7. Features Product/Service • Detailed description • Attributes • Environment • Use photos, images, schematics • What is unique? • What is evidence that customers want these features? • Systems approach – how produce & deliver • Don’t assume people know or understand your product/service

8. 0 Attributes Bad Slide Product/Service 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.

9. Benefits Product/Service Describe major benefits - be specific What is the evidence that benefits are understood by the market?

10. Benefits Product/Service 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 & features, not put into categories

11. Features & Benefits FEATURES are about the product or service and are often tangible attributes BENEFITS are about the customer and are often about their needs, desires, dreams

12. Features & Benefits FEATURES justify a product’s existence. BENEFITS motivate (re)purchase.

13. Features & Benefits FEATURES are rational. BENEFITS are emotive. To define the key benefits, keep asking: “Why does my customer care about that?”

14. Breathe Right Nasal Strips FEATURES • Flexible, spring-like bands gently lift nasal passages. • Special adhesive holds strip comfortably in place. • Improves airflow by 31%.

15. Breathe Right Nasal Strips BENEFIT (L1) BENEFIT (L2) Reduces Snoring My spouse sleeps My spouse is cheerful My marriage thrives Relieves Congestion Great night’s sleep I feel energetic Higher performance I achieve my dreams

16. Other Examples… FEATURE BENEFIT Overnight delivery Saves your job “When it absolutely… Inexpensive Biz Lodging Peak Performance “No, but I did sleep at a Holiday Inn last night” Intoxicating refreshment Look sexy, get the girl (every beer ad)

17. attribute benefit value emotional connection Pathway to Brand Loyalty

18. Product/Service

19. Product/Service

20. Product & Service Conclusions Product/Service • Make it real • Photo, rendering, specs http://leeds-faculty.colorado.edu/moyes/html/documents/Business%20Plan/Amari%20Final%20BPLAN.pdf • Prototype • Evocative description • Make it exciting • Sell your concept

21. Quality Product/Service

22. Moments of Truth • Each customer contact is called a moment of truth. • You have the ability to either satisfy or dissatisfy them when you contact them. 6-22

23. Quality Dimensions I Product/Service 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

24. Quality Dimensions II Product/Service 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

25. Service Quality Dimensions Product/Service Reliability - ability to perform service dependably & accurately - receive mail at same time each day Responsiveness - willingness to help customers & provide prompt service - avoid keeping customers waiting for no apparent reason. Assurance - knowledge & courtesy of employees and ability to convey trust and confidence - being polite and showing respect for customer. Empathy - provision of caring, individualized attention to customer - being a good listener. Tangibles - appearance of physical facilities, equipment personnel and communication material - cleanliness. .

26. Margins Revenue – COG’s Revenue Revenue – Variable Costs Revenue Net Earnings Revenue Sales, General & Admin Revenue Product/Service % Gross Profit Margin % Contribution Margin % Net Profit Margin % Operating Expenses

27. Margins % Product/Service