roadmap condensed 2015- june cgy
TRANSCRIPT
Your Road Map For Success: Business Plan Writing Workshop
Your Facilitator
• Alexandra Kulas• Small Business Advisor at
AWE• Communications expert
with Start-up Canada and Enactus
• Bachelor of Commerce in Entrepreneurial Management
What does AWE do?• Start-Up Training• Performance Learning Series- Build Your Business• Excelerator Program• Lending• Market ExpansionMarket Expansion Training, Supplier Diversity Network, Trade Missions, Buy/Sell Forums
• ConferencesAnnual Leadership Series
• Programs for Aboriginal Women
Objectives for the workshop• Describe your business or concept• Explain why the business plan is important• Identify the main sections of a business plan• List sources for market research information• Create a customer profile• Determine method for sales forecast
Group Activity
Group One• Entrepreneur• Cash Flow• Target Market • Sole Proprietorship
Group Two• Competitor • Profit• Contingency Plan• Elevator Pitch
Let’s Get Started!
What is a Business Plan?• A living document that outlines the
strategy behind your business.• It explains how you will start and operate
your business• 30-45 page document on average
Why Do you need a Business Plan?
Fact: Most lenders won’t consider financing a firm that does not have a business plan
Internal ReasonForces the founding team to work together to hammer out
the details of a business venture
External ReasonCommunicates the merits of a new venture to outsiders, such
as investors or bankers
What Does a Business Plan Include?
• Cover Page• Table of Contents• Executive Summary• Business Concept• Marketing Research*
• Marketing Plan• Operations Plan• Financial Plan*• Risk Analysis• Appendices
Red Flags in Business Plans• Founders with none of their own money at
risk• Defining the market size too broadly• Overly aggressive financials• Hiding or avoiding weaknesses• Sloppiness in any area• Too long or too short of a plan
Market ResearchThe Spine of the Business
Plan
Market Research• Uncovering your best customer• Provides background to determine how you
will market and operate your company• Highlights how the industry works, it’s
history, and it’s projected future
Market Research• Is about asking questions and finding
information about:
The Industry/Market
Competitors
Customers
What should I consider when I start?
• Think like a detective• Identify the key questions you want answers
to• Constantly evaluate the information you
have gathered, what are it’s implications to your business?
Answering the "So What Question"
• Look for information that provides evidence or rationale to support your claim
• Seek out specific information: be aware of making leaps in logic when making deduction from available information
• Example of a leap in logic: “The economy is doing well therefore my business will do well.”
What business are you in?• What industry are you in?• Where is the industry going?
Industry Trends and Characteristics
• What is your NAICS code?
Industry Trends and Characteristics
Involves:•PEST Analysis•Porter’s Five Forces•SWOT•Size of an industry
- Sales - Numbers
What industry are you in?Identify the industry your company is in…Develop a profile of the industry to answer questions such as: •How does the industry work? •How do existing companies reach customers? •Who are the competitors? •Is the industry fragmented?
What industry are you in?• Tip: Be cautious about using market
research to prove the WHY the business works, use market research to show under WHAT condition the business works
Where is the industry going?• Briefly outline the history of the industry• How could past trends impact your
predictions and what does this mean for your business?
Market Data• Is your business structured as a business to
business or a business to consumer?
What is your local market?Define the immediate market you are targeting.•What is the geographic scope? It’s important to define regardless of delivery•This will help create focus for marketing and sales to contribute to business successDetermine how many customers are in the local market •Think of the “lowest hanging fruit”
Who are your key competitors?Identify your 4-5 closest competitors.Conduct a SWOT analysis for each:•Strengths•Weaknesses•Opportunities •Threats
Market Research• Who will buy?
Demographics
Lifestyle/Psychographics
Buying Behavior
Scope
http://www.environicsanalytics.ca/prizm-c2-cluster-lookup
Marketing PlanHow You Reach Your
Customer and Make the Sale!
Marketing Plan• Sales and Marketing= Finding Customers• Determine the best strategy to reach your
customers• Outline the tactical details to implement
each
What is Marketing?• Anything that influences the buying decision
of the customer• Starts with the initial presentation of you
(whether it be in person, over the phone, or online)
• Good marketing is built on small action oriented steps that you repeat again and again to create an impact over time
How to form a strategy based on marketing research
• Articulate the key message of your company• Identify the most effective ways to reach
your best customer- utilize your research to understand their needs, potential spending, and what they value
• How does this reflect or incorporate your key message?
Marketing Strategy• Identify 3-5 specific marketing activities
you’ll employ to find your best customers• Don’t be overly ambitious. Be realistic • Provide details on each activity
How do you determine price?• Know your competition• Know your market• Know your worth• Be consistent
Know your Competition• Outline what competitors are charging for
similar or like products/services• How does your product/service compare?• Where does your price position in the
market?
Know your Market• Identify what price the market will bear• How does your product or service compare?• Where does your price position you in the
market?
Know your Worth • Don’t be afraid to charge for your products
or services!• It’s easier to decrease your price once you’re
in the market than it is to increase it• It’s very common for entrepreneurs to
undervalue their offerings
Be Consistent• Review your positioning statement and your
compelling value • Does your pricing rationale align?
What is YOUR Marketing Strategy?
• Define the overall direction of your marketing efforts
• Establish the most effective methods to reach your ideal customer (target market)
• What is your primary marketing activity?• What is your secondary marketing activity?• What is your supporting marketing activity?
Smart Marketing for Start-Ups• Build on your three key marketing activities• Activities and Tools to consider
Build on your 3 Key Marketing Activities
• Outline the implementation for each activity. Think about:
• How will you do this?• Where will you do this?• What support materials are needed?• What is the follow-up system?• When will you do this and how often?• What are the costs?
Activities to Consider• Networking• Direct selling• Social Media• Advertising- Newspaper, Radio, Magazine• Publicity• Grand Opening• Trade Shows• Website
Marketing Support Tools• Presentation• Website• Print Materials• Business Cards• Email sales letters• Samples• Testimonials
How much of my revenue do I spend on marketing?
How do you define smart marketing objectives?
• Define your top 3 marketing objectives for the next year
• Include one that is your yearly sales target• Calculate the number of sales you’ll need
per year to achieve that target• Set a goal for the number of clients you
want to gain for the year
Customer Profiling for B2CImportantInformation What do you know? How will this inform your
decision making?GenderAge(child, teen, adult, senior)
Occupation type(white collar, blue collar, sales,service, student, retired)
Education levelHomeownerHobbies and interests
When do they buy
Market area(urban, rural, national, international)
Size of marketPopulation
For your small business…
• Explain the target market and why you chose that target market
• Identify 1 key message for the business• Identify 1-3 tactics of getting the
message out
5-10 MINUTE BREAK
Financial Projections• Source and Use of Funds Statement• Income Statement• Balance Sheet• Cash Flow Statement• Break-Even Analysis • Ratio Analysis
Cash Flow Statement • The cash flow statements provide an
indication of whether a firm will be able to maintain a sufficient cash balance to get up and running successfully.
• Should prepare your cash flow on a monthly basis, at least for the first two years of business.
What is Included in a 12-Month Cash Flow?
• Projected Sales/Sales Forecast
• Expenses
• Cost of Sales
• Startup
• Ongoing Operating
• Net Cash Balance (net income/loss)
Cash Flow Surprises That Could Hurt Your Start-Up
1. Not documenting cash-flow projections2. Seasonal Sales Fluctuations3. Unanticipated expenses and emergencies4. New businesses don’t get normal terms5. Sales volumes don’t always keep up with marketing
expenses
Determining Costs1. Start Up and/or Expansion Costs• Licenses/permits• Beginning inventory• Leasehold improvements• Marketing and promotions• Insurance• Website • Rent Damage Deposits etc.
Determining Costs2. Ongoing Operating Costs•Rent•Salaries/Commissions •Utilities•Inventory •Supplies•Loan Payment •Taxes
Important Tip Calculate your expenses first and then determine what will be required in monthly sales in order to cover those expenses.
Remember: Factor in a small contingency amount to take care of unforeseen costs.
Forecasting Sales Bottom Up Method
1.Number of people passing the location per day. (Observe the people passing by to obtain this info. Try different times of the day to determine an average.)
500
2. Number of people who enter the business 250
3. Estimated percentage of those people entering the business who make a purchase 50%
4. Multiply Line 2 by Line 3 to find:Potential Buyers Per Day 125
5. Average purchase per visit. (Ask in a customer survey or find out from competitors.) $40
6. Multiply Line 4 by Line 5 to determine:Average Daily Sales $5,000
7. How many days per year will you be open? 300
8. Multiply Line 6 by Line 7 to determine:Projected Total Annual Sales $1,500,000
Forecasting Sales Top Down Method
1. Estimate the number of people or families in your market area. 50,000
2. Identify the percentage of market survey respondents who indicated they do or would use a business such as yours. 40%
3. Multiply Line 1 by Line 2 to find:Estimated Market 20,000
4. Number of times per year the respondents say they would use this type of business 2
5. Multiply Line 3 by Line 4 to find the:Number of Potential Sales per Year 40,000
6. Amount per average sale. (Ask in a survey or find out from competitors.) $25.00
7. Multiply Line 5 by Line 6 to find:Potential Total Market (in dollars) $1,000,000
8. The number of existing competitors plus one (you). 4
9. Divide Line 7 by Line 8 to find:One Full Market Share 250,000
10. What percentage of One Full Market Share do you expect to gain in your first year? 50%
11. Multiply Line 9 by Line 10 to find:Projected Annual Sales $125,000
How Can You Finance Your Business?
• Personal Savings• Love Money• Angel Investors• Venture Capital• IPO• Banks & Credit
Unions
• Credit cards• Lease Financing• Supplier Financing• Government
Supported Business Financing
What Do Lenders Look At?• Credit history• Viability of the business plan• Likelihood of success• Management capacity• Experience of the owner/manager• Owner’s investment
Questions?
Thank you for joining us today!
AWE is supported and funded by: