Roadmap condensed 2015- june cgy
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Roadmap for Success- June 9
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Roadmap condensed 2015- june cgy
- 1. Your Road Map For Success: Business Plan Writing Workshop
- 2. Your Facilitator • Alexandra Kulas • Small Business Advisor at AWE • Communications expert with Start-up Canada and Enactus • Bachelor of Commerce in Entrepreneurial Management
- 3. What does AWE do? • Start-Up Training • Performance Learning Series- Build Your Business • Excelerator Program • Lending • Market Expansion Market Expansion Training, Supplier Diversity Network, Trade Missions, Buy/Sell Forums • Conferences Annual Leadership Series • Programs for Aboriginal Women
- 4. 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
- 6. Group One • Entrepreneur • Cash Flow • Target Market • Sole Proprietorship Group Two • Competitor • Profit • Contingency Plan • Elevator Pitch
- 8. 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
- 9. Why Do you need a Business Plan? Fact: Most lenders won’t consider financing a firm that does not have a business plan Internal Reason Forces the founding team to work together to hammer out the details of a business venture External Reason Communicates the merits of a new venture to outsiders, such as investors or bankers
- 10. 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
- 11. 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
- 12. Market Research The Spine of the Business Plan
- 13. 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
- 14. Market Research • Is about asking questions and finding information about: The Industry/Market Competitors Customers
- 15. 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?
- 16. 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.”
- 17. What business are you in? • What industry are you in? • Where is the industry going?
- 18. Industry Trends and Characteristics • What is your NAICS code?
- 19. Industry Trends and Characteristics Involves: •PEST Analysis •Porter’s Five Forces •SWOT •Size of an industry - Sales - Numbers
- 20. 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?
- 21. 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
- 22. 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?
- 23. Market Data • Is your business structured as a business to business or a business to consumer?
- 24. 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 success Determine how many customers are in the local market •Think of the “lowest hanging fruit”
- 25. Who are your key competitors? Identify your 4-5 closest competitors. Conduct a SWOT analysis for each: •Strengths •Weaknesses •Opportunities •Threats
- 26. Market Research • Who will buy? Demographics Lifestyle/Psychographics Buying Behavior Scope http:// www.environicsanalytics.ca/prizm-c2-cluster-lookup
- 27. Marketing Plan How You Reach Your Customer and Make the Sale!
- 28. Marketing Plan • Sales and Marketing= Finding Customers • Determine the best strategy to reach your customers • Outline the tactical details to implement each
- 29. 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
- 30. 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?
- 31. 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
- 32. How do you determine price? • Know your competition • Know your market • Know your worth • Be consistent
- 33. 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?
- 34. 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?
- 35. 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
- 36. Be Consistent • Review your positioning statement and your compelling value • Does your pricing rationale align?
- 37. 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?
- 38. Smart Marketing for Start-Ups • Build on your three key marketing activities • Activities and Tools to consider
- 39. 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?
- 40. Activities to Consider • Networking • Direct selling • Social Media • Advertising- Newspaper, Radio, Magazine • Publicity • Grand Opening • Trade Shows • Website
- 41. Marketing Support Tools • Presentation • Website • Print Materials • Business Cards • Email sales letters • Samples • Testimonials
- 42. How much of my revenue do I spend on marketing?
- 43. 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
- 44. Customer Profiling for B2C Important Information What do you know? How will this inform your decision making? Gender Age (child, teen, adult, senior) Occupation type (white collar, blue collar, sales, service, student, retired) Education level Homeowner Hobbies and interests When do they buy Market area (urban, rural, national, international) Size of market Population
- 45. 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
- 47. Financial Projections • Source and Use of Funds Statement • Income Statement • Balance Sheet • Cash Flow Statement • Break-Even Analysis • Ratio Analysis
- 48. 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.
- 49. 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)
- 50. Cash Flow Surprises That Could Hurt Your Start-Up 1. Not documenting cash-flow projections 2. Seasonal Sales Fluctuations 3. Unanticipated expenses and emergencies 4. New businesses don’t get normal terms 5. Sales volumes don’t always keep up with marketing expenses
- 51. Determining Costs 1. Start Up and/or Expansion Costs • Licenses/permits • Beginning inventory • Leasehold improvements • Marketing and promotions • Insurance • Website • Rent Damage Deposits etc.
- 52. Determining Costs 2. Ongoing Operating Costs •Rent •Salaries/Commissions •Utilities •Inventory •Supplies •Loan Payment •Taxes
- 53. 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.
- 54. 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
- 55. 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
- 56. 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
- 57. 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
- 58. Questions?
- 59. Thank you for joining us today! AWE is supported and funded by:
Hinweis der Redaktion
- A business plan is a blueprint outlining your business, the direction it will go, how it will get there, and the projected results. It reflects how all the pieces of your business fit together. It’s also dynamic. It can and likely will change over time as you adjust your services/product offerings to meet consumer demand, adapt your marketing and strategy, and your long term goals may also change dramatically as new opportunities and issues arise. I would encourage you to review your BP regularly to see how you’re progressing and make any changes. You will find that when you actually start your business, it’s easy to lose sight of your goals when you’re busy dealing with the day to day responsibilities of operating a business. You will be inundated with advice and people telling you about opportunities to expand your services/products, invest in more marketing, etc. With a BP, it gives you more confidence to say ‘that’s a great idea but that doesn’t fit into my plans right now, maybe in the future…” or “that idea really does fit into my business concept, strategy right now”.
- Like a resume which has key components – skills, education, work history - your business plan will be different from mine and from others in the room; however, these key common components will be included are these items which we will be going into more detail. The two biggest areas we get asked about is market research and financial projections, so I’ll be spending more time on these areas. Here are some tips though to keep in mind when developing your BP: -make sure it’s concise and backed up by research; -keep the reader in mind: avoid using complex industry jargon or technical terms, unless you explain it. (eg. client described her business as a ‘fusion of functionality of the inhabitable object with the dynamism of the experience of the wearable object’…she was basically saying she’s in interior design and fashion design) -use sentences and paragraph format -use charts, graphs, pictures if necessary (don’t go overboard) Above all, make sure you understand and can use it. Don’t feel pressured to generate a fancy 20 page university level essay. As a business advisor that reviews BP on a regular basis, it’s the quality of the information that’s important not the quantity or the way it’s presented.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- Customers: Who will buy my product and service and how will I reach them? Competitors: Who are they? What are their strengths and weaknesses? What is my advantage? What makes me unique? The Market: Who will want and be able to buy my products/service? Are there enough of these people for me to make money? Are there trends occurring in the market place that will affect, either positively or negatively, my product or service? What are some of the ways we could generate information about these three distinct groups? Group brainstorm and feedback This leads into sources of market research.
- What do you know about your potential customer, so basically who is your target market? Ask attendees to take a moment to fill out the first column (is it important to your business: yes or no?) They can fill the right column later. What are some other characteristics that are important to your business that may not be listed here? Eg. Family structure/have kids, married or single, house hold income, maybe very specific things like do they own a pet (pet business), have certain health conditions (health care business), have to own a home (interior design, real estate) etc. Why is it important to know who your target market is? The more you know about them, the more you’ll learn: -if your services/products meet their needs or if you will need to add on or change what you’re offering, -what’s important to this group (pricing, convenience, accessibility, etc.) -the best way to market to this group, -where you should locate your business And so much more. You may find that if your target market is very broad, you might want to break this group down further by identifying who your primary and secondary target markets are. For instance, a high-end lingerie store’s primary market might be women 25-40, single, with income of 50K+, and their secondary market is women 35-55, married, household income of 80k+. Two very different markets with different preferences/spending habits and requiring diff. marketing strategies. So, what’s the first step? Use this Customer Profile sheet on page 11 to help you identify who your target market is. Then go out and find how large your target market is…. Show: City of Edmonton or Calgary census website: population by ward Census Tract Profile (from StatsCan): population by postal code This information will help you identify how big and where your target market is located---will affect where you set up your location, how big of a geographic area you will need to cover, where to do marketing activities, and even if there’s potentially enough demand for your services/products. For example: you’d like to start a business that provides mobile health services to seniors. Your target market is men and women 60+years old. By looking at the City of Edmonton census info, you find that the biggest population of these people reside in NW Edmonton/St. Albert. You break that population down even further by checking it by postal code in NW Edmonton/St. Albert. This will help you determine what neighborhoods to do marketing in, the potential to partner with other businesses kin the area, maybe look for a temporary/permanent location etc. On the other hand, you might find the geographic area you wanted to serve, doesn’t have enough of your target market. You may want to expand your geographic area in order to encompass more people (for example: all of Edmonton, maybe outlying cities, the whole province, etc), but you need to keep in mind, it needs to be feasible and attainable. Once you’ve found this information, there’s also an interesting way to learn about what this population’s spending habits are through getting a PCensus report which can be provided to you free from The Business Link library (show the example report for Alberta Beach, food store) This information will give you insight into what people spend on, and what you may want to offer. So far, you’ve identified who your target market is, where they are located and possibly their spending habits. Now you need to prove it: is this really your target market and are your assumptions on products/services being offered, pricing, location, etc. correct? This is where primary research comes in. Remember, it’s the information you gather yourself from doing surveys, talking to suppliers, competitors, testing samples, etc. Hopefully the data you collect verifies that there’s strong demand for your product/service, what gaps there are currently, your pricing is within the range that’s acceptable by consumers or comparable to competitors and other items that may affect using your business: convenience, hours of operations, location’s accessibility, etc. You might be surprised by some of the results you get. You may find the strongest support for your product is actually a totally different age group, easy access and customer services is the most important to them, they’re willing to pay less than what you’re pricing your goods at right now, etc. In your BP, it’s important to discuss what type of research you’ve done, what were the results and how has this affected your plans. Don’t be afraid to say you were wrong and how you’ve adapted your business. Some tips on finding information about your target market: -it’s not easy. There’s a lot of information and takes time to pick through it all. And the information can sometimes be out-dated. On the flip-side, sometimes there’s no reports or stats on what you’re looking for, especially if your business concept is something very new or narrowly defined. Do the best you can and if you’re having problems, contact us and we can guide you. -don’t spend too much time searching on-line. We all know how frustrating that can be! Check out the resources we list on the Market Research excel sheet I handed out, those are some of the best places to find information. Ask people for help! Contact us, your public library or The Business Link library.
- Projected Sales How much you can sell in each month over a 12-month period Expenses Inventory purchases Start Up costs Ongoing operating expenses First you should calculate your expenses to determine the sales required to pay your expenses and make a profit. Expenses are your monthly cost for supplies, rent, utilities, and loan payment. This includes start-up costs and monthly expenses. Net Cash Balance – (Net Income/Loss) The amount left after all costs are deducted from sales. Try to be as accurate as possible, based on the information and understanding you have. If your projections are substantially over-estimated or under-estimated because you think it presents a ‘better’ picture for an outside investor or bank for financing purposes, you could be undermining your opportunity to obtain financing.
- Another very important use of your market research and analysis is to help you project sales. It provides the rationale for your underlying assumptions. What is forecasting? It is an educated guess based on data gathered in your market research. There are two methods of forecasting: Bottom Up Top Down We recommend you try both methods. Once the values are determined by each method, compare the results. The accuracy of your projections is reflected in the closeness of the two values. If there is a large difference between the values, rework your calculations for each method and rethink your assumptions. If values are still way off, go back and re-evaluate your market research data and your analysis of it. Do your assumptions make sense based on the data found?
- Now that you know how much money you need to start and run your business, you have to determine where you are going to get it. There are several financing options you may want to consider: Personal Savings – Business owner’s own money or assets. Love Money – investment by friends and family; usually more patient for payback than more formal investors. Angel Investors – individuals who tend to finance early stages of a business - $100,000 range Venture Capital – private or publicly sponsored capital funds; $1,000,00 range; usually take equity position and like to have a say in significant decisions IPO – selling equity through investment dealers to the public by issuing shares Banks & Credit Unions – Most banks or credit unions will lend to businesses. Compare interest rates and administration fees charged by different financial institutions and determine how interest rates are calculated. Credit Cards – personal and business; compare interest rates and administration fees Lease Financing – Rather than buying equipment and other assets, these can be leased. With leases, businesses can obtain the use of assets (e.g. office furniture, computers, cash registers) without having to raise the cost of the asset in advance. Supplier Financing – Terms can be negotiated usually after you have a track record established with a supplier. Government Supported Business Financing – The guidebook refers to such organizations as Alberta Women Entrepreneurs, the Community Futures Development Corporations, and others. These are some of the more common sources of financing. Personal Lines of Credit – To be used only in emergency. Banks and credit unions can establish a line of credit for a business, allowing the entrepreneur to draw cash up to an established limit.
- What Do Lenders Look At? Credit History Once you apply for a loan with a financial institution, they will use Equifax or Trans Union Canada to check your personal credit history. You can also check your credit history yourself. Viability of the business plan & likelihood of success. How well thought out is your business idea and what are the chances it will succeed? Management Capacity Experience of the owner/management Do you have related experience? Owner’s investment Are you prepared to invest your own money in this business?
- What Do Lenders Look At? Credit History Once you apply for a loan with a financial institution, they will use Equifax or Trans Union Canada to check your personal credit history. You can also check your credit history yourself. Viability of the business plan & likelihood of success. How well thought out is your business idea and what are the chances it will succeed? Management Capacity Experience of the owner/management Do you have related experience? Owner’s investment Are you prepared to invest your own money in this business?