[IT 174: ELECTRONIC COMMERCE]

Transcription

1 E-BUSINESS PLAN OUTLINE I. EXECUTIVE SUMMARY While appearing first, this section of the business plan is written last. It summarizes the key elements of the entire business plan. The executive summary is a synopsis of the key points of the entire e-business plan. Its purpose is to explain the fundamentals of the business in a way that both informs and excites the reader. If, after reading the executive summary, the investor or manager understands what the business is about and he/she is eager to know more, the executive summary has done its job. The executive summary is not just a brief description of the business and its products. This informationis presented in the business description section inside the plan and should not be duplicated here. Because the summary is a synopsis of the entire plan, don't let information from any one section dominate your executive summary. The executive summary is not an outline of the plan. First-time summary writers sometimes make the mistake of creating an extended table of contents. For example, don't tell the reader there is a competitor analysis inside, instead summarize the analysis by identifying one or two key competitors and your company's primary source of advantage in the competitive marketplace. The executive summary is not hype. While a goal of the executive summary is to excite the reader enough to read the entire plan, the temptation to make exaggerated claims or accentuate only the positive must be avoided. For example, you might want to point out a significant risk or a well-established competitor and suggest how the business will deal with this problem. This provides a sense of balance and realism in what can be an over-glorified summary of the plan. An experienced investor or businessperson will recognize hype and this will undermine the plan's credibility. The executive summary is not a cut-and-paste exercise. Drafting the summary can begin with key paragraphs and sentences from inside the plan, but the end result should be written "fresh" without large-scale duplication of content and with a smooth flow of plan highlights from the beginning to the end. Content of the Executive Summary In addition to summarizing the business idea and business plan, the content of the executive summary must be written with the intended reader in mind. If the plan is being written for an investor, then important content about financial requirements must be included. Similarly, avoid terminology and concepts which may be unfamiliar to the reader. For example, don't use e-business terms such as infomediary, digital divide, or mass customization unless you explain the meaning or know with absolutely certainty that the reader will know what they mean. The best executive summary, and the plan itself, shows an understanding of what issues and questions are important to the reader and addresses them in a straightforward and comprehensive manner. Length of the Executive Summary There is really only one answer to the question "how long should an executive summary be?". The answer is "short". Most business ideas need more than one page to tell the reader what the business is about, but only rarely will more than two pages be required. Conventional wisdom is Instructor: HAJAH T. SUENO, MSIT Page 1

2 that if you can't summarize your business plan in two pages, then this is an indication to the reader that you are indecisive and can't set priorities. II. DESCRIPTION OF THE BUSINESS A. INDUSTRY ANALYSIS A good way to open this section is with a brief industry analysis. An industry is a group of businesses that manufacture, distribute, or sell similar projects or services. An industry analysis defines the industry in which the business will operate (e.g., retail, information distribution, financial services) and uses reliable and objective data to show the future prospects of the industry and, by implication, the business. B. VISION/MISSION i. VISION Vision statement focuses on the what of your business. It should describe your idealized perception of what your business will look like under ideal conditions. KEY COMPONENTS of VISION STATEMENT Name of planned venture The product/service you plan to provide The target markets you intend to serve Vision statement should be short (one/two sentences) Vision statement should be easy to understand and easy to remember. example: The Hockey House plans to provide a wide range of hockeyrelated products and services to casual skaters, minor league hockey players, community clubs and organizations, and competitive hockey teams and players. ii. MISSION A mission statement focuses on the how of your business. it defines the purpose of the venture. it outlines the reason for being for your business and provides some understanding of how your business will be operated-the Strategy KEY COMPONENTS of MISSION STATEMENT What you business will do Its market focus, niche, or particular image Your planned location and the geographic market served How you plan to grow your business Your sustainable uniqueness or what will distinguish your business from others on a long term basis Example mission statement: The Hockey House will provide a broad range of skates, sticks, pads, sweaters, and other related hockey equipment and services intended to meet the requirements of ice and in-line hockey players at all levels of ability; from beginners to semi-professional and professional. It will also sell related supplies and equipment such as goal nets and timers with a view to being the one stop shop for hockey in Manitoba and Northwestern Ontario. It will sell to individuals, teams. and community clubs through a retail outlet located adjacent to a major hockey complex in Winnipeg but will also produce a 4 color catalogue and call personally on groups and communities outside the city. The principal competitive edge will be the breadth of selection we can offer and the quality of service we plan to provide. Instructor: HAJAH T. SUENO, MSIT Page 2

3 C. CORE VALUES STEP 1: Each member should define he/his personal values STEP 2: Consolidate the common values by which business will be operated Example: In conducting our business, we will implement our vision by conducting our affairs so that our actions provide evidence of the high value we place on: INTEGRITY by dealing honestly with our customers, employees, suppliers and the community RESPONSIBILITY: by taking into account the environment in which we do business, community views and the common good PROFITABILITY by being conscious that an appropriate level of profit is necessary to sustain the business and allow our values to continue to be observed VALUE by providing quality products that deliver value for money EMPLOYEES by providing quality equitable opportunities for development in a healthy workplace with appropriate rewards. D. BUSINESS GOALS/OBJECTIVES Stating what you intend to do in your mission statement is insufficient for most business plan readers, and certainly so for all investors. In addition to stating what you are going to do, you must also indicate how you are going to do it. To do that you need to set some business goals. A goal is a statement that clearly describes actions to be taken or tasks to be accomplished by a company. E. PROJECT OBJECTIVES If a mission statement expresses what is to be done and goals state how the promise of the mission statement is to be fulfilled, then project objectives answer the when, where, who, and by how much questions. Achieving goals doesn't just happen. Usually one or more projects are initiated in order to accomplish the action or task stated in the goal. The nature and scope of the project is expressed through its objectives. So, there should be a clear link between a goal, its subordinate project(s), and the project's objectives. Be aware that whereas a goal is a general statement about what needs to be accomplished, an objective states a specific, shortterm, measurable, and verifiable condition that must exist to fulfill the affiliated goal. F. VALUE PROPOSITION The value proposition describes the benefits that a company's products or services provide to customers and/or the consumer's need that is being fulfilled. In other words, why should a customer buy your product or service? Since the focus of the value proposition is on the customer, the proposition should be stated from the customer's perspective. Value propositions (with examples) may be based on lowest cost, superior customer service reduction in product search or price discovery costs, product customization, or provision of niche products (anything left-handed). Instructor: HAJAH T. SUENO, MSIT Page 3

4 This is also the "first-best" opportunity to tell the reader who are your customers. Complete information about your target markets will be covered in the market analysis section, but here you should identify your primary, secondary, and, if necessary, tertiary target markets. III. OPPORTUNITY ANALYSIS A. PRODUCTS AND SERVICES This section of the business description offers the reader a thorough and straightforward description of the products or services the business will provide to customers. For example, include product characteristics such as functionality, design, styles, and colors. The product/service description should be complete enough to give the reader a clear idea of your products/services, but not overly detailed or technical so the reader is confused or loses interest and attention. If the product is unusual or not easily described, include a picture or a drawing. If a range of products or services are being offered, highlight the principal one or two and list the rest of the range here and/or put the full product/service range in an appendix. As much as possible, describe the product or service from the customer's perspective. The description should tell the reader what makes your company's product or service different or unique in the marketplace. More detail on this will be provided in the competitor analysis section, but a brief highlighting of product distinctions and key selling attributes here will help the reader understand the product or service better. After describing the product or service, tell the reader what benefits the customer will receive from purchasing the product or service (e.g., what problem is being solved). This will most likely further explain the value proposition statement defined earlier. B. DOMAIN NAME Domain name of your E-business. Should be product specific or company name specific. C. ONLINE CUSTOMERS Who will be your target customers? Explain how you would segment your potential online customers and provide your online customer profile. Describe your online target customer s needs and wants and their online buying behavior. D. ONLINE COMPETITORS Do most of your competitors have Web site? List the direct online competitors for your E-biz and describe their E-bz strategies. How do you want to differentiate your products and services on the Web from your competitors? Instructor: HAJAH T. SUENO, MSIT Page 4

5 IV. WEB SITE DEVELOPMENT A. WEB SITE TYPE The type of your Web site should be determined by goals, budget of your Web site, and nature of your business. What will be the major source of your E-biz income (e.g. advertising, rental, or sales income)? What type of Web site do you want to create? B. DEVELOPMENT TOOL Includes Web development resources It discusses the technology and application to be used. C. INTERNET SERVICE PROVIDER (ISP) i. ISP EVALUATION WORKSHEET Name of ISP Web URL Address Years in Business Features and Services Customer Service Responsiveness Pricing Network Utilization Downtime and outages, Connection speed Technical Support Storage/data transfer Capability (FTP Access) Customer Staff ration Instructor: HAJAH T. SUENO, MSIT Page 5

6 ii. ISP COST WORKSHEET Contact Person Telephone Number Address Account Setup or Activation fee Monthly Service plan Usage Cost Estimate Software Included Upgrades in access Training Included e.g. dedicated line, leased line, toll free line usage, wireless access Web Access e.g. Basic hosting services, premium hosting services D. CONTENT DESIGN i. LAYOUT/COLOR/THEME What look are you going for? How do you want your visitors to feel or perceive your company or product when they visit your site? ii. IMAGES/GRAPHICS Images: photos, clipart, animated art, digicam? Logo: existing logo, or design from scratch iii. PAGES List your pages and describe the content. iv. SITE MAP Draw a site map of your Web site. v. NAVIGATIONS List your navigations Instructor: HAJAH T. SUENO, MSIT Page 6

7 E. DESIGN WORKSHEET Manpower Electronic Content you can provide Time to design your site Time to create and program your site Extra fees for software and development Size of your site Management and Control of your content Security F. SITE CONSTRUCTION What information on the site should be regularly updated and how does your business plan to keep it updated? V. E-MARKETING ANALYSIS A. E-BUSINESS TARGET MARKETS The segmentation is based on: Demographic characteristics: specific, objective factors such as age, gender, race/ethnicity, education, occupation, and income. Geographic characteristics: location-based factors such as country, state, city, mobile workers, and lifestyle setting (e.g., rural versus urban). Psychographic characteristics: personality traits such as attitudes, beliefs, life experiences, needs, and desires. Consumer characteristics: customer-based factors such as loyalty, shopping frequency, and willingness to purchase from the Internet. B. E-MARKETING OBJECTIVES Meeting marketing objectives should lead to sales. (If not, you need to set different marketing objectives.) They should: Be clear Measurable, and Have a stated time frame for achievement. Instructor: HAJAH T. SUENO, MSIT Page 7

8 Examples of marketing objectives follow: Increase product awareness among the target audience by 30 percent in one year. Inform target audience about features and benefits of our product and its competitive advantage, leading to a 10 percent increase in sales in one year. Decrease or remove potential customers' resistance to buying our product, leading to a 20 percent increase in sales that are closed in six months or less. If you have multiple objectives, make sure they are consistent and not in conflict with each other. Also, be sure that the remainder of your marketing plan components - the marketing strategy, budget, action programs, controls and measures - support your marketing objectives. C. E-MARKETING STRATEGIES Action plan that can help achieve your E-marketing objectives. D. PRODUCT PRICE CATALOG List of your products/services with corresponding prices, description, available sizes, color.. etc.. E. BUDGET PLAN Estimates on Internet service and development costs, including upgrade expenses Estimates of purchasing, configuring, and operating an in-house server Many ISPs offer package services that include access, hosting, Web design, and maintenance services A budget spreadsheet with cost breakouts for each ebusiness marketing plan element An assessment of the impact of the ebusiness marketing program on other traditional media expenditures F. ONLINE PROMOTION Followings are examples of online tools you can use to promote your ebusiness: Paid Advertising Direct Marketing ( publishing) Search Engines Public Relations Linking Strategies Discuss your online promotion tools Instructor: HAJAH T. SUENO, MSIT Page 8

9 G. ONLINE ADVERTISEMENT Banners and buttons Banners and buttons (pop-up window) occupy designated space for rent on Web pages Evolution of banners: click-through, animated GIF, interactive banner Web banners help build brand awareness Tickers are banners that move across the screen Sponsorships integrate editorial content and advertising Interstitials (roadblocks) are Java-based ads that appear while the publisher's content is loading Using online or sign-on Web casting services such as PointCast and Ifusion, which automatically download customized information to recipients Online advertising and search engine promotion services Describe any promotional activities for your ebusiness. List search engines and commercial online services that you want to register your Web site. Describe your keyword strategies for search engines. Public Relations Content sponsorship: most free online content that is meant to inform, persuade, or entertain is public relations. Brochureware: is used to describe sites that inform customers about products or services without providing interactive features. Interactive features such as games and electronic post cards can be used to entertain. Community building: online events, chat rooms and discussion groups can be used to build community. The public knows there is no filtering process in place, which means that your message may have less credibility than traditional editorial coverage. H. DISTRIBUTION PLAN The distribution channel you will use to move the product or service to the customer (e.g., direct sales, wholesale distributors, brokers) and, if necessary, back again (e.g., returns). Distribution strategies deal with actual delivery of products and services to your customers. You can deliver your products online if you are selling service products or software programs. Speedy delivery and reliable customer service, including tracking inventory, order, and delivery status are key success factors for your distribution strategies. I. DEMAND FORECAST Estimates of product or service sales, based on the market analysis and assumptions about the effectiveness of the pricing, promotion, and distribution strategies. Instructor: HAJAH T. SUENO, MSIT Page 9

10 J. TARGET MARKET RESEARCH With 1-3 target markets identified, the next step is to conduct market research to provide some concrete data about them. In this section you are seeking answers to questions such as: What are the specific demographics (age, education, income, etc.) of these markets? How many individuals are in the target market? Do they use the Internet? Do they buy on-line? Are these markets growing? stable? declining? K. CUSTOMER SERVICE Customer service is a series of activities designed to enhance the level of customer satisfaction. Types of customer service functions include: answering customer inquiries, providing search and comparison capabilities, providing technical and other information, letting customers track accounts or order status, allowing customers to customize and order online. Tools of customer service include: personalized web pages, FAQs, a chat room, and automated response, help desk and call centers. L. PERFORMACE MANAGEMENT With your ebusiness, you may want to measure your performance hourly, incorporate feedback daily and reallocate marketing resources weekly for best results. Review impact of campaigns and alter the offer if returns are not being met Review performance vs. objectives and demand immediate changes when targets are not met Reallocate marketing dollars if returns are not being met To evaluate your emarketing performance quantitatively, you need to measure: Traffic of your Web site For example, provides traffic report by generating Growth in monthly unique visitors Growth in days per visitor/month Growth in depth of visit (unique pages/month) You may install a software program that measure Web traffic Or you may hire an outside agency to design a customer package that meets your evaluation needs. Site ranking vs. competitors Financial results such as revenue and profitability Press Coverage You should also include some qualitative factors such as: Customer and telephone calls Customer suggestions Number of complaints Customer profitability Vendor feedback on site design/easy of navigation Instructor: HAJAH T. SUENO, MSIT Page 10

11 VI. COMPETITIVE ANALYSIS A. DIRECT COMPETITORS These are businesses that are offering identical or similar products or services as your business. These are companies that customers can easily buy from instead of from you, so these companies represent your most intense competition. B. INDIRECT COMPETITORS These are businesses that are offering products and services that are close substitutes. These competitors are probably targeting your markets with a same or similar value proposition, but delivering a different product. C. FUTURE COMPETITORS These are existing companies that are not yet in the marketplace that you intend to occupy, but could move there at any time. For Purma Top Gifts, a future competitor is an existing bricks-and-mortar gift shop in Purma that decides to start selling products on-line. One obvious source of future competition is an indirect competitor. D. COMPETITORS ANALYSIS GRID Company Products/services Customers Sources of competitive advantage Strengths Weaknesses E. COMPETITIVE POSITION i. OPPORTUNITIES AND STRENGTHS The competitor analysis grid reveals the strengths and weaknesses of your competitors. The other half of a SWOT analysis is to look for opportunities and threats that your company can use. For example, a weakness-opportunity strategy would create an opportunity for your business based on a weakness found in competitors. Or a strengththreat strategy focuses on risk avoidance by initiating a strategy that minimizes a threat caused by a competitor's strength. More information about this SWOT analysis approach can be found in most strategic management textbooks. Tell the reader specifically what will give your business a competitive edge in contrast to other competitors. For example, your business will provide a full range of products, competitors A and C don't. Or your business will provide after-purchase customer service, something only competitor C does. Or your merchandise will be of a higher quality and include a money-back guarantee, something no other competitor does. Or competitors B and C sell the best widgets, but your site will sell the best gadgets. Instructor: HAJAH T. SUENO, MSIT Page 11

12 ii. COMPETITIVE STRATEGIES A classic approach to thinking about and writing this section is to use the competitive strategies found in the strategic management literature. For example, look at your product, pricing, promotion, distribution, and service and ask the following questions (adapted from the competitor analysis grid): Cost leadership: Can you be a low-cost producer and sell equivalent or better goods in the marketplace for less? Differentiation: How can you distinguish your product in the marketplace? Innovation: Is there opportunity to create a new way of doing business, perhaps one that changes the nature of the industry? Growth: Are there opportunities to expand production, sell into new markets, introduce new products? Alliance: Can current or prospective production, promotion, and distribution be improved through partnerships with suppliers, distributors, and others? Time: Can your business reduce product cycle time? Offer express customer service? Use time in other ways that your competitors are not doing? There may also be opportunities for you to: Lock in customers and suppliers Create switching costs for customers and/or suppliers Improve business processes Raise entry barriers for rivals and substitute products Create a strategic information system or strategic information base The answers to these questions might reveal sources of competitive advantage such as patents, branding (e.g., a marketable domain name such as plumber.com), innovative product sales techniques, better and/or cheaper sources of supply than competitors, more entrepreneurial management, and superior customer relationship management strategies. VII. MANAGEMENT PLAN An outline of your business's legal structure and management resources, including your internal management team, external management resources, and human resources needs. VIII. OPERATING PLAN A. BUSINESS LOCATION As an on-line business, the primary location of your business is the Internet, and various aspects of establishing and maintaining your location in Cyberspace will be discussed in the Web presence section below. However, every e-business will also have a physical presence, even if it is in the entrepreneur's home. If your e-business sells product out of a physical storefront, stores product in a warehouse, ships product from a distribution depot, or services customers from a call center, those location-specific aspects of your business should be identified here. If location is an important consideration for business success, then be sure to highlight that here. For example, Amazon.com located its warehouses in small population states such as Delaware and Nevada so it can ship books into the large East Coast and California markets without charging sales tax, giving it a competitive price advantage over local bookstores. Instructor: HAJAH T. SUENO, MSIT Page 12

13 B. OPERATING FACILITIES AND EQUIPMENT Concurrent with the discussion of location, or immediately following, is a description of the operating assets the business will require, including buildings, equipment, fixtures, vehicles, and software. Again, the information that is provided should be brief and focus on facilities that contribute to the value proposition (e.g., an equipment patent or software application that allows unique or highly efficient production techniques). C. PRODUCTION AND OPERATING PROCEDURES This subsection outlines the day-to-day operating procedures that describe how the value sold to customers is created. Only operating procedures and policies that are unique or special should be highlighted here. For example, if the business will use new technology to speed work flow and achieve new efficiencies in information or product handling, say so here. D. PURCHASING PROCEDURES If operations is about converting inputs into outputs, then purchasing inputs should be considered for inclusion in the operations plan. The nature of these inputs will largely depend on the business -- raw materials for manufacturers, components for assemblers, finished products for retailers, equipment and supplies for service providers. Highlight any major purchasing considerations, such as e-procurement or participation in a digital exchange, that will give the business increased efficiencies over competitors. E. ORDER PROCESSING Process or the work flow associated with the picking, packing and delivery of the packed item(s) to a shipping carrier. Include the order process and fulfillment process (i.e. process that happens when the customer orders an item, shipping and customer s feedback) IX. SWOT ANALYSIS STRENGTHS WEAKNESSES OPPORTUNITIES THREATS Instructor: HAJAH T. SUENO, MSIT Page 13

14 X. FINANCIAL ANALYSIS A. STARTUP BUDGET If the business is a new one, you will need to prepare a budget that defines the expenses required to start the business, before it can begin to generate revenue through sales. For almost every business this includes items such as office furnishings, legal fees, product development, manufacturing equipment, and vehicles. For an e-business, a start-up budget will also include computers, software, Web site development costs, and provision of Internet service. A draft start-up budget template has been developed for your use. It will have to be modified to accommodate your business requirements. B. INCOME AND EXPENSE STATEMENT An income and expense statement is an accounting term for what most people call a budget. The I&E statement includes income items such as revenue from sales and interest income. It also includes all anticipated expense items, usually grouped into logical categories such as cost of goods sold, administration expenses, interest, and taxes. The statement concludes with various profit figures -- operating profit, profit before taxes, and net profit. Instructor: HAJAH T. SUENO, MSIT Page 14

15 (Your Company Name Here) Income and Expense Statement Years ending: December 31, 200_ - December 31, 200_ INCOME Current Year Dec 31, 200_ 2nd Year Proj Dec 31, 200_ 3rd Year Proj Dec 31, 200_ 4th Year Proj Dec 31, 200_ Gross Receipts on Sales Dividend and Interest Income TOTAL INCOME EXPENSES Cost of Goods Raw materials and supplies Salaries and wages Payroll taxes Facilities Total Cost of Goods Sales, General, and Administration Salaries and wages Payroll taxes Rent and lease expenses Utilities Insurance Web site hosting Advertising Vehicle expenses Accounting and legal services Total Sales, General, and Administration Buildings and Equipment Building renovations Manufacturing machinery and equipment Office equipment and computers Vehicles Depreciation Total Buildings and Equipment Other Expenses New product development Web site development Debt reduction Dividend distribution to owners Total Other Expenses TOTAL OPERATING EXPENSES Operating Profit Less: interest expense Profit Before Taxes Less: corporate taxes NET PROFIT Instructor: HAJAH T. SUENO, MSIT Page 15

16 C. BALANCE SHEET The balance sheet is a statement of the business's assets (what it owns), liabilities (what it owes), and owner's equity (what it is worth). (Your Company Name Here) Balance Sheet Years ending: December 31, 200_ - December 31, 200_ ASSETS Current Year Dec 31, 200_ 2nd Year Proj Dec 31, 200_ 3rd Year Proj Dec 31, 200_ 4th Year Proj Dec 31, 200_ Current Assets Cash Short-term investments Accounts receivable Inventory Prepaid expenses Total Current Assets Fixed Assets Land Buildings Equipment and machinery Vehicles Less: accumulated depreciation Total Net Fixed Assets Intangibles Goodwill Intellectual property Total Intangibles TOTAL ASSETS LIABILITIES AND OWNER'S EQUITY Current Liabilities Accounts payable Short-term notes payable Accrued expenses payable Total Current Liabilities Long-term Liabilities Long-term notes payable Mortgage payable Total Long-term Liabilities Owner's Equity Invested capital Accumulated retained earnings Total Owner's Equity TOTAL LIABILITIES and OWNER'S EQUITY Instructor: HAJAH T. SUENO, MSIT Page 16

17 D. CASH FLOW STATEMENT Even if the income and expense statement shows profits and the balance sheet shows positive owner's equity, you may still not have a viable business. Why not? Because a business needs cash on hand in order to pay bills. The purpose of the cash flow statement is to monitor changes in the cash position of a business over a period of time. (Your Company Name Here) Cash Flow Statement Year ending: December 31, 200_ INFLOW 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Jan- March April-June July-Sept Oct-Dec Gross Receipts on Sales Dividend and Interest Income Invested Capital TOTAL FUNDS IN OUTFLOW Cost of Goods Produced Sales, General, and Administration Buildings and Equipment Other Expenses Interest Expense Corporate Taxes TOTAL FUNDS OUT Net Cash Flow Plus: Beginning Cash Balance Ending Cash Balance Instructor: HAJAH T. SUENO, MSIT Page 17

18 Attachment A: RESOURCES E-business Books, Periodicals, Magazines, and Software Programs EXAMPLE: BOOKS B2B Application Integration: E-Business-Enable Your Enterprise Author David S. Linthicum E-Business Intelligence: Turning Information Into Knowledge Into Profit Author Bernard Liantaud E-Strategy, Pure & Simple: Connecting Your Internet Strategy To Your Business Strategy Author Michel Robert, Bernard Racine, Robert Michel How to start an E-Business Smallbizbooks.com Other Free Online Resources Software Program Adobe Acrobat Exchange Allows for.pdf creations Info USA Select-Phone Residential and Commercial 2001 CD Dreamweaver Suite (Includes Fireworks) Web Page (WYSWYG) Builder Dreamweaver Ultra-dev Active Server Page (ASP) Builder Instructor: HAJAH T. SUENO, MSIT Page 18