BCIT Student Innovation & Entrepreneurship Ideas for a business plan 22 February, 2012
Business plans don t help in early stages? Anchor analogy Entrepreneurs
ebay example: Whatever future you re building don t try to program everything.
On the other hand. Central planning in USSR: Five-year plans never worked for The Soviet Union. or for Cuba, Ethiopia etc.
TerraCycle example Began as a sustainable fertilizer company, making the product out of worm refuse and putting it in used bottles. It even got a license to use Coca-Cola bottles Now, their business model has totally changed, based around 'upcycling,' or the repurposing of waste materials as something else: Purchase waste, such as food wrappers and old cell phones, then incorporate the recycled materials into products sold to consumers.
Expect rejection "TerraCycle's plan is weak on operations. Some questions are left unanswered. (Inc. Magazine) "TerraCycle has multiple markets that must be developed simultaneously for it to be financially viable.
The company has made it into the top 1000 in Inc Magazine's annual Inc 5000 list of fastest growing privately-owned companies for three consecutive years, and even had its own 4-episode mini-series on National Geographic Channel in 2009 called Garbage Moguls. http://youtu.be/mmh-mrlc2zo
Why do we need plans? To get financing. And more..
Purpose of Planning Provides direction Reduces uncertainty Minimizes waste and redundancy Sets the standards for controlling Test the feasibility of your business idea To attract investors
What s your story? What problem does your business solve? What solution does your business provide? Track record?
Stories A great story is interesting, memorable and emotional. It engages us and makes us want to take action. - New story: Lady Gaga: Power of Social Media Old story: TerraCycle
Sound advice Do your homework! (Dragon s Den example) SWOT analysis Spend time on preparing the plan Proofread! Internet: Answer any of these questions:
Sound advice Can the Internet be used to improve your customer transactions, to make it easier for customers to interact with your company? Can your Internet presence be more effectively utilized to not only position and promote your business but also to educate your customers and prospects. Are there market segments that you're not reaching now that you can reach economically via Internet?
Sound advice Storytelling: By painting a picture of the market, the competition, and the strategy needed to beat the competition - these narratives can fill in the spaces around the bullet points for those who will approve the plan. Use common sense Expect the unexpected
The actual plan Business description Business overview Personal goals Vision & Objectives Product/Service overview The marketplace Environment Competition Customers
The actual plan Sales & Marketing Marketing mix Internet Business Operations Key team Suppliers Planned changes Financials Personal net worth Business: Balance sheet, Income statement & Cash flow projections
The actual plan Handout: What should you do? What s in it for you?
Practical assignment http://www.scotiabank.com/ca/en/0,,588,00.html Resources: http://www.rbcroyalbank.com/sme/create-plan/business-plans.html http://www.tdcanadatrust.com/products-services/smallbusiness/windocs.jsp http://www.knowledge.hsbc.ca/enca/planning+for+growth/planning+and+strategy/writing+a+business+plan http://www.grants-loans.org/resourceview.php?id=105 http://www.canadabusinessplans.org/index.php http://www.slideshare.net/presentonomics/how-to-develop-a-winningbusiness-plan-presentation http://www.youtube.com/watch?v=x9fuqd50or4&feature=related
What should you do? What's in it for you? 1 Write a sentence describing what products or services your business provides. You have a short statement that tells peopleinvestors, customers, family members-what you do. You'll use it all the time. 2 Write down who your customers are and why they will buy from you over the competition. (Price, quality, innovation, service, convenience?) You get a mental picture of the ideal customer, including demographics, and the way the customer thinks. It's very helpful in your marketing and other decisions such as pricing, distribution and so on. 3 Research your market before investing in resources. For example: products, customers, competition, traffic patterns, parking, rents, employee availability, and labour costs. The more you know the better. Try to get real numbers, not estimates, to use for your projections. 4 Decide how you will get your product or service to your customers-how will they learn about your product or service. For example, directly to customers through retail, distribution arrangements or over the internet. You can now put some costs to these items and make sure the methods you choose are linking up to the customers you have identified and their reason for buying from you. You will also begin to recognize any problems or bottlenecks in your strategies and develop solutions or alternate plans.
5 Decide where you will conduct your business. Can you work at home or do you need an office, a plant or a store? Choose a location that balances all your important criteria such as budget, traffic and visibility. This will lead to concrete information about the cost of rent or real estate, labour and distribution. You may also be able to determine traffic patterns, customer parking availability and other important considerations. 6 Forecast your finances: Create realistic income statements and cash flow projections. What will your costs, sales and profits be for the first two or three years? Will you have sufficient cash flow to survive the start-up? What is your break-even point (the point at which you begin to make money)? Talk to your accountant and banker. These will prove to yourself and indicate to lenders and other backers that your ideas are based in reality. You must show that your plan has a definite timeline and will make money and pay back investors. 7 How will you obtain raw materials or other crucial supplies? Are there backup sources to draw upon? With a list of suppliers and alternatives, you are prepared if one goes out of business or cannot meet your requirements.
8 Decide how many employees (if any) you need, and find out whether it is easy to hire people with the required skills in your market area. You will know what skills you will be looking for and you will have a better understanding of what you will need to pay, including benefits, to attracts employees and fully staff your company. 9 Set up your advisory team: Get professional advisors, partners and mentors behind you. You get the benefit of their experience with other companies that have gone through similar situations. 10 What are the key risks your business will face? (Consider problems such as the failure of a key supplier or customer, product-performance issues, legal disputes and illnesses of key employees-including you.) What will you do to deal with these risks? You will be prepared for most foreseeable situations. You may wish to buy insurance for certain risks. Check with your RBC small business advisor or insurance representative. Source: http://www.rbcroyalbank.com/rbc:9jipmkwwaa0acrdqe0aaaaae/sme/bigidea/introduction.html