Understanding Business Plans, Marketing, and Financing

What is a Business Plan?

A Business Plan is a Written Document that details proposed venture: Describes the current status, expected needs and projected results of a new Business /Covers the project’s research and development, manufacturing, management, marketing, critical risks, financing and milestones or timetable

Demonstrates a road map of where the venture is aimed to reach and how the entrepreneur proposes the route it will reach by.

Elements of a Business Plan:

Sec 1: Executive Summary: summary or brief statement of a longer report or proposal about the project for the reader to be acquainted with without reading the full details Sec 2: Business Description: Is the key element of a full business plan (how to make profit), ranges between few paragraphs to several pages. Sec 3&4:Marketing: the steps of marketing the project and channels being used to market and how to distinguish self between other competitors Sec 5 Operations: outlining the administrative side of the business, how to operate and from where, equipment, overhead expenses, suppliers etc Sec 6 Management: Acknowledging the people or staff that will be managing the business and hierarchy Sec 7 Critical Risks: Identifying the problems and risks that must be dealt with during the development and growth of the business. Sec 8 Harvest Strategy: reducing or eliminating investment in a particular product, brand or line Sec 9 Milestone Schedule : Special event that requires special attention. Adds significant value to project scheduling. Sec 10 Appendix Bibliography: holds the documentation from receipts , bank statements to contracts and inventories.

Advantages & disadvantages of family controlled firms:

Advantages: Long term orientation (Focus on the future of the family’s business) / Greater independence of action (Freedom of decision making) / Family culture as source of Pride (Keeps the business stronger)/Less bureaucracy (faster decision making) /Financial Benefits (Strong financial backbone) / Knowing the business (closer to the business and how it works)

Disadvantages: Less access to capital markets which could affect growth. /Confusing Organization (Some processes are confusing) /Nepotism (favouring relatives that might not be qualified for the job)/Spoiled Kid Syndrome (Behaviors that can be self-centered and immature which is not good for the business. /Financial Strain /Succession Dramas

Describe Social Media Marketing & Key Distinctions:

it is the use social networks, online communities and other collaborative media tools for marketing purposes, by creating value with an event (Video, tweet, blog entry) which attracts attention and become viral.

Enable customers to promote a message themselves with multiple online socials, its emphasize audience engagement to add content, the organization has control over a large parts of content, creates trust building, but cant fully control content shared by users . relationship with clients via ongoing interactive conversation between the firm and customer.

Analyze and discuss different pricing strategies:

The degree of competitive pressure which should be taken into consideration, depending on the availability of supply /Seasonal or cyclical changes in demand, Distribution cost choosing what best fits in./Being aware of the life cycle of the product which effect the pricing depending if it was long lasting or not./The customer services provided which require costs and should be put into pricing / The cost of promotion and marketing the product/Consideration of the buying power in the market and prevailing economic conditions

Phychological factors: Level of quality of product is connected to the price according to customers, making sure printed prices are available to encourage customers in buying as they shy away if there not available/ Its expected by customers that they buy luxury products on even price ranges, while common products are based in odd prices to encourage them to purchase. /The more benefits with a product’s the less price resistant it becomes.

Debt Financing:

a secured financing of a new venture that involves a payback of the funds plus a fee (interest for the use of the money) Advantages: No relinquishment of ownership is required. More borrowing allows potentially greater return on equity. Low interest rates reduce opportunity cost borrowing. Disadvantages: Regular monthly interest payment is required, continual cash flow problems can intensified because of payback responsibility; heavy use of debt can inhibit growth and development.

Venture Capital Screening Criteria: 1-Venture Capital Firm Requirements:

must fit within lending guidelines of venture firm storage and size of investment, must be within geographic area, proposal by someone known to venture capitalist, industry invested in venture firm 2- Nature of Proposed Business: projected growth should be relatively large within five years of investment.3- Economic Environment of Proposed Industry: must be capable of long term growth and profitability, should be favorable to new entrant.4- Proposed Business Strategy: Selection of Distribution Channels must be feasible/ Product must demonstrate defendable competitive position.5- Financial Information on the Proposed Business: Financial projections should be realistic 6-Entrepreneur Characteristics: must have relevant experience, should have balance management team in place, willing to work with venture partners, entrepreneur, successfully started previous business. 7-Proposal Characteristics: full information, reasonable length, be easy to scan, professionally presented,balanced presentation, graphics large print to emphasize key points.