THE BUSINESS PLAN

 

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FOR VENTURE CAPITAL AND PRIVATE INVESTORS

 

You are one of 3 million people each month obtaining news and other information from this site. Around 99.9% of our visitors are just doing their homework, researching a topic or catching up with current events. They are all potential customers.  On the other hand, you are considering investing and looking to identify a business with growth potential, for an exit point in under 7 years.

 

If you are interested in seeing the business plan for a soft drinks company called Solar Cola - a company with the potential to equal Coke, or Pepsi, or just fancy an informal chat before going further, please contact Nelson Kruschandl using the email address or telephone number below.  If you are studying business, please see the STUDENT section a couple of paragraphs below.

 

 

 

Nelson Kruschandl - Give me a call

 

 

Thank you for your time in coming this far.  At this time we need your investment.  Solar Cola offers the promise of substantial growth within a 3 to 7 year span.  The company owns an impressive portfolio of Intellectual property, trademarks, designs and formulas.  In addition raw materials suppliers have been sourced and a manufacturing facility arranged for Europe and the USA.  Other distribution agreements are to follow.

 

The company is seeking seed capital investment to implement a marketing strategy intended to make the product a household name, details of which are contained in the Business Plan.

 

Read about the healthier alternative to ordinary colas, by clicking on the can at the foot of this page.

 

 

SOLAR COLA LIMITED

 

cola @ solarnavigator . net

 

UK HOTLINE:    +44 (0) 7905 147709

 

 

 


 

 

 

 

FOR STUDENTS - WHAT IS A BUSINESS PLAN:

 

 

A business plan is a summary of how a business owner, manager, or entrepreneur intends to organize an entrepreneurial endeavor and implement activities necessary and sufficient for the venture to succeed. It is a written explanation of the company's business model.

 

Business plans are used internally for management and planning and are also used to convince outsiders such as banks or venture capitalists to invest money into a venture.

 

Business plans are noted for often quickly becoming out of date. One common belief within business circles is that the actual plan may have little value, but what is more important is the process of planning, through which the manager gains a greater understanding of the business and of the options available.

 

 

Example of the Content of a business plan

 

A business plan can be seen as a collection of sub-plans including a marketing plan, financial plan, production plan, and human resource plan.

The business plan has many forms. There is however a format that is typical:

  • Executive summary

    • explains the basic business model

    • gives rationale for the strategy

  • Background

    • gives short history of company (unless it is a new company)

    • provides background details such as:

      • age of company

      • number of employees

      • annual sales figures

      • location of facilities

      • form of ownership including

        • sole proprietor

        • partnership

        • entrepreneurial startup

        • private corporate startup

        • publicly traded corporation

        • limited liability company

        • public utility

        • Non Profit Organization

    • background of key personnel including

      • owners

      • senior managers

      • head scientists and researchers

  • Marketing

    • the macroenvironment

    • the competitive environment

    • the industry

    • the customers priorities

    • product strategy

    • pricing strategy

    • promotion strategy

    • distribution strategy

  • Production and manufacturing

    • describe all processes

    • production facility requirements - size, layout, capacity, location

    • inventory requirements - raw materials inventory, finished goods inventory, warehouse space requirements

    • equipment requirements

    • supply chain requirements

    • fixed cost allocation

  • Finance

    • source of funds

    • existing loans and liabilities

    • projected sales and costs

    • break even analysis

    • expected return

    • monthly pro-forma cash flow statement

  • Human resources

    • assign responsibilities

    • training required

    • skills required

    • union issues

    • compensation

    • skills availability

    • new hiring

Specialized sections such as product research and development, legal strategies, marketing research, or inter-company collaborations, are added to deal with unique features or characteristics of the business or its markets.

 

 

 


 

 

 

THE MARKETING PLAN

 

 

A Marketing Plan is a written document that details the actions necessary to achieve a specified marketing objective(s). It can be for a product or service, a brand, or a product line. It can cover one year (referred to as an annual marketing plan), or cover up to 5 years.

 

A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

 

 

Content and presentation

 

 

Practical presentation

 

There are many formats for marketing plans and every company does it a little differently, but the outline that follows is a very complete format. Using this format will produce a 30 to 40 page plan. Many companies prefer an abridged format that would yield a 10 to 20 page plan.

 

  1. Title page

  2. Executive Summary

  3. Current Situation - Macroenvironment

    • economy

    • legal

    • government

    • technology

    • ecological

    • sociocultural

    • supply chain

  4. Current Situation - Market Analysis

    • market definition

    • market size

    • market segmentation

    • industry structure and strategic groupings

    • Porter 5 forces analysis

    • competition and market share

    • competitors' strengths and weaknesses

    • market trends

  5. Current Situation - Consumer Analysis

    • nature of the buying decision

    • participants

    • demographics

    • psychographics

    • buyer motivation and expectations

    • loyalty segments

  6. Current Situation - Internal

    • company resources

      • financial

      • people

      • time

      • skills

    • objectives

      • mission statement and vision statement

      • corporate objectives

      • financial objective

      • marketing objectives

      • long term objectives

    • corporate culture

  7. Summary of Situation Analysis

    • external threats

    • external opportunities

    • internal strengths

    • internal weaknesses

    • key success factors in the industry

    • our sustainable competitive advantage

  8. Marketing research

    • information requirements

    • research methodology

    • research results

  9. Marketing Strategy - Product

    • product mix

    • product strengths and weaknesses

      • perceptual mapping

    • product life cycle management and new product development

    • Brand name, brand image, and brand equity

    • the augmented product

    • product portfolio analysis

      • B.C.G. Analysis

      • contribution margin analysis

      • G.E. Multi Factoral analysis

      • Quality Function Deployment

  10. Marketing Strategy - Market share objectives

    • by products,

    • by customer segments,

    • by geographical markets

  11. Marketing Strategy - Price

    • pricing objectives

    • pricing method (eg.: cost plus, demand based, or competitor indexing)

    • pricing strategy (eg.: skimming, or penetration)

    • discounts and allowances

    • price elasticity and customer sensitivity

    • price zoning

    • break even analysis at various prices

  12. Marketing Strategy - promotion

    • promotional goals

    • promotional mix

    • advertising reach, frequency, flights, theme, and media

    • sales force requirements, techniques, and management

    • sales promotion

    • publicity and public relations

    • electronic promotion (eg.: Web, or telephone)

  13. Marketing Strategy - Distribution

    • geographical coverage

    • distribution channels

    • physical distribution and logistics

    • electronic distribution

  14. Implementation

    • personnel requirements

      • assign responsibilities

      • give incentives

      • training on selling methods

    • financial requirements

    • management information systems requirements

    • month-by-month agenda

      • pert or critical path analysis

    • monitoring results and benchmarks

    • adjustment mechanism

    • contingencies (What if's)

  15. Financial Summary

    • assumptions

    • pro-forma monthly income statement

    • contribution margin analysis

    • breakeven analysis

    • Monte Carlo method

  16. Scenarios

    • Prediction of Future Scenarios

    • Plan of Action for each Scenario

  17. Appendix

    • pictures and specifications of the new product

    • results from research already completed

 

 

 


 

 

 

 

STRATEGIC MANAGEMENT

 

Strategic management is the process of specifying an organization's objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It is the highest level of managerial activity, usually performed by the company's Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. An organizationís strategy must be appropriate for its resources, circumstances, and objectives. The process involves matching the company's strategic advantages to the business environment the organization faces. One objective of an overall corporate strategy is to put the organization into a position to carry out its mission effectively and efficiently. A good corporate strategy should integrate an organizationís goals, policies, and action sequences (tactics) into a cohesive whole. To see how strategic management relates to other forms of management, see management.

 

Strategic management can be seen as a combination of strategy formulation and strategy implementation.

 

Strategy formulation involves:

 

  • Doing a situation analysis: both internal and external; both micro-environmental and macro-environmental.

  • Concurrent with this assessment, objectives are set. This involves crafting vision statements (long term view of a possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.

  • These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to achieve these objectives.

 

This three-step strategy formation process is sometimes referred to as determining where you are now, determining where you want to go, and then determining how to get there. These three questions are the essence of strategic planning. SWOT Analysis: I/O Economics for the external factors and RBV for the internal factors.

 

 

Strategy implementation involves:

  • Allocation of sufficient resources (financial, personnel, time, computer system support)

  • Establishing a chain of command or some alternative structure (such as cross functional teams)

  • Assigning responsibility of specific tasks or processes to specific individuals or groups

  • It also involves managing the process. This includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary.

  • When implementing specific programs, this involves acquiring the requisite resources, developing the process, training, process testing, documentation, and integration with (and/or conversion from) legacy processes.

 

Strategy formation and implementation is an on-going, never-ending, integrated process requiring continuous reassessment and reformation. Strategic management is dynamic. See Strategy dynamics. It involves a complex pattern of actions and reactions. It is partially planned and partially unplanned. Strategy is both planned and emergent, dynamic, and interactive. Some people (such as Andy Grove at Intel) feel that there are critical points at which a strategy must take a new direction in order to be in step with a changing business environment. These critical points of change are called strategic inflection points.

 

Strategic management operates on several time scales. Short term strategies involve planning and managing for the present. Long term strategies involve preparing for and preempting the future. Marketing strategist Derek Abell (1993), has suggested that understanding this dual nature of strategic management is the least understood part of the process. He claims that balancing the temporal aspects of strategic planning requires the use of dual strategies simultaneously.

 

 

General approaches

 

In general terms, there are two main approaches, which are opposite but complement each other in some ways, to strategic management:

  • The Industrial Organization Approach

    • based on economic theory ó deals with issues like competitive rivalry, resource allocation, economies of scale

    • assumptions ó rationality, self descipline behaviour, profit maximization

  • The Sociological Approach

    • deals primarily with human interactions

    • assumptions ó bounded rationality, satisfying behaviour, profit sub-optimality. An example of a company that currently operates this way is Google

 

Strategic management theories can also be divided into those that concentrate mainly on efficiency and those that concentrate mainly on effectiveness. Efficiency is about doing things the right way. It involves eliminating waste and optimizing processes. Effectiveness is about doing the right things. There is no point in acting efficiently if what you are doing will not have the desired effect. A good strategy will blend both efficiency and effectiveness. This distinction is linked to the formulation/implementation distinction made above.

 

Strategic management techniques can be viewed as either bottom-up, top-down, or collaborative processes. In the bottom-up approach, employees submit proposals to their managers who, in turn, funnel the best ideas further up the organization. This is often accomplished by a capital budgeting process. Proposals are assessed using financial criteria such as return on investment or cost-benefit analysis. The proposals that are approved form the substance of a new strategy, all of which is done without a grand strategic design or a strategic architect. The top-down approach is the most common by far. In it, the CEO, possibly with the assistance of a strategic planning team, decides on the overall direction the company should take. Some organizations are starting to experiment with collaborative strategic planning techniques that recognize the emergent nature of strategic decisions.

 

 


 

 

 

THE BUSINESS MODEL

 

A business model (also called a business design) is the instrument by which a business intends to generate revenue and profits. It is a summary of how a company means to serve its employees and customers, and involves both strategy (what an business intends to do) as well as an implementation (how the business will carry out its plans).

 

 

A business model describes how a business:

  • Selects its employees and customers,

  • Defines and differentiates its product offerings,

  • Creates utility for its employees and customers,

  • Acquires and keeps employees and customers,

  • Goes to the market (promotion strategy and distribution strategy),

  • Defines the tasks to be performed,

  • Develops a sustainable presence with respect to the environment and society,

  • Configures its resources, and

  • Captures profit.

 

Types of business models

 

Generally, the business models of service firms are more complex than those of manufacturers and resellers. The oldest and most basic business model is the shop keeper model. This involves setting up a store in a location where potential customers are likely to be and displaying a product or service.

 

A business model is a description of how an organization functions, a general template that describes its major activities. It identifies the firmís customers and the products and services it offers. A model also provides information about how a firm is organized and how it generates revenues and profits. Business models combine with strategy to guide major decisions at a firm. The model also describes products and services, customer markets and business process.

 

Currently, most of the business models depend on technology. Entrepreneurs on the internet have also created entirely new models that depend entirely on exiting or emergent technology. Using technology, businesses can reach a large number of customers with minimal costs.

 

Over the years, business models have become much more sophisticated. The bait and hook business model (also referred to as the "razor and blades business model" or the "tied products business model") was introduced in the early 20th century. This involves offering a basic product at a very low cost, often at a loss (the "bait"), then charging excessive amounts for refills or associated products or services (the "hook"). Examples include: razor (bait) and blades (hook); cell phones (bait) and air time (hook); computer printers (bait) and ink cartridge refills (hook); and cameras (bait) and prints (hook). An interesting variant of this model is a software developer that gives away its word processor reader for free but charges several hundred dollars for its word processor writer.

 

In the 1950s new business models came from McDonald's Restaurants and Toyota. In the 1960s the innovators were Wal-Mart and Hypermarkets. The 1970s saw new business models from Federal Express and Toys R Us; the 1980s from Blockbuster, Home Depot, Intel, and Dell Computer; the 1990s from Southwest Airlines, eBay, Amazon.com, and Starbucks. Poorly thought out business models were a problem with many dot-coms.

 

Each of these business model innovations can give the firm a sustainable competitive advantage. But times are changing and companies must continuously rethink their business design. Companies must change their business models as value migrates from industry to industry. Ultimately the success or failure of a company depends first on how well its business design matches their customers' priorities.

 

 

 

MONEY FINDER

 

 

 

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LINKS:

 


 

 

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This material and any views expressed herein are provided for information purposes only and should not be construed in any way as a prospectus or offer.  Please contact the company concerned for information of any business opportunity or specific program. Before investing in any business, you must obtain, read and examine thoroughly its disclosure document or offering memorandum.

 

This website is Copyright © 1999 & 2007  NJK.   The bird logo and name Solar Navigator are trademarks. All rights reserved.  All other trademarks are hereby acknowledged.       Max Energy Limited is an environmental educational charity.

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