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BUSINESS PLAN DESCRIPTION BY SUBHEADINGS

The Company

Background

Describe the start-up and history of your company from the time of inception. State where and when it was organized. State what form of business it is and where it is located. Discuss significant milestones, such as obtaining a patent, building a prototype, or signing a major contract. Discuss the people involved and the roles they have played. Mention any trademarks on the company's name or logo.

Current Status

Discuss where you are now. Talk about the reputation you have built, your strengths, and what limitations are being experienced. Describe how your product is performing in the marketplace. State the amount of money that has been invested to date, by whom, and how it has been used. Give an overview of your sales and services record, if any. Discuss the kind and amount of funding the business needs to begin operations or improve operations.

Future Plans

Discuss your goals for the next three to five years. Describe how you plan to achieve them and what resources will be needed. Allude to improvements and expansion of your existing product line as well as your hopes for increasing your market share and sales.

The Industry

Chief Characteristics

Describe the industry your company is in. Discuss the industry's profile, including size, geographical dispersion, market, history summation, current status, and total sales and profits for each of the last three years.

The Participants

Discuss the competition and other players (suppliers, wholesalers, distributors, etc.) within your industry. Summarize each participant along a spectrum of weakest to strongest. Briefly discuss more thoroughly the participants with whom you will have direct involvement or competition.

Analyst Summaries

Provide a series of quotes and statements that summarize significant facts, figures, and trends about the industry from various reputable sources. Make sure you properly credit the source and provide the date of publication. Use quotes and statements from diverse sources i.e., industry magazines and newspaper articles. Quotes from personal interviews can also have a powerful impact. These statements should clarify where the industry is headed and the various markets to be served within the industry.

Trends

Discuss where your industry is headed. State whether it is declining, improving, or holding steady and what opportunities there may be. Discuss where it might be in five to 10 years and your relative position within it. Discuss the future of the industry in terms of market need and/or acceptance and profit potential. Describe significant events or changes within the industry that will affect your business positively or negatively.

Product and Related Services

Description of Product/Service

Describe exactly what your product/service is and for what it was designed. Discuss how it works, special features, capabilities, and resulting benefits (economic, social, environmental, leisure, etc.). If more than one service or product line is involved, discuss them and how they function together and/or affect each other. State what stage of development the product/service is in.

Description of the Facilities

If the facilities are a focus and part of the product or service (such as a hotel would be), describe them in this section. If the facilities are an adjunct, rather than interrelated with the product or service (such as a machine manufacturing and assembly plant), it would be best to describe them along with the Operations Description later.

Describe the facilities and why they are unique or better, i.e., none other like them, more attractive, better proximity to customer base, offer more, etc. Discuss location and why it is advantageous. State services, operations, storage, etc.

Proprietary Features

Discuss any patents, copyrights, trademarks, service marks, or other legally binding agreements that protect your product or service. State if a patent is pending. Overall, discuss how you intend to protect the integrity, confidentiality, and competitive nature of your product and services. Briefly mention any regulatory or approval requirements your product or service must meet. State who has jurisdiction and how you will satisfy these requirements.

Future Development Plans

Describe the nature and application of future development plans. Discuss whether these plans are improvements, an extension of the current product/service line, or plans for other products/services. State whether these plans will address your current market or other markets. Discuss the time frames for these plans. Justify why these plans are important by showing increased or newly generated profits.

Product Liability

Discuss the liability and insurance considerations that are inherent in manufacturing and/or marketing the product. Describe how you plan to limit the company's liability. Provide an estimate of the percent cost of the product that will be applied toward liability coverage.

Technology: Research and Development

Concept Development

Describe how the product came about. Discuss how long it has been in development and the related cost factors. Describe the initial concept and how it has changed and improved through the development process. Discuss any new applications or opportunities that have resulted. State who owns what portions of the concept and/or product and give the percentages of each. Describe the technology employed in development.

Research, Testing, and Evaluation

Describe all related research, testing, and evaluation activities. Mention any surveys, articles, or studies that may have been published as a result of these activities. Present your findings as factual conclusions and document them as supporting materials in your appendix. State what makes the product reliable. Discuss the results of your research in terms of production needs, cost factors, time requirements, documentation, maintenance, and updating requirements. Describe the facilities, conditions, instrumentation, and supervision with which the research was conducted.

Major Milestones and Breakthroughs

Discuss the significant milestones and accomplishments that were achieved during R&D. State when and under what circumstances the breakthroughs happened. Describe what impact they had or will have on the venture. Discuss how the technology or process is different from or superior to similar products. Describe what risks and problems were overcome to reach these milestones.

Current Status and Continuing R&D

Discuss where the project stands now. Describe how much of the product has been developed and what still needs to be done to protect, manufacture, license, market, and/or distribute it. Discuss how much of this you will be involved in or who may take over the development of these things. State when R&D will be completed. Discuss what contacts you have made regarding the product and the results of the contacts.

Market Analysis

Target Market and Characteristics

Describe your target market and who or what it includes; give a profile. Discuss how your product/service meets the needs/wants of this market. Discuss the buying record and habits of your customers. State pertinent facts concerning the size, age, location/area, profession, income, and other demographic information about the market. Allude to any self-performed or professional research, studies, or surveys conducted. Include a list of these in a bibliography in your Appendixes.

Analyst Summaries

Provide a series of quotes and statements that summarize significant facts, figures, and trends about the market (and market potential) from various reputable sources. Make sure you properly credit the source and provide the date of publication. The objective is to pinpoint specific market opportunities that exist within the industry and how your product/service capitalizes on these opportunities. The quotes and statements should make it clear what problems and needs exist in your market. It should become evident to the reader that your product/service can solve these problems and/or meet these needs better than existing methods.

Market Share, Trends, and Growth Potential

State the percent share of the market you now have or hope to gain. Discuss the trends of the market - industrywide, regional, and local. State if the market is seasonal, delineate the time frames, and discuss how you will adjust and compensate during the off-season. Discuss how the market may change over the next three to five years. Discuss the growth potential of the entire market and your increased share. State on what assumptions you base these growth patterns (i.e., technology development, changing customer needs, costs, etc.). Discuss your rationale and the costs and risks associated with achieving higher levels of penetration.

Sales, Distribution, and Profits by Product/Service

Discuss your projected sales record by product/service. State what each product/service costs you to produce, distribute, and sell. Discuss how your product/service will be distributed and sold. Describe any unique features of your sales and distribution network. Discuss the implications of transportation, tariffs, duties, foreign exchange, and other government regulations.

Service and Warranty Policies

Are they needed? Will they help you to sell your product(s)? What is normal practice in your industry?

Competitive Analysis

Competitors' Profile

Discuss the competition: size, age, locations, sales volume, management, mode of operation, and other characteristics. Discuss potential competitors who may enter your market.

Product/Service Comparison

Discuss the similarities and differences between your product/service and that of the competition. Compare your operations and management style with those of your various competitors. Highlight whatever it is that makes your product/service and company more attractive in the marketplace.

Market Niche and Share

State the approximate percentage each of your competitors holds in the market. Discuss those that hold the large percentages and why they have an edge. Discuss the competitors who have come or are coming on strong and are making (or expected to make) bigger gains in the market. Discuss the particular segments of the market that each of your competitors addresses. Discuss your niche in relation to these and what percent of the total market it makes up. Describe where the market is headed and how each competitor's niche and share may change over the next three to five years.

Comparison of Strengths and Weaknesses

Discuss your strengths and weaknesses in relation to your major competitors. It is helpful to list the variables down the left-hand column and the competition and your company along the top of the page. The reader can quickly summarize the characteristics, as well as the strengths and weaknesses, of all participants at a glance. The major strengths and weaknesses you should summarize are product superiority, price advantages, market advantages (large contracts with customers or suppliers, proximity to a larger market, proximity of labor supplies, raw materials, energy, transportation, land or other resources), and management strengths and weaknesses (experience and track record, skills, etc.).

Marketing Strategy

Market Penetration Goals

Describe your plans for entering the market. State what your estimated sales and share will be. Discuss the sales appeal among specific segments of the market. Discuss how you will identify prospective customers within each segment, how you will prioritize them, and how you will reach them. State your timetables for achieving these penetration goals and how your strategy may be affected by the reactions of competitors. Discuss any major customers whom you have precommitted and how they may help you to further penetrate the market.

Pricing and Packaging

Describe your pricing policies and how they are determined. Discuss the influences of the competition, discounts, cost of goods, market forces, and other factors that will affect pricing. Justify your prices, particularly if they are substantially above or below the prices of similar products/services in the marketplace. Above all, demonstrate that your pricing decision is based on your company's ability to make a profit.

Discuss your packaging and labeling design plans. Describe how the brand name, colors, logo, and overall packaging appeal will entice customers to buy. Discuss the directions or instructions that accompany the product and how you make the product easy to use.

Sales and Distribution

Discuss any relationships you have with suppliers and/or distributors. Mention any distribution or licensing agreements that are in force or that you are seeking. Describe how your product/service will be distributed and over what geographical area. Discuss the method(s) of sales and retailing, direct sales, and other methods. Discuss how these will be attracted, compensated, and controlled.

Discuss your selling arrangements in terms of cash sales, financing, leasing, credit, and payment terms. If you will be employing salespeople, discuss their quotas and incentives. (Remember that sales volume will be directly proportional to the number of effective sales calls made. Prospective investors will want to see you knocking on doors.) Discuss briefly your hiring, training, and promotion program.

Service and Warranty Policies

Describe your service arrangements, product support, warranty terms, and customer orientation of these things. Discuss how these policies make you competitive and how they may affect profits. Discuss the procedures for implementing these policies. State how they are reviewed by management and how they may change or be improved on as you gain experience. Describe how you will handle customer complaints and other problems with the product/service.

Advertising, Public Relations, and Promotions

Describe your advertising, public relations, and promotional programs and campaigns. Discuss the media you will use and any professional ad agencies you may retain. Describe your overall approach and strategy for introducing your product/service and gaining it market familiarity and acceptance. Discuss how the company's name or the product/service name may contribute to market identity. Discuss your attendance at conventions and trade shows within the industry.

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