Chapter 15:BUSINESS PLAN DRAFTING WORKSHEET

CHAPTER 15

Business Plan Drafting Worksheet

A WISE MAN TURNS CHANCE INTO FORTUNE. – THOMAS FULLER

BUSINESS PLAN PREPARATION can be a daunting task and it helps to have some solid guidelines to be sure that all the important areas are covered. This business plan drafting worksheet includes an extensive list of questions and information that should be answered and provided in a good business plan. In some cases, the items will overlap and the organizational emphasis will vary depending on the type of business and the purpose of the plan. However, working through these items should provide a good starting point. The drafter should allow sufficient time to thoughtfully answer each of the questions. In the plan itself, refer to independent research reports, as well as any other credible evidence to support the claims and strategies of the company. Further information on each of the areas is included in the substantive chapters in this book. The business plan exemplars in the ensuing chapters should be consulted for ideas regarding presentation of the responses in the plan. Also, reference should be made to the chapter on financial information for specific issues relating to the presentation of financial statements in the plan.

The International Business Plan

I. INTRODUCTION / EXECUTIVE SUMMARY

1.Briefly describe the company’s business. 2.Describe the significant features of the company’s products. 3.Describe the market potential for the company’s products. 4.Describe the financial goals of the company (e.g., reaching $2 million in sales in the new market in two years, profitability in three years and specified levels of sales and after-tax profits within four years). 5.Describe the purpose of the plan and its relation to the attainment of the company’s financial goals.

PLAN NOTE: This section should showcase the highlights of the company’s business plan and provide the reader with a snapshot of the information included elsewhere in the plan. After reviewing the executive summary, the reader should have a clear understanding of the company’s products, market opportunities and financial objectives. The executive summary should be written after the rest of the plan has been drafted. In most cases, the executive summary should be no more than two pages (one page is best). The global aspects of the plan should be highlighted in the executive summary by focusing on foreign market opportunities and the financial goals of the company in those markets.

II. COMPANY DESCRIPTION

1.Describe the company’s principal line(s) of business. 2.For each line of business, describe the company’s products. 3.For each line of business and related product, describe the actual or anticipated customer base and their specific needs with respect to the types of products offered by the company. 4.Describe the specific steps taken by the company to identify customer needs, including interviews, market surveys, research or beta testing. 5.For each identified customer base for the company’s products, describe the company’s distinctive competence or competitive advantage (i.e., why will those customers purchase the products of the company as opposed to those offered by competitors or substitutes). 6.For each product, describe the profitability structure, including anticipated sales price, costs and profit margins.

ADVISORY: This section lists details about each of the company’s products. Emphasis should be placed on relating the products to the needs of an identified group of customers.

This process will demonstrate how the company will be able to service those needs in a manner that distinguishes it from competitors. Although this section includes several questions regarding the company’s anticipated customer base, such issues also may be addressed in “Industry Background and Market Analysis” below.

III. INDUSTRY B ACKGROUND AND MARKET ANALYSIS

1.Describe the industry or industries in which the company is active. 2.Describe the size of each industry and anticipated growth patterns over the next five to ten years. 3.Identify the major industry segments that would have an interest in the company’s products. 4.Describe the business types that will likely be the major customers for the company’s products (e.g., large corporations or small partnerships). 5.Identify and describe any other major demographic or technological trends in the industry. 6.Describe the actual or potential impact of regulatory requirements on the company’s products.

PLAN NOTE: The industry and market for the company’s products include a variety of variables, many of which are covered in greater detail in other sections. For example, customer needs and buying habits, as well as the strengths and weaknesses of competitors, will impact trends in the industry and marketplace. In this section, the view is more broad-based and looks at general demographic and technological factors, as well as any other changes that might impact the company in the years to come. If the company’s products are subject to extensive regulation, or the company’s foreign investment plans will be subject to government review in the target countries, additional time will need to be spent on regulatory matters and strategies.

IV. COMPETITION

1.Identify and briefly describe the major actual and potential competitors in each of the company’s target markets. 2.Identify and describe the major factors of competition in each target market. 3.Candidly analyze how prospective customers will perceive the way that the company compares with competitors with respect to each of the aforementioned factors of competition. 4.Describe the steps that the company intends to take to exploit competitive advantages and/or reduce or eliminate competitive disadvantages. 5.Describe the anticipated response of major competitors to the steps enumerated in Item 4 above.

ADVISORY: Competitive factors vary in each geographic market. For example, some competitors are global companies active in each market where the customer base is sufficiently large to warrant attention. In other cases, competition will come from local companies content to do business solely within its borders. These firms can often be very competitive and attract strong brand recognition and loyalty. Also, while price may be the significant factor in one market, customer service may be the key in other areas.

V. MARKETING AND SALES

1.Describe the company’s overall marketing strategies and objectives (e.g., how is the company to be perceived in the market and what are its goals with respect to developing market share). 2.Describe the company’s strategies with respect to distribution of its products (e.g., direct sales, independent sales representatives, distribution agreements with third parties, etc.). 3.Describe the company’s promotion strategies. 4.Describe the company’s pricing strategies, including anticipated changes as brand acceptance develops. 5.Identify and describe the company’s main “sales pitch” (i.e. the main messaging in sales and promotion activities). 6.Describe the company’s strategies with respect to service and support of customers and distributors. 7.Describe the company’s sales strategies and activities (e.g., customer identification, sales staffing requirements and compensation, sales goals and sales tracking).

PLAN NOTE: These questions cover the main issues in establishing and implementing the company’s marketing and sales strategies. Take care to establish the right strategy in each geographic market since the company may need to vary its distribution channels and promotional activities from country to country. While not highlighted in these questions, the plan also should provide the reader with a good sense of the priorities of the company with respect to attacking specific markets and launching a particular marketing activity. In most cases, the company’s budget will require that marketing activities proceed in two or more planned stages over a fixed period of time.

VI. T ECHNOLOGY AND R&D 1.Describe the key aspects of the technology required for the company to operate its business. 2.Describe the status of each element of the technology enumerated in Item 1 above (e.g., idea, prototype, small production runs, etc.). 3.Describe the company’s ownership and/or usage rights with respect to each key element of its technology. 4.Describe the general status of technology in the company’s main markets, including companies that have technology that is superior or equal to the company’s technology. 5.Describe anticipated trends in relevant technology over the next five years, including specific new technologies that might become commercially viable during that period and factors that might restrict their development or acceptance. 6.Describe the company’s key research and development activities, related milestones and risks. 7.Describe how the results of the company’s research and development activities will be used in the company’s business (e.g., new products, new production methods, updated versions of existing products that meet identified customer needs, etc.). 8.Describe the impact of regulatory approval requirements on the company’s research and development activities. PLAN NOTE: Technology is important for every business, regardless of the type of products distributed by the company. For some companies, the technology is integrated into the products themselves. In other cases, technology allows the company to achieve competitive advantage in the production process. In any event, the plan should describe the company’s key technology and strategies for development of new products and process technologies. In some cases, R&D is supplemented or completely replaced by active technology purchase or licensing programs that rely on third party development efforts.

VII. PRODUCTION AND O PERATIONS

1.Describe the company’s production and operations activities and strategies. 2.Describe any significant agreements with third parties with respect to production. 3.Describe any competitive advantage or disadvantage of the company with respect to production activities and the steps the company will take to exploit or eliminate such advantages or disadvantages.

PLAN NOTE: Production is often an area where companies will look to foreign markets for low-cost alternatives. In such situations, the plan should carefully analyze the costs and risks associated with offshore production.

VIII. MANAGEMENT AND HUMAN RESOURCES

1.Describe the management and organizational structure of the company, including all key foreign business units.

2.Describe the company’s recruitment, training and compensation policies. 3.Describe the company’s internal information management structure. 4.In the case of a business plan used to raise capital, describe the skills and track record of the key managers and the company’s plans for recruiting additional managers.

ADVISORY: Management skills, human resources and organizational structure are key elements of any business plan. For an international business plan, specific attention should be paid to the organization of the foreign business unit, recruiting qualified local managers and establishing an information and reporting system to monitor operations around the globe.