Assessment 1

1. Outline three reasons why a company may choose to develop a business plan.
 To Test the Feasibility of Business Idea
An idea for starting a business is discarded at the marketing analysis or
competitive analysis stage, freeing to move on to a new (and better) idea.
 To Give Business the Best Possible Chance of Success
Writing a business plan will ensure that pay attention to both the broad
operational and financial objectives of new business and the details, such as
budgeting and market planning.
 To Secure Funding, Such as Bank Loans or Equity Financing
Having an up-to-date business plan gives a much better chance of getting the
money need to keep operating or to expand. Investors and financiers are always
looking at the risk of non-repayment, and word-of-mouth is no substitute for
written facts and figures in a properly prepared business plan.

2. Outline the key steps involved in developing a business plan.

a) Research
Research and critical analysis are key to developing and communicating a
business plan properly. The information used has to be relevant, valuable, and
objective. However, you’re not writing a novel, so the presentation also needs to
be concise. That means choosing the right research to include versus just a brain
dump of anything about the company’s situation.
b) Having a Purpose
The purpose has to be clear and definitive. If you don’t know why you’re writing a
business plan, the effort will be a waste of time. Knowing also means having a
target audience you expect the plan to be ready by. With both defined, it will help
dictate what information is included and how.
c) Craft a Company Snapshot
Some people call it a company profile, others a snapshot. Either way, your
business plan needs a section that gives a reader a clear view of what your
company is, does and provides in a few paragraphs. This should be the same
information that one would find if they looked on the business’ website. It’s
designed to be quick and digestible mentally because it needs to stick in a
 reader’s mind quickly, especially as more information is provided later in the plan.
If the reader remembers nothing else, he or she will have the profile well
entrenched in memory. And that matters when your plan is being considered with
others.
d) Detail the Company in Total
Some folks write their business plan to only highlight what they think are the
selling points and good features of their venture. That’s a mistake. Most readers
have a pretty good idea where the company sits in the big picture. Detail the
company’s status in full, good and bad. And where there are weaknesses,
include plans on how they will be addressed given the right support. Details
should also include key features like patents, licenses, copyrights and unique
strengths no one else has.
e) Write the Marketing Plan Beforehand
A simple mistake made by most startups is that people think they can write a
business plan without knowing first how something is going to be sold. A
strategic marketing plan is essential; it shows how your product or service is
going to be delivered, communicated and sold to customers. It covers where,
when and how much, all the key pieces that later on feed into the financial
statement projections in the business plan. No surprise, marketing has to be
nailed down before planning out the rest of the business.
f) Be Willing to Change the Plan for Your Audience
Another common mistake folks often make is writing only one business plan. The
document given to a lender is going to be very different than the one for internal
direction. Smart startups have multiple versions, just like candidates have
multiple resumes for different prospective employers. Match the plan and
message to the audience you are addressing.
g) Include Your Motivation
This is the most important piece in a successful plan – your motivation and goals.
Why are you going through all this effort, work, sweat and effort? Your motivation
needs to be a reason that will convince people the business will succeed,
through thick and thin. A business needs a mission that drives it, not just selling
to make money. Your motivation defined in the business plan is that mission.
3. Outline five common components of a business plan.
a) Executive summary
The executive summary is the elevator pitch for your business. It distills all the
vital information about your business plan into a relatively short space. It’s a high-
level look at everything and should include information that summarizes the other
sections of your plan.
b) Company description
This is your chance to describe your company and what it does. Include a look at
when you formed your business, your mission statement, and your values. These
are the things that tell your story and allow others to connect with you.
c) Market analysis
This is your chance to look at your competition and the state of the market as a
whole. Your market analysis is an exercise to see where you fit in the market and
how you are superior to the competition. As you create your market analysis, you
need to make sure to include information on your core target market, profiles of
your ideal customers, and other similar market research.
d) Organization and management
Use this section of your business plan to show off your management team
superstars. Venture capitalists want to know you have a competent team that has
the grit to stick it out. You are more likely to be successful when you have the
right management and organization for your company. Make sure you highlight
the expertise and qualifications of each member of the team in your business
plan.
e) Sales strategies
You should also detail the promotional strategies you’re using now, along with
strategies you hope to implement in the future. This includes your social media
efforts and how you raise your brand awareness. Your sales strategy section
should include information on your web development efforts and your search
engine optimization plan.
f) Funding requirements
 This section will outline how much money your small business will need so that
you can make an accurate funding request. Make sure you are as realistic as
possible. You can create a range of numbers if you don’t want to try to pinpoint
an exact number. Include information for a best-case scenario and a worst-case
scenario. You should also put together a timeline, so your potential investors
have an idea of what to expect.
g) Financial projections
Finally, the last section of your business plan should include financial projections.
Your forward-looking projections should be based on information about your
revenue growth and market trends. You want to be able to use information about
what’s happening, combined with your sales strategies, to create realistic
projections that let others know when they can expect to see returns.

4. Outline three areas that the initial business planning process may address.
 Seek Expert Opinions
Sometimes the best business advice comes from outside perspectives. If you
have a friend or family member who has experience with entrepreneurship, ask
them their opinion of your idea. With experience in starting a business, these
individuals will be able to point out things to expect, problems that may arise and
ways to avoid them.
 Observe Competition
One of the best ways to test your idea and plan your business is to observe your
competition. Several ways to observe competition exist and are a large part of
the market research step of the planning process. Spend time in the store. Take
notes on its appearance, including cleanliness, decor and layout, as well as
speed of service, items and pricing. Observe the positives, negatives and
consider the things you would do differently.
 Focus Groups
A focus group is a group of individuals selected from a wide range of consumers
to give their thoughts, ideas, perceptions and beliefs about a certain realm of
business or a certain industry. Forming a focus group provides valuable market
research about your product or service, along with people's perception of your
idea.
5. Outline the purpose of a SWOT analysis in a business planning process.

The purpose of a SWOT analysis is to get managers thinking about everything that
could potentially impact the success of a new project. Failure to consider a key
strength, weakness, threat or opportunity could lead to poor business decisions. For
example, if the tech company with the patent for a new processor did not recognize
the threat that its competitors were developing similar products, it might overestimate
the sales potential of the new processor and take on debt to fund the development of
the processor only to discover that the new product does not bring in enough
revenue to pay off the debt. In other words, a strengths, weaknesses, opportunities,
and threats brainwork can help managers avoid making costly mistakes and
determine which projects are most likely to succeed.

6. Describe the relationship between performance objectives and key performance

indicators in a business plan.
When you set goals, they are either outcome-oriented or performance-oriented. An
outcome goal is an end result you want, such as a sales volume, number of units
produced or profit. A performance goal is an objective that helps you improve the
way you reach outcome goals. For example, avoiding using overtime hours to
produce your desired number of units or hitting your sales volumes using more in-
house phone calls rather than costly road trips are examples of performance goals.
Performance goals often provide less measurable results than outcome goals, but
it's important to add them to your management efforts. Some people use the term
“performance objective” as a synonym for “outcome objective,” so it’s important to
determine how you and your team use the term.

7. Explain why it is important for a business to use a range of performance measures

within its business plan.
Performance measurement is the process of collecting, analyzing and reporting
information regarding the performance of an individual, group, organization, system
or component. One of the most important aspects to be considered in relation to
performance measurement process is that the performance measures work
qualitatively to provide the useful information about products, processes and services
that are produced in a business. Hence, implementing performance measures is a
great way to understand and manage and improve what a a business organization
does.
8. If a business plan has an objective of improving customer satisfaction, describe three
performance measures that could be used to measure customer satisfaction.
 Customer Satisfaction Survey
The customer satisfaction survey is the standard approach for collecting data on
customer happiness. It consists of asking your customers how satisfied they are,
with or without follow up questions. Three useful variations In-App Surveys, Post-
Service Surveys and Long Email Surveys.
 Customer Satisfaction Score
This is the most standard customer satisfaction metric, asking your customer to
rate her satisfaction with your business, product, or service. Your CSAT score is
then the average rating of your customer responses. The scale typically ranges
between 1 – 3, 1 – 5, or 1 – 10. A larger range is not always better, due to
cultural differences in how people rate their satisfaction. An article in
Psychological Science, for example, showed that people in individualistic
countries choose the more extreme sides more frequently than those in
collectivistic countries.
 Net Promoter Score
The Net Promoter Score (NPS) measures the likeliness of a customer referring
you to someone, and it’s probably the most popular way of measuring customer
loyalty. Customer are asked how likely they are to recommend you on a scale
from 1 to 10.

9. Describe the balanced scorecard approach in relation to performance measurement.

With the balanced scorecard approach, an array of performance measurements is
developed. Each indicator should be congruent with the overall entity objectives.
Further, each measure should be easily determined and understood. These
measurements can relate to financial outcomes, customer outcomes, or business
process outcomes. Although a balanced scorecard approach may include target
thresholds that should be met, the primary focus is on improvement.

10. Outline key stakeholders who may be involved in business planning.

 End Consumers
a. household
i. demographic segments
 ii. psychographic segments
iii. purchasing behavior segments
b. commercial & industrial
i. product use
ii. alternative products
iii. purchasing behavior segments
iv. industry classification 
 Key Customer groups, if not direct to end consumer
c. distributors
d. retailers
e. product transporters
f. intermediary storage
 Employees
a. internal, specify level
b. sales force
c. support personnel for outside relationships
d. contractors (not really employees, but still impacted)
 Stockholders (owners) – Board of Directors