Define you business

Understanding your market

Define your product and services
Selling to you customers
1. Defining Your Business

a. Determining why you need a business plan

Business plans helps you
- Define your business
- Understand the market
- Define your product
- Outline go-to-market strategy

b. Defining the problem you solve

Articulate the problem to solve
- Who has the problem ?
- How big is the problem ?
- How does the problem come about ?

c. Sizing the market

- Businesses or Consumers ?
- How big is the market ?
- How does the market self-organize ?
- How Big is the Profit Pool ?
- Market Research, Analyst Reports

d. Defining your product/solution

- Explain product in simple terms
- Avoid buzzwords
- Assume audience is unfamiliar
- Describe benefits in concrete way
e. Defining your revenue model

How will you make money ?

- One time
- Recurring
- Upsell
- Add-ons
How are similar products/services priced ?
What are your customers willing to pay ?
- Market Research
- Value Analysis

f. Describing why you’ll win in the market

SWOT Analysis > why are u going to win in the market

Strengths
- Strong IP, High demand

Weakness
- Lack distribution capabilities of competitors.

Opportunities
- Partner with channel partner to get better product into the segment.

Threat
- Changing market landscape
2. UNDERSTANDING YOUR MARKET

2.1. Understanding customers and trends

Understanding Trends
- Growing or Shrinking ?
- What's happening in the market ?
- Who makes the buying decisions ?
- What other products/ services do customers want/need ?

Customer trend resources

- Market research
- Focus groups
- Competitive analysis

2.2. How you rank vs competitors

- Moon chart Template

2.3. Knowing the threat of substitutes

Identifying threats
- What can replace your product
- What substitutes are competing with you now ?
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2.4. Building a go to market strategy
- Strategy that describes how customers will first be exposed to your product/service and how you will get them to purchase.
- How will you reach your customers ?
- Directly ? distribution ?
- Building Awareness ?
3. DEFINING YOUR PRODUCT

3.1. Articulating your value proposition

Value proposition > tangible benefits your customer will receive from buying /using your product/services.

3.2. Defining points of differentiation

Highlight what makes you different and how it delivers better performance.
Differences have to be substantial relative to competitors.
Differences have to be meaningful to customers

3.3. Protecting your market

Use Proprietary Rights
Patents
Copyrights
Trade secrets
Non-compete agreements

3.4. Developing your product

Document Your Roadmap and Timeline
Describe Your Minimum Viable Product
Features
Nextlevel prototypes
Final product (With timeline)
Describe your approach to testing
Explain key risks in product development lifecycle and how are you going to mitigate

3.5. Delivering your product

How are you going to deliver ?
Service ? directly to consumer ? remotely ?
Describe hurdles and challenges ?
4. SELLING YOUR PRODUCT

4.1. Branding and Marketing your product

What is your brand promise ?
Describe how you will advertise and promote your product and service
How you will communicate with your customers
Emphasize your points of differentiation

4.2. Pricing your product

With a 10% profit margin, a price increase of 1% increases profit margin by 10%
Benchmark competitors in terms of pricing model and price points.
Determine your pricing model
- Cost plus
- Value based
- One time fee

4.3. Selling your product

How will you sell your product/services ?
Using a Sales Force
What will it look like ?
What is your expected sales cycle?
What is your sales conversion rate expectation ?

4.4. Supporting your product

How will you support your product/service ?
Aftercare ?
Returns ?
Customer Service ?
5. RUNNING YOUR OPERATIONS

5.1. Determining how many people you need

What job-families do you need ?
Where will you hire from ?
Employees or contractors ?
How will you use vendors ?
What are training requirements ?
How will staff grow as the business grows?
When do you achieve scale benefits ?

5.2. Managing Production

Where will you make your product
What suppliers are you going to use ?
Own or lease equipment

5.3. Managing supplies

Determine your major inputs
Identify your suppliers
Consider reputation risk
6. MANAGING YOUR BUSINESS

6.1. Leading the organization

Define executive members > draw organization chart
Define members
Draw organization chart
Include Bios
Show relevant experience
Describe Ownership Structure
Identify decision-making authority
Describe roles to be filled and timeline

6.2. Getting advisors

Advisory board
Board of directors
Specialists

6.3 Compensating Leadership

Cash
Bonus
Equity > stock /options ( Equity should vest for the time)
Put employment agreement

6.4. Administration
Finance
HR
Legal
Intellectual Property
7. PROJECTING YOUR FINANCIALS

7.1. Financial Assumptions

Identify assumptions
Showing ground/background
Comparables
Market research
Basic estimates
Best/worst case scenario
Identify impact

7.2. Financial Forecasts

From the bottom up
By month
Based on unit drivers
Include a profit/loss statements
Forecast / Revenues/ Costs and Cash
Include forecast scenarios ( worst case >>>expected >>> best case )

7.3. Capital Requirements

Capital on hand > money on bank
Burn rate > amount of money a business is spending every month
Runway > The amount of time a business can operate with current financial resources.
Cash flow breakeven > the financial point where a business generates enough money to pay all its costs.
Owners
Loans
Friends/Family
Good use of Capital (Marketing , Sales force, Product development)
7.4. Financial Risks
Potential risks
- Loss of funding
- Loss of an important customer
- Marketing failure
- Legal issues
- Competition
Risk Response
- Cut expenses
- Lay off staff
- Seek additional investment
- Drop prices
- Invest in marketing
- Sell to or partner with another firm

7.5. Exiting your business

- Is your business a lifestyle ? are you look for exit ?
- How will you exit ?
- Acquisition > who might buy ?
- Selling to other owners ?
- Exit planning ? expect an ROI ( Return on Investment)

BUSINESS PITFALLS
1. Not defining competitors
2. Showing market size potential
3. Financial overassumptions
4. Ungrounded assumptions
5. No owner “skin in the game”
6. Investing early in the wrong items