Business Plan - Target Market, Products And Services Offered, Marketing Tactics, Distribution, Competition, Production, Management - TRADEMARKS AND LICENSES
A business plan is a document written by an individual or group of individuals interested in launching a new business. Along with helping to determine whether or not an idea can be transformed into a functional company, a business plan is also used to secure capital and recruit executives. During the dot-com mania of the late 1990s, several analysts began to criticize the many Internet-based ventures operating without a formal business plan, as well as the business investors pouring funding into these upstarts.
A March 2000 study of 300 e-commerce businesses in California revealed that most had launched operations with no business plan in place. Those who did develop e-business plans tended to produce documents much less exhaustive than their traditional counterparts. This lack of planning began to backfire for a variety of reasons. When the Internet revolution took off, many existing brick and mortar businesses built World Wide Web sites without figuring out who it was they were targeting; as a result, traffic remained minimal and those who did visit such sites complained of poor design and limited customer service. In some cases, companies that began selling directly to consumers via the Web alienated their traditional retailers. For example, Macy's and J.C. Penney threatened to stop selling Levi brand clothing in their stores after Levi Strauss began selling its merchandise via the Web; as a result, Levi Strauss abandoned its e-commerce efforts.
In 2000, the highly publicized bursting of the dot-com bubble prompted venture capitalists to begin scrutinizing business plans, particularly those for Internet-related ventures, more closely. As a result, the business plans developed for Internet-based businesses began to resemble those created for more traditional ventures, in terms of both length and level of detail. Rather than favoring condensed 15-page plans, lenders began paying attention to more thorough documents, which numbered 25 pages or more. Although business plans continue to vary in format and style, they typically include the following information, regardless of industry.
The steps a business has taken or will take to gain protections like trademarks and licenses are also relevant to many business plans. In the case of businesses engaged or planning to engage in e-commerce, domain name registration plans may also be included.
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Most business plans cover both the existing size and the anticipated growth rate of the market they are targeting. For example, a business plan for an online discount travel service might point out that travel is the most successful segment of the online industry, and that despite the rapid demise of many dot-com businesses, analysts continue to forecast substantial growth in online travel booking…
Along with describing exactly what it is a company will sell, business plans also explain why these products or services are more likely to sell than similar offerings by competitors. For example, travel discounter Hotwire.com could have justified in its business plan the superiority of its services to those offered by rival Priceline.com, a name-your-own-price travel service, by pointing out key …
An explanation of how customers will be made aware of your products and services is another key feature of most business plans. Often discussed are advertising mediums—including print, television, and the Internet—as well as pricing strategies, major promotions, and any guarantees or warranties that might be used to attract customers. Priceline.com could have included in its business…
Business plans describe the channels through which customers will obtain products and services, including retail stores, catalogs, and Web sites. In the case of Amazon.com, the ease of distribution was a key concern for Bezos, who believed the small size of most books would facilitate easy shipping. Another of his decisions related to distribution was location. Liking its proximity to the warehous…
Analysis of competition is an essential component of most business plans. This section tends to cover the strengths and weaknesses of rivals and includes information about their market share, profitability, and pricing strategies. Prior to choosing books as Amazon's initial focus, Bezos analyzed his competition and realized that market share was distributed among many leading book publisher…
Information about how a business will obtain what it is selling, whether it be by manufacturing it or simply purchasing it wholesale, is also important to a business plan. A discussion of production processes can cover anything from the cost and construction of needed facilities to the availability of qualified labor. Quite often, the location of a company's headquarters is based on proximi…
According to a June 2000 article in BusinessWeek Online, a survey of venture capitalists completed by Centurion Consulting revealed common problems with business plans. "The No. 1 problem
they identified was the lack of a management team,&rquo; stated Barbara Lewis, co-owner of the business plan consultancy. "Understandably, it's hard for a new entrepreneur without the…
Most business plans also set forth how much capital is needed to sustain operations for five years. According to an April 2000 issue of Tampa Bay Business Journal, "Most new businesses stumble and fail somewhere during the first and fifth year. One of the biggest stumbling blocks is not having the cash when you need it to grow your business. The better you anticipate your need for capital t…
Many analysts argue that this section is the most consequential portion of a business plan, particularly in terms of securing funding. In short, lenders and investors want to know what kind of revenues a business will generate and how soon it will be profitable. While many dot-com investors in the late 1990s appeared willing to wait several years for profitability, an October 2001 article in Inc. …
Although it appears at the beginning of a business plan, most business plan experts recommend that entrepreneurs write the two-or three-page executive summary, perhaps an even more important business plan component than the financial projections, last. The executive summary gives readers a thumbnail sketch of the contents of the entire plan. It briefly describes the type of business detailed in th…
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