The Business Plan Part II

Operations

This section of the business plan asks for an explanation of the daily operations of the business, its location, equipment, people, processes, and surrounding environment. This section allows the entrepreneur the opportunity to plan and work out areas of the business that will have a large impact on the vitality of the business. Consider the following start-up concerns:

• Location: What qualities do you need in a location? Describe the type of location you’ll have. You will also want to note how much space (square feet) you will need and what type of building (office, warehouse, etc.).

      Access: Is it important that your location be convenient to transportation or to suppliers? Do you
      need easy walk-in access? What are your requirements for parking and proximity to freeway,
      airports, railroads, and shipping centers?

      Cost: Estimate your occupation expenses, including rent, but also including maintenance, utilities,
      insurance, and initial remodeling costs to make the space suit your needs. These numbers will
      become part of your financial plan.

• Legal: Businesses have a wide variety of legal needs, which varies amongst the different types of businesses. Businesses also need to be aware of legal parameters that may restrict their businesses. Areas that businesses need to be aware of in regards to the legal environment include licensing and bonding requirements, permits, workplace regulations, employee manuals, industry regulations, zoning and building code requirements and intellectual property protection. Legal council may be needed with the following: incorporation papers, contracts, employee manuals, nondisclosure agreements, patents and more.
• Personnel: What are the current and future personnel needs for the company? What would an organizational chart look like? Will job descriptions be created and what sort of talent will be needed for the company. How will the company manage compensation and fringe benefits?
• Production: If you are manufacturing a product, can you provide a flow chart of how the product will proceed through the manufacturing process? What sorts of machines are needed for production? What are the production techniques and costs? How will quality control be maintained? How will the company engage in new product development?
• Inventory: What kind of inventory will be kept? Where will pre-production and post-production inventory be stored? What is the projected rate of inventory turnaround? Is seasonal inventory needed? What lead time does the vendor need in replenishing inventory?
• Supplies: Who are your suppliers? What are their payment/credit terms? What do they supply? Do the suppliers have references or a record of performance?
• Credit Policies: Will the business sell on credit? If so, what kind of credit will be offered and at what terms?

For more information about Operations, go to:
www.score.org
www.openforum.com
www.sba.gov
http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html
www.inc.com/guides/start_biz/20660.html
www.cbsc.org/ibp/doc/intro_bp.cfm

Market & Competitive Analysis

"Business Opportunity Assessment Checklist"

No matter how good your product service may appear, the venture cannot succeed without effective marketing. And this begins with careful, systematic research. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts.

There are two kinds of market research: primary and secondary. Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies.

Primary research means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus-group interviews to learn about consumer preferences.

In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis of sales projections. While engaging in market research and competitive analysis consider the following topics:

• Economics (facts about the industry): What is the total size of the market/industry you wish to enter? What percentage of the market do you wish to capture (is it locally, nationally, internationally)? What is the current demand for your product/service in the market? What are the barriers to entry into the market (what would keep you from starting your business)?
• Products/Services: Please describe your product/service from the eyes of your targeted customers. What are the features/benefits? What is special about your product/service? What will the product/service do for the customer? Will you provide any after-sale services? What makes you different from the competition?
• Customers: Who are your targeted customers? What are their key characteristics? Where are they located? What is their annual income? What are some of the related products that they buy? The more you know about your customers (income, gender, age, social class, education, type of business, size of firm, industry etc.), the better equipped you will be to make advertising and sales decisions for the company. You will need to do this research for each customer group your business will have.

Competition: Who are the companies that will compete against you? What products/services will compete against you? What secondary items will compete against you for your customer’s money? Where are your competitors located? How will your product/service compare to the competition?

Using the Competitive Analysis table by SCORE (below) to compare your company with your two most important competitors. In the first column are key competitive factors. Since these vary from one industry to another, you may want to customize the list of factors.

In the column labeled “Me”, state how you honestly think you will stack up in customers' minds. Then check whether you think this factor will be a strength or a weakness for you. Sometimes it is hard to analyze our own weaknesses. Try to be very honest here. Better yet, get some disinterested strangers to assess you. This can be a real eye-opener. And remember that you cannot be all things to all people. In fact, trying to be causes many business failures because efforts become scattered and diluted. You want an honest assessment of your firm's strong and weak points. In the final column, estimate the importance of each competitive factor to the customer.  1 = critical; 5 = not very important.

                                                                                                                 Continue to The Business Plan Part III...