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Young Enterprise

By Luis Porter,2014-03-19 09:32
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Market analysis. 3.1 Overview. 3.2 Market research. 3.3 Customers. 3.4 The productservice. 3.5 Competition. 3.6 Conclusions. 4. Your productservice

Young Enterprise

North West

Business Plan Guidelines

    Contents

1. Introduction

    2. Your business proposal

3. Market analysis

    3.1 Overview

    3.2 Market research

    3.3 Customers

    3.4 The product/service

    3.5 Competition

    3.6 Conclusions

    4. Your product/service

    5. Your marketing strategy

    5.1 Product

    5.2 Price

    5.3 Place

    5.4 Promotion

6. The people

7. Financials

    7.1 Cash Flow Forecast

    7.2 Budgeted Profit and Loss Account

1. Introduction

You’re probably reading this because you need to write a business plan for your Young Enterprise

    Company and are not quite sure where to start or what is needed. And why should you do one anyway?

A business plan does a number of things:

; It’s a way of persuading people to put money into your business

    ; It will help you run your business more efficiently

    ; It will help you to avoid mistakes things will change throughout the life of your business and

    you can’t plan for everything that may happen, but you can reduce the risk of setting out on the

    wrong foot.

So what should go in it? Well, you’ve only got a maximum of 10 pages to play with, so it’s important

    to be concise, but you should include:

; Your Company Name and Logo obvious, but important!

    ; Executive Summary not everyone will have time or the inclination to read the whole thing. ; Index/Contents Page

    ; The business proposal what are you going to do?

    ; A market analysis what exactly is the business you’re in; how big is the market; is it going up or

    down?

    ; Your product or service

    ; Your marketing strategy Product, Price, Place and Promotion

    ; The People who are you? Why should an investor put their faith (and hard-earned cash) into

    your business venture?

    ; Financials costings; pricing; cash flows; Profit and Loss accounts it’s early to be making

    forecasts but vital to convincing people you have a good plan.

    Remember that a plan is just that a plan. You haven’t got a crystal ball to see into the future, but with a bit of planning now you can avoid potential difficulties and get a better feel for what you’re really

    trying to do.

2. Your business proposal

Ask yourself a couple of questions:

; What do we want to achieve from our experience of running a YE Company?

    ; What exactly is the nature of our business?

One way to sum these up is in a short and snappy “Mission Statement”.

An example from a real businesses:

     From Netcetera, an internet hosting company…

     "Our mission is to become one of the top 5 European providers of Internet Hosting and E-Commerce Solutions to the Small and Medium sized Enterprise (SME) market."

    A Mission Statement can also include something about your values as a business, such as this (rather long) one from The University of Birmingham…

     The University is proud of its origins in the city of Birmingham and of its first hundred years as an inspirational centre of learning, teaching and research. Recognising the variety of purposes we serve, we affirm that: We will maintain an international reputation for the highest quality of scholarship and research, for academic excellence, and for the quality of our alumni. We will continue to serve Birmingham and the West Midlands region using our skills and knowledge and drawing on our international reputation to promote social and cultural well-being and to aid economic growth and regeneration. We will attract and welcome students of the highest ability to study in a wide range of disciplines and will give encouragement and support to them and to all the staff who work with them. We will continue the tradition of making a university education available to the members of any community able to benefit from it. We will, through changing times, maintain an unswerving commitment to truth, wisdom and academic freedom.

Coca-Cola do it slightly differently, calling it their “Promise”…

     The basic proposition of our business is simple, solid and timeless. When we bring refreshment, value, joy and fun to our stakeholders, then we successfully nurture and protect our brands, particularly Coca-Cola. That is the key to fulfilling our ultimate obligation toprovide consistently attractive returns to the owners of our business.

    Your business plan should include your Mission Statement (if you have one). It’s sometimes a useful tool when you have to make difficult decisions down the line. Does whatever you are planning fit in with your stated aims? Or were your aims unrealistic in the first place? The only way to find out is to get stuck in and run your own YE Company!

3. Market analysis

    How do you know that there is someone out there prepared to pay for the service or product that your company has to offer? It’s hard to be sure until you have goods ready for sale or a service just waiting to be delivered, but effort put in to market research at early stage will reap the benefits later and convince who ever is reading your business plan that you’ve really thought about what you are doing.

    Market research can be very time-consuming and it’s worth spending a little time thinking about the questions you want answers to. A good starting point are these three questions:

    ; Customers can we get enough of them, and will they pay us enough to be profitable?

    ; Competitors will we be able to compete with businesses already in the market?

    ; Operations do we have the ability and resources to meet our customers’ needs?

    These three key questions should generate a series of further questions. Try to be as specific as you can. The following key questions may help:

Customers

    ; What type of person/business?

    ; How much spending power?

    ; Will this go up or down?

    ; How do we let them know about our service/product?

    ; What do they want from our service/product?

Competitors

    ; What do they charge?

    ; Are there gaps in the market?

    ; Is anyone else doing this already?

    ; Is anyone else likely to muscle in?

    ; What methods/equipment do they use?

Operations

    ; How much will we charge?

    ; What level of funding will we need?

    ; What specialist skills/equipment are needed?

    ; Where can we get funding?

    ; What specialist regulations will we need to meet?

    The answers to these questions can come from a variety of sources. As a small, specialised business though it’s likely that the best source of information will be your potential customers themselves. You can make some simple assumptions but you’re also likely to need more specific, and tested,

    information. It’s no good trying to sell a Valentine’s Card for ?3.00 if they are no better than the ones in the shops, cost twice as much and go on sale three days after the event!

Surveys can be useful in order to help your decision-making process, including:

    ; Personal surveys

    ; Telephone surveys

    ; Postal surveys (or something similar eg. a questionnaire given out at registration)

If you’re producing a survey, make sure you test it out on a few people first – it’s easier to fix any

    errors or omissions at an early stage than to have to go back through the process again because you forgot to ask the right question!

You should cover the following points under your market analysis:

3.1 Overview

    Define exactly what business you are in. What is the overall size of the market available to you? Is demand rising or falling? A lot of YE Companies are tied in with Christmas and the events such as Valentine’s Day.

3.2 Market Research

    Describe exactly what research has been carried out. Data and graphs can be included as an appendix if you think it would be useful, but get your key messages across here.

3.3 Customers

    What “segment” of the market are you trying to reach? Some of the factors you may wish to consider include:

    ; Consumer or industrial (students, local shops etc)

    ; Age (or specific year groups at school)

    ; Income/spending power

    ; Location (eg. school, events, local shops etc)

3.4 The product/service

What’s special about your product or service and what benefit does this bring for your potential

    customers? In other words, why should they buy it? The next section in this document covers this in more detail.

3.5 Competition

Are there any “barriers to entry?” For example, if your college/university won’t let students run a tuck

    shop because they have a franchise operating commercially then there’s no point in planning one.

Who else is out there in the market place? How do they operate?

    A good idea might mean that there are few competitors, but can you be sure there will be demand for your great new idea?

If there’s a gap in a market, how can you go about filling it?

3.6 Conclusions

    Briefly summarise this section with a description of the threats and opportunities that the market is presenting at the time you write your plan.

4. Your product/service

    YE Companies often start out by “brainstorming” ideas and then focus down on one or two that look like they may be worthwhile investigating in some detail. This section of your business plan is an opportunity to explain your business idea, what you propose to do and how you will address any problems that arise.

    A useful technique is to do a “SWOT” analysis for each product, pulling together your market and product information:

SWOT = Strengths, Weaknesses, Opportunities, Threats

    Strengths Weaknesses

    Opportunities Threats

    For each product or service build up a list under each heading, then use the results to help you write this section.

5. Your marketing strategy

    Hopefully by now you will have identified an opportunity in the market place and considered what you may be able to offer as a business. You now need a plan of action often referred to as a Marketing

    Strategy. This can be summarised under the “4Ps” of Product, Price, Place and Promotion. In other

    words, how will you run your operation, what price will you charge, how will you make customers aware of your product/service and how will you get it to them?

5.1 Product

    You should have already described your main product(s)/service(s) in the last section. Use this section to explain how you will manage any product changes over the life of your business especially if you

    plan a range of goods or services. More adventurous ideas may be reliant on the success of earlier projects.

    Importantly define what it is about your product or service that differentiates it from the competition. Why will people choose your business or product in preference to another? Or, if your product is so new that there is no competition, how will you protect your market share once others see what a good idea it is?

5.2 Price

    You will need to charge a certain price in order to meet your costs. Anything above that is profit, but what pricing strategy should you employ? You may want to consider the following:

; Discounts for bulk purchases

    ; Introductory offers to allow customers to sample your products

    ; The balance between quality and price people will usually pay more for a product they perceive

     to be of high quality

5.3 Place

    It’s no good building the best bouncy castle ever if you can’t get it out of the workshop! How will you get your product to your customers?

    ; Are you selling directly to the customer, via the web, or through someone else (such as a shop)? ; How will you get your items physically to the customer? (Personal delivery, normal post,

    registered post, trade fairs etc)

    ; Are you in the right location?

5.4 Promotion

    How do you let your customers know that your company exists and that you have a product/service to sell?

    What message do you want to get over? Think of the benefits that the product brings….a new car can be as much about status as it is about the size of the engine.

    What media will you use to get your message over? YE Companies often have to be inventive as formal advertising can be very expensive. It costs very little to walk round the University/college grounds with a sandwich board and a megaphone (apart from the embarrassment!)

    Publicity is always useful try to get people talking about you. YE is a charity, so you already have some goodwill on your side. Use this to your benefit with local papers, radio etc.

    Image is important. If you’re selling face to face, think about how you appear to a potential customer. You are unlikely to be selling large volumes of goods. Quality may therefore be the thing that makes your product stand out. The right image is important if you want to get the message over that your company and products are of high quality.

6. The people

    Businesses are run by people and, in a Young Enterprise Company, the people involved are as important in any other. A summary that covers the following points may be useful:

    What are the skills needed to make the idea work? Who has them? These can range from technical skills such as metalworking though to “softer” skills such as enthusiasm and drive.

Who will cover these requirements? List everyone involved this may include people outside the

    Company Advisers, teachers, parents etc.

Why will they be able to meet these responsibilities? What makes them able to do so previous

    experience, qualifications etc?

    Training do you have any training needs? Identify them if appropriate and how they will be addressed.

Organisation how are you structured and what kind of business are you?

7. Financials

7.1 Cash Flow Forecast

    It is crucial that you know how much money you are going to need. Many businesses fail at an early stage simply because they do not have enough money in the bank to make payments (even though they may have everything else in place to run a great business).

    This is probably your most single important table in understanding and managing the early stages of your YE Company. It’s no good having hundreds of orders if you can’t buy the raw materials to make them up. Your customers may want credit fine to let them pay on delivery, but not if you can’t

    deliver in the first place!

    Be realistic and sensible in trying to fill in the following table. You should have made a sales forecast already but make sure you’re being realistic and put the income received from projected sales in the right month! If you’re going to sell 80% of your goods at Christmas, it’s no good just averaging out your sales over the life of your business.

    This table should help you work out how much (if any) share capital you wish to raise to finance the setting up of your business. You may also be able to negotiate an overdraft at the bank which will help you get going, but they’ll want to see evidence that you know what you’re doing – your financial

    calculations will help enormously at this stage!

     Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7

    OPENING BALANCE

    Credit (Debit)

    INCOME

    Shares

    Sales

    Loans

    Other

    TOTAL INCOME

    EXPENDITURE

    Materials

    Wages

    Rent

    Advertising

    Postage

    Insurance

    Travel

    Telephone

    Bank charges

    Tax

    VAT

    TOTAL EXPENDITURE

    CASH

    INCREASE/(DECREASE)

CLOSING BALANCE

7.2 Budgeted Profit and Loss Account

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