business plan executive summary

business plan executive summary

Developing a Successful Business Plan

1. Introduction

The entire book is formatted in a way that will allow the reader to not only use it as a step-by-step instruction for creating a well-developed and organized business plan, but also as a reference guide to the component parts that make up a professionally executed business plan. Each subsequent chapter highlights a specific component of a business plan and provides the reader with information on what should be included in the main body of a business plan, as well as useful resources such as sample worksheets, instructions, and recommended resources.

Greetings reader. Welcome to “Developing a Successful Business Plan”. This workbook is designed to clearly explain each aspect of the business plan creation process. By taking a comprehensive approach, it provides the reader with not only instructions on how to do the task at hand, but also explains the theory and the reasons behind the instructions. The reader will not only learn how to do it, but why it should be done this way.

2. Market Analysis

There needs to be a good reason for customers to come to our café over others. There are many substitute products in the coffee shop industry such as tea or buying coffee from a convenience store and sitting at home. We will also need to differentiate between direct competitors and indirect competitors. Our direct competitors are other coffee shops, but indirect competitors include any other place offering food and drinks since customers have a limited time for a break. Email between customers and employees’ classmates during the week provided a lead to an overlooked market of people seeking a quiet place to do work and to sit, relax, and discuss with friends on the weekend. This is definitely a good niche market for our café to focus on, providing a nice transition from busy people to a calming environment. Offering good quality and a reasonable price, Cappuccino Lovers can satisfy these customers and excel in an industry that has high growth rates in the US.

Market needs/Service Our café is in a competitive industry. Five forces shaping the industry include the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products, and the intensity of rivalry among competitors. Looking at the threat of new entrants, we will need to be constantly keeping an eye on our customer base. The bargaining power of buyers is quite high since there are many coffee shops around. We will have the ability, however, to create a high degree of customer loyalty through our quality and hard work. There are many suppliers of coffee and baked goods, but the bargaining power of suppliers is not a huge issue.

Market Overview The café will be a soothing, relaxing environment that will provide a high degree of quality coffee and fresh food at a reasonable price. Customers in the US are spending their money on a daily basis at gourmet coffee establishments providing a chance for Cappuccino Lovers to make it in this business. According to the latest Best of the Web (BotW) report, cafes and coffee shops are the highest growing retail businesses over the last six years. That’s an annual growth rate of 7%. The US is seeing a changing landscape in terms of coffee. There’s been an explosion in the coffee industry over the last few decades. According to the National Coffee Association’s 2002 survey, daily consumption is up among 18-24 year olds. And the specialty coffee market has been doing exceptionally well. It appears Americans are growing a taste for higher quality, freshly roasted coffee. From an economic standpoint, there are no signs of the coffee market slowing down. Coming off a slow 2001, the National Coffee Association of USA, Inc. is predicting good things for the coffee industry in 2003.

3. Business Strategy

Customers we wish to target are individuals who are new to drumming and percussion or have an intermediate drumming ability and want to progress their skill either with their school band/ensemble or on their own. This can also include school teachers who are looking to buy a product for their band/ensemble. We already have a good understanding of who these customers are and what they want based on our previous experiences and drumming knowledge. With these customers in mind, we are going to employ a niche strategy focusing primarily on the snare/timpani market. This strategy will allow us to concentrate our efforts on a small segment and only customize our product to suit the needs of a particular customer group. The advantage of this strategy is that we can become highly specialized producing products that are tailored to the particular needs of these customers. This can help us build a reputation for quality, which is an important attribute for customers who require professional drumming/percussion equipment. In the long term, as we will have expertise in making this type of product, we can then expand or use a different strategy to target other customers in the drumming/percussion market. This also allows for direct and effective competition with other companies who may be looking to target a similar customer group.

The business strategy is a plan to achieve a goal based on certain specifications and requirements. It is a specificity of how the business’s mission and goals will be achieved making use of the business’s core competencies. The business strategy provides a vision on the way forward and explains what is to be done in order to achieve the required goals and objectives. It is also important as it provides a mechanism for a company to gauge its performance and successes in the form of predetermined goals and objectives. A business strategy primarily is concerned with building competences and resources which will give the business a competitive advantage. This is done by satisfying the needs of customers more effectively than rivals. Finally, it states how the business will sustain and preserve its position in order to be able to achieve long-term success.

4. Financial Projections

Financial representations are a critical segment of any business plan. This part will reveal to readers how soon the organization is expected to become profitable, and also the amount of return the investors will get. Sensible long-term and short-term goals, such as the ambition to take the company public within five years, will also be a factor. Projections should be summarized and often included in the business plans’ executive summary. For some entrepreneurs, developing the financial projections section of the business plan is the trickiest part of the plan. Use realistic numbers. “I can’t tell you how often I am given projections that show the company quickly reaching revenues of $100 million per year using only a small amount of capital,” Hawthorne says. “There is almost always a large and realistic gap between aspirations for sales, and sales in reality.” This is seen as the standard rather than the exception. Be aware that investors are fully aware of the capital to sales dynamic for your industry, and will likely decrease the projections rather than increase them. Keep this in mind when determining the amount to ask from an investor. The initial step without a clear strategy is to research what other companies in your industry have achieved. This is the most effective way to determine what the future holds for your company. If you cannot assess this because your company offers a new product, you must be extremely practical in your approach. What are the start-up costs, and how much return is predicted if all of the capital is reinvested into sales? For investors, the rate at which they recoup their initial investment in terms of profits can be a deciding factor. The investor will view a faster rate more favorably since with inflation, money is always worth less than it is today. This willingness and lack of a strategy for a slower profit is one of the most common flaws of business venture today. This lack of offering a lower risk at the same rate of return is what makes small businesses less appealing.

5. Conclusion and Next Steps

In concluding, be confident that the time you invested in the process of preparing a business plan has been one of the best investments you can make for the success of your business. The creation of a comprehensive business plan provides you with the necessary document for making informed decisions about your business. And, with a variety of strategies and ideas to draw from, you are much better prepared when hard times hit. Iche and Custom graphix, two of the companies I started, had no sales, marketing, or business plans. Quite frankly, we were flying by the seat of our pants. As difficult as that was, it taught me important lessons about how to make a business successful. Your plan becomes a working document that you will consistently refer to. As you move forward, you will evaluate each aspect in which you are currently engaged and determine to what extent it might contribute to your project. During this process you may find that you need to return to an earlier step and redo a portion of your plan. Business plans are dynamic; constantly changing and evolving. A plan from a few years ago may look quite different today. Do not be discouraged by the daunting task of writing a business plan. Before you know it, you will have a working document to use in pursuit of your business goals. Essentially, the business plan is the map which guides you on your business journey. By Michelle Helin