Chapter 7

The Venture Plan

Society’s Effects on Entrepreneurs

Financial and legal institutions provide a strong foundation (copyright laws, patent laws, competition act).

Money for starting new ventures is easily accessible.

Education and training are widely available.

Laws and regulations do not deter new venture creation.

Free and open trade exists.

Support groups in government, business and education are available to advise and encourage entrepreneurship.

Taxes are low, motivation is high and supply and demand determine price.

Democracy and free enterprise flourish.

Entrepreneurship flourishes in a supportive environment where:

What does it mean to live in a Democratic, Free Enterprise Society?

Say what we want as long as it is not slanderous

Write what we want as long as it is not libelous

Associate with whom we want

Believe what we want

Free to compete

Free to choose your job

Free to set up a business

Free to own property

Free to vote for the political party of our choice

Free to make profit

Many consumer choices

You are free to do what you want as long as you are not preventing others from doing what they want.

We are free to:

• Prestartup Stage

• Develop ideas • Complete Market testing• Develop business plan

– Challenges• Market acceptance• Do not spread money and time resources

too thin.• Profit is negative

• Prestartup Stage

– Focus• Find professional advisors• Finalize business planning• Match your business needs with your

skills, experience and passions. • Aim to get the business onto a stable foundation of profitable sales and a consistent cash flow

• Money Sources (Pre-startup stage)

– Early in the business life cycle with no proven market or customers the business will rely on cash from owners, friends and family.

– Other potential sources include suppliers, customers and government grants.

• 2. Development Stage

– Attempt to reach your break-even point• Total monthly revenues = total monthly

costs• Look at your cash flow analysis• Look at fixed costs and variable costs

• Challenge: (Development Stage)– If your business is in the start-up life

cycle stage, it is likely you have overestimated money needs

– Main challenge: not to burn through what little cash you have.

– You need to learn what profitable needs your clients have and do a reality check to see if your business is on the right track.

• Focus: (Development Stage)

– Start-ups requires:• Advertising is extremely important

• establishing a customer base and • market presence along with • tracking and conserving cash flow.

• 3. Growth Stage

– You are making a profit– Business is increasing– Look at options for expansion (but be careful

not to expand faster than your company can financially handle and adapt to the changes)

• Challenge: (Growth Stage)

– The biggest challenge growth companies

face is dealing with the constant range of issues bidding for more time and money.

– Effective management is required and a possible new business plan.

– Learn how to train and delegate to conquer this stage of development.

• Focus: (Growth Stage)

– Growth life cycle businesses are focused on running the business in a more formal fashion to deal with the increased sales and customers.

– Advertising continues to be extremely important

– Better accounting and management systems will have to be set-up.

– New employees will have to be hired to deal with the influx of business.

Maturity or Comfort Stage

This stage begins when sales come to a plateauThe business is thriving with a good customer base and a

consistent cash flow.Its now that a more formal, detailed

approach towards planning should take place.

During growth, it is more important to make quick decisions with a good chance of success. Now the rate of change has slowed; more detailed long term plans can be made.

Re-evaluate the businesses mission and vision statements to match where the business is now

Maintain profits at pre-existing levels.

Monitor your business to ensure your profits continue to increase. Marketing and financial management are central to this.

Maturity Stage continued

Finances need to be monitored because “the numbers show you trends”

Look for:Downward trends, upward trends, fluctuating trends. Where are your profits heading? This is your pre-warning to where you are headed in post maturity; allowing you to find out why, when and how to change it.

Post-Maturity

The final stage consists of three possible outcomes

– Renewal: New areas of growth cause increased sales and profits

– Steady State: A continuing state of maturity.

– Decline: Profits begin to fall as a result of poor management; often a direct result of a drop in sales or excess expenses.

Renewal

Often a direct result of new markets being tapped to create new areas of growth, expanding the reach of products and services the business provides.

Steady State

To maintain a steady state, focus should be on what existing customers are currently demanding.

This requires market research for accurate results.

Stops expenditure on research and development required for renewal.

Be warned, a steady state cannot be maintained forever and will fall into decline if not forced into renewal.

Decline

Decline is difficult to reverse as:• Financial institutions are reluctant to

lend money to high risk businesses• Suppliers will restrict credit facilities

and may insist on cash payments• Products may have become obsolete• Well qualified employees may begin

to leave to seek out better opportunities, without a strong workforce, the rate of decline increases.

Your Venture Plan

The roadmap in developing your business

Mission Statement

• Describe your vision, aim, objective

• Clearly identify:– Who is your target client/customer?

– What product or service do your provide to that client/customer?

– What makes your product or service unique, so the client would choose you?your type of business

A mission statement is a statement of the purpose of a company or organization.

Should guide the actions of the organization, spell out its overall goal, provide a path, and guide decision-making.

It provides "the framework or context within which the company's strategies are formulated.“ Wikipedia

• McDonalds - "To provide the fast food customer food prepared in the same high-quality manner world-wide that is tasty, reasonably-priced & delivered consistently in a low-key décor and friendly atmosphere.“

• Key Market: The fast food customer world-wide

• Contribution: tasty and reasonably-priced food prepared in a high-quality manner

• Distinction: delivered consistently (world-wide) in a low-key décor and friendly atmosphere.

• Courtyard by Marriott - "To provide economy and quality minded travelers with a premier, moderate priced lodging facility which is consistently perceived as clean, comfortable, well-maintained, and attractive, staffed by friendly, attentive and efficient people"

• Key Market: economy and quality minded travelers

• Contribution: moderate priced lodging

• Distinction: consistently perceived as clean, comfortable, well-maintained, and attractive, staffed by friendly, attentive and efficient people

• Google's mission is to organize the world's information and make it universally accessible and useful.

• The Walt Disney Company's objective is to be one of the world's leading producers and providers of entertainment and information, using its portfolio of brands to differentiate its content, services and consumer products.

• The Home Depot is in the home improvement business and our goal is to provide the highest level of service, the broadest selection of products and the most competitive prices.

• The Canadian Cancer Society is a national, community-based organization of volunteers whose mission is the eradication of cancer and the enhancement of the quality of life of people living with cancer.

So what is the difference between a

Mission Statement

and a

Vision Statement ??

• Vision: outlines what the organization wants to be, or how it wants the world in which it operates to be. It is a long-term view and concentrates on the future. – For example, a charity working with the poor might have a

vision statement which reads "A World without Poverty.“

• Mission: Defines the fundamental purpose of an organization, succinctly describing why it exists and what it does to achieve its vision. – For example, the charity above might have a mission

statement as "providing jobs for the homeless and unemployed".

DSBN Vision Statement

http://www.moosefishing.com/toc/about/vision.htm

Assignment

• Create a group of four

• Create a mission statement for one of the following:– In-line skating league– Fitness center for all ages– Hockey Team

The Research Assistance Grid:A Basic Planning Tool

• See Chart page 149

The Business Plan

• Title

• Table of Contents

• Executive Summary

• Business Overview

• Market Research

• Marketing Plan

• Financial Strategy

• Look at examples of Business Plans

Test