Thursday, April 10, 2008

components of biz plan

Section I- Executive Summary
a brief introduction to the biz concept, and what is unique about it, the opportunity that gave rise to it, the skill-set of the entrepreneur and capital outlay. All of it should not exceed 800 words.

Section II - General description of the biz
this is elaboration of Section I. It gives the industry background in terms of size, competitors, maturity of industry, whether there is any government regulation, market characteristics, pricing, technology, what drives the demand, etc.

in this context, the biz that you are thinking of should be highlighted, what is your value proposition, is it in terms of product, price, or superior technology, or location economics (availability of the crucial raw material in plenty in a particular region that may drive down costs), what is your QSP (quality, service, price) commitment vis-a-vis the competitors, and how do you plan articulating the value proposition to the market place.

this is also where you will articulate your vision and your mission statements. who you want to be and how you plan to become who you want to be. and the milestones. milestone is a beautiful word in management. it gives you the opportunity to break into the short-term, the goals that you have set for your organization, long term. if your vision is to cross the million dollar mark in the first year, then it has to be appropriately broken into four quarters. each quarter, you can review your progress, if you are lagging behind, it gives you the opportunity to play catch up in the suceeding quarters. and every milestone that you reach gives you an opportunity not only to look back but to look ahead at the next milestone.

it is therefore imperative to set realistic milestones. not unachievable, yet not easily achievable either.

most important, this is the section where you articulate what is the value you are creating for the customer, how do you propose to deliver that value to the customer, and how you plan to communicate that value proposition to your customer,- all this in the backdrop of your understanding of what the customer wants.

it is important to understand what value the customer is looking for. Xerox when it enetered india offered excellent value to the customer in terms of copy quality, which was as good as the original, at Re 1 per copy. there were no takers because the market was not unhappy with the ordinary quality that it was getting from other copiers at 25 paise. the market simply was not ready for superior copy quality proposition. it took xerox three years to educate the market on the importance of good copy and how it enhanced company image and conversely how a bad copy adversely affected it. then there was no looking back.

we will continue with the other components in the next blog.

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