Page 90 - Business Plans that Work A Guide for Small Business

Company and Product Description: Selling Your Vision • 81

Many business plans falter here. They fail to articulate a clear entry strat-
egy. Crafting a finely honed wedge to insert a new venture into a market-
place is essential for success. Think of taking a long walk. If you start on
the wrong road the trip can be extended dramatically or you may never
reach your destination. Therefore, the goal is to communicate how you
enter the industry and survive for the first couple of years while you are
building your customer base and refining your business model. Since most
new ventures are resource constrained, especially in terms of available
capital, it is crucial that the lead entrepreneur establish the most effective
way to enter the market. Based upon analysis in the market and customer
sections, entrepreneurs need to identify their primary target audience
(PTA). Focusing on a particular subset of the overall market niche allows
new ventures to effectively utilize scarce resources to reach those custom-
ers and prove the viability of their concept.
Lazybones may well be different from your business proposition in
that Lazybones is attempting to grow an existing lifestyle business into
a high-growth enterprise via franchising. Therefore, the plan talks about
why people might want to become a franchisee, highlighting key points
such as operating margins, refined systems, and a turnkey operation that
will improve the franchisee’s probability of success. However, this exer-
cise is a clear example of explaining why the core idea is valuable for the
broad set of stakeholders; operator, student, parent, university, among
others.
The business plan should also sell the entrepreneur’s vision for growth
because that indicates the true potential for the business. Investors, in
particular, need to assess the growth potential because that is what drives
their returns. As part of the storytelling, you need to lay out the strategy
and resultant scenario that you believe is most likely. Thus a paragraph
or two should be devoted to the firm’s growth strategy. If the venture
achieves success in its entry strategy, it will either generate internal cash
flow that can be used to fuel the growth strategy, or be attractive enough
to get further equity financing at improved valuations. The growth strat-
egy should talk about the secondary and tertiary target audiences that the
firm will pursue. Thinking ahead to the next section of the business plan,
the marketing section of the business plan must support your entry and
growth strategies.