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Business Meeting

EDUCATION

GLOSSARY OF TERMS


ASSETS
Things a business owns, e.g. buildings, vehicles, stock and money in the bank.
BRAND
Refers to the words and symbols such as a name, logo and slogan that represent a business's identity.
BREAKEVEN
The amount of sales a business needs to make to cover all
its costs.
BUSINESS PLAN
A document that describes a business's aims and objectives and a plan for how they can
be achieved.
CAPITAL EXPENDITURE
Money spent on buying
or improving items that will be owned by a business for a long time, e.g. building or equipment.
CARBON FOOTPRINT
A measure of the impact that human activities have on the climate in terms of the total amount of greenhouse gases produced.
CASHFLOW FORECAST
An estimate of the amount of money a business will spend and receive within a certain time period (usually a year).
CREDIT
Somebody to whom a business or individual owes money.
ELEVATOR PITCH
A two minute summary that explains (i) what your business does (ii) who your customers are and (iii) what makes your business different from the competition. A customer should have a clear understanding of your business and its Unique Selling Point after hearing your elevator pitch.
EXPENDITURE
Money paid; cost.
FIXED ASSETS
Things a business owns or controls for a long time, such as premises or equipment.
FIXED COSTS
Costs that stay the same, regardless of how many sales a business makes, e.g. rent.
GROSS PROFIT
Total income from a business's sales minus the direct costs of making the sales (this does not include a business's overhead or running costs).
KEY MESSAGES
The things you most want customers to remember about your business.
LETTER OF INTENT
A signed statement from a potential customer outlining what product/service they are interested in buying from you and how many.
MARGIN
the difference between
the selling price of a product/ service and its costs. The higher the margin, the more profit that is made.
MARKETING
Any activity a business does to try and contact potential customers.
MARKET POSITIONING
How a business presents
its products/services in relation to its competitors; higher quality, cheaper, etc.
MISSION STATEMENT
A sentence to describe where your business is going or what you want to achieve in the long- term.
NET PROFIT
A business's total income minus its total costs.
OBJECTIVES
Things a business wants or sets out to achieve.
OPERATIONS
The day-to-day activities that take place within a business.
PROFIT AND LOSS ACCOUNT
Shows a business's total income and expenditure for a given period of time.
PROSPECT
Someone who could become a customer.
PUBLIC RELATIONS (PR)
Two-way communication between a business and anyone who is interested in it.
REFERRAL
A customer gained through a recommendation from someone else.
RESOURCES
The money, people, time and equipment needed to run a business.
STOCK
All the raw materials and finished goods owned by a business.
STRAPLINE
A catchy phrase that sums
up a business's message, for example: 'Cadbury's Crème Egg – how do you eat yours?'.
TARGET MARKET
The group of customers a business chooses to focus its marketing efforts on.
TURNOVER
A business's total sales income for a year.
USP (UNIQUE SELLING POINT)
A benefit that a business offers to its customers that its competitors do not.
VALUES
The principles and beliefs that guide what a business does and how it does it.
VARIABLE COSTS
Costs that vary in line with a business's level of sales.
VIABLE
If a business idea is viable, it means that it should work and the business should be a success.
VISION
A business's long-term goal.


Business Plan Preparation guide



1.Writing a business plan helps you:
    check that your idea makes sense
    plan your sales, marketing and business operations
    identify problems and how to overcome them
    set out your objectives and the financial return you expect
    work out what financing you need
    convince other people to back your business
Writing a business plan helps you think about what you are doing
    The plan sets out your strategy and action plan for the next one to three years, or sometimes longer.
    As part of the process you set concrete objectives and plan how you will achieve them.
    Writing a business plan helps you focus and develop your ideas. Priorities are identified. Non-priorities are dropped, saving precious time.
    Putting the plan in writing makes it easier to spot any gaps where you have more to do.
    Once written, the plan is a benchmark for the performance of the business.
    By involving your employees in the complete planning process, you continue to build up a successful, committed team.
You may need a plan to explain your business to other people
    A business plan is essential if you are raising finance from a bank or outside investors.
    A good plan can help you attract new senior management, or business partners such as distributors and agents.
    You should tailor your plan to the target audience. For example, you may want the plan to 'sell' the business to your bank manager or investors
    Ask the intended recipient if there are any specific issues they want the plan to address or a template you should follow.             
2. How to write a business plan
Base your business plan on detailed information where possible. But do not include all the detail in the plan. Leave the detail for operational or marketing plans.
Keep the plan short
    Focus on what the reader needs to know.
    Cut out any waffle.
    Make sure there are no spelling mistakes.
    Detailed business plans are often quickly shelved, because they are difficult to use on an ongoing basis.
Include any detailed information you need in an appendix
For example, you might want:
    detailed financial forecasts and assumptions
    market research data that backs up what you say
    CVs of key personnel (essential if you are seeking outside funding)
    product literature or technical specifications
Base your business plan on reality, or it may be counterproductive
    Over-optimistic forecasts can lead to increased overheads followed by a cash flow crisis and drastic cost-cutting.
    Be realistic, even if you are selling the business to a third party. Financiers, business partners and employees will see through over-optimistic plans that ignore weaknesses or threats. Management credibility can be damaged.
Make the plan professional
    Put a cover on it.
    Include a contents page, with page and section numbering.
    Start with an executive summary. This summarises the key points, starting with the purpose of the business plan.
    Use charts, if helpful.
Even if the plan is for internal use only, write it as if it were aimed at an outsider
    Include company or product literature as an appendix.
    Give details about the history and current status of the business.
Review your business plan
    Read through the plan from your target reader's point of view. For example, try to imagine the impression the plan will make on your bank manager.
    Check the plan is realistic. Make sure it includes the evidence to back up what you say (perhaps in an appendix) or that you can provide evidence if needed.
    Make sure you assess the risks. What might go wrong (eg if your main supplier closes down or you lose a key customer) and what would you do about it?
    Concentrate on the executive summary. People often make provisional judgements based on this. Only then do they read the rest of the plan to confirm their decision.
    Show the plan to friends and expert advisers for comments. Which parts did they not understand or find unconvincing?
3. Your business and products
Explain the history of the business
    When did it start trading and what progress has it made to date?
    If the business is a new start-up, what is your personal industry background and what progress towards launching the business has been made?
    Who owned the business originally?
    What is the current ownership structure?
Describe what your product or service is, avoiding technical jargon if possible
    In general, what makes your product or service different?
    What benefits does it offer? What are its disadvantages and how will you address these?
    What changes and improvements are you planning?
Explain any key features of the industry
    For example, any special regulations, whether the industry is dominated by a few large companies or any major changes in technology.
4. Your market and competition
Describe the market in which you sell
    Highlight the segments of the market in which you compete. What are the key characteristics of customers in each segment and what influences their purchasing decisions?
    How large is each market segment? What is your market share?
    What are the important trends, such as market growth or changing tastes? Explain the reasons behind the trend.
    What is the outlook for each important market segment?
Describe the nature and distribution of existing customers
    Do they fit the profile of the chosen market segment? If not, why not?
    Is there a heavy concentration of sales around one or two large customers?
    If you are a new start-up, do you have any confirmed orders and who are your best prospects?
Outline the main competition
    What are the competing products or services? Who supplies them?
    What are their advantages and disadvantages compared to you? For example, price, quality, distribution.
    Why will customers buy your product or service instead? How will your competitors react to losing business and how you will respond?
    Never openly criticise or underestimate competitors.
5. Your marketing and sales strategy
Where do you position your product or service in the market?
    Is it high quality and high price?
    Is it marketed as a specialist product due to a particular feature?
    What unique benefits do you offer customers? For example, product reliability or customer service.
    Which of these benefits are you going to concentrate on?
6. What is your pricing policy?
    Explain how price-sensitive your customers are.
    Look at each product or market segment in turn. Identify where you make your profits and where it may be possible to increase margins or sales. Set your pricing accordingly.
7. How do you promote your product or service?
    Each market segment will have one or two promotional methods that work best. For example, direct marketing, advertising or PR.
    If you are considering using a new marketing method, start on a small scale. A failed investment in marketing can be costly.
What sales channels do you use to reach your target customers?
    For example, do you sell directly to the customer, or through retailers or agents? Do you sell online?
    Compare your current channels with the alternatives. Note the distribution channels used by your competitors.
    Look at the positive and negative trends in your chosen distribution channels.
8. How do you do your selling?
    Look at the cost-efficiency of each of your sales methods. For example, telesales, a direct sales force, through an agent or over the internet.
    Include all the hidden costs, such as management time.
    Explain how long it takes to make sales (and to get paid for them), what the average sales value is and how likely customers are to give repeat orders.
Sell more to existing customers
Customer relationship management systems (CRMs) record customers' preferences, spending patterns and demographics, allowing you to build a detailed picture of their tastes, needs and buying habits so you can target then with tailored messages and offers.

9. SWOT analysis
A SWOT analysis helps show that you really understand your business and the key external factors that you need to deal with.
Set out a one-page analysis of strengths, weaknesses, opportunities and threats
    Strengths might include brand name, quality of product, or management experience.
    Weaknesses might be lack of finance, or reliance on just a few customers.
    Opportunities might be increasing demand or a competitor going bust.
    Threats might be a downturn in the economy or a new competitor.
Be honest about your weaknesses and the threats you face
    Spell out mitigating circumstances and the defensive actions you are taking.

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