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ISM6508_Slide_Part2.pdf

TERM PROJECTpart 2

Competitive Positioning

■ A well-done competitor table succinctly portrays a value proposition offering relative

to your competition in tabular form.

■ Competitor table lays out the decision-making process of the customer among

competitor.

– Write like a customer

■ Who are your competitors? No competitor?

– Internet search, North American Industry Classification System, industry

associations, etc.

■ It should get updated and referenced often.

Competitive OfferingYour Business

(Type here)

Competitor #1

Home Depot Garden

Center

Competitor #2

Wildcat Garden Center

Value PropositionNative, distinctive, and

uncommon plants, trees and

shrubs

Lowest prices for the most

common mass-market

plants and materials

One-stop shopping for all

your garden center needs

Geographic area server7-mile radius of single location

with mobile outreach

10-mile radius of multiple

locations

5-mile radius of single

location

Core products or services

Locally grown green goods,

glowers, plants trees and

shrubs, and premium

accessories

Name-brand discounted

flowers, nursery stock,

garden tools, greenhouses,

planters, water, and

accessories

Everything from plants to

pots, chemicals, accessories

and more

Value-added offering

Landscape architecture design,

sourcing perfect plants, in-

house delivery, installation,

education events

Installation, low-prices sales,

project how-to-guides for do-

it-yourselfers, e-commerce

Store-owned delivery,

category event sales, private

consultations

Pricing strategy

Premium price for a premium

product to premium

customers, 50% gross margin

minimum

Name brands at low prices

Event sales, prices within

20% of Home Depot’s for

overlap, 45% gross margin

pricing on all other products

Café? No No No

Milestones

■ A good business plan provides a guide, like a road map, for you to reference when

you need one.

– Talk to your customers first before you write any business plan.

■ Milestones represent significant events in the life of a business

– It can be used to check whether your business is on the right track.

■ How can we possibly predict what our business will be doing 90 days from now, or

one, three or even five years from now?

■ We need the milestones to happen.

– Action plans and items

Milestones

■ Three elements

– A significant business event, a deliverable date, and a measurable description

of the business event.

■ What are some classic milestones in business?

– Completing the product or service prototype for customer testing.

– Hiring the first employee

– Obtaining the first sales order

– Receiving your first customer payment

– Paying back your investors

Milestones

■ With the proper level of sandbagging

built into your milestone, you can

reduce uncertainty and myriad

business risks.

– You do not want to create future

business millstones that you

cannot achieve because they

might also be used as weapons

against you.

■ Action plan and action items for the

milestones

Mini Budget

■ Recording the early customer financial transactions is the most important part of

the budget process.

– We ignore most expenses for now, except for those that enable us to achieve

the first customer transaction.

■ Mini budget is a major cornerstone for your business model, and we will see how it

naturally folds into a more complete profit-and-loss budget.

Mini Budget

■ Selling price: the price at which something is offered for sale.

– Market-based method: based on your competitors’ selling prices.

– Mark-up method: establishing a selling prices based on all known costs.

■ Cost of goods sold: the direct costs attributable to the production of the goods sold

by a company.

– This amount includes the cost of the materials, direct labor costs, packaging

costs, inland freight, etc.

– For service goods, costs related to employee training, travel, and printed

materials should be considered.

Mini Budget

■ Average sales cycle time/customer acquisition time

– How many days will it take you to acquire your first customer?

– You will need to estimate and later refine your average sales cycle time as a key business model performance indicator.

■ Add (#) of days from first contact to customer conversion for all deals = Total (#) of days for all sales combined

■ Total (#) of days for all sales combined / (#) of deals = (#) of days for Average Sales Cycle. E.g., 20 days / 50 transactions = 0.4 day.

■ Unit sales forecast

– How many units of your offering you can sell in your average sales cycle time?

– How many customers can you approach in one month?

Mini Budget (an example of Aruba)

■ Aruba’s snorkeling business example

– 2.25 trips per day (0.25 from the night snorkeling.)

– Two vans seating five people each on average. The second van breaks down a

lot.

■ Unit sale forecast by month.

– 30 days * 2.25 snorkeling event per day * 1.25 vans * 5 people per van *

0.65 average van capacity

– 274 average snorkeling unit sales per month.

Mini Budget

Question?

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