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?
