Planning & Research:
Entrepreneurial Essentials
Session 2
Date:
Due:	Section III: Part A
Section V: Part D
Class Opener (10 min.)
Articles of interest, best / worst news, brainteaser, etc.
Instructor Topics (60 min.)
(15 min.)	1.	What Is Business Planning?
Understanding the Planning Cycle
Business Goals and Objectives
Feasibility Studies [Optional]
The NxLeveL® Business Plan
(20 min.)	2.	Introduction to the NxLeveL® Marketing Plan
A. Products and Services
B. Market Analysis
C. Marketing Objectives, Strategies and Tactics
D. Direct Sales and Customer Service
(25 min.)	3.	Conducting Market Research
Industry Research
Guest Speaker (30 min.)
Business librarian or market researcher
Break (20 min.)
Refreshments
Networking activity
Work Period (60 min.)
Discussion: Accessing Market Research Tools in the Library and Online
Homework Review—Session 1
Workbook Preview—Session 2
Assignment for Session 3
WORKBOOK	Complete the Session 2 worksheets. WRITE	After completing the Session 2 worksheets, follow the instructions on the Writing Your Business Plan page at the end of the worksheets to write Section II. Business Concept: A. Business Description; B. Business Goals and Objectives; and C. Industry Information. TEXT	Read Chapters 5 through 7 (Contingency and Continuity Planning, Choosing the Right Legal Structure, and Laws, Regulations and Taxes), Chapter 22 (Management and Leadership), and Chapter 23 (Supply Chain Management).
Additional Instructor Notes
Session 2
NOTE: We suggest that all (or at least the last hour) of this session be held in your local college, SBDC, or public library. Failing this, you will need access to the Internet to demonstrate research tools and techniques.
What Is Business Planning?
Start this discussion with OHD 2-1. Then, use OHD 2-2 to go over the benefits of planning.
Studies show that businesses that make planning a priority are more likely to succeed. But for many business owners, planning is simply a reaction to a specific event like needing a loan.
This is not sufficient when you’re trying to start or grow a successful business. Planning should be integrated into your day-to-day management practices, just like sales or marketing activities.
Many entrepreneurs focus on the product of planning (i.e., a plan) rather than the process. Emphasize the importance of mastering the planning process itself.
Discuss the need to revisit your plan regularly as your business grows. Evolving technology (e.g., mobile computing) is one example of a factor that can suddenly change business plans.
Last, emphasize the importance of committing your plans to paper, and talk about how to use the plan to run your business.
Understanding the Planning Cycle
Use OHD 2-3 to explain the planning cycle and emphasize the continuous nature of planning:
Plan a course of action for your business.
Take action by making decisions that are supported by data in the plan.
Assess the results, and note any differences between what you expected and what you got.
Explain results that varied from planned results, whether the variance is positive or negative.
Make improvements to the plan as a result of what you learned.
Use OHD 2-4 to highlight the keys to successful planning.
Types of planning
Discuss the differences between strategic planning, operational planning and financial planning.
Strategic planning outlines how you want your business to grow over the next two to three years, based on realistic predictions.
Operational planning is day-to-day planning. Normally, you begin operational planning once your strategic plan is in place.
Financial planning includes preparing budgets, cash flow projections, sales forecasts and projected financial statements, all of which must be updated when new planning is undertaken.
Explain how they are interrelated, and note that the business plan includes examples of each.
Who is responsible for planning?
As a business owner, you must lead the planning process. Note the disadvantages of having someone else research or write your business plan for you.
Although you must take the lead role, it’s a good idea to form a planning team to help you. In addition to your mentor, involve your family and friends. Also, try to involve professionals, such as a lawyer or accountant. If you have employees, you should involve them, too.
Not every team member should be involved in every step. Instead, they should review and comment on the parts of the process in which they have expertise or insight.
Business Goals and Objectives
One of the first steps in business planning is writing down goals (dreams with deadlines) and objectives (steps you’ll take to reach your goals).
What do you want your business to achieve one year from now? These are your short-term goals. What do you want your business to accomplish in the next two or three years? These are your long-term goals. The steps you take to meet these goals are your objectives.
Each objective should be clear, measurable and easy to understand. It should also include a deadline and name the person responsible for getting it done.
Use OHD 2-5 to define business goals and objectives. Then, have students turn to the Business Goals and Objectives Worksheet on page 2-23 of the WORKBOOK. Discuss the worksheet, and reiterate the importance of goal-setting. Be sure to discuss the difference between short-term and long-term goals, and the importance of writing down both, even though the long-term goals may change.
Mission statement
Have students turn to the Mission Statement Worksheet on page 2-25 and explain to them how values, vision and purpose fit together to form a business’s mission. If possible, provide good examples of mission statements from local businesses. Otherwise, use a mission statement from a well-known national business.
Use OHD 2-6 to show the elements of a good mission statement. Stress that students may need to revisit and update their mission statement as they learn more about their customers, their business and themselves. Point out that writing a mission statement is easy; the challenge is living up to it.
Feasibility Studies [Optional]
The TEXT explains in some detail how to conduct a feasibility study. This is one of the most useful skills a business owner can have, and it’s applicable to many aspects of business. Depending on the time available, and the attitude and enthusiasm of your class, you may wish to present some or all of this material using OHDs 2-7 and 2-8. Otherwise, skip this section.
The NxLeveL® Business Plan
Ask the questions: Has anyone written a business plan before? Has anyone read one?
A business plan is a road map for the business owner. Again, students should understand that it’s important for day-to-day management and profitability, not just for seeking loans.
A business plan may be read by owners, managers, lenders, employees, partners and investors. Each reader has different interests, so a business plan should be prepared with the needs of the audience in mind. Discuss your students’ intended uses for their plans, and how they might adapt them to different audiences.
Sections of the NxLeveL® Business Plan
Use OHD 1-13 and OHD 1-14 to briefly revisit the business plan outline. Be sure to point out where business goals and objectives fit into the plan. As you discuss each element of the plan, invite comments and questions. Where possible, use real-life examples to illustrate your points.
Introduction to the NxLeveL® Marketing Plan
Ask the question: What things affect how people see your business, whether you intend them to or not? Good answers might include: the way you talk, the way you dress, the way your vehicles look, the street your business is on, the way you answer the phone.
The lesson: These everyday decisions have as much to do with marketing as buying an ad during the Superbowl would. In fact, they’re even more important. After all, a high-profile ad can drive people to your business, but if they don’t like what they see, they won’t buy.
Given the broad scope and central importance of marketing, it’s no surprise that it requires careful planning. A good marketing plan organizes your thoughts and keeps you from spending your precious time and money on the wrong things. More important, it helps you put your best foot forward every single time you interact with customers.
Investors and lenders also pay close attention to a business’s marketing plan. They look to it as an indicator of the business’s potential. Who will the business sell to? How will it position itself in the market? How well does it understand and serve its customers and its market? How realistic are its goals? What makes it special or different?
Use OHD 2-9 to introduce the sections of the NxLeveL® Marketing Plan. Expand as necessary, using the following points.
A. Products and Services
This section addresses such issues as features and benefits, differentiation factors, psychological appeal, product life cycle, and seasonality. It has two subsections.
Product Description. What is your product? How is your product made, and how does that make it special? What needs does it meet? What problems does it solve?
Features and Benefits. Every feature of your product should have at least one corresponding benefit that does something for or gives something to your customer. It can’t be said often enough: Customers buy benefits!
B. Market Analysis
This section describes your target customers and your competitors. It has three subsections:
Customer Analysis describes how many customers you have, who they are, where they live, why they need or want your product, how much of it they’ll buy, when they’ll buy it and what they’re willing to pay.
Competitive Analysis describes who and where your current and future competitors are, and how their strengths and weaknesses compare to yours. Remember that online competitors may operate almost anywhere!
Market Potential defines the percentage of your target market you can realistically capture and the revenue you can realistically earn from selling to them. It also describes barriers to entry that could prevent you from achieving your market potential.
C. Marketing Objectives, Strategies and Tactics
This section describes your marketing objectives, strategies and tactics for each target market.
Objectives are actions that support your business’s goals within chosen markets. This might mean controlling 20 percent of the market, increasing sales by 50 percent over the next six months or getting 100 new customers by the end of the year.
Strategies are plans for achieving objectives (for example, targeting customers who are between 24 and 40 years old, or entering a niche market for customized bridal gowns).
Tactics are actions that support your strategies, such as offering a two-for-one promotion, offering an online coupon or distributing your products through specialty boutiques.
Your marketing objectives, strategies and tactics guide your marketing mix, which consists of the Four Ps: product, price, placement and promotion. We’ll discuss these topics further in Session 5.
D. Direct Sales and Customer Service
Your sales strategy identifies your major sales prospects or target markets in order of importance and explains how you will sell to them.
Your customer service strategy explains your policies for ensuring excellent customer service, including handling returns, dealing with complaints, and tracking and measuring customer satisfaction.
Conducting Market Research
As we learned in the previous session, a market is a group of people who are—or will be—your customers. Market research is the process by which you learn what these customers want, which products will satisfy those wants, how to reach them with information about your business, how much to charge, and so forth.
Market research proves market validity, which is a key point when trying to attract investors, get a bank loan, or assess the feasibility of a business idea. The more research you do now, the better chance you have of developing a realistic marketing plan.
Use OHD 2-10 to discuss the elements of marketing.
Industry Research
Explain what an industry is (a general group of businesses that includes companies of a similar type). Examples: McDonald’s restaurants are part of the fast food industry; a daycare center is part of the child care industry; a ski shop is part of the sporting goods industry). Help participants categorize their businesses by industry.
Have participants look at Section III of the NxLeveL® Business Plan Outline. Their assignment will be to write the Background Information section, which explains the background of the industry, current and future trends, and how their business fits into the industry.
Explain that this section will be written after doing the appropriate research, which they will be starting shortly. However, this research is an ongoing process. They may not find all the information they need in one week, which is why it’s critical to start now!
Primary and secondary data
Market data can be either primary or secondary:
Primary data means information you collect firsthand (by asking people how they feel about your product, for instance).
Secondary data means information originally collected by other people, which includes the information you find on industry or government websites.
Secondary data
It can be tough to collect primary data, so most entrepreneurs start by looking at secondary sources. The library and the Internet both offer lots of secondary data, as well as industry background and forecasting information. Use OHD 2-11 to highlight data sources.
Once you find relevant secondary materials, read them carefully and take lots of notes. The Industry Research Worksheets will help you use this information to answer questions like these:
What is your industry, and how big is it?
Is it new, growing, stable or declining?
How does it compare to the overall economy? Is it doing better, worse or about the same?
Primary data
After you’ve used secondary data to develop a basic knowledge of your industry—which includes knowing what you don’t know—you’re ready to look for primary data. Start by studying the secondary information you gathered. Then, make a list of questions you still need to answer.
Next, come up with a list of experts to contact, such as members of a chamber of commerce or national trade association. Having done this, you’re ready to choose a research method. Use OHD 2-12 to discuss common methods of gathering primary data:
Interviews. An interview is really nothing more than asking questions and encouraging open, honest answers. The people you contact may be very busy, so keep your questions clear and brief.
Surveys. A survey is basically a written interview. There are three big differences, though. First, you can’t ask followup questions. Second, the respondent can’t ask you questions. Last, you can’t see body language or facial expressions, or hear the person’s tone of voice. Therefore, your survey must be clearly written and easy to understand. Surveys that have only a few questions, and offer multiple-choice answers, are most likely to get a response.
Students should be comfortable conducting interviews and surveys, because they will have to use these tools often as they grow. Before moving on, recap these basic research steps:
Gather secondary industry data from the library and the Internet.
Based on these sources, decide where to get primary industry data.
Contact primary sources by phone or email, and collect information from them with an interview or survey.
Research tools and resources
Have students look at the Sources of Industry Data Worksheet and Key Contacts Worksheet, starting on page 2-29.
Ask the questions: How many of you belong to trade associations? What information do trade associations provide? Discuss. Have the Encyclopedia of Associations available (or copy a page out of it, if you choose not to be in the library for this class). Explain what information it provides and where to find it.
Discuss industry magazines and websites. They have highly specific information about particular industries and can be great sources of trend information. Have sample magazines on hand or explain where to find them.
Remind students to keep notes on sources (authors’ names, dates, publications, page numbers, URLs). They will need to present these sources to lenders or investors.
Ask the question: What conclusions are you trying to draw by looking at your industry? Use OHD 2-13 to discuss.
Next, have students turn to the Industry Research Worksheets that begin on page 2-32. Show them that the information they will seek during the Work Period relates directly to these issues.
Guest Speaker
Business Librarian or Market Researcher
This session is designed to help students become familiar with the market research process. Your guest speaker should understand this and focus on teaching students to find and interpret reputable data sources online and in the library. Make sure your guest speaker understands that these are small-business owners who lack the resources of a large organization. Simple, low-cost/no-cost methods will be best for this audience, at least when it comes to secondary data.
Also, ask ahead of time whether your guest speaker can stay and help students during the Work Period. Holding class in the library (or going to the library for the Work Period) is an ideal way to expand your students’ knowledge of modern library tools.
Prepare some questions you want your guest speaker to address in 20 minutes of talking, plus 10 minutes of questions. Give them to your guest well in advance.
Suggestions—Business librarian
What references are available for industry data? Where are they?
Besides the library, are there other local research facilities that may be useful?
What special online tools or subscriptions does the library have?
How can I find current articles about my industry?
If I can’t find the information I need, is there someone in the library who can help?
Suggestions—Market researcher
How do I know what I need to find out?
Are there any tips you can share that will make market research easier, or more fun?
Finding national data and trend information is easier than finding local information. Do you have any suggestions?
I’ve invented a totally new product, so there is no research available. What should I do?
How does market research fit into the marketing plan?
Work Period
Discussion: Accessing Market Research Tools in the Library and Online (30 mins.)
If you can hold this class in the library, use the Work Period to begin finding industry information. Consider dividing the group into smaller groups: those who need a general tour of the library, those who are somewhat familiar with the library but need to know the reference section better, and those who are familiar enough with the library to begin working on research.
Ask the library staff to give tours of the library and familiarize students with research tools. In the reference book section, locate standard industry research resources, such as Standard & Poor’s Industry Surveys. Ask the reference or information librarian to assist with online resources, if appropriate. Stress the difference in credibility between formal statistical data and research findings, and statements of opinion found in articles and op-eds.
If you can’t hold this class in a library, bring sample research tools to class (e.g., copies of pages from the reference books cited above, or printouts of online data). Better yet, bring in a computer and demonstrate the use of online research tools and methods.
Homework Review—Session 1
Ask students if they have any questions or problems relating to the Session 1 worksheets. Then, ask these questions:
How well did your personal goals, business goals and family considerations align? Are there any conflicts? If so, do you know how you will resolve them?
What action steps did you list on your Action Plan Worksheet? Why? Did you research any associated costs?
Collect the Writing Your Business Plan section from students who completed it. Confusion is common during these early assignments, so don’t be surprised if the writing results are not exactly what you had in mind. Have students look at the NxLeveL® sample business plans again. This visual example often does more to help them understand the writing task than a verbal explanation would.
Workbook Preview—Session 2
Have students look at the Worksheets Assignment for Session 3 on pages 2-37 and 2-38 of the WORKBOOK. Explain that they should complete all worksheets before attempting to write the assigned sections of the business plan.
Give students a couple of minutes to review the worksheets, and then ask if they have any questions or concerns. Remember: Even if students have an existing business, they may know very little about market research concepts and tools. Take extra care to ensure that everyone understands the purpose of this assignment and knows how to use the worksheets.
Assignment Review—Session 3
Have students look at the Assignment for Session 3 at the bottom of the Session 2 Student Outline. Stress the importance of reading the Session 3 text before the next class.
Use OHD 1-13 to show the first half of the NxLeveL® Business Plan Outline, so students understand how the writing assignment fits into Section II, Parts A, B and C.
Use the NxLeveL® sample business plans to show how this section of the business plan can be written. Again, note that this is a draft. It can and should be revised later.
Overheads for Session 2
OHD	2-1	Questions About Business Planning
OHD	2-2	The Benefits of Business Planning
OHD	2-3	The Planning Cycle
OHD	2-4	Keys to Successful Planning
OHD	2-5	Business Goals and Objectives
OHD	2-6	Elements of a Good Mission Statement
OHD	2-7	Basic Feasibility Study [Optional]
OHD	2-8	Advanced Feasibility Study [Optional]
OHD	2-9	Contents of the Marketing Plan
OHD	2-10	Elements of Marketing
OHD	2-11	Sources of Industry Data
OHD	2-12	Ways to Gather Primary Data
OHD	2-13	Drawing Industry Conclusions
Suggested Supplemental Materials for Session 2
Articles on the importance of business planning
Articles on the importance of knowing your industry
Sample trade association publications or trade magazines
You have the option of finding reputable articles and publications for use in class, or suggesting that students search them out on their own and share what they find with the rest of the class. Keep track of supplemental materials you used by making notes below. (This will be helpful if you choose to teach this course again.)
Supplemental materials used for Session 2
Notes

Learning Objectives
Understand the business planning process, feasibility studies, and the internal and external uses of a formal business plan. Understand the components and organization of business plans. Understand why, how and when to do market research. Understand how to collect primary and secondary data. Begin market research by identifying industry data and resources.