What plans, if any, do you have to change your products or services in the future?
No business is an island. Every business, including yours, operates as part of a larger overall industry. Forces affecting your industry as a whole will inevitably affect your business, as well.
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Sniffing Out Industry Info
Researching industry trends enables you to provide facts supporting your claims for your company’s potential success. Let’s say you’re opening a doggie day spa. This idea might raise investor eyebrows. You’ll help overcome their skepticism by providing data showing the dramatic increase in spending on pets in recent years. Even more convincing are sales figures for pet clothing boutiques, doggie day care centers, and specialty pet-food stores.
Every industry changes. Some changes come about because the customers for the products or services change. For instance, aging baby boomers provide new opportunities for industries serving retirees or the elderly. Other industry changes occur because of new technology, outsourcing or offshoring, or corporate mergers.
Make sure you address the major changes occurring in your industry. The Internet in particular had an enormously disruptive impact on many industries. This is not a bad thing: with change comes opportunity. Indicate how you’re prepared to take advantage of these opportunities, and respond appropriately to any challenges you face.
Pay particular attention to your industry’s recent economic health and rate of growth. When looking for financing, potential funding sources ask tougher questions if you’re in a troubled or shrinking industry than if you’re in a healthy, expanding one.
Industry Developments and Trends
ComputerEase is well positioned to take advantage of the significant opportunities presented by the rapidly expanding market for computer-related business services. From 2010 to 2012, the industry grew in excess of 68 percent, compared to an overall GDP increase of approximately 9.3 percent during that period.
Healthy industry growth
The computer software training industry, despite being around for nearly 25 years, is still fragmented, with no clear market leader, creating the opportunity for newer, smaller companies to succeed.
The key to success in the industry is to develop a regionally recognized brand in conjunction with online services, as is currently the case with other business services, such as accounting or human resources. Regionally dominant training companies are able to earn revenues and build market share sufficient to sustain continued development of online courses and support the high overhead cost of equipment, skilled trainers and subject matter experts, and materials.
The current lack of industry leadership represents an opportunity for ComputerEase to develop a strong regional as well as online presence.
Strategic opportunity
In what industry (or industries) does your company operate? What types of businesses belong to this industry?
Is your industry growing? What’s the rate of growth?
What trends in the industry—paying special attention to those fueled by the Internet and ecommerce—have created opportunities for you?
What challenges, if any, is your industry facing?
How do you plan to capitalize on these opportunities and/or overcome these challenges?
The purpose of this section is to provide a brief explanation of your financing to date and, if you’re seeking financing, to describe how much money you need and for what purposes. It’s not meant to provide a total financial picture of your company. That will be seen later in your financial statements.
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Invest in Yourself
Most lenders and investors want to see that the business owners have already made a significant personal financial investment in their own company. Many loan programs require owners to contribute a certain percent (often 20 percent) toward any funds sought. So make certain you highlight the amount of money—as well as the time and other resources—you’ve already committed to your company.
Don’t go into specific details, such as your accounts receivable or payable, here. However, indicate any major sources of future funds already committed to you. For instance, if you have secured a three-year contract with a large customer that will generate significant annual income, this is a good place to highlight that fact.
If you’re using your business plan to seek financing, indicate how much money you’re looking for and how you plan to use the money you receive. You’ll expand on this in your “Sources and Use of Funds” worksheet on page 147.
International Industry Trends
Because of the global nature of business today, you need to consider not only industry trends in your own country, but industry trends worldwide. This is particularly true if you hope to sell your products or services internationally, but it is even true if you are sourcing materials or inventory worldwide, are using labor across national borders, or are hoping to take advantage of global industry advances to improve your own company’s performance.
Funding to Date and Funds Sought
Funding of the company to date has come from the personal savings of Mr. Connors. This has amounted to a $60,000 investment and $40,000 in loans. In addition, the company has received a $30,000 loan from Mr. Connors’ family members. All other funding has come from the income generated by sales.
Indicates personal financial commitment of owner
The company is now seeking $160,000 from outside investors. These funds will be used to open an additional Training Center, hire trainers, add staff, and expand marketing activities, especially for online courses.
Planned