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Table of Contents
A. B. C. D. E. F. G. H. I. J. K. L. M.
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Workshop outline ................................................................................................ 1 Workshop goals, objectives and strategies......................................................... 4 What is a business plan ...................................................................................... 5 Characteristics of a good business plan ............................................................ 6 How to turn investors on ................................................................................... 7 Getting organized and avoiding procrastination .............................................. 8 Suggested format and contents for a business plan ....................................... 10 Covering letter ................................................................................................. 11 Cover page ...................................................................................................... 12 Title page ...................................................................................................... 13
Executive summary ......................................................................................... 15 Table of contents .............................................................................................. 16 Business plan contents .................................................................................... 18 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Company description ............................................................................. 18 Direction and environment ................................................................... 20 Market analysis ..................................................................................... 23 Products and services ............................................................................ 25 Marketing and promotion ..................................................................... 26 Advertising ............................................................................................ 30 Operations ............................................................................................. 33 Manufacturing ....................................................................................... 35 Research and development ................................................................... 36 Management and personnel .................................................................. 37 Implementation plan ............................................................................. 40 Financial information and projections ................................................. 41 Appendices.............................................................................................. 44
N. O.
Packaging the final plan .................................................................................. 45 Using the plan to get funding........................................................................... 46
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A. Workshop Outline
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Welcome and overview of the day Introductions and participant expectations Workshop goals, objectives and instructional approaches What is a business plan Characteristics of a good business plan How to turn investors on How to get organized and avoid putting off writing your business plan Suggested format and contents of your business plan Title page Executive Summary Company description a) b) c) 12. Concept Background Current operations
Direction and environment a) b) c) d) e) Vision and mission Goals and objectives Reasons for focus Strategic issues Distinctive competencies
13.
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Workshop Outline . . .
14. 15. Products and services Marketing and promotion a) b) c) d) e) f) g) 16. Marketing to date Market positioning Target markets Pricing strategies Distribution Marketing blueprint General marketing strategies
17.
Manufacturing Research Management and personnel Implementation plan a) b) Short term Long term
22.
Financial information and projections a) b) c) d) e) General considerations Financial history Financial projections Assumptions Funds requested and their use
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Workshop Outline . . .
23. 24. 25. Appendices to the plan Packaging the final plan Using the plan to get funding a) b) 26. Sources of funding Interviews with prospective investors
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T
B.2
1.
he goal of the Writing Your Business Plan workshop is to help business owners and entrepreneurs to complete a significant part of their own business plan.
Objectives
To provide participants with general direction and information to help them write a business plan. 2. To provide an opportunity for participants to develop and write the fundamental ideas and concepts behind their business plan. 3. To provide an opportunity for participants to exchange, share and test their ideas.
B.3
Strategies
1. To present and discuss some general ideas regarding each section of the business plan. 2. To allow some time for participants to write down core ideas relevant to their business plan. 3. To allow participants an opportunity to test segments of their business plan with others.
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T
1. 2.
he following rules are important, especially if the business plan is to be used to raise funding. Make it neat. Appearance is critical. Use a laser or letter-quality printer on white paper. Sloppiness of any kind will reflect negatively on the way you do business. Make it grammatically correct. Have someone read the draft and correct any spelling, typing or grammatical errors.
3.
Make it honest. Dont exaggerate or lie. Tell it exactly as it is, not as you would like it to be. Financial sources are looking for integrity and honesty.
4.
Write in plain English. Avoid technical jargon. Some 80% of all plans and proposal have too much jargon, which only someone in the field can understand.
5.
Dont overemphasize your product or service. Many business owners know a great deal about their products and services and talk or write for hours about them. But the product or service is just one part of a business. Sell the company, not the product. Concentrate on the benefits your customers get from using your product or service.
6.
Write your business plan from the lenders or investors point of view, not the entrepreneurs.
7.
Make it complete. A well-written business plan contains all the information necessary for the financing source to make a decision without talking to the entrepreneur.
A typical business plan is between 25 to 40 pages long depending on the complexity of the business and amount being sought. It will take two to three weeks of actual work to put together a well-written business plan.
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E.
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3.
Unrealistic growth projections. This is probably the most common characteristic of unsophisticated management.
F.
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Here are some strategies for conquering procrastination: a) Leading task. Take the first step. Get a binder and label it as your business plan. Write up the cover sheet and the table of contents. Once this first step is taken, continuing is much easier. b) Break it up into smaller pieces. This often called the sliced salami or swiss cheese technique. Tasks and projects can be broken up by functions or time periods. Once the project is in smaller pieces, the feeling of being overwhelmed goes away. The work can then be done over a period of time and as each piece is completed, there is a sense of accomplishment. Also, the work does not have to be done in any set sequence. Easier parts can be done first to develop momentum. c) Five-minute plan. Work on an unpleasant task for five minutes and quit. Often you will develop the momentum and find it easier to continue until completion. d) Worst first. Tackling an unpleasant task the first thing in the morning gets it out of the way and makes you feel great and motivated for the rest of the day. e) Going public. Tell whoever will listen what you plan to do. This perceived external pressure will encourage you to start and complete a task or project because you told everyone you would do so. f) Balance sheet. Take a sheet of paper and on one side list all the reasons for procrastinating, and on the other side for starting the project. The reasons for starting are often greater than delaying. Writing your business plan should be a labour of love. It is such a critical part of your success that it is important to make suitable time available to research and write your plan.
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lthough a well-written business plan can vary in format, it should contain the following information: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Cover letter Cover Title page Executive Summary Table of Contents Company description Direction and environment Market analysis Description of products and services Marketing and promotion Advertising Operations Manufacturing Research and development Management and personnel Implementation plan Financial information and projections Appendices
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H.
Covering letter
A personal letter directed to a specific person by name and title. One page long. Say why you are sending the plan to him or her. Say why the financing opportunity is a good deal. Say how you plan to follow up the solicitation. Be personal and avoid the mass mailing look. Sign the letter in blue ink.
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I.
Cover page
This is the report or binder cover. It should identify document as a Business Plan Provide a descriptive title for the Business Plan State the company name. State the date. Include appropriate graphics, photographs and corporate logo Should look very professional but uncluttered.
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J.
Title page
The title page should include the following information: Descriptive title Contact name Company name, address and phone number Legal structure - show date company was incorporated or started business Date Disclaimer (see sample disclaimers on the next page)
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Sample disclaimers:
The information contained in this plan is confidential and proprietary and is intended only for the persons to whom it is transmitted by the company. Any reproduction of this plan, in whole or in part, or the divulgence of any of its contents, without the prior written consent of the company, is prohibited. Receipt or possession of this document does not convey any rights to disclose its contents, in whole or in part, to any third party, or to develop, manufacture, use, or sell anything described herein. This plan does not constitute an offer to sell any securities. Any such solicitation will be undertaken only under appropriate documents and pursuant to all applicable securities laws. The information set forth herein is believed by the company to be reliable. It must be recognized, however, that projections and predictions about the companys future performance are necessarily subject to a high degree of uncertainly, and no warranty of such projections is expressed or implied hereby.
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K.
Executive Summary
The most important part of the whole plan as only 10% of business plans get read beyond the summary. Think of it as a commercial to grab readers attention Write last - after rest of plan is complete Two to three pages long Be brief and only highlight key points The Summary should include the following points: A brief outline and description of the company Overall strategy and direction Objectives and how you propose to achieve them The market segment you are attempting to reach and how The unique features of the product or service Brief management team profile Overall financial glimpse of the company How much money is required and for what. Be specific. How and when investors will benefit from their investment
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L.
Table of Contents
page Executive Summary ...............................................................................................
1.
Company description.............................................................................................. 1.1 1.2 1.3 Concept ....................................................................................................... Background................................................................................................. Current operations .....................................................................................
2.
Direction and environment .................................................................................... 2.1 2.2 2.3 2.4 2.5 Vision and mission ..................................................................................... Goals and objectives ................................................................................... Reasons for focus ........................................................................................ Strategic issues........................................................................................... Distinctive competencies............................................................................
3.
Market analysis...................................................................................................... 3.1 3.2 Market description ..................................................................................... The competition ..........................................................................................
4. 5.
Products and services............................................................................................. Marketing and promotion ...................................................................................... 5.1 5.2 5.3 5.4 5.5 5.6 5.7 Past and current marketing ...................................................................... Market positioning ..................................................................................... Target markets ........................................................................................... Pricing strategies ....................................................................................... Distribution ................................................................................................ Marketing blueprint................................................................................... General marketing strategies ....................................................................
6.
Advertising ............................................................................................................. 6.1 6.2 6.3 Mini-media.................................................................................................. Maxi-media ................................................................................................. Non-media ..................................................................................................
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Table of Contents . . .
7. Operations .............................................................................................................. 7.1 7.2 7.3 8. 9. 10. Administrative systems ............................................................................ Customer support systems ........................................................................ Space and facilities ....................................................................................
Manufacturing ....................................................................................................... Research and development ................................................................................... Management and personnel .................................................................................. 10.1 10.2 10.3 10.4 Management team ..................................................................................... Organization structure .............................................................................. Key personnel ............................................................................................ Company philosophy and values ..............................................................
11.
Implementation plan ............................................................................................. 11.1 11.2 Short term .................................................................................................. Longer term ...............................................................................................
12.
Financial information and projections ................................................................. 12.1 12.2 12.3 Financial history ....................................................................................... Financial projections ................................................................................. Funds requested and their use .................................................................
13.
Appendices .............................................................................................................
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Company description
Concept
Describe in one or two paragraphs your concept or proposal. Give the who, what, when and why.
1.2
Background
Provide a history of the company When established Legal structure Ownership Locations and geographical areas of operation Any significant events, changes or successes
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1.3
Current operations
Describe company current activities Major focus Good place to identify key strengths and successes
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2.
2.1
2.2
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2.3
2.4
Strategic issues
Successful companies are aware of broader trends and developments around them that may impact their operations e.g., concern for environment, pending legislation, changing demographics, etc. In this section, identify any broader issues that may impact the success of your proposed plan - mention both positive and negative impacts. In this section, identify all the risks to your venture. Discuss how you plan to manage these risks.
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2.5
Distinctive competencies
List as many factors as possible that make your company and its products unique or special. Be as specific as possible remember investors are looking for companies that have an edge on the competition. These could be patents, trademarks or copyright materials These could be people with unique skills and talents
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3.
3.1
Market analysis
Market description
Describe with as much detail the market you are going after. What is the size of the market? At what rate is it growing? What evidence do you have that it will continue growing? What are the characteristics of the market? Some possible sources of information about the market are: Trade publications Business section of library Statistics Canada publications Chambers of Commerce Economic Development Depts of government Federal government publications The Internet and World Wide Web sites
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3.2
The competition
Who is your competition? Identify not only direct competitors but also others that may be after your customers business. How does the competitions products or services compare with yours? How do you plan to sell more than they do? How will you make it difficult for others to compete with you? Dont downplay or ignore the competition. Investors know every business has competition and want to know how you will deal with it.
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4.
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5.
5.1
5.2
Market positioning
Where are you going to position your products or services - low, medium or high end? It is important to pick one niche and stick with it. Identify what strategies you are going to use to reinforce your positioning, e.g., pricing, quality, advertising, locations, etc.
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5.3
Target markets
Identify as clearly as possible what your target market is Geographical area - community, province, part of country, country, international? Type of business or customer what are the demographics or profile - age, sex, income levels, occupations, etc. Provide any information you may have on your existing customers. Note: with existing telecommunications technologies and courier connections, more small businesses can sell nationally and internationally
5.4
Pricing strategies
Discuss how you will set the prices for your products and services. How does your pricing fit into an overall marketing strategy?
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5.5
Distribution
How will you get your products or services to the client? Direct sales, e.g., telephone, Internet, etc. Catalogue distribution Local agents Retail outlets Wholesalers, etc.
5.6
Marketing blueprint
Suggest you prepare a brief marketing blueprint based on Levisons Guerrilla Marketing approach: A statement that tells the purpose of the marketing. How will you accomplish purpose through marketing, focusing on key benefits? What is your target audience? What marketing weapons will you employ? What is your positioning in the market? What is your identity? How much will you spend on marketing as a per cent of gross sales?
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5.7
(For more information on each, see Levinsons book Guerrilla Marketing Attack)
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6.
6.1
Advertising
Mini-media
These are the targeted media that you can use in your advertising. Identify which ones you will use and how: Canvassing Personal letters Telephone marketing Circulars and brochures Classified advertising Signs Yellow Pages Fax back systems 800 - phone service Post card decks Listing in directories Ads in directories Listing in databases News releases Catalogues Internet World Wide Web
(For more information on how to use each effectively, see Levinsons book - Guerrilla Marketing)
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6.2
Maxi-media
These are the mass media. Identify which ones you may use. Major newspapers Specialty newspapers Magazines Radio Television Outdoor advertising Direct mail
(For tips on how to use each effectively, see Levinsons book Guerrilla Marketing)
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6.3
Non-media
Some of the other ways you can keep your companys name in front of potential customers include: Advertising specialities or give-aways Free seminars or demonstrations Free samples Contests Coupons T-shirts, caps, jackets Newsletters Free videos Free computer diskettes Voice mail systems Public relations Networking and memberships Word-of-mouth
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7.
7.1
Operations
Administrative systems
You must make it as easy as possible for customers to do business with you. Nothing turns customers off more than administrative screw-ups. In this section, briefly describe the systems you have in place to ensure your company will operate effectively and efficiently. Describe any suppliers and subcontractors that will be used
7.2
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7.3
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8.
Manufacturing
If you business plan is based on a manufacturing activity, describe the manufacturing processes to be used and other relevant information in this section. Be brief and avoid technical jargon. How much will be subcontracted? Why? Discuss distance to customers, vendors, worker training, access to skilled labour, inventory management, quality and production controls. Cover any zoning or local, provincial or federal laws affecting your facility . Discuss whether an environmental impact assessment will be required.
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9.
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Show how your company will have each of the above skills. If your management team is weak of deficient in one or more of the above areas, describe the kind of person you will hire as soon as you get the money. In this section, list the owners, legal structure, and the Board of Directors and their qualifications.
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Five year revenues Base all your revenues on units sold. Do with each product or product line. Be sure to detail all assumptions. Five year expenses Be as detailed as you can possibly be. Be realistic and believable. Historical costs provide a good basis for future projections. Five year income statement This is a summary projected profit and loss statement based on the first two tables. Balance sheets Provide a projected balance sheet for each of five years. One year monthly cash flows The key assumptions that need to be described here are: 1. 2. the terms of sale of your products or services the historical payment schedules for receivables and payables
Industry comparisons Check your profit and loss statement ratios with industry averages. Dont deviate too far from the norm. Examples of possible financial projections at included at the end of this workbook.
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13. Appendices
Include the following: Pictures of products or facilities Company literature and sales material Newspaper and magazine clippings Market survey Production flow chart Patent description Significant contracts Price list Sample advertisement or press release Historical financial statements Table of start-up costs Fixed asset acquisition table Break-even analysis Management and key staff resumes Management tax returns Letters of intent References
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A
1.
fter your business plan has been written, here are some steps that should be taken before it is given to any potential investor or banker. Get someone to proofread it. It should be clear, easy to understand and without any grammatical or spelling errors. More importantly, get someone who is involved with the investment community to read it and give you feedback. Try and get answers to the following questions. Did it grab their attention? Did it prove the company has tremendous potential? Was it easy to understand? How can it be improved?
2.
Avoid putting in the following. The entrepreneur should not put any exit strategy into a business plan. Instead just tell the investor that the exit strategy is negotiable. Do not describe why type of investment vehicle you prefer or what portion of your company is being offered for sale. This information is too premature to be put into a business plan.
3.
Check your facts. Do not include any fraudulent or misleading information.You want to fully disclose any material items that a lender or investor would to know before leading or investing in your business. It always pays to tell the truth.
4.
Get professional help if necessary. You will find that writing a complete business plan is difficult and time-consuming, but it should be a labour of love. Its your baby; its your business. If you do get help, remember that it still must be your plan, and that you must know it inside out, and be able to explain/defend every statement in it.
5.
Package in a professional manner. Remember that the first impression is critical. The business plan should:
Be printed on good quality white paper. Be printed with a laser printer. Have one-inch margins on all sides. Use graphics and pictures if appropriate.
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Be bound so that pages can turn easily and lie flat when left open.
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c)
Be prepared to answer the following questions over the phone: 1. 2. 3. 4. 5. 6. 7. 8. 9. What kind of business are you in? How did you get my name? How much money do you need? What do you need it for? How do you intend to pay it back? What collateral do you offer? When did you buy the real estate? What is unique about your product or service? Do you have any patents on your product?
d)
Dont do the following on the phone: 1. Dont get involved in long discussions that are not relevant to the subject. 2. Dont tell the potential source what terms you want for the money. 3. Dont allow yourself to be unprepared to answer relevant questions. 4. Dont try and sell the financing; just go for the appointment. 5. Dont use technical words that the listener might not understand. 6. Dont assume the listener knows a lot about you, your business, or your industry. 7. Dont leave out explanations of what has happened or expect the listener to read your mind. 8. Dont give too long answers. Sources want short answers that stick to the point.
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9.
Dont volunteer information. You never know what reaction it will have on the listener. End by asking, When can I see you to explain my project in more detail?
3.
Go to the personal interview. Once an appointment has been made, keep the following in mind: a) Dress neatly and conservatively. You dont want anything to detract from your business plan. b) Bring your plan and any samples of your product. They might be useful in explaining your project. c) Know your plan well. This is especially important if you had someone else help you prepare it. Especially familiarize yourself with the assumptions that go behind any projections. d) Make a good impression. Here are some tips on how to do so: 1. First impressions are crucial. Enter the meeting with confidence, a glowing smile, and an extend hand. Make eye contact. The financial source will attempt to read your personality. Your voice, tone, and confidence are extremely important. 2. Be businesslike and prepared. Do your homework, such as getting information about he people you are going to meet and reviewing your plan. Expect questions. 3. Be honest. Always tell your story truthfully. There may be certain pieces of your story that are not ideal from a financing standpoint, but that is true of every business in need of money. Hiding crucial facts will destroy your credibility.
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4.
Talk in specifics, but dont use technical jargon unless it is helpful and will be understood by all the people in the room. Ask questions to ensure that your listeners understand what you are talking about.
5.
6.
Be aware of the impact of body language and actual words when you are selling your proposal. Sit forward and straight if possible. Look and act like a leader. Also watch your listeners body language and adjust as necessary.
7.
Dont forget to listen. When you listen you pick up valuable clues.
8.
Put yourself in the lenders or investors position. Consider his or her point of view as if you were lending or investing in your own company for the first time.
9.
Be prepared to walk; dont take the first offer. Dont let yourself become emotionally committed to any one source until you have talked to as many as you can.
10.
Always end your discussions on a friendly note. Just because they say no this time, doesnt mean no in the future. Always leave the door open to come back.
e)
Here are some things not to say during the interview: 1. Do not discuss grandiose plans, additional products and services, other opportunities or mergers that may occur in the future. Stick to your immediate plans. 2. Avoid explaining why you are in business or want to go into business for a reason other than money. The lender
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or investor is interested in making money, not solving personal, country or world objectives. 3. Dont tell the source you will make money by doing anything that would be considered dishonest or illegal. 4. Dont avoid hard questions with vague answers. Give a direct answer to a direct question. If you cant answer or dont know, just say so. 5. Dont hide past problems such as poor credit, bankruptcy or lawsuits. Reveal the good, bad and ugly. The source will eventually find them out anyway. 6. Dont downgrade the risks. If you are asked what can go wrong, or how your plan can fail, tell them. 7. Never bring a lawyer to the initial meeting unless requested by the source. 8. 9. Dont press for an immediate decision. Dont say your management team makes all the decisions jointly or in a committee. You cant run a business by committee; someone has to be in charge. 10. Try not use the word problem in phrases such as we have cash flow problems, labour problems, our main problem and the like. Investors are looking for companies with solutions, not problems.
4.
Follow-up on the interviews. a) Be patient. Wait a few days before calling. If more information is requested, get it to the source as soon as possible. b) If additional meetings are requested, reinforce the positive relationship you have established.
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c)
If the source says no, call and find out what happened. Use the feedback to learn from your mistakes and make appropriate changes. Use the experience positively.
d)
If the investor or lender is interested, then it is important to negotiate the best terms for yourself. Get good legal assistance to conclude the final terms.
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2010
2011
2012
2013
2014
Total costs Direct mail Pieces mailed out Productions costs/unit Postage/unit Total costs Trade shows Number of shows Booth costs (@ $500/show ) Staff expenses (2@ $500 per) Materials (@ $200 per) Total costs Other marketing expenses Total marketing costs
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2010
2011
2012
2013
2014
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2010
2011
2012
2013
2014
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2010
2011
20012
2013
2014
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