3.4 Field Research

• Surveys or questionnaires

You have been considering your prospective customers. One of the next steps is to find out what they want, what they need, what they are doing now and what they think of your plans. It is essential to have a well-structured market survey. If you poll the wrong people you will find that their answers differ from those of your original customers. Describe the following items for the structure of your market survey: the target group, the random sample and the statistical conditions

Now make the survey, clearly formulating your objectives and what you want to achieve. We recommend that you make a trial survey before you hand in your survey. You will get a fair idea of the quality of your questions if you test your survey on a few people. If there are any problems during your trial survey, you can change the questions so that the real (simulated) survey will go smoothly. Check your trial survey with your marketing lecturer!

When making your survey please note that it is very important (and therefore necessary) to analyse the information needs before making a survey. Sometimes in analysing the information needs it turns out not to be such a good idea to have a survey at all. Make sure you can, at all times, answer the questions why/what (why are you asking this specific question, what do you want the answers to resolve, why are you (or are you not) doing a survey, etc.).

3.5 Marketing

• Marketing strategy: target group, positioning and objectives

When you’ve executed the research you have to make some important, strategic decisions:

• What is/are your target groups for the first three years?

• How will you position your product during the first years?

• What are your objectives for the first year, the second year and the third year?

• Marketing mix

After you have made the strategic decisions on segmentation and positioning and after having set the objectives, you need a real plan for action. How are you going to use the tools in the marketing mix to reach your objectives? Use the four P’s.

• Formulate your marketing mix. Remember it is an action plan, so it should be very detailed. Someone else reading the plan must be able to execute it without any further analysis.

This is a very large and important part of your business plan and the outcome should be consistent with the other parts!

3.6 Finance

• Opening balance sheet

If you want to start a company you will have to make short-term decisions after having made a number of long-term decisions (what legal form, range of products, target group, desired market share). One of the components of the report is the financial planning for the first year. First of all you must determine your initial financial position.

Which factors of production are required to make your company work? In other words: which investments must be made to become successful? The answer to these questions is an investment budget.

Part 1

Make a survey of the investments required for the start-up of your company. You should distinguish between fixed and current assets. Clearly indicate (use a note) explaining how you arrived at your estimates.

Now that you know the size of your investments for a start-up, the next question is: where will the money come from? Or, who is going to finance it? Before you try to find your financiers, it is essential that you, as an entrepreneur, make an overview of the capital required and the available equity. This overview is called the financing plan.

Part 2

Make an overview of the financing required for the investments desired. Make sure you distinguish between owners equity, long-term and short-term debt. Clearly state how you have calculated these amounts. Be realistic and think of the securities. The bank is likely to demand a 30% solvency (debt ratio) for a standard financing agreement.

The opening balance sheet can now be compiled on the basis of an investment forecast and the financing plan. In it, solvency and liquidity can again be scrutinised. Please consider possible investments in the run-up period.

Part 3

Draw up the opening balance sheet and add it to the investment forecast and the financial budget. (add an extensive explanation to both).

Suggestion: Make the assignments in Excel so that any calculating errors are avoided and changes (in price, for instance) can easily be made and calculated!

NOTE: State the type of company.

It is obligatory for all groups to have their financial reports checked by Mr. Piet Post, who will give feedback and hints for improvement, before adding them to the project report. Project reports that have not been checked and approved by Mr. Post, will not be assessed at the end of the project!

• Financial planning (first year of business)

The first financial assignment gave a provisional description of the initial financial position of your company. But what do we do now?

Is your company really profitable? How profitable do you want it to be?

If you want an answer to these questions you must make an operating forecast. This forecast gives an overview of the expected costs and return, resulting in profit or loss. In other words, an operating forecast is a preliminary profit and loss account.

Part 1

Make an overview of the returns which you think or hope to achieve and the attendant costs for the first year of your operations. Give a quarterly specification. Clearly indicate how you calculated your estimates.

The first financial assignment (Opening Balance Sheet) gave a provisional description of the initial financial position of your company, in which you assessed the static liquidity or included the static liquidity in the decision-making process. But what about the dynamic liquidity? Will you be able to meet all your short-term debts? You will need a cash flow forecast to answer these questions.

Part 2

Make an overview of the cash flows which you think or hope to achieve and the expenditure for your first year of operations. Give a quarterly specification. Clearly indicate –use a note – how you calculated your estimates.

The first financial assignment gave a provisional description of the initial financial position of your company, in which you made a forecast of the profitability of your company in its first year of operations. A combination of these two assignments will enable an assessment of the financial position of the company at the end of its first year of operations.

Part 3

Draw up a predetermined closing balance sheet at the end of year 1 and assess the solvency and the liquidity.

Suggestion: Make the assignments in Excel so that any calculating errors are avoided and changes (in price, for instance) can easily be made and calculated!

NOTE: Hand in a version (if necessary an improved version) of the Opening balance sheet, in addition to this assignment.

It is obligatory for all groups to have their financial reports checked by Mr. Piet Post, who will give feedback and hints for improvement, before adding them to the project report. Project reports that have not been checked and approved by Mr. Post, will not be assessed at the end of the project!