Business Plans

Business Plans

Business Plans

 A Step-by-Step Guide

A business plan is a written description of your business's future, a document that tells what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.

Business plans are inherently strategic. You start here, today, with certain resources and abilities. You want to get to a there, a point in the future (usually three to five years out) at which time your business will have a different set of resources and abilities as well as greater profitability and increased assets. Your plan shows how you will get from here to there.

Plan Your Business Plan

You've decided to write a business plan, and you're ready to get started. Congratulations. You've just greatly increased the chances that your business venture will succeed. But before you start drafting your plan, you need to--you guessed it--plan your draft.

One of the most important reasons to plan your plan is that you may be held accountable for the projections and proposals it contains. That's especially true if you use your plan to raise money to finance your company. Let's say you forecast opening four new locations in the second year of your retail operation. An investor may have a beef if, due to circumstances you could have foreseen, you only open two. A business plan can take on a life of its own, so thinking a little about what you want to include in your plan is no more than common prudence.

Second, as you'll soon learn if you haven't already, business plans can be complicated documents. As you draft your plan, you'll be making lots of decisions on serious matters, such as what strategy you'll pursue, as well as less important ones, like what color paper to print it on. Thinking about these decisions in advance is an important way to minimize the time you spend planning your business and maximize the time you spend generating income.

To sum up, planning your plan will help control your degree of accountability and reduce time-wasting indecision. To plan your plan, you'll first need to decide what your goals and objectives in business are. As part of that, you'll assess the business you've chosen to start, or are already running, to see what the chances are that it will actually achieve those ends. Finally, you'll take a look at common elements of most plans to get an idea of which ones you want to include and how each will be treated.

Determine Your Objectives

Close your eyes. Imagine that the date is five years from now. Where do you want to be? Will you be running a business that hasn't increased significantly in size? Will you command a rapidly growing empire? Will you have already cashed out and be relaxing on a beach somewhere, enjoying your hard-won gains?

Answering these questions is an important part of building a successful business plan. In fact, without knowing where you're going, it's not really possible to plan at all.

Now is a good time to free-associate a little bit--to let your mind roam, exploring every avenue that you'd like your business to go down. Try writing a personal essay on your business goals. It could take the form of a letter to yourself, written from five years in the future, describing all you have accomplished and how it came about.

As you read such a document, you may make a surprising discovery, such as that you don't really want to own a large, fast-growing enterprise but would be content with a stable small business. Even if you don't learn anything new, though, getting a firm handle on your goals and objectives is a big help in deciding how you'll plan your business.

Goals and Objectives Checklist

If you're having trouble deciding what your goals and objectives are, here are some questions to ask yourself:

How determined am I to see this succeed?

Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?

What's going to happen to me if this venture doesn't work out?

If it does succeed, how many employees will this company eventually have?

What will be its annual revenues in a year? Five years?

What will be its market share in that time frame?

Will it be a niche marketer, or will it sell a broad spectrum of good and services?

What are my plans for geographic expansion? Local? National? Global?

Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?

If I delegate, what sorts of tasks will I share? Sales? Technical? Others?

How comfortable am I taking direction from others? Could I work with partners or investors who demand input into the company's management?

Is it going to remain independent and privately owned, or will it eventually be acquired or go public?

Your Financing Goals

It doesn't necessarily take a lot of money to make a lot of money, but it does take some. That's especially true if, as part of examining your goals and objectives, you envision very rapid growth.

Energetic, optimistic entrepreneurs often tend to believe that sales growth will take care of everything, that they'll be able to fund their own growth by generating profits. However, this is rarely the case, for one simple reason: You usually have to pay your own suppliers before your customers pay you. This cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford.

Start by asking yourself what kinds of financing you're likely to need--and what you'd be willing to accept. It's easy when you're short of cash, or expect to be short of cash, to take the attitude that almost any source of funding is just fine. But each kind of financing has different characteristics that you should take into consideration when planning your plan. These characteristics take three primary forms:

First, there's the amount of control you'll have to surrender. An equal partner may, quite naturally, demand approximately equal control. Venture capitalists often demand significant input into management decisions by, for instance, placing one or more people on your board of directors. Angel investors may be very involved or not involved at all, depending on their personal style. Bankers, at the other end of the scale, are likely to offer no advice whatsoever as long as you make payments of principal and interest on time and are not in violation of any other terms of your loan.

You should also consider the amount of money you're likely to need. Any amount less than several million dollars is too small to be considered for a standard initial public offering of stock, for example. Venture capital investors are most likely to invest amounts of $250,000 to $3 million. On the other hand, only the richest angel investor will be able to provide more than a few hundred thousand dollars, if that.

Almost any source of funds, from a bank to a factor, has some guidelines about the size of financing it prefers. Anticipating the size of your needs now will guide you in preparing your plan.

The third consideration is cost. This can be measured in terms of interest rates and shares of ownership as well as in time, paperwork and plain old hassle.

How Will You Use Your Plan

Believe it or not, part of planning your plan is planning what you'll do with it. No, we haven't gone crazy--at least not yet. A business plan can be used for several things, from monitoring your company's progress toward goals to enticing key employees to join your firm. Deciding how you intend to use yours is an important part of preparing to write it.

Do you intend to use your plan to help you raise money? In that case, you'll have to focus very carefully on the executive summary, the management, and marketing and financial aspects. You'll need to have a clearly focused vision of how your company is going to make money. If you're looking for a bank loan, you'll need to stress your ability to generate sufficient cash flow to service loans. Equity investors, especially venture capitalists, must be shown how they can cash out of your company and generate a rate of return they'll find acceptable.

Do you intend to use your plan to attract talented employees? Then you'll want to emphasize such things as stock options and other aspects of compensation as well as location, work environment, corporate culture and opportunities for growth and advancement.

Do you anticipate showing your plan to suppliers to demonstrate that you're a worthy customer? A solid business plan may convince a supplier of some precious commodity to favor you over your rivals. It may also help you arrange supplier credit. You may want to stress your blue-ribbon customer list and spotless record of repaying trade debts in this plan.

Assessing Your Company's Potential

For most of us, unfortunately, our desires about where we would like to go aren't as important as our businesses' ability to take us there. Put another way, if you choose the wrong business, you're going nowhere.

Luckily, one of the most valuable uses of a business plan is to help you decide whether the venture you have your heart set on is really likely to fulfill your dreams. Many, many business ideas never make it past the planning stage because their would-be founders, as part of a logical and coherent planning process, test their assumptions and find them wanting.

Test your idea against at least two variables. First, financial, to make sure this business makes economic sense. Second, lifestyle, because who wants a successful business that they hate?

Answer the following questions to help you outline your company's potential. There are no wrong answers. The objective is simply to help you decide how well your proposed venture is likely to match up with your goals and objectives.

Financial:

What initial investment will the business require?

How much control are you willing to relinquish to investors?

When will the business turn a profit?

When can investors, including you, expect a return on their money?

What are the projected profits of the business over time?

Will you be able to devote yourself full time to the business, financially?

What kind of salary or profit distribution can you expect to take home?

What are the chances the business will fail?

What will happen if it does?

Lifestyle:

Where are you going to live?

What kind of work are you going to be doing?

How many hours will you be working?

Will you be able to take vacations?

What happens if you get sick?

Will you earn enough to maintain your lifestyle?

Does your family understand and agree with the sacrifices you envision?

Sources: The Small Business Encyclopedia, Business Plans Made Easy, Start Your Own Business and Entrepreneur magazine.

Continue on to the next section of our Business Plan How-To >> Elements of a Business Plan

business Objectives

business Objectives

business Objectives

You've decided to write a business plan, and you're ready to get started. Congratulations. You've just greatly increased the chances that your business venture will succeed. But before you start drafting your plan, you need to--you guessed it--plan your draft.

One of the most important reasons to plan your plan is that you may be held accountable for the projections and proposals it contains. That's especially true if you use your plan to raise money to finance your company. Let's say you forecast opening four new locations in the second year of your retail operation. An investor may have a beef if, due to circumstances you could have foreseen, you only open two. A business plan can take on a life of its own, so thinking a little about what you want to include in your plan is no more than common prudence.

Second, as you'll soon learn if you haven't already, business plans can be complicated documents. As you draft your plan, you'll be making lots of decisions on serious matters, such as what strategy you'll pursue, as well as less important ones, like what color paper to print it on. Thinking about these decisions in advance is an important way to minimize the time you spend planning your business and maximize the time you spend generating income.

To sum up, planning your plan will help control your degree of accountability and reduce time-wasting indecision. To plan your plan, you'll first need to decide what your goals and objectives in business are. As part of that, you'll assess the business you've chosen to start, or are already running, to see what the chances are that it will actually achieve those ends. Finally, you'll take a look at common elements of most plans to get an idea of which ones you want to include and how each will be treated.

Determine Your Objectives

Close your eyes. Imagine that the date is five years from now. Where do you want to be? Will you be running a business that hasn't increased significantly in size? Will you command a rapidly growing empire? Will you have already cashed out and be relaxing on a beach somewhere, enjoying your hard-won gains?

Answering these questions is an important part of building a successful business plan. In fact, without knowing where you're going, it's not really possible to plan at all.

Now is a good time to free-associate a little bit--to let your mind roam, exploring every avenue that you'd like your business to go down. Try writing a personal essay on your business goals. It could take the form of a letter to yourself, written from five years in the future, describing all you have accomplished and how it came about.

As you read such a document, you may make a surprising discovery, such as that you don't really want to own a large, fast-growing enterprise but would be content with a stable small business. Even if you don't learn anything new, though, getting a firm handle on your goals and objectives is a big help in deciding how you'll plan your business.

Goals and Objectives Checklist

If you're having trouble deciding what your goals and objectives are, here are some questions to ask yourself:

How determined am I to see this succeed?

Am I willing to invest my own money and work long hours for no pay, sacrificing personal time and lifestyle, maybe for years?

What's going to happen to me if this venture doesn't work out?

If it does succeed, how many employees will this company eventually have?

What will be its annual revenues in a year? Five years?

What will be its market share in that time frame?

Will it be a niche marketer, or will it sell a broad spectrum of good and services?

What are my plans for geographic expansion? Local? National? Global?

Am I going to be a hands-on manager, or will I delegate a large proportion of tasks to others?

If I delegate, what sorts of tasks will I share? Sales? Technical? Others?

How comfortable am I taking direction from others? Could I work with partners or investors who demand input into the company's management?

Is it going to remain independent and privately owned, or will it eventually be acquired or go public?

Your Financing Goals

It doesn't necessarily take a lot of money to make a lot of money, but it does take some. That's especially true if, as part of examining your goals and objectives, you envision very rapid growth.

Energetic, optimistic entrepreneurs often tend to believe that sales growth will take care of everything, that they'll be able to fund their own growth by generating profits. However, this is rarely the case, for one simple reason: You usually have to pay your own suppliers before your customers pay you. This cash flow conundrum is the reason so many fast-growing companies have to seek bank financing or equity sales to finance their growth. They are literally growing faster than they can afford.

Start by asking yourself what kinds of financing you're likely to need--and what you'd be willing to accept. It's easy when you're short of cash, or expect to be short of cash, to take the attitude that almost any source of funding is just fine. But each kind of financing has different characteristics that you should take into consideration when planning your plan. These characteristics take three primary forms:

First, there's the amount of control you'll have to surrender. An equal partner may, quite naturally, demand approximately equal control. Venture capitalists often demand significant input into management decisions by, for instance, placing one or more people on your board of directors. Angel investors may be very involved or not involved at all, depending on their personal style. Bankers, at the other end of the scale, are likely to offer no advice whatsoever as long as you make payments of principal and interest on time and are not in violation of any other terms of your loan.

You should also consider the amount of money you're likely to need. Any amount less than several million dollars is too small to be considered for a standard initial public offering of stock, for example. Venture capital investors are most likely to invest amounts of $250,000 to $3 million. On the other hand, only the richest angel investor will be able to provide more than a few hundred thousand dollars, if that.

Almost any source of funds, from a bank to a factor, has some guidelines about the size of financing it prefers. Anticipating the size of your needs now will guide you in preparing your plan.

The third consideration is cost. This can be measured in terms of interest rates and shares of ownership as well as in time, paperwork and plain old hassle.

How Will You Use Your Plan

Believe it or not, part of planning your plan is planning what you'll do with it. No, we haven't gone crazy--at least not yet. A business plan can be used for several things, from monitoring your company's progress toward goals to enticing key employees to join your firm. Deciding how you intend to use yours is an important part of preparing to write it.

Do you intend to use your plan to help you raise money? In that case, you'll have to focus very carefully on the executive summary, the management, and marketing and financial aspects. You'll need to have a clearly focused vision of how your company is going to make money. If you're looking for a bank loan, you'll need to stress your ability to generate sufficient cash flow to service loans. Equity investors, especially venture capitalists, must be shown how they can cash out of your company and generate a rate of return they'll find acceptable.

Do you intend to use your plan to attract talented employees? Then you'll want to emphasize such things as stock options and other aspects of compensation as well as location, work environment, corporate culture and opportunities for growth and advancement.

Do you anticipate showing your plan to suppliers to demonstrate that you're a worthy customer? A solid business plan may convince a supplier of some precious commodity to favor you over your rivals. It may also help you arrange supplier credit. You may want to stress your blue-ribbon customer list and spotless record of repaying trade debts in this plan.

Assessing Your Company's Potential

For most of us, unfortunately, our desires about where we would like to go aren't as important as our businesses' ability to take us there. Put another way, if you choose the wrong business, you're going nowhere.

Luckily, one of the most valuable uses of a business plan is to help you decide whether the venture you have your heart set on is really likely to fulfill your dreams. Many, many business ideas never make it past the planning stage because their would-be founders, as part of a logical and coherent planning process, test their assumptions and find them wanting.

Test your idea against at least two variables. First, financial, to make sure this business makes economic sense. Second, lifestyle, because who wants a successful business that they hate?

Answer the following questions to help you outline your company's potential. There are no wrong answers. The objective is simply to help you decide how well your proposed venture is likely to match up with your goals and objectives.

Financial:

What initial investment will the business require?

How much control are you willing to relinquish to investors?

When will the business turn a profit?

When can investors, including you, expect a return on their money?

What are the projected profits of the business over time?

Will you be able to devote yourself full time to the business, financially?

What kind of salary or profit distribution can you expect to take home?

What are the chances the business will fail?

What will happen if it does?

Lifestyle:

Where are you going to live?

What kind of work are you going to be doing?

How many hours will you be working?

Will you be able to take vacations?

What happens if you get sick?

Will you earn enough to maintain your lifestyle?

Does your family understand and agree with the sacrifices you

An Introduction to Business Plans

An Introduction to Business Plans

An Introduction to Business Plans

business plan is a written description of your business's future. That's all there is to it--a document that desribes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.

Business plans can help perform a number of tasks for those who write and read them. They're used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used by firms that are trying to attract key employees, prospect for new business, deal with suppliers or simply to understand how to manage their companies better.

So what's included in a business plan, and how do you put one together? Simply stated, a business plan conveys your business goals, the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.

Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. There are three primary parts to a business plan:

The first is the business concept, where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.

The second is the marketplace section, in which you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you'll position yourself to beat it.

Finally, the financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.

Breaking these three major sections down even further, a business plan consists of seven key components:

Executive summary

Business description

Market strategies

Competitive analysis

Design and development plan

Operations and management plan

Financial factors

In addition to these sections, a business plan should also have a cover, title page and table of contents.

How Long Should Your Business Plan Be?

Depending on what you're using it for, a useful business plan can be any length, from a scrawl on the back of an envelope to, in the case of an especially detailed plan describing a complex enterprise, more than 100 pages. A typical business plan runs 15 to 20 pages, but there's room for wide variation from that norm.

Much will depend on the nature of your business. If you have a simple concept, you may be able to express it in very few words. On the other hand, if you're proposing a new kind of business or even a new industry, it may require quite a bit of explanation to get the message across.

The purpose of your plan also determines its length. If you want to use your plan to seek millions of dollars in seed capital to start a risky venture, you may have to do a lot of explaining and convincing. If you're just going to use your plan for internal purposes to manage an ongoing business, a much more abbreviated version should be fine.

Who Needs a Business Plan?

About the only person who doesn't need a business plan is one who's not going into business. You don't need a plan to start a hobby or to moonlight from your regular job. But anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit, should take the time to draft some kind of plan.

Startups. The classic business plan writer is an entrepreneur seeking funds to help start a new venture. Many, many great companies had their starts on paper, in the form of a plan that was used to convince investors to put up the capital necessary to get them under way.

Most books on business planning seem to be aimed at these startup business owners. There's one good reason for that: As the least experienced of the potential plan writers, they're probably most appreciative of the guidance. However, it's a mistake to think that only cash-starved startups need business plans. Business owners find plans useful at all stages of their companies' existence, whether they're seeking financing or trying to figure out how to invest a surplus.

Established firms seeking help. Not all business plans are written by starry-eyed entrepreneurs. Many are written by and for companies that are long past the startup stage. WalkerGroup/Designs, for instance, was already well-established as a designer of stores for major retailers when founder Ken Walker got the idea of trademarking and licensing to apparel makers and others the symbols 01-01-00 as a sort of numeric shorthand for the approaching millennium. Before beginning the arduous and costly task of trademarking it worldwide, Walker used a business plan complete with sales forecasts to convince big retailers it would be a good idea to promise to carry the 01-01-00 goods. It helped make the new venture a winner long before the big day arrived. "As a result of the retail support up front," Walker says, "we had over 45 licensees running the gamut of product lines almost from the beginning."

These middle-stage enterprises may draft plans to help them find funding for growth just as the startups do, although the amounts they seek may be larger and the investors more willing. They may feel the need for a written plan to help manage an already rapidly growing business. Or a plan may be seen as a valuable tool to be used to convey the mission and prospects of the business to customers, suppliers or others.

Plan an Updating Checklist

Here are seven reasons to think about updating your business plan. If even just one applies to you, it's time for an update.

A new financial period is about to begin. You may update your plan annually, quarterly or even monthly if your industry is a fast-changing one.

You need financing, or additional financing. Lenders and other financiers need an updated plan to help them make financing decisions.

There's been a significant market change. Shifting client tastes, consolidation trends among customers and altered regulatory climates can trigger a need for plan updates.

Your firm develops or is about to develop a new product, technology, service or skill. If your business has changed a lot since you wrote your plan the first time around, it's time for an update.

You have had a change in management. New managers should get fresh information about your business and your goals.

Your company has crossed a threshold, such as moving out of your home office, crossing the $1 million sales mark or employing your 100th employee.

Your old plan doesn't seem to reflect reality any more. Maybe you did a poor job last time; maybe things have just changed faster than you expected. But if your plan seems irrelevant, redo it.

Finding the Right Plan for You

Business plans tend to have a lot of elements in common, like cash flow projections and marketing plans. And many of them share certain objectives as well, such as raising money or persuading a partner to join the firm. But business plans are not all the same any more than all businesses are.

Depending on your business and what you intend to use your plan for, you may need a very different type of business plan from another entrepreneur. Plans differ widely in their length, their appearance, the detail of their contents, and the varying emphases they place on different aspects of the business.

The reason that plan selection is so important is that it has a powerful effect on the overall impact of your plan. You want your plan to present you and your business in the best, most accurate light. That's true no matter what you intend to use your plan for, whether it's destined for presentation at a venture capital conference, or will never leave your own office or be seen outside internal strategy sessions.

When you select clothing for an important occasion, odds are you try to pick items that will play up your best features. Think about your plan the same way. You want to reveal any positives that your business may have and make sure they receive due consideration.

Types of Plans

Business plans can be divided roughly into four separate types. There are very short plans, or miniplans. There are working plans, presentation plans and even electronic plans. They require very different amounts of labor and not always with proportionately different results. That is to say, a more elaborate plan is not guaranteed to be superior to an abbreviated one, depending on what you want to use it for.

The Miniplan. A miniplan may consist of one to 10 pages and should include at least cursory attention to such key matters as business concept, financing needs, marketing plan and financial statements, especially cash flow, income projection and balance sheet. It's a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It can also serve as a valuable prelude to a full-length plan later on.

Be careful about misusing a miniplan. It's not intended to substitute for a full-length plan. If you send a miniplan to an investor who's looking for a comprehensive one, you're only going to look foolish.

The Working Plan. A working plan is a tool to be used to operate your business. It has to be long on detail but may be short on presentation. As with a miniplan, you can probably afford a somewhat higher degree of candor and informality when preparing a working plan.

A plan intended strictly for internal use may also omit some elements that would be important in one aimed at someone outside the firm. You probably don't need to include an appendix with resumes of key executives, for example. Nor would a working plan especially benefit from, say, product photos.

Fit and finish are liable to be quite different in a working plan. It's not essential that a working plan be printed on high-quality paper and enclosed in a fancy binder. An old three-ring binder with "Plan" scrawled across it with a felt-tip marker will serve quite well.

Internal consistency of facts and figures is just as crucial with a working plan as with one aimed at outsiders. You don't have to be as careful, however, about such things as typos in the text, perfectly conforming to business style, being consistent with date formats and so on. This document is like an old pair of khakis you wear into the office on Saturdays or that one ancient delivery truck that never seems to break down. It's there to be used, not admired.

The Presentation Plan. If you take a working plan, with its low stress on cosmetics and impression, and twist the knob to boost the amount of attention paid to its looks, you'll wind up with a presentation plan. This plan is suitable for showing to bankers, investors and others outside the company.

Almost all the information in a presentation plan is going to be the same as your working plan, although it may be styled somewhat differently. For instance, you should use standard business vocabulary, omitting the informal jargon, slang and shorthand that's so useful in the workplace and is appropriate in a working plan. Remember, these readers won't be familiar with your operation. Unlike the working plan, this plan isn't being used as a reminder but as an introduction.

You'll also have to include some added elements. Among investors' requirements for due diligence is information on all competitive threats and risks. Even if you consider some of only peripheral significance, you need to address these concerns by providing the information.

The big difference between the presentation and working plans is in the details of appearance and polish. A working plan may be run off on the office printer and stapled together at one corner. A presentation plan should be printed by a high-quality printer, probably using color. It must be bound expertly into a booklet that is durable and easy to read. It should include graphics such as charts, graphs, tables and illustrations.

It's essential that a presentation plan be accurate and internally consistent. A mistake here could be construed as a misrepresentation by an unsympathetic outsider. At best, it will make you look less than careful. If the plan's summary describes a need for $40,000 in financing, but the cash flow projection shows $50,000 in financing coming in during the first year, you might think, "Oops! Forgot to update that summary to show the new numbers." The investor you're asking to pony up the cash, however, is unlikely to be so charitable.

The Electronic Plan. The majority of business plans are composed on a computer of some kind, then printed out and presented in hard copy. But more and more business information that once was transferred between parties only on paper is now sent electronically. So you may find it appropriate to have an electronic version of your plan available. An electronic plan can be handy for presentations to a group using a computer-driven overhead projector, for example, or for satisfying the demands of a discriminating investor who wants to be able to delve deeply into the underpinnings of complex spreadsheets

Online video platform

Online video platform

Online video platform

An online video platform (OVP) is a productized-service that enables users to upload, convert, store and play back video content on the Internet, often via a structured, scalable solution that can be monetized.

Online video platforms can be a SaaS (Software as a Service) solution model, a DIY (Do It Yourself) model or UGC (User Generated Content) model solution. The OVP comes with an end-to-end tool set to upload, encode, manage, playback, style, deliver, distribute, download, publish and measure quality (QoS) or audience engagement (QoE) of online video content for both on-demand and live delivery. This is usually manifested as a User Interface with log-in credentials. OVPs also include providing a custom video player or a third-party video player that can be embedded in a website. OVPs are synonymous with the OTT (Over-the-top) video industry although there are many OVP providers that are also present in broadcast markets, serving Video On Demand set-top boxes.

OVP product models vary in scale and feature-set, ranging from ready-made solutions that individuals can use, to white label models that can be customized by enterprise clients or media/content aggregators and integrated with their traditional broadcast workflows. The former example is YouTube. The latter example is predominantly found in FTA (Free-To-Air) or Pay-TV broadcasters who seek to provide an OTT service that extends the availability of their content on desktops or multiple mobility devices.

In general, the User Interface accessed by operational users of the OVP service is SaaS-based. Revenue is derived from the monthly subscription based on the number of users it is licensed to and the complexity of the workflow. Some workflows require encryption of content with DRM and this increases the cost of using the service. When videos need to be transcoded from their original source format/resolution to a mezzanine format (suitable for management and mass-delivery), the solution is either via onsite transcoders or cloud-based ones. The latter would be where PaaS or Platform as a Service, is provided as an additional cost.

It is feasible, but rare, for large broadcasters to develop their own proprietary OVP. However, this can require complex development and maintenance costs and diverts attention to 'building' as opposed to distributing/curating content.

Contents  [hide]

1              Third Party Features

2              Video and content delivery protocols used

3              Examples of OVPs

4              References

5              See also

Third Party Features[edit]

OVPs increasingly maintain an open platform and 'plug into' specialized third-party service providers. These include cloud transcoders, recommendation engines, search engines, metadata libraries and analytics providers.

Video and content delivery protocols used[edit]

The vast majority of OVP solutions today use industry-standard HTTP streaming or HTTP progressive download protocols. With HTTP streaming, the de facto standard is to use adaptive streaming where multiple files of a video are created at different bit rates, but only one of these is sent to the end-user during playback, depending on available bandwidth or device CPU constraints. This can be switched dynamically and near-seamlessly at any time during the video viewing. The main protocols for adaptive HTTP streaming include Smooth Streaming (by Microsoft), HTTP Live Streaming (HLS) (by Apple) and Flash Video (by Adobe). Flash is still in use but is declining due to the huge popularity of HLS and Smooth Stream in mobile devices and desktops, respectively.[citation needed] Each is a proprietary protocol in its own right and due to this fragmentation, there have been efforts to create one standardized protocol known as MPEG-DASH. However, OVPs can easily configure the choices made by the end user and update the protocol settings as and when needed.

UNIT COSTS

UNIT COSTS

UNIT COSTS

PROCESS COST SYSTEM

The process cost system is used by firms manufacturing identical products in a continuous mass production. As opposed to job order cost systems where unit costs are determined for separate jobs, in process cost systems, there is only one product and, therefor, only one overall unit cost. But, separate unit costs for each department reflect the manufacturing process as the product moves from department to department.

PROCESS COST INVENTORIES

Each department work in process inventory is debited for 1- the goods transferred to it and 2- the conversion costs (made of direct materials, direct labor and an apportioned factory overhead). It is credited for the goods transferred to the next department (or finished goods).

EQUIVALENT UNITS OF PRODUCTION

The number of products which could have been manufactured from start to finish by a department in a given period is known as the equivalent units of production. This number takes into account the beginning and ending inventory being made of products in different stages of production: both are converted to full or equivalent units before being added and subtracted (respectively) from actual total production of completed units.

UNIT PROCESSING COST

The unit processing cost is calculated by dividing the total processing cost assigned to the department by the equivalent units of production. This cost is further broken down into direct materials unit cost and conversion unit cost.

JOINT PRODUCT COST

When two or more products are produced simultaneously in a single manufacturing process, the joint material, labor and/or overhead must be apportioned to the different products. A common allocation method is based on the relative sales value of each product. When one of the products has a much lower value, it is called a byproduct. A byproduct is valued at net realizable value.

MANAGERIAL ACCOUNTING REPORTS

The desirable features of a managerial accounting reports are accuracy, clarity, conciseness, relevance and timeliness. Reports are not desirable if their cost exceeds any potential benefit.

GROSS PROFIT ANALYSIS

Gross profit analysis reveals whether a change in gross profit is attributable to sales volume, selling price or cost of production. The cost of production is further analyzed with variable costing or absorption costing. The purpose of the analysis is to help management make production, pricing, sales mix decisions as well as control costs.

VARIABLE COSTING

In variable costing, also known as direct costing, all the variable cost, and only variable costs, are assigned to cost of goods. A manufacturing margin (or marginal income) is derived by subtracting this variable cost from sales, and the factory overhead together with other selling and administrative expenses are deducted from it to arrive at net income. Variable costing reveals the effect of changing volume of production on net income.

 Sales minus Variable costs = manufacturing margin (or marginal income)

Manufacturing margin

          minus          factory overhead

          minus          other selling and administrative expenses

--------------------------------------------------------

Net income

ABSORPTION COSTING

In absorption costing, both variable and allocated overhead costs are assigned to cost of goods sold. Variable and absorption costing are similar if goods sold and goods manufactured are equal. When they are not equal, the absorption costing method reveals the effect of changes in inventory on net income.

technology

Bill Gates says U.S. needs limits on covert email searches

Bill Gates said on Monday that no one was an “absolutist” on either side of the digital privacy debate, but the co-founder of Microsoft Corp (MSFT.O) said he supports his company’s lawsuit against the U.S. government seeking the freedom to tell customers when federal agencies have sought their data.

"There probably are some cases where (the government) should be able to go in covertly and get information about a company’s email," Gates said at a Reuters Newsmaker event in Washington.

"But the position Microsoft is taking in this suit is that it should be extraordinary and it shouldn’t be a matter of course that there is a gag order automatically put in,” he said in an interview with Reuters Editor-in-Chief Stephen Adler.

The lawsuit, filed last week in federal court in Microsoft's home town of Seattle, argues that the government is violating the U.S. Constitution by preventing Microsoft from notifying thousands of customers about government requests for their emails and other documents, sometimes indefinitely.

The move comes as rival Apple Inc (AAPL.O) is locked in a showdown with the U.S. government over access to an iPhone belonging to one of the killers in the December shooting in San Bernardino, California.

Gates said more collaboration between law enforcement and privacy advocates would help determine which “legislative framework ... strikes the perfect balance” on government access to private data.

“I don’t think there are any absolutists who think the government should be able to get everything or the government should be able to get nothing,” Gates, 60, said.

The man who co-founded Microsoft in 1975 and is still held in reverence by the technology world made waves in February when he appeared to distance himself from Apple in its legal fight with the U.S. Federal Bureau of Investigation, but later clarified his comments and said that headlines suggesting he supported the FBI’s position were inaccurate.

Gates, the world's richest person, also talked about the work of the Bill and Melinda Gates Foundation, the philanthropic organization he formed in 2000, which has an endowment of more than $40 billion.

The foundation, where Gates works day to day, has focused attention in recent months on the Zika outbreak, which has been linked to thousands of suspected cases of microcephaly, a rare birth defect, in Brazil and is affecting large parts of Latin America and the Caribbean.

The World Health Organization declared the outbreak an international health emergency on Feb. 1. Gates said the foundation would be contributing funds to aid in the Zika fight, but did not say how much.

Private sector and governments need to work together to quickly roll out products to combat Zika and other mosquito-borne diseases, Gates said.

"Zika is a tough one," he said. "There are potential solutions. They won't come soon enough to avoid some problems in the entire hemisphere."

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UNIT COSTS

UNIT COSTS

UNIT COSTS

PROCESS COST SYSTEM

The process cost system is used by firms manufacturing identical products in a continuous mass production. As opposed to job order cost systems where unit costs are determined for separate jobs, in process cost systems, there is only one product and, therefor, only one overall unit cost. But, separate unit costs for each department reflect the manufacturing process as the product moves from department to department.

PROCESS COST INVENTORIES

Each department work in process inventory is debited for 1- the goods transferred to it and 2- the conversion costs (made of direct materials, direct labor and an apportioned factory overhead). It is credited for the goods transferred to the next department (or finished goods).

EQUIVALENT UNITS OF PRODUCTION

The number of products which could have been manufactured from start to finish by a department in a given period is known as the equivalent units of production. This number takes into account the beginning and ending inventory being made of products in different stages of production: both are converted to full or equivalent units before being added and subtracted (respectively) from actual total production of completed units.

UNIT PROCESSING COST

The unit processing cost is calculated by dividing the total processing cost assigned to the department by the equivalent units of production. This cost is further broken down into direct materials unit cost and conversion unit cost.

JOINT PRODUCT COST

When two or more products are produced simultaneously in a single manufacturing process, the joint material, labor and/or overhead must be apportioned to the different products. A common allocation method is based on the relative sales value of each product. When one of the products has a much lower value, it is called a byproduct. A byproduct is valued at net realizable value.

MANAGERIAL ACCOUNTING REPORTS

The desirable features of a managerial accounting reports are accuracy, clarity, conciseness, relevance and timeliness. Reports are not desirable if their cost exceeds any potential benefit.

GROSS PROFIT ANALYSIS

Gross profit analysis reveals whether a change in gross profit is attributable to sales volume, selling price or cost of production. The cost of production is further analyzed with variable costing or absorption costing. The purpose of the analysis is to help management make production, pricing, sales mix decisions as well as control costs.

VARIABLE COSTING

In variable costing, also known as direct costing, all the variable cost, and only variable costs, are assigned to cost of goods. A manufacturing margin (or marginal income) is derived by subtracting this variable cost from sales, and the factory overhead together with other selling and administrative expenses are deducted from it to arrive at net income. Variable costing reveals the effect of changing volume of production on net income.

 Sales minus Variable costs = manufacturing margin (or marginal income)

Manufacturing margin

          minus          factory overhead

          minus          other selling and administrative expenses

--------------------------------------------------------

Net income

ABSORPTION COSTING

In absorption costing, both variable and allocated overhead costs are assigned to cost of goods sold. Variable and absorption costing are similar if goods sold and goods manufactured are equal. When they are not equal, the absorption costing method reveals the effect of changes in inventory on net income.

Statement of Cash Flows

Statement of Cash Flows

Statement of Cash Flows

THE CASH BASIS FUNDS STATEMENT

SOURCES OF CASH

1) Operating income - is usually the largest and most frequent source of cash provided a business is profitable. When revenues exceed expenses, cash flow increases. When expenses exceed revenues, cash flow decreases.

2) Issuance of capital stock or long-term debt.

3) The sale of noncurrent assets such as equipment, land, buildings, patents, etc.

CASH PROVIDED BY OPERATIONS

CONVERSION OF NET INCOME FROM A ACCRUAL BASIS TO A CASH BASIS

1) The following items should be added to net income: depreciation expenses, increases in current liabilities, decreases in current assets, and the amortization of bond discount or intangible assets.

2) The following items should be subtracted from net income: amortization of bond premium, increases in current assets, and decreases in current liabilities.

WORKING CAPITAL FUNDS STATEMENT

SOURCES OF WORKING CAPITAL

1) Operating income - when revenues exceed expenses.

2) The issuance of long-term debt.

Example: Issued a $50,000 bond due to mature in ten years.

3) The issuance of capital stock.

Example: 10,000 shares of $100 par preferred stock are sold to

shareholders for $105 a share.

4) The sale of noncurrent assets. Example: building, land, bonds,

equipment, etc.

WORKING CAPITAL FUNDS STATEMENT

USES OF WORKING CAPITAL

1) The declaration of cash dividends.

Example: The board of directors issues a declaration that all

common shareholders will receive $0.50 for each share held.

2) The retirement of long-term debt.

Example: Full payment is made to bondholders at maturity.

3) The purchase of noncurrent assets. Example: equipment, land,

buildings, etc.

WORKING CAPITAL FUNDS STATEMENT

WORKING CAPITAL IS NOT AFFECTED BY THE FOLLOWING TRANSACTIONS

1) Those that are only between current asset accounts.

Example: Cash is used to purchase inventory.

2) Those that are only between current liability accounts.

Example: A 90 day note is drawn up for a trade receivable.

3) Those that are only between current asset and current

liability accounts.

Example: A cash payment is made to reduce accounts payable.