Definitive Business Plan, Second Edition, The

Building up value

At this point, take another break from writing. Sit back for a moment. Think about the flow of activities that convert an idea into a product or service and then deliver it to a customer. This might involve purchasing, delivery of raw materials, manufacturing, marketing, sales, delivery, after sales support and much more.

Figure 4.2 shows a simple example of the activities and costs associated with producing an electronic assembly, such as a programmable controller for an indus- trial machine. Think of it as part of a computer. The total cost in this case is 1000 dollars or yen, or whatever you like. The height of each step (repeated on the right) indicates the value that activity contributes to total output.

Figure 4.2. A sample ...