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The Business Plan

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IdeaOpportunityAcquisitionAllianceOther

Business Assessment

Environmental Assessment

Technology Assessment

Viable Business Concept

BusinessCase

BusinessPlan

Market Research

Sales InputCustomer Interviews

Customer Value Proposition

FinancialAnalysis

ARINC New Business Evaluation Process

Investment $ Current BU Business Development

New Business Seed Money <$250K Capital Request

PersonnelBU – Champion, Financial Analyst

CBD – Advisory, Environmental Assessment

BU – Project Leadership, Sales – Customer InputCBD – Advisory, Market Research, Financial Modeling

Business Unit -New Team

Timeline 1-2 months 3 months Dependent on Scope

Business Unit(s)

Corp Bus DevelopSales and Marketing

Financial

DecisionPoints

Responsibilities

Financial Assessment

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What is a Business Plan

A business plan is a formal statement of

1. clear business goals,

2. the reasons why they are believed attainable, and

3. the plan for reaching those goals.

It may also contain background information about the organization or team attempting to reach those goals.

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Why Write a Business Plan?Per Jeffrey Timmons,

– A business plan is a selling document that conveys the excitement and promise of your business to any

potential backers or stakeholders

A business plan

1. Is used to interest and attract support

– marketing document

– legal document to raise capital

2. Is a document that articulates

– critical aspects of the business

– how to create and keep customers

– basic assumptions

– financial projections

3. Forces entrepreneurs to think through the business in a systematic way

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Preparing to Write the Business Plan

Macro Level

Micro Level

Market Domains Industry Domains

Mission, Ability toAspirations, Execute Propensity on CSFsfor Risk

Connectedness up and down Value Chain

Team Domains

Market Attractiveness

Target Segment Benefits and Attractiveness

Industry Attractiveness

Sustainable Advantage

John Mullins, The New Business Road Test (Prentice Hall: 2003).

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The Business Plan Requires Hard Evidence

Clayton Christensen, et. al., The Innovator’s DNA (Harvard Business Review Press: 2011)

…business innovators actively try out new ideas by creating

prototypes and launching pilot tests.

Good experimenters understand that although questioning,

observing, and networking provide data about the past (what was)

and the present (what is), experimenting is best suited for generating

data on what might work in the future.

In other words, it’s the best way to answer our “what-if”

questions as we search for new solutions. Often, the only way to get

the necessary data to move forward is to run the experiment.

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Business Plans:

Structure

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Structure of the Business Plan 1

Per William Sahlman (Harvard),– The opportunity– The context– The risks and rewards– The deal– The people

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Structure of the Business Plan 2

Per David E. Gumpert,– Cover page– Table of contents– Executive summary– The company– The market– The product/service– Sales and promotion– Finances– Appendix

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Structure of the Business Plan 3

Per Michael J. Roberts (Harvard),– Executive summary– The company– The product or service– The market– Competition– Sales and marketing– Operations– Financials– Appendix

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Structure of the Business Plan 4

Per Jeffrey Timmons,– Executive summary– Industry, company, and

product/service– Market research and

analysis– Economics of the business– Marketing plan– Design and development

plans– Manufacturing and

operations plan

– Management team– Overall schedule– Critical risks,

problems, and assumptions

– Financial plan– Proposed company

offering– Appendices

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Structure of the Business Plan 5

Per Looser and Schlapfer (McKinsey),– Executive summary– Project idea– Management team– Marketing– Business systems and organization– Realization schedule– Risks– Financing

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Structure of the Business Plan 6Per Lynda Applegate (Harvard):

1. Title slide

2. Executive summary

3. Market positioning or problem description

4. Product positioning (solution)

5. Competition or substitutes

6. Benefits

7. Operations

8. Financials

9. Risks

10. Implementation, Status and Traction, Financing

11. The “ask”

12. The team

13. Appendices

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Structure of the Business Plan 7Per Henry Kressel (venture capitalist):

1. High-level vision statement.

2. The team.

3. Current state of the market problem.

4. Why now?

5. Product or service solutions to the market pain points. What is your differentiation?

6. Quantified benefits of the product or service solution to the market.

7. Go-to-market plan.

8. Business model—your revenue, pricing, and profitability.

9. Analysis and deep understanding of the competition.

10. Risks, and your plan to mitigate them.

11. Investment—goals, schedule, and milestones for the investment needed.

12. Summary of the financial plan.

13. Technical designs. Kressel, Henry; Winarsky, Norman (2015-09-29). If You Really Want to Change the World: A Guide to Creating, Building, and Sustaining Breakthrough Ventures (pp. 102-104). Harvard Business Review Press. Kindle Edition.

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Structure of the Business Plan 81. Cover page2. Executive summary

• Opportunity• Context• Risks and rewards• The deal

3. Product or service offering• Description of product or service• Origin of the opportunity• Description of market/industry• Sources of competitive advantage

4. Market analysis• Size of market• Competition – both companies and

products/services• List of likely customers• Evidence of market research• Sales and promotional plans,

including timelines

5.Operational analysis• Description of how the product or service

will be manufactured or created• Action steps necessary to deliver the

product or service to customers• Timelines• Description of any necessary vendors• Organizational structure required

6.Financial analysis• Summary of annual cash flows• Three year monthly cash flows• Required start-up capital and usage• Returns to investors

7.The deal• Sources of start-up capital – the

combination of equity and loans• Cost of equity and loans• Ownership structure

8.The team• Team members, qualifications, and roles• Outside advisors

9.Appendices

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My Own Favorite1. What is the problem?

2. How is it currently being solved?

3. What are the problems with the current solution?

4. What is your solution and how does it fix these problems? What are its key advantages?

5. Who will be impacted by your solution? What are their characteristics (i.e. market segments)?

How many of them are there (i.e. market size)? Who will benefit the most (i.e. initial target

segment)?

6. How hard will it be to get into the market space? And maintain any sort of competitive

advantage? What is your market entry strategy?

7. How will you actually accomplish this? What are the operational details (i.e. intellectual

property, regulatory approvals, reimbursement, manufacturing, sales and distribution)?

8. Can you define critical success factors and then map them to a project plan with milestones (i.e.

deliverables) and funding requirements?

9. Can you delineate key revenue and cost drivers and prepare a reasonable financial forecast?

10. Who is on the team?

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What Investors are Looking For (at least what they told me)

1. Is the value proposition realistic?2. Are the competitive advantages believable?3. Is the target market clearly identified and sensible?4. Are the market and competitive landscapes clearly analyzed?5. Considering the value proposition, competitive advantage and target

market prediction, does the revenue and profit model make sense?6. Are the people necessary to make this plan happen in reality clearly

identified?7. What is the expected timeframe and pay-off for new investors?8. Is it likely the business will be around in five years?9. Is the plan clear and well written?10. Is the plan well documented?

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SummaryThe business plan must answer these questions:

1. What is the customer benefit?

– What problem does the business model solve?

2. What is the market and how large is it?

– How can the market be segmented and what is the target market?

– How can your offering be positioned in the minds of customers?

– How can these customers be reached, i.e. informed and influenced?

– What will customers pay and how much will they buy?

– Who else is in the market?

– Is your business idea scalable?

– What is your evidence for all of this?

3. How will the venture make money? What is the profit formula?

4. How will you accomplish this? Can you assemble the resources and manage the risks?