business plans made simple center for entrepreneurship and innovation school of management alumni...
TRANSCRIPT
Business Plans Made Simple
Center for Entrepreneurship and InnovationSchool of Management
Alumni RelationsCareer Services
Presented by:Gerard F. Zappia, DeanSchool of Management
September 2, 2014
Goals for Today
Have fun!
Demystify the business plan (complexity vs.
value)
Learn the basics - business plans (concept
stage)
Develop a “rough” draft
Identify strengths and areas for development
Access to docs
What is a Business Plan?
What is a Business Plan?
“A business plan is a road map that provides directions
so a business can plan its future and avoid bumps in
the road.”
Author Unknown
What is a Business Plan?
“A business plan is a written description of your
business's future. That's all there is to it--a document
that describes 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.”
Entrepreneur.com
Users (Audience) of the Business Plan?
Audience – Business Plan
Investors
o Individual
o Institutional
o Strategic/Partner
Bankers (growth/maturity stage)
Management Team
Yourself - Most Important!
“A lot of entrepreneurs think they only need to develop a
formal business plan if they’re seeking investment. This is a
costly folly.
Writing a business plan gives you a chance to thoroughly
evaluate your idea inside and out, uncover its upsides and
potential pitfalls, and, most crucially, think up ways to avoid
them before they happen.
It’s your chance to stare long and hard at your ideas’
weaknesses and decide whether or not you can overcome
them.”
Forbes.com
Summary - Business Plan Concept
Business roadmap (story)
Living document (meaning?)
Process driven
Forces you and to think holistically
Must make sense
Contents of a Business Plan?
Table of Contents
1. Executive Summary
2. Market Opportunity
3. Product/Service/Technology
4. Competition
5. Sales/Marketing Strategy
6. Financials
7. Company/Management Overview
8. Summary
Let’s Start Writing – Version 1.0
(Expect to Revise – Many Times)
(You may not be able to answer every question today)
Once the idea is out of your head. It has the chance to evolve and
be refined. It can be shared with others to get the idea validated
and enhanced (or mocked). It means the idea has a chance of
becoming more than just an idea.
Aden Davies
Writing and Thinking
Friendly Advice• This is not rocket science!
• Use clear, concise language with no techno jargon. Your mother/father must understand it!
• Avoid using hype words.
• Must be a story (that makes sense) – Think of everything in context.
• The only thing you have is your credibility. Don’t risk it with false claims.
• Sophistication of the plan – varies with stage of development
Financing Sources
Concept Pre-Seed SeedEarlyStage
Growth
CustomerValidation
Maturity
ProfitabilityMarket
ExtensionIdea RevenuesPrototype
Grants – SBIR, NSF, NIH, NYSERDA, etc.
Angels - VCs
Ven
ture
Sta
ges
3Fs
Senior/Bank Debt
Econ. Dev. / Factoring
Grants
Eq
uit
yD
eb
t
A/B Series– VCs
Boot Strapping
Assumption - You are here
Executive Summary
One short paragraph for each of the business plan sections
Include a summary of the financials
Include funding requirements to complete development and to begin sales.
Prepare after completing the other sections.
Market Opportunity What problem are you solving? Who has it?
o Do not confuse with the solution
How are they solving it today?
What is the market size?
What user feedback do you have?
What is your initial target market and why?
What are the macro-trends?
Product/Service/Technology What is your solution?
How does it solve market need?
What IP do you own or plan on pursuing?
What approvals do you need?
What is the status of your solution?
This should not be a technical treatise (write for a general audience).
Competition• Who is your competition ?
• What do you know about them?
• How is your solution better?
• How much better?
• What prevents your competition from copying your solution?
Sales/Marketing Strategy
• How will you bring your solution to market?
• What is the average sales cycle? (if applicable)
• What is the average cost of customer acquisition?
• What sales channel will you use?
• Who are your potential partners?
• How do you plan to generate demand?
Manufacturing/Operations
Where will your product/service be manufactured/created?
Explain your methods of: Production techniques and costs Supply chain Quality Control
Financials
What does your financial picture look like for the next five years?
Revenue Cost of Goods Gross Income Expenses Net Income
Provide a cash flow analysis
Year 1 Year 2 Year 3 Year 4 Year 5
a. Unit Volume
b. Average Revenue/Unit
Revenue (= a x b)
c. Average cost/unit
Cost of Goods (= a x c)
Gross Profit
Expenses
Engineering/R&D
Sales and Marketing
Gen and Admin
Net Income
Total Cash Receipts
Total Cash Paid Out
Cash Position
Cash Flow Statements
Management Overview Brief overview of company
Brief overview of team (expertise that relates to company/product
Qualifications must add value
Board of Advisors
Do not say “world class”
Funding needs
Summary
Why should we invest?
List a few compelling bullet points
Why is your business important?
What happens if your business does not exist?
Exhibits and Appendices Be focused
Include content that supports the plan
Don’t include what you don’t refer to
Reasonable contents Summary Financials
Management team resumes
Customer letters of intent
Existing marketing materials
Max: 10 to 15 pages
Important Guidelines• Proof, proof, and proof again– Grammar, punctuation, sentence
structure, etc.– Mistakes and sloppiness are a death knell
• A “good” picture (or graph) is worth a thousand words– Omit images, tables, charts don’t
instantly convey meaning.– Label graphics and significance– Balance use of text and graphicc– Lots of white space
Assess
How well developed is your business idea?
Which areas need additional development?
Thank You