Writing the Business Writing the Business PlanPlan

EntrepreneurshipEntrepreneurship

February 25, 2014February 25, 2014

Axiom: Don’t forget Axiom: Don’t forget the goal; make a the goal; make a profit.profit.

Learning ObjectivesLearning Objectives

Describe major components of an Describe major components of an entrepreneurial business planentrepreneurial business plan

Examine a plan from investor Examine a plan from investor perspectiveperspective

Assess benefits of a discovery Assess benefits of a discovery processprocess

Learn what not to doLearn what not to do

Investor EvaluationInvestor Evaluation

Top Level Sniff TestTop Level Sniff Test

Significant, credible market Significant, credible market opportunity?opportunity?

Realistic market engagement Realistic market engagement plan including competitive plan including competitive strategy?strategy?

Management team complete Management team complete and qualified…in place or and qualified…in place or planned?planned?

Top Level Sniff Test Top Level Sniff Test con’t.con’t. Adequate resources (financial, Adequate resources (financial,

equipment, facilities) available or equipment, facilities) available or conceivable?conceivable?

Based on sound Based on sound technical/scientific principles?technical/scientific principles?

Protection if based on proprietary Protection if based on proprietary technology?technology?

Evaluation:Evaluation:Quality of ConceptQuality of Concept Market Potential Market Potential Product UniquenessProduct Uniqueness Technology RobustnessTechnology Robustness Proprietary & Competitive Proprietary & Competitive

PositionPosition External AssessmentExternal Assessment

Evaluation:Evaluation:Quality of StrategyQuality of Strategy Strategy FocusStrategy Focus Management TeamManagement Team Operating & Marketing PlanOperating & Marketing Plan

Evaluation: Quality of Evaluation: Quality of Investment Investment OpportunityOpportunity FinancingFinancing Financial ProjectionsFinancial Projections Risk/Reward SharingRisk/Reward Sharing

Evaluation: Quality of Evaluation: Quality of Plan PresentationPlan Presentation Plan Format Plan Format Plan ReadabilityPlan Readability

Fatal FlawsFatal Flaws

None!None!

Specific Plan Specific Plan ComponentsComponents

OutlineOutline

No single right outlineNo single right outline However, every plan must have…However, every plan must have…

– Executive Summary (2 to 4 pages)Executive Summary (2 to 4 pages)– People (1 to 2 pages)People (1 to 2 pages)– Business Core (8 to 12 pages)Business Core (8 to 12 pages)– Financing & Liquidity (1 page)Financing & Liquidity (1 page)– Financial and Business Driver Financial and Business Driver

AppendicesAppendices

Business CoreBusiness Core

Business Description incl. Problem Business Description incl. Problem & Solution and Value Proposition& Solution and Value Proposition

Industry & Market OpportunityIndustry & Market Opportunity Competitive, Sustainable Competitive, Sustainable

Advantage Advantage Technology Position & StrategyTechnology Position & Strategy Marketing & Sales StrategyMarketing & Sales Strategy Organization / Management TeamOrganization / Management Team Operations/ logistics Operations/ logistics

Financial AnalysisFinancial Analysis

Time Horizon: 3 to 5 yearsTime Horizon: 3 to 5 years Statements: Income, Cash Flow, Statements: Income, Cash Flow,

Balance SheetBalance Sheet Level of DetailLevel of Detail Assumption drivenAssumption driven Industry Benchmarks Industry Benchmarks

– SIIA, Hoover’s, etc.SIIA, Hoover’s, etc.

Executive SummaryExecutive Summary

Final part of business planningFinal part of business planning Selling documentSelling document Assume broad distribution and no Assume broad distribution and no

confidentialityconfidentiality Typically delivered electronicallyTypically delivered electronically

– Keep format simple in Word or use Keep format simple in Word or use PDFPDF

2 to 5 pages2 to 5 pages

ContentContent

Company name and contact infoCompany name and contact info Business conceptBusiness concept Opportunity, Industry, and Target MarketOpportunity, Industry, and Target Market CompetitionCompetition Value Proposition and Sustainable Value Proposition and Sustainable

AdvantageAdvantage Go-to-market strategyGo-to-market strategy Economics including breakevenEconomics including breakeven Management teamManagement team Offering, liquidity, use of fundsOffering, liquidity, use of funds

Business Plan Business Plan CustomersCustomers InvestorsInvestors

– IndividualIndividual– InstitutionalInstitutional

BankersBankers Management TeamManagement Team

Five Key RisksFive Key Risks

DevelopmentDevelopment– Product or service actually created?Product or service actually created?

Manufacturing/OperationsManufacturing/Operations– Produced in appropriate volume?Produced in appropriate volume?

MarketingMarketing– Sales volume achievable in time?Sales volume achievable in time?

FinancialFinancial– Profitable and realizable to investors?Profitable and realizable to investors?

GrowthGrowth

MilestonesMilestones

Demonstrates operational Demonstrates operational orientationorientation

Validate progressValidate progress But, can backfireBut, can backfire

Timeless AdviceTimeless Advice

The plan is nothing.The plan is nothing.

Planning is Planning is everything.everything.

Dwight EisenhowerDwight Eisenhower