Who Needs a Business Plan?

• … And Why?

• Some Good Ideas

• …And Some Bad Ones!

To Successfully Launch a New Business...

• ...Requires Identifying and Bringing Together Necessary Resources– Human - Technological– Physical - Financial

• We Do This Through a Business Plan

What Is a Business Plan?• It’s a Process, Not a Product

• It’s Written to Develop a Successful Business– Not Just to Raise $– Should Be Used & Updated as a Mgmt Tool

• Most Business Failures Can Be Prevented …– If You Have a Good Business Plan

Why Do Startups Fail?

• How Often Can We Predict?

Who Do We Write Plans For?

• Resource Providers

• Might Be Investors

• Might Be Internal Sponsors

• Might Be Strategic Alliance Partners

• Always for Your Team

• Many Entrepreneurs Have Multiple Versions

What Does the “Product” Look Like?• Executive Summary (1-2 pages)

– It’s All They’ll Read– Must Communicate and Capture Attention

• Industry & Market Opportunity• Marketing Plan• Product / Operations• Management Team• Financials• Critical Risks• Timetable / Milestones• Exhibits

Appearance (Continued)

• Length Will Vary

• Average Today Around 25 Pages + Exhibits

• Usually Have a “Summary Version” of 10-12 Pages

• Generally:– More $$ Needed = More Pages– Less Well Known Audience = More Pages

What Are They Looking For?• What’s the Problem?

– How Big Is It?

• How Will You Solve It?– You and Who Else?

• Do I Believe You Can Do It?– The TEAM!

• Why Should I Help You?– Financials / ROI– Exit Strategy

What Do They Want to Hear?

Ingredients of a Successful Plan

(What It Takes to Create Successful Enterprises – TiE)

Ingredients of a Successful Plan

• Vision• Commitment• Strategy• Time to Market• Team• Passion• Customer Testimonial• Competition• Capital Need• Milestones

Vision

• Looking for:– Market Leadership– Proprietary Advantage– Realism

Commitment

• Prove You’re Serious About This:– Clearly Defined Priorities– Understandable Objectives

• Show You Know the Way!

Strategy

• Can You Execute the Vision?

• “Go to Market” Strategy

• Execution Plan

• Clearly Define Your:– Product/Service – Pricing– Explain How it Solves the Problem

Time to Market

• What is Window of Opportunity?

• What Features Are Critical Now?

• What Will Future Products Look Like?

Management Team

• Have a Winning Team

• We Know How to Execute

• Plan to Augment As We Grow

Passion

• “Fire in the Belly”

• Confidence

Customer Testimonial

• Proves Market Traction

• Referencable Customers

• In Order of Preference– Happy Users– MOU– Letter of Endorsement– They’ll Take a Call

Competition• Identifies Players

• Describes Strengths & Weaknesses

• Explains Our Advantage

• Describes Barriers to New Entrants

• Is Respectful of Competition!

Capital Need

• Clear About Amount Requested

• Clear About Timing

• Use of Funds Must Match Strategies

• Ask for Enough to Have a Slight “Cushion”

Milestones

• Both Short Term & Long Term

• Be Sure to Include:– Beta Testing– Ready for Shipping

What NOT to Do in a BP

• What is a “BAD” Business Plan?

• What Are Some of the Common Mistakes We See?

What is a “BAD” Business Plan?

• One That Doesn’t Meet Its Objectives• Fails to Help Launch a Successful Business• Fails to Identify Key Obstacles / Problems• Fails to Attract Interest:

– Of Investors– Of a Team– Of Partners– Of Other Resource Providers

It’s Possible to Launch a Good Business Without One!

• …And Vice-Versa

• …But a Good BP Improves Your Odds

First Clue That You’re Reading a “Bad Plan”…

You Don’t Want to Keep Reading!• It Doesn’t Capture Your Attention

• It’s Hard to Get Through

• You Just Don’t Get It!

Most Common Errors in a Plan

• Lack of Understanding of Value Proposition– …Or Significantly Overstates It

• Lack of Understanding of Customer– And How to Reach Them

• Lack of Focus• Underestimating Inertia• Underestimating Effort & Resources Required

Most Common Errors in a Plan (Cont’d)

• Failure to Identify Competition• Lack of a Competitive Advantage• Unproven Team• Inconsistent Facts or Logic• Over-Optimistic Financial Projections• Lack of a Robust Business Model

Business Model(How Will I Make Money Delivering My Product?)

• What Can I Charge?• How Will I Charge?• Who Will I Charge?• What Will It Cost Me to Deliver?• Where Do I Make the $$?

Your Business Model Will Define:• Critical Success Factors• How Much $$ You Need• Ultimate Value Creation

So, How Do I Develop a Business Plan ?

• There Is No “Right Way”

• The Following Generally Makes Sense

My 10 Step Process (1-4)• Start With “Why Am I Doing This?”

• Need To Define a Good Outcome to Achieve It

• Try To Answer the First 2 Questions• “What Problem Am I Solving”

• “What Is My Solution?”

• Outline Your Market Analysis• What Do I Know?

• What Do I Wish I Knew?

• Begin Talking to People• Advisors

• Potential Customers

• Friends

My 10 Step Process (5-7)

• Define Your Business Model• Both Revenues & Expenses• Consider Alternates (List Them)• Try to Begin a Rough Spreadsheet• Identify Critical Success Factors

• Begin Formal Market Research• What Questions DO You Need to Answer?• Where Can You Find This Information?• Consider Primary & Secondary Data

• List the Resources You Need to Succeed• Human, Physical, Financial, Etc.

My 10 Step Process (8-10)

• Outline the Business Plan• What Parts Can You Begin to Write?• How Much More Info Do You Need?

• Define A Successful Scenario• What Has to Happen?• What Do You Need to Do?• Simulate in Your Model

• Write the Plan• …and READ It!• Get Some Feedback• Revise and Update

How Will I Know When I’m Done?

• You’re NEVER “Done”!

• The Environment Is Constantly Changing

• You Are Constantly Gaining New Information

• Your Capabilities Are Changing

• How Do These Things Change Your Plan?