2 Purpose of Business Planning Provide a roadmap for success of the companyForce the entrepreneur to formalize their vision and do the research to answer hard questions about the company, its industry and the competitive landscapeSet goals, strategies, policies and procedures for the firmA tool for raising capital
3 Business Plans Must Tell: What Problem you are solving and how serious it is.Who has this Problem and Why it is Important to them.How Large is the Market and How Fast is it Growing.How Large your Company will be in 3 to 5 Years.
4 Business Plans Must, cont. Who are You and Why are You Qualified to Solve this Problem.How much Money you need to Make this Happen.What are your Key Milestones.How much the Investors will Make on Their Investment in 3 to 5 Years.
5 What’s What messages . . . to reach What market(s) . . . with What pain that needWhat product(s) distributed throughWhat channel(s) againstWhat competition withWhat pricing and packaging to deliverWhat value inWhat time frame?
6 What is the Customer’s Pain? Must Have or Nice to Have?Who Are Your Customers?What Are They Buying?Why Are They Buying?Who Are Your Competitors?What is your Business Model?
7 Business Plan Components Executive SummaryCustomer Need and Business OpportunityBusiness Strategy and Key MilestonesMarketing PlanOperations PlanManagement and Key PersonnelFinancial Projections
8 Business Plan Details Executive Summary The Purpose of the plan including how much money is required, what it will be used for and how much investors will make at exitWhat is going to give you an unfair advantage!Business opportunity, business model, market, product/service description, technology and management teamSummary of five-year income statement, profit, head count and capital requirements
9 BP Details, continued Customer Need and Business Opportunity Product/service idea and technology descriptionStrategic Value Triangle for end users and customersBusiness Strategy and Key MilestonesPlan to out-maneuver the competitionShow each milestone with the cumulative cash needed and head count
10 BP Details, continued Marketing Plan Basic need and company solution Ideal customer and value propositionMarket segmentation and size of marketsChannels of DistributionStrategic Partners
11 The Marketing Plan Current Marketing Situation Basic need and company solutionIdeal customer and value propositionObjectivesMarketing StrategyMarket segmentation and size of marketsChannels of DistributionStrategic Partners
12 Marketing Plan, cont. Business model and branding plan Sales strategy and plansCustomer supportAction programsFive-year sales forecastCompetition, positioning and unfair advantageControls
13 BP Details, cont. Marketing Plan, cont. Business model and branding planSales strategy and plansCustomer supportFive-year sales forecastCompetition, positioning and unfair advantage
14 How Do Businesses Compete? They Fill Needs That Are Not Being MetThey Find Customers and Suppliers Who Are Weaker Than They AreThey Get More Out of LessThey Use Other People’s Money (OPM)The Try to Stay Out of the Way of Larger & Meaner Competitors (Nibble at the Edges)
15 Who Are Your Competitors? They Know All About You What Type of People Are in Charge?Why Do They Want Your Customers?Do They Know Who Your Most Profitable Customers Are?Can You Win A Price War With Them?Do They Have A Glass Jaw or Do They Bite Ears?Whose Market Share Will You Take?
16 BP Details, continued Operations Plan Management and Key Personnel Engineering planWeb site planManufacturing or outsourcing plan (Make/Buy)Facilities and administration planManagement and Key PersonnelOrganization ChartStaffing plan (timing) and head count projections
17 BP Details, continued Financial Projections Detailed resumes of founders and key employeesIncentive compensation plan and stock option poolCompany culture planFinancial ProjectionsOverview and key assumptionsFive-year forecasts – Balance sheet, Income statement and Cash Flow Stmt by month for one year, by quarter for two years and annually for remainder of years.
18 BP Details, continued Income Statement Balance Sheet Cash Flow StatementBest, Worst and Expected Case VersionsValuation AnalysisExit OptionsReturn on Investment for each option
19 AppendixThe remaining slides are summary of business plan requirements from local venture capital firms.
20 Every Business Plan Must Answer These Questions PEOPLEWho are the people involved?What have they done in the past that suggests they will be successful in the future?Who is missing from the team and what will they do to get them to join?
21 Key Questions, continued OPPORTUNITYWhat is the nature of the opportunity?How will the company make money?How is the opportunity likely to evolve?Can entry barriers be built and maintained?CONTEXTMacro economyTaxRegulatorySocio-politicalCultural
22 OPPORTUNITYIs the Total Market for the product or service large and/or rapidly growing?Is the industry one that is now or can become structurally attractive?Who is the customer and how do they make decisions?Is this a compelling purchase for the customer?
23 OPPORTUNITY, continued How will the product or service be priced?How will you reach the target customer?How much does it cost to acquire a customer in time and $?How much does it cost to produce and deliver the product or service?How much does it cost to support a customer?How easy (expensive) is it to retain a customer?
24 OPPORTUNITY, continued Buy Low, Sell High, Collect Early & Pay LateWhen do you have to buy and pay for resources?How long does it take to acquire a customer?How long before the customer sends you a check?How much capital equipment is required to support a dollar of sales?Accounts Receivable vs. Accounts Payable
25 COMPETITION Who are the current competitors? What resources do they control and what are their strengths and weaknesses?How will they respond to our decision to enter the business and what can we do?Who else might notice and enter our market?Can we co-op competitors by forming alliances?
26 New Product Development Process MarketingStrategyDevelopmentBusinessAnalysisProductDevelopmentConceptDevelopmentand TestingMarketTestingCommercializationIdeaScreeningIdeaGeneration
27 Market Development Strategy Checklist Target CustomerCompelling Reason To BuyWhole ProductPartners and AlliesDistributionPricingCompetitionPositioningNext Target Customer