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The Art of Writing the Business Plan Presented by Jeffrey A. Robinson, Ph.D. Assistant Professor of Management & Entrepreneurship.

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Presentation on theme: "The Art of Writing the Business Plan Presented by Jeffrey A. Robinson, Ph.D. Assistant Professor of Management & Entrepreneurship."— Presentation transcript:

1 The Art of Writing the Business Plan Presented by Jeffrey A. Robinson, Ph.D. Assistant Professor of Management & Entrepreneurship

2 Opportunity Innovatio n Networks Capital What is a good framework for entrepreneurship?

3 Capital can be acquired, exchanged & converted Five forms of capital –Financial (debt, equity, etc.) –Human (skills, education) –Social (networks of people) –Cultural (social resources, family background and knowledge of cultural nuances) –Intellectual (IP in firms, transferable) Capital

4 The identification, evaluation, exploration, and exploitation of a venture opportunity The structures around an opportunity or context Opportunity

5 The cultivation and management of innovation and innovative practices The innovation of business models The protection of innovations Innovatio n

6 Networks connect people within organizations and between organization Networks connect entrepreneurs to capital, innovation, opportunities Networks tie everything together Personal Networks/Professional Networks/ Entrepreneurial Networks Networks

7 Opportunity Innovatio n Networks Capital Entrepreneurship The success or failure of your venture depends upon how your put these pieces together.

8 Why is this important? … because good entrepreneurs leverage capital, opportunities, innovation and networks to create viable ventures … because good business plans demonstrate how an entrepreneurial team will leverage capital, opportunities, innovation and networks to create a new venture

9 Traditional Ventures: Types of Firms Lifestyle firms –generally < $1M in revenues –founders have no desire to expand –founders usually are pursuing their passion Growth Firms –$1 M to 20 M revenues, 10-20% growth –$20M + revenues, >20% growth {gazelles} –Founders want to expand and grow the firm Scale and Sustainability are key!!

10 Social Entrepreneurship: Formal Definition Social entrepreneurship uses entrepreneurial and business skills to create innovative approaches to social problems. These are mission driven organizations focused on the double bottom line of social impact and financial sustainability or profitability.

11 Examples of Social Entrepreneurship across sectors Charter/Contract/New Schools –New Schools Social Service/ Social Action –One Economy –Poverty Solutions –Simultel Underserved/Underrepresented –CitySoft –CityFresh Foods Economic Development/Workforce Development –Greyston Foundation (Greyston Bakery) Social Ventures can be for profit or non-profit organizations

12 Are my goals well defined? Personal Aspirations Business sustainability and size Tolerance for risk Do I have the right strategy? Clear definition Profitability and potential for growth Durability & Rate of growth Can I execute the strategy? Resources Organizational infrastructure The founder’s role If the answer is yes… If the answer is no … Source: Amar Bhide “The Questions Every Entrepreneur Must Answer”

13 Questions for the New Venture New Venture Idea –What existing need or want does the concept fill? In other words, what is the problem you solve? –Describe the service/product – will it change the way people live, work, or do business? –Who is your customer? What is your market segment? Is there more than one customer group? –What is the unique selling benefit? (Why will they buy?)

14 Opportunities: Evaluation, Exploration, and Improvement

15 The real big opportunities are here … Untapped Markets Underserved Markets Underdeveloped Markets Unique Perspectives

16 Examples Dogloo Dell TV One Altitunes/Laptop Lane/WayPort ZipCar FUBU/Sean Jean/Phat Farm

17 Opportunities: Evaluation, Exploration and Improvement I.Where do opportunities come from? II.Evaluating and Exploring Venture Opportunities III.Developing the Venture Idea and Concept

18 Current Trends Baby boomers entering their 50s New boomer crop of children Growing disparity between rich and poor Increasing globalization of business Reinvention of religion Yearning for high-touch product and services Mass Customization From the Business Owner’s Toolkit --

19 Other trends Healthy food/healthy living Hyper-customization For profit social service providers Outsourcing

20 Common Mistakes in Choosing a Business Error #1 – Converting a hobby or interest into a small business without first finding out if there is sufficient demand for a choices Error #2 – Starting the business without adequate planning Error #3 – Resisting the urge to ask for help. From the Business Owner’s Toolkit --

21 Assessing and Evaluating Venture Opportunities All ideas are not venture opportunities! All ideas are not created equal!

22 Opportunity Identification Opportunity Evaluation & Exploration Opportunity Exploitation AnalysisAction The Entrepreneurial Process: Simplified

23 Does the opportunity … Fill a need? Show evidence of product/service acceptance? Show that a market/opportunity exists now? Reflect that your product/service/solution is better than the competition’s? Show an upside gain potential? (scale and sustainability) Describe the cost to achieve this potential? Evaluating an Opportunity Source: Modified from Patterns of Entrepreneurship by Jack Kaplan

24 The Management Team Are you the right team to pursue this opportunity?

25 Why a team? Most successful ventures are led by teams!! Teams leverage the strengths/creativity of team members. Solo entrepreneurs have limited capital (financial, human, social, cultural and intellectual)

26 Survivor

27 The Management Are you the right team to pursue this opportunity? –Do you have some experience in the venture area you are exploring? –Do you have some contacts in the venture area you are exploring? –Does your team have most of the business/technical skills covered (marketing, finance, operations, etc.)

28 Characteristics of the A-Team vs. B-Team The A-Team –Knows something about the industry/market/issue –Has previous entrepreneurship experience –Has a solid team including advisors/mentors who have influence The B-Team –Knows very little about the industry/market/issue –Is starting their first venture –Have a loosely committed team with no advisors/mentors with influence

29 The Role of Advisors and Mentors Advisors and Mentors –Volunteers –Provide contacts to resources and key people –Are good sounding boards for your ideas, strategies, etc. –Provide an outsiders perspective –May become investors

30 Key Hires Understand where the gaps are in the entrepreneurial team Develop a list of key future hires for your venture Explain in your plan what role these key future hires will have in your company

31 Elements of the Business Plan

32 Executive Summary Business Concept Market Size and opportunity Product/Service Description Intellectual Property Summary (if any) Business Model (i.e. how you will make revenues and profits) Key Competition Key Points of Advantage and Difference Management biographies (1 paragraph) Financial Summary

33 Business Concept Company Overview/History Description of Industry Product/Service Overview Factors giving rise to opportunity Market opportunity and strategy to exploit it Industry segment and current participants Target addressable market and projections Sources of revenue Milestone Key drivers for success and critical assumptions

34 Business Model Economics Gross and Operating Margins Fixed and Variable Costs Cash Flow Analysis (time and money to cash flow positive) Break-even analysis (time and money to break- even) Product or service unit analysis (cost and profit margins)

35 Market Analysis and Research Demonstration of market need Customer Base Market Size and Trends Target addressable market and projections Pricing Willingness of Customers to Pay Above Corporate Cost Value Added For Customers, Customer Benefits/Problems Solved Competition and Competitive Advantage Overall marketing and selling strategy Projected sales and market share

36 Marketing Plan Strategy and positioning Tactics Pricing Distribution and selling Communication strategy (Advertising, promotion and PR) Selling and Collection Cycle Critical Mass/Reference Customers Required for Market Traction Implementation Strategy (Customer service, retention, warranty)

37 Product Development Development Status and Next Steps Risk Factors Costs and Budget Opportunity Specific Issues

38 Operations Plan Operating Cycle How the Business Works Manufacturing Process (or Retail Locations) Shipping/Product Delivery Geographic Locations and Local Resources Physical Facilities and Equipment Human Capital (hiring, requirements, training, compensation) Regulatory and Legal issues Business timeline and schedule

39 Management Team Organization (Chart) Key Management Personnel (biographies, esp. key relevant accomplishments) Management compensation and ownership Employee Incentive Plans Board of Directors and other advisors

40 Critical Risk Factors and Mitigation of them/Contingency Plans (What are the risks and what are you able to do about them?)

41 Financing Requirements and Opportunity Target financings (equity and debt) Current Offering Capitalization Use of Proceeds

42 Financial Projections 5 year summary projections 3 year detailed, quarterly projections Balance Sheet Income Statement Cash Flow Operational Break-even Analysis

43 Appendices Exhibits, articles, tables, specifications, references

44 Developing the venture idea and concept

45 Tips on developing the venture idea … Describe your new venture idea in compelling terms. Be persuasive but not over-the-top! Be clear about your target customer/client/ community. Remember to frame your venture idea in terms of the benefits to the consumer/client/community.

46 Framing Your Business as Benefits to the Customer/Consumer/Community The best benefits are the ones that a potential customer can hold on to. For example: –The consumer can make money with your product or service –The consumer can save money (time) with your product or service –The consumer can feel good (or feel better) with your product or service This approach feeds into the Marketing Strategy!

47 Questions & Answers ….

48 great websites 3 Inc Magazine --- – click on article by Entreworld – Business Owner’s Toolkit –

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