2. Writing The Winning Business Plan Jack Derby Derby Management

3. Why create a Business Plan? Most importantly, for you & your team –You need one for a startup –You need one for a corporation –The actual process of planning is the key. It consolidates management direction. It provides debate & finally consensus. –It’s used as a guide when speed bumps happen. –It’s your company & your personal scorecard.

4. Why else? No Business Plan…No money. –The Six Stages of Successful Sources: FF&A: Friends, Family & Acquaintances Private angels Venture capitalists Corporate investors Strategic partners Banks

5. Writing a plan is tough work It requires disciplined balance –It’s visionary, but logical. –It’s financially perfect, but flexible. –It’s for today, but also for 3-5 years out –It’s a formal Plan, but it’s easy to read. –It’s creative, but it follows The Rules.

6. How do you start? Pay attention to The Do’s & Don’ts. –Above all else… Be compelling Be brief, focused, & deliberate Focus on customers & how you will sell them. Provide market research & hard data Be innovative & describe barriers to others. Create an experienced management team

7. The 25 Do’s… Be brief & direct & detailed. Get to the bottom line quickly. Identify what the business is immediately Identify the business model immediately. Focus on your customers. Define what’s compelling. Define what’s unique.

8. The 25 Do’s… Be realistic with yourself. Remember, you're investing your career. Define long term objectives for 3 to 5 years. Describe the 3 to 4 primary strategies. Focus on your sales model & channel strategies. Include your ecommerce strategies. Make realistic, but exciting, projections.

9. The 25 Do’s… Support strategies with detailed tactics. Substantiate with accepted market research. Discuss very objectively your risks. Answer the question of why customers buy. Describe the barriers to entry for others Convince your reader about success.

10. The 25 Do’s… State how much money you will need. Define exactly how the funds will be used. State clearly your exit strategy. Stick with proven and accepted plan formats. Don't try to be cute!

11. The 15 Don’ts… Write about history. Focus on the future. Focus only on you & your technology. Use highly technical buzz & descriptions. Forget about objective customer research. Make unsubstantiated statements or claims. Create revenues that you won’t make. Include detailed budgets.

12. The 15 Don’ts… Forget what makes your plan different… –Experienced management –Large and growing markets –Proven sales models & channels –Experienced sales penetration tactics. –Innovative technologies

13. The 15 Don’ts… Assume anything. Forget what your reader wants. Define valuations in the actual plan. Attempt to write the business plan alone. Extend the process more than two months. Include copies of resumes & technical papers. Forget to proofread, proofread & proofread.

14. Don’t just start writing Preparation…The Key to Success. –What’s my Vision? –Can I say it so that anyone understands it? –What business are we in today? –What about in 3 years? –Are we really innovative? –What about in 3 years?

15. Don’t just start writing… Preparation…The Key to Success. –What do we really know about… Our future product roadmap What our service offerings could be. The market data, trends, & forecasts. The new technologies in development The competition Who are our customers will be in 3 years?

16. One more preparation task… Think about your starting assumptions. –Externally, what do I think will happen about… Economic trends Markets that I am entering Technology changes Regulations

17. One more preparation task… Define your starting assumptions –Internally, what do I want & expect for… Sales revenue growth rates Product costs and margins Sales expense percentages G&A expense percentages Receivables, payables, financing, & capital models.

18. Now, you can finally start writing. What you need… –A quiet place and time. –All of your data easily available. –Start working by yourself. –Get the content down quickly. –Send a first rough draft to others quickly. –Write draft after draft after draft after…..

19. You have two options today The Traditional Business Plan –7-8 sections –20-30 pages with financials –More detail: markets, products & technologies Business Plan Lite –2 sections: –8-10 pages with financials –An extended Executive Summary

20. The traditional plan Certainly preferred by us –Provides an opportunity to provide clear details –Brings out the richness of the business idea. –Details the business and sales models What follows here is the traditional format –7-8 sections –20-30 pages

21. Business Plan Lite A result of the times –Today, time to read is the driver. Requires you to… –Be an excellent writer –Provide great detail with very well chosen words –Get your points across succinctly & with clarity. Sections 1 & 2 & 7 create the BP Lite

22. What’s included? Vision Strategies Tactics Operations Actions

23. What’s included? 7-8 Sections… –Executive Summary –Introduction to the business –Definition of your products & services –Overview of your markets –Overview of your sales & marketing plans These become the Business Plan Lite.

24. What’s included? –Overview of product development roadmap –Summary of manufacturing & operations –Bios of your management team –Four pages of financials –Brief appendices if necessary

25. 2-3 pages –Make it compelling… Your Idea Your Markets Your business and sales models Your competitive advantages Your management team Your use of the funds Section 1: The Executive Summary

26. Section 2. What’s the Business? This section is focused on… –The Business Opportunity –The Markets –The Technology –The Products

27. Section 2. What’s the Business? This section must define… –a clear Vision –clear strategies –a well defined business model –a dedicated, believable Mission –a strong sense of management experience

28. Section 2. What’s the Business? The products & their value add services –features & benefits, innovation, technology The markets –research data –competition The customers –who they are & their needs

29. Section 3: Sales & Marketing The most important section –3.1 What’s the Market? Customer analysis & their needs Worldwide market size & trends Competitive strengths & weaknesses Value creation for your products & services

30. Section 3: Sales & Marketing 3.2 The Marketing Plan –What are your marketing strategies? What are the data points to measure success? What is your price positioning & why? What are your primary tactics in years 1 & 2? What are your primary events in year 1?

31. Section 3: Sales & Marketing 3.3 The Sales Plan –What’s your Sales strategy? What standard channels will you use? Is there an innovative channel? What are your penetration tactics? –What’s your sales model? –What’s your hiring & training plan? –What’s your measurement & reporting?

32. Section 4: Engineering and R&D What are your core technologies? –Provide sufficient, but not numbing, detail. What is your development status? –Describe your primary milestones. –Be conservative. –Assume development will be late. Detail the technical team’s background.

33. Section 4: Engineering and R&D What is your strategy for future products? –Define in text with graphics your roadmap –Define common platforms and architectures. What your IP & patent strategy? –What is your IP strategy? –If you have patents, provide a status table. –If not, define why not in a positive manner.

34. Section 5: Operations/Manufacturing What’s your Manufacturing strategy? –Outsource or not? –Why & why not? What is core in Manufacturing? What are your unique capabilities What are your unique processes?

35. Section 5: Operations/Manufacturing Focus on your customers in your… –Distribution strategy –Quality strategy –Value added services that you will employ

36. Section 5: Operations/Manufacturing What is your Customer Support strategy? –Customer order fulfillment tactics –Primary objectives Delivery Response time –Primary policies –Outsource or not? –Future services that you will provide?

37. Section 6: Senior Management Management –The #1 reason that investors do not invest. –Experience counts first. –Dedication counts second. –Ability to rapidly learn is third –Too strong an ego is a negative.

38. Section 7: The Financials The Rule: Everything Must Hang Together –Your vision and strategies in text must tie in. –Your market growth objectives must tie in. –Your business and sales models must tie in. –Your margin percentages must tie in. –Your cost of goods must tie in. –Your expenses must reflect standard percentages.

39. Section 7: The Financials You need… –P&L’s 1 st year by month 2 nd year by quarter 3 rd year by year –Balance Sheets for each year –Cash Flows for each year –3-4 pieces of paper only

40. Section 7: The Financials You need to list your… –Primary assumptions –Primary categories for the use of the funds –What are the primary risks? Other than the normal of early stage companies If nothing specific, do not list any. –What’s your exit strategy?

41. Section 8: The appendices Provide only the compelling things… –Product data sheets for primary products –Any critical publication. –Do not provide resumes. –Do not include patents.

42. Where do I go for help? Good textbooks –Rich, Gumpert –Anything from HBS Press –Anything from Inc. Inc Magazine & inc.com Startup.wsj.com MIT Enterprise Forum workshops

43. Where do I go for help? MIT Enterprise Forum & TCN seminars The best local entrepreneurship schools –MIT Sloan, Babson, HBS, Bentley Professional Mentors & Coaches Venture capital investors The big CPA firms: –PWC, Deloitte, Ernst, Andersen. The big law firms –Testa, INC, Fortune Small Business

44. Derby Management Coaching –One on One senior management –One on Team senior management –Strategic Planning –Business Plan writing & editing –Fundraising –Recruiting and replacing players

45. How to find us… Derby Management 20 Park Plaza Boston, MA 02116 Office: 617-266-9266 Cell: 617-504-4222 jack@derbymanagement.com