Business Plan Preparation Aerospace Engineering Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado Introduce Liz Snowden Ed Kahn Myself Describe concepts Frank Moyes

Why Write a Business Plan? Road Map Establish goals to make sure that are on track and heading in the right direction Action Plan Small steps lead to large results Sales Tool Attract investors, vendors, customers, partners, employees So You Can Throw It Away! Process is the key Cauldron - test ideas & strategies Think through problems to solutions Lowers the risk “If we don’t have a plan for ourselves, we will be part of someone else’s.” Joan Lunden

Ask Yourself 3 Questions Will any one buy it? Can it make money? What is my competitive advantage? Technology company – will it work? Frank Moyes

Will Anyone Buy It? Need - what problem are you solving? Size, growth & trends of YOUR market Target customer – Who will buy it? Why? Size, growth & trends Size has to be big enough to be worth your while Demographics & psychographics Who cares? People are already having their need satisfied Needs Solves a problem Unfulfilled niche Dissatisfaction with current products/services Poor quality or service Physical Physiological Emotional Social Financial Intellectual Best proof: sales, order, agreement. LOI Needs: Manage information: Google Physical: food, warmth, shelter, sleep, etc. Physiological: health, cleanliness, comfort, fitness, safety, etc. Emotional: euphoria, love, prestige, stress, etc Social: ethical, honesty, power, competitiveness, integrity, friendship, etc. Intellectual: achievement, better decisions, artistry, etc. Economic: revenues, productivity, cost savings, maintenance, etc. Financial: ROI, DCF, payback, burn rate, etc. Frank Moyes

Can I Make Money? Positive cash flow High Margins Clear Revenue Model Low prices are not the answer Clear Revenue Model Positive cash flow Introduce concept of burn rate Really understand What are the normal margins in your market? How will I get volume. What customer? When? Agreement What sales do I need to break-even? What is your burn rate? Best Case Worst Case Financial dynamics COMP’s How do you make money? Hi volume, low margins and v.v. Channel discounts Pricing policy: keystone, Credit terms Inventory policy Frank Moyes

What Is My Competitive Advantage? Who is the competition? How can I differentiate? How can I sustain the advantage? Questionable competitive advantages Taste Organic Sustain Reaction of competition Entry of new competition because of your success Best competitive advantage Really understand the market Really understand the competition Frank Moyes

Questionable Competitive Advantages “We will be first to market.” “We have filed a patent.” “We have the best quality.” “We have lower costs than the competition.” “We will do it better.”, than people with 10 years experience. “We don’t need much money to live on.”, if our parents continue to pay the bills. Frank Moyes

Business Plan Elements Executive Summary Product or Service Description Industry and Marketplace Analysis Marketing Plan Operations Plan Development Plan Management Competitive Advantage Financial Projections Offering, Funding, Valuation Length 20 pages Frank Moyes

Course Overview Course reference Class structure Research EMEN 4825 Business Plan Preparation ESBM 4830 Business Plan Preparation Class structure First – lecture Second – in-class assignment Team meetings with instructor Research Interviews with experts about the concept Customer surveys about the product/service In the Fire sessions Difference between Feas and BP Before writing the business plan Necessary steps Critical questions Frank Moyes

Resources & Tools http://leeds-faculty.colorado.edu/moyes Lawrence & Moyes, Writing a Successful Business Plan, 2009 Financial Projections Model v6.8.9 John Mullins, The New Business Road Test, FT Prentice Hall Frank Moyes