Business Plans for Engineers John Callahan Business and Systems Carleton University Monday, Jan 28, 2002

Three Points  Engineers do not see the whole picture  Seeing the whole picture is critical  Doing a business plan trains you to see the whole picture

Engineering is Only Part of the Problem Engineering issues Business issues

Product Development and Management Product Development (cost) Product ideas Product specification Product Management (profit) Product introduction DesignEnd of product life

Having a JOB vs. Creating Entrepreneurial Value  40 year old engineer A good JOB - $120K per year Must keep working for salary JOB pressure, layoffs, young competition  40 year old tech entrepreneur Salary of $120K per year Owns 10% of the company Can cash out – value creation Knows how survive tech churn

Starting a Business  Idea to opportunity  Start-up Small group of principals Insider funding  Business creation Product/service development Private investors: angels and venture capitalists  Making $ Market success Acquisition or IPO

Business Plans Play a Key Role  Internal audience What are we doing – what, why, how, who, when Executives who will fund opportunity Personnel who will execute  External audience Bringing people on board Venture capital sources Bankers

Opportunity Definition- ask these questions  What is the product or service?  Who is the customer?  What is the customer value?  Why you?  So what? Who cares? Why you?

Ideas vs. Opportunities  “Every time you get a good business idea, ten other people are having the same idea at the same time”  An opportunity is “a product or service idea for creating value for reachable customers that allows you to make a profit”  An idea is not an opportunity

Screening Opportunities  Real, initial buyers  Large and growing market  Low required investment  High margins  Basis for competitive advantage Idea generation Screening Product/service development Value creation

From One Sentence to a Full Business Plan So what? Who cares? Why you? So what? Who cares? Why you? Lead buyers Competition Fit with capabilities First cut economics So what? Who cares? Why you? Fit with capabilities Lead buyers Competition Market size/segments Full economic analysis Risk assessment

Typical Business Plan Specs  Sections Summary for investors Company and the Industry Product/Service Offering Market Analysis, Marketing Plan Operations Plan Management Team Implementation Schedule Risks Associated with the Opportunity Financial Plan  20 – 30 pages total

Learn How to Write a Business Plan  Add engineering value within your company  Understand the status of your project/team  Advance into management  Start your own company

Wes Nicol Business Plan Competition  Web site:  Entry deadline: Wednesday, February 6  Deadline for business plan: Monday, March 25  Prizes: $6000, $3000 and $1000

Three Points  Engineers do not see the whole picture  Seeing the whole picture is critical  Doing a business plan trains you to see the whole picture