What You Must Know About Launching Your Business with an Effective Business Plan Steve Stralser May 2, 2011

Five Predictors of Business Plan Success

Predictors of Success 1. Created by Teams

Predictors of Success 2. Team has Experience in the Industry

Predictors of Success 3.External Customer Validation and Acceptance

Predictors of Success 4. Finance in Place

The Business Plan is a Blueprint

Purpose of the Business Plan Written Vision Strategic Plan

Purpose of the Business Plan Operational Plan

Purpose of the Business Plan Financing Proposal

Purpose of the Business Plan Comprehensive Analysis

Purpose of the Business Plan Guidance in Implementation

Purpose of the Business Plan Communication

Purpose of the Business Plan Learning during the Process

Purpose of the Business Plan Sets a Path to Follow

Purpose of the Business Plan Reality Check

Business Plan Failures No marketing experience Weak management team Weak marketing plan Poor understanding of competition Weak or missing financial projections

How Simple Is Your Concept? How Easy Can You Communicate It? The “Grandmother Test”

“Telling” Your Business Plan Story… ….in 30 Seconds! “Your 30-Second Commercial”

Stralser’s Law of Startups… Cash and Burn = 3x$ Cash and Burn = Money that goes out before sales and revenue comes in; or, the negative cash flow when starting out 3T = Entrepreneurs find out it usually takes three times longer for good things to happen than they thought 3x$ = Entrepreneurs find out that actual costs and expenses are often three times higher than they thought

While all Business Plans are similar in content, certain sections may require additional emphasis when presenting to: –Board of Directors –Banks –Government Support Agencies –Angels –Venture Capitalists –Private and Public Offerings –Officers and Employees –Potential Hires, New Employees…

A Business Plan— Macro Components Executive Summary Industry & Market Analysis The Product/Service Management Marketing Plan Production & Operations Plan Financial Plan Appendices (including Financials) Exhibits

A Business Plan— Executive Summary Mission Statement Goals, Objectives, and Strategies—Near and Long-Term Company’s Current Status/Stage Product or Service Description Market Potential and Target Market Definition Competitive Advantage/Positioning/Unique Selling Proposition “Dollars” Required To Meet Objectives Investor Benefit—When and How

What Makes a Good Business Plan? A Marketing Section with: –Information on the industry that the company is competing in; focus on industry trends and profit potential –A marketing plan, especially a customer profile, an analysis of market needs, and a geographic analysis of markets –An analysis of why the company’s marketing efforts are different from competitors’ efforts

A Business Plan— Marketing Section Target Market(s) Segmentation Marketing Strategy and Tactics: –Place –Price –Promotion Customer Relationship Strategy Competitive Advantage Positioning Competition Potential Market –Size –Growth

What Makes a Good Business Plan? A Products/Services Section with: –A description of the product or service –Future product research and development efforts

What Makes a Good Business Plan? A Production/Services Section with: –A description of the complexity and logistics of the manufacturing process –The company’s production capacity and current percentage of capacity use –A complete description of the company’s distribution system

What Makes a Good Business Plan? A Financial Information Section with: –Financial projections for 3-5 years and assumptions for sales, cost of sales, cash flow, proforma balance sheets –1st Year: Monthly; Year 2+, Quarterly

What Makes a Good Business Plan? A Management Section with: –Short explanation of your experienced management team—management gaps and how they will be filled

A Business Plan— The Management Managerial Skills Required Managerial Track Record and Depth Organization Chart (Top Levels) –(Put Resumes in “Exhibits” Section)

A Business Plan— Appendices Financial Summaries –Income Statement –Cash Flow Statement—Sources and Uses of Money –Balance Sheets Data Supporting Market Size and Share Supporting Graphs and Charts as Necessary

A Business Plan— Exhibit Photos Layouts Brochures Management Biographies

Telling a Business Plan Story… tell it in 4-5 sentences for each of the following topics … The Business Case—aka “the pain” The Customer—“dogs who eat the food” The Solution—the “secret sauce” Accomplishments The Entrepreneurs—the “TMT” The Company The Numbers

Elements: In Order of Importance 1.Management Team 2.Market Opportunity 3.Sustainable Competitive Advantage 4.Comprehensive Competitive Analysis 5.Go-to-Market Strategy

Go-to-Market Strategy Be specific Identify customers (specifically) Provide external validation that customers will buy How do your customers buy? –Length of sales cycle? Key decision-makers? Controlling the “buzz” –Use of PR, analysts, tradeshows, publications, ads

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