1. BUSINESS PLANS Sul Kassicieh Anderson School of Management

2. WHY WRITE A BIZ PLAN? Focus your thinking Establish realistic strategy – operating company on paper Financing and other support – give them good reason to invest Reaction by others Kassicieh: Business Plan2

3. PLAN Build it for its intended purpose Lots of work: story needs to make sense from all angles Do not approach it as a necessary evil: you are looking to convince someone to give you something Changes to plan are part of life: entrepreneur should be intimate with plan Kassicieh: Business Plan3

4. SITES WITH SAMPLE PLANS Many sites/software packages are out there Use them for help in design The content should be totally yours so that you are able to answer the probing questions of your investors, bankers, advisors, etc. Use packaged software but with care: content knowledge is key and you need to demonstrate capabilities Kassicieh: Business Plan4

5. DEFINITION Document that can convince the reader that the business can produce enough revenue to make a satisfactory profit and therefore attractive as an investment opportunity Benefits in writing plan: Record of ideas and justification Way to get feedback Kassicieh: Business Plan5

6. WHY DOES ENTREPRENEUR NEED BP? Information about competition, choices, growth, markets, etc. Information leads to knowledge Knowledge promotes confidence Confidence leads to enthusiasm Enthusiasm promotes success Kassicieh: Business Plan6

7. WHY BUSINESSES FAIL? Lack of planning Poor management: due to lack of planning, unanticipated events and inability to find solutions Lack of adequate information: what is going on in industry, economy, competition, etc. Undercapitalization: not enough money planned for survival, expansion, meeting competition Kassicieh: Business Plan7

8. PURPOSES OF A PLAN Investment by VC or Angels Strategic alliances Large contracts Key employees Mergers and acquisitions Kassicieh: Business Plan8

9. PERSONAL ISSUES/QUESTIONS What do you want? What kind of a business person are you? A “people” person (extrovert) or “shy/aloof” person (introvert) Do you want money now or later? Lifestyle vs. high flyer: venture capital groups invest in technology high growth companies only Kassicieh: Business Plan9

10. GUIDING PRINCIPLES Make it easy to read Market driven approach: Know your competition and market Uniqueness of company Management strength Attractive realistic projections Funding sources Kassicieh: Business Plan10

11. PRINCIPLES OF BP No right way: plans can differ Be creative but set a limit Concise and focused Captures energy and personality of business leader Include negatives and issues Spend some time on it Kassicieh: Business Plan11

12. ESSENTIAL SECTIONS OF BUSINESS PLAN Cover Page: contact name, legal disclosures Table of contents: page numbers Executive summary The product: why is it better than what exists? How is it cheaper, better, faster, etc. The market and competition Kassicieh: Business Plan12

13. ESSENTIAL SECTIONS OF BUSINESS PLAN The management team Financial information: must include the “ask” and “how to exit” Company history: if any Sales and Promotion Exit options Kassicieh: Business Plan13

14. OTHER SECTIONS: TECHNOLOGY BASED Risk factors: shows that you know what could go wrong and plan to avert it Marketing plan: if this is new to the world “innovative”, how are you going to get people to know about it and use it? Kassicieh: Business Plan14

15. PREPARING A BUSINESS PLAN Sul Kassicieh

16. EXECUTIVE SUMMARY Miniature business plan: investors see a large number of business plans. You need to get them to read more a full view in the two pages of the executive summary Capture attention Your passion/personality Kassicieh: Business Plan16

17. EXECUTIVE SUMMARY Spend time on it Guide for rest of plan More confidence about the rest Lead to a better product If you were the reader, Would you invest? Would you follow up with other questions? Would you pursue? Kassicieh: Business Plan17

18. BAD EXEC SUMMARIES Says little about company strategy No coverage of marketing issues Focus on needs: people who invest are not in the charity business, they are investors! Internally rather than externally directed Kassicieh: Business Plan18

19. GOOD EXEC SUMMARY Explains why market opportunity is there Establishes strategy Deals with competing effectively Shows external readers why they should be interested Using “to the point” language Kassicieh: Business Plan19

20. MANAGEMENT TEAM One man band: OK in life style or small (<$1m revenue) companies but harder to justify with bigger goals Same background for all participants Define life accomplishments for team Specialized knowledge /honors, awards, etc. Board of directors: accomplishments and skills Kassicieh: Business Plan20

21. MARKETS Important issue that drive Do not use naïve planning model: I could get 1% of market Revenue potential tied to sales Activities needed to reach customers Without understanding its dynamics, it is hard to build a good business plan or one that will receive funding. Kassicieh: Business Plan21

22. LATEST REQUIREMENT IN MARKETS Lean StartUp Methodology: Udacity free course on “how to build a StartUp?” Steve Blank methodology: get out of the building and talk to your customers Pivot (change) your preconceptions to serve the customer: deliver a product that is designed based on customer actual needs Customer willingness to pay you for the product is the “issue”: without it you do not have a “business” Kassicieh: Business Plan 22

23. TRADITIONAL ACCOUNTING DOCUMENTS Cash Flow Income: P/L Balance Sheet 1 st year in months, 2 nd year in quarters and 3 rd, 4 th and 5 th in years Kassicieh: Business Plan23

24. REALISTIC NUMBERS Reflect reality in your costs Comparable info: what are others in your industry paying for similar positions other costs should reflect market rates: for example, rent info is easy to find do not forget ALL expenses: tie to activities you proposed in your plan… Kassicieh: Business Plan 24

25. USING PACKAGED SPREADSHEETS I like the one from Colorado http://leeds- faculty.colorado.edu/moyes/bplan/ht ml/spTools.html it links the P&L statement, Cash flow and balance sheet but remember GIGO There are others out there as well (SBA, etc. Kassicieh: Business Plan 25

26. ISSUES TO CONSIDER Examine rules of business planning: for UNM business plan competition go to bizplan.unm.edu Know who is your audience and tailor plan to the audience: length, tone, passion, etc. Typical length 20 pages: you can write much more but you need to boil it down to essentials Kassicieh: Business Plan26

27. PACKAGING THE PLAN It is a ”living” document No right/wrong way: remember need of reader What are the challenges/ questions that can be raised by reader: answer these. Kassicieh: Business Plan27

28. PACKAGING THE PLAN Include supporting materials Don’t make unsupported statements It is helpful to designate an outside reviewer/ reader that can critique plan Limit access: number plans, copying is prohibited, confidentiality (?) Kassicieh: Business Plan28