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Sul Kassicieh Anderson School of Management.   Focus your thinking  Establish realistic strategy – operating company on paper  Financing and other.

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Presentation on theme: "Sul Kassicieh Anderson School of Management.   Focus your thinking  Establish realistic strategy – operating company on paper  Financing and other."— Presentation transcript:

1 Sul Kassicieh Anderson School of Management

2   Focus your thinking  Establish realistic strategy – operating company on paper  Financing and other support – give them good reason to invest  Reaction by others Kassicieh: New Ventures2 Introduction

3   Build it for its intended purpose  Lots of work  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: New Ventures3 Plan

4   Many sites 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.  Be careful in using packaged software to build your plan: content knowledge is key Kassicieh: New Ventures4 Sites with sample plans

5   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: New Ventures5 Definition

6   Information about competition, choices, growth, markets, etc.  Information   knowledge  Knowledge promotes confidence  Confidence   enthusiasm  Enthusiasm promotes success Kassicieh: New Ventures6 Why does entrepreneur need BP?

7   Lack of planning  Poor management: due to lack of planning, anticipation of events and alternative 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: New Ventures7 Why Businesses fail?

8   BP should sell the writer/reader on the business: so that you can go out and do it, and for reader to invest in it  Confidence of knowing the issues  Improve chances of success Kassicieh: New Ventures8 Many reasons to build one

9   Investment by VC or Angels  Strategic alliances  Large contracts  Key employees  Mergers and acquisitions Kassicieh: New Ventures9 Purposes

10   Look inward: what do you want?  What kind of a business person are you? A “people” person or “shy/aloof” person  Do you want money now or later?  Lifestyle vs. high flyer: venture capital funds technology high growth ones only Kassicieh: New Ventures10 Issues

11   Small group/person and early money is lifestyle business  Large group and later money is growth business  Mismatches  Turning from one to another  Both are OK Kassicieh: New Ventures11 Personal Goals

12   Make it easy to read  Market driven approach: Know your competition and market  Uniqueness of company  Management strength  Attractive realistic projections  Funding sources Kassicieh: New Ventures12 Guiding principles

13   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: New Ventures13 Principles of BP

14   Cover Page: contact name, legal disclosures  Table of contents: page numbers  Executive summary  The market and competition  The management team  Financial information: must include the “ask” and “how to exit” Kassicieh: New Ventures14 Essential sections of Business Plan

15   What are you selling?  How is it “better”, “faster”, “cheaper”?  Company history  Sales and Promotion  Exit options Kassicieh: New Ventures15 Essential sections of Business Plan

16   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: New Ventures16 Other sections: technology based

17 Sul Kassicieh

18   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: New Ventures18 Executive Summary

19   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: New Ventures19 Executive Summary

20   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: New Ventures20 Bad exec summaries

21   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: New Ventures21 Good exec summary

22   Overall approach to producing and selling  Overall purpose encapsulated in mission statement  Using technology is important success factor  Management team  Compatibility between these elements is a must, otherwise you cannot sell the company’s plan. Kassicieh: New Ventures22 Company strategy

23   Break into  Past  Present  Future  Make sure the link between these is justified  Problems if you want to accomplish things that were not accomplished before without much change Kassicieh: New Ventures23 Strategy

24   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: New Ventures24 Management team

25   Important issue that drive  Revenue potential  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: New Ventures25 Markets

26 Sul Kassicieh

27   Cash Flow  Income: P/L  Balance Sheet  Cover the past and the future Kassicieh: New Ventures27 Traditional Accounting documents

28   Assumptions: how did you arrive at estimates? Use industry standards  Do not use naïve method: market is $14 billion, I will get 1% of that, …  Put forward the most realistic scenario  Concise statements  Get an accountant to help Kassicieh: New Ventures28 Issues

29 Sul Kassicieh

30   Several plans tailored to different audiences  Investor: growth, 20 pages (some say more?)  Strategic partner: synergy, 20  Large customer: stability, 20  Key employees: security, 20  M&A: past record, 20 Kassicieh: New Ventures30 Issues to consider

31   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: New Ventures31 Packaging the Plan

32   Include supporting materials  Don’t make unsupported statements  Designate an outside reviewer/ reader that can critique plan  Limit access: number plans, copying is prohibited, confidentiality (?) Kassicieh: New Ventures32 Packaging the Plan

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