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The Perfect Business Plan, Slide Show and Elevator Pitch

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1 The Perfect Business Plan, Slide Show and Elevator Pitch
Note to speaker: 1. The business plan section gives the speaker an opportunity to refer back to, and reinforce, many of the concepts that were discussed earlier in the workshop. This slide is intended to introduce and set the stage for the presentation. The introduction may sound something like this: “Unless you can clearly articulate your idea, it is unlikely that investors, customers, potential Team members will understand it. And if people do not understand it they will not invest or join your Team, and they will be less likely to purchase your product or service. In the next few minutes we will discuss four important elements of that description and communication: the business plan, executive summary, slide show and elevator speech. Transition to next slide: “Let’s discuss each in turn, but first a word of caution/reality. During the ‘bubble,’ investors (even sophisticated VCs) were plunking down a lot of money just on the basis of a slide presentation. Just in case you haven’t heard, those days are over. While the elevator speech and slide presentation are certainly necessary, they are not sufficient by themselves. You need a well thought-out and well written business plan and executive summary to have a complete package.” Presented by Tim Hoerr, CEO

2 Sell Your Business Idea
Telling Your Story Telling Your Story Sell Yourself Sell Your Team Sell Your Business Idea

3 Telling Your Story Effectively
Executive Summary Business Plan Telling Your Story Effectively Elevator Pitch Slide Show

4 Executive Summary Criteria
Great Idea Great Market Opportunity Great Team

5 Business Plan A 15 to 25 page marketing document that is:
An external sales tool for investors, bankers, future team members, or potential partners/customers Distinct from a strategic plan which acts as an internal road map or guide Different versions for different audiences A living document, changing as you learn Bullet 1 -- The business plan serves two distinct purposes: As an internal road map to help you plot your course and to reposition the original business concept if/when it becomes necessary. As a sales tool to help you sell your idea to investors, key Team members, strategic partners, and perhaps your first major target customers. Bullet 2 -- Your strategic partners and/or your first major target customers may have different perspectives; thus, you may want different versions of the plan. For example, a corporate strategic partner/investor is likely to view things differently from a venture capitalist. Bullet 3 -- Your business plan must be a living document that changes as you learn. Writing the business plan is an evolving process; the plan grows as the idea matures and grows; it is not a one-time effort. Bullet 4 -- The plan will normally include milestones that investors expect you to meet; in fact, your next round of funding may be contingent upon doing so. Do not make promises you know you can’t keep, don’t try to fool people and do not lie about your technology, your background, or your capabilities. They will find out sooner or later. One general point to make: A major benefit of writing a business plan (even though it changes overtime and some of it falls by the wayside) is that it forces you to think things through early-on. It helps you generate a set of hypotheses to test and modify as the real world dictates. Note to speaker: At the end of this slide you might want to say something to the effect of: “The outline of business plan content that follows (next slide) is one way to structure an effective business plan. Your particular situation might dictate a different structure, but the information included is not likely to vary greatly. So let’s use this outline to talk about the important messages you want to cover in your plan. One element not included in the outline is the Executive Summary. Although it is included in the Business Plan document it is important enough to be covered separately in its own section.” “We can only scratch the surface here. However, there are a number of books and articles that can provide help and go into greater detail. See bibliography in the I2V mini-book.”

6 A typical business plan outline
Executive Summary – VERY IMPORTANT – identifies basic problem and solution Technology and IP Market Opportunity (scope and size) Customers and how you will reach them Competition Business/Strategic Model Leadership/Management Team Financial projections Exit Strategy Appendices This gives you a sense of the major topics to be covered and how they fit together. Not included in this list is the executive summary (a 2-5 page document summarizing your business plan), but keep in mind that the executive summary is an important part of the BP, and is bound with the actual plan, but is often sent alone prior to the BP as an introductory document. We will discuss it separately later on. Now let’s look at each part of the business plan individually (see next slides).

7 Executive Summary 1 to 1 ½ page section that distills the essence of your business plan Must capture the reader’s attention – this may be all they read Must answer the basic question -- What problem or point of pain will you solve? In this introductory section, state the problem you will solve, the need you will fill, or the “pain” you will alleviate. Don’t shy away from aggressive terms and phrases in this section—you want to grab the reader’s attention. For example, let’s say you’re trying to commercialize a treatment for Alzheimer’s disease. You could say, “Alzheimer’s disease is a growing, worldwide problem expected to affect X number of people in the US alone by Currently there is neither an effective diagnostic tool nor a recognized cure for this crippling ailment, which devastates not only those with the disease but their relatives and friends.” Make people stand up and take notice. (Note to speaker: Please also supply your own examples.) In the “solution” section, state in general terms how you will solve the problem, fill the need, or alleviate the pain. Continuing with the Alzheimer’s example, you could say, “Our solution is based on technology originally developed by, and licensed from, Massachusetts General Hospital. It uses the same molecule , modified appropriately, to act as either a diagnostic test in conjunction with an MRI machine or as a therapeutic cure. Initial tests have provided very positive results for both applications and, so far, there have been no signs of toxicity in laboratory mice.”

8 Technology and IP section
Provides more detail about your technology Describes the status of IP protection Does not discuss proprietary or confidential technical information Bullet 1 -- Here you can get more technical, but do not go overboard: the explanation should be readable/understandable by an intelligent layman who has some knowledge of the field. Also, tell your audience if the technology is yours or licensed (or optioned), and, if so, from whom and under what general conditions. Bullet 2 -- Supply the patent number(s) or the application number(s) if already published. If you have other forms of IP protection, state them and say why you chose them (refer to the IP section presented earlier in the day). Bullet 3 -- We recommend that you not reveal any confidential/proprietary information unless you have a signed NDA with the listener/speaker. By the same token, you cannot be paranoid and discuss so little of your idea as to make it incomprehensible. As discussed earlier, VCs will rarely if ever sign an NDA, and if they do it is usually in the due diligence or later phases of your relationship. Thus, you and your management team need to sit down (preferably with an advisor, mentor or IP counsel) and decide ahead of time just how much you will reveal without the NDA.

9 Market Opportunity Section
Who they are How you’ll get to the pragmatists Why they will buy…from you? What channels will you use and when Describes market opportunity in detail Identifies customers and explains how you will reach them

10 Competition section Same technology as competitors, or different?
Does industry exist, or are you starting a new one? Is competition domestic or foreign? What are strengths and weaknesses of major players? As with customers, the greater knowledge/familiarity you can demonstrate regarding the competition, the better. We will talk about your sustainable competitive advantage in the next slide, but some plans also discuss how you compare to the competition, and how you plan to beat them, in this section.

11 Business model/strategy section
Your sustainable competitive advantage, core competencies, unique value proposition The basics of how your idea will be commercialized successfully How will you make a profit, and when? Risks and how you will deal with them Key points: Bullet 1 -- This is the place where you explain how the venture will make a profit. What is the strategy? You also do the numbers here, and the details in the financial appendix should bear them out. For example -- if you are producing a new laboratory instrument, will you provide the instrument at a low or no profit margin and make your money on the consumable sales (e.g., razor and razor blade strategy)? How long will it take for them to have a sufficiently large, installed base so that the consumable sales and profits are meaningful? Bullet 2 -- Have you thought about how you will protect those consumable sales from being stolen by clever competitors? That is, what is your competitive advantage and how will you sustain it, or create new ones over time? Bullet 3 -- This subsection should demonstrate you are aware of the major risks in each category (e.g., Technical Risk, Market Risk, Business Risk; Environment Risk) and have thought about the ways to minimize them if/when they arise. In addition, it is helpful if you can demonstrate that the management team is sufficiently experienced to deal with unpredictable risks/problems when they occur.

12 Team, financial, and exit strategy
Founders/Management Directors, Advisors Others Financial Projections How much money and when Use of money Time to break even/profit Exit Strategy Acquisition/merger Initial Public Offering(IPO) Bullet 1 -- Team. The importance of the Team was discussed earlier. This section of the plan needs to convince potential investors they can trust their money with the people running the company. Do you have the knowledge, experience, skill sets, integrity, drive, persistence, and passion to stand up to adversity and “make it happen” in spite of all the bad stuff that is likely to occur along the way? Do you understand your own limitations, and are you willing to seek help and listen, even if it means hiring your own replacement/boss? Has the Management Team surrounded themselves with a really good Directors and Advisors? This section of the plan is only the first step in the convincing process. Personal interactions (e.g., during the slide show) and the due diligence process also play an important role. Bullet 2 -- Financial. This section should include: The amount of money the venture is seeking and over what time frame. How the money will be used. The major assumptions involved. When you will achieve cash flow break even and profitability. This section should not discuss how much equity the Team is willing to give up for the investment needed. That discussion, hopefully, will occur later on if the business plan, slide show and elevator speech have done their jobs well. The detailed financial calculations (e.g., P&L balance sheet, cash flow statement, use of funds) along with detailed assumptions, should be contained in the appendix. These financials must bear out and be consistent with statements throughout the rest of the plan. Bullet 3 -- The exit strategy details how investors can get their money back (hopefully with a healthy return) and exit your company.

13 Be sure the team is on board
Before you start talking to investors, make sure the entire management team: Understands and believes in the plan Demonstrates Passion Knowledge of the technology and key non-technical factors Is comfortable being questioned, and has back-up data available Is ready to “connect” to investors and others in a friendly, likeable way General comments: It is critical that the various team members not only understand their individual specialty but that they all also understand and can communicate the fundamental purpose, goals, and business strategy of the venture. Be passionate! If you are not excited and passionate about your idea, why should anyone else be? And why, therefore, should they give you money or buy your product/service?

14 Separate Executive Summary
A 2-5 page document that summarizes the main points of the business plan (BP) Often used as a stand-alone document A powerful selling tool, it may be your only chance to catch an investor’s attention Bullet 1 -- The importance of the executive summary cannot be overestimated. The Team needs to pay careful attention to its creation. In a few pages they have to convey the essence of their venture. It must be kept short and should contain only the key points from the important sections of the full plan. 1st Dash -- Initially, it is probably the only part of the business plan that a busy investor will read, so make it good. 2nd Dash -- The executive summary is used as a stand-alone communication tool. It can be used not only with potential investors but also with potential Team members/employees and Board members/advisors. Bullet 2 -- It is very common for a potential investor to say, “Send me the Executive Summary, and if that interests us, we’ll get back to you.” (Needless to say, you, the entrepreneur, have to follow up -- probably more than once. But if the executive summary does not create interest/excitement you have lost a potential investor.)

15 The Slide Show A brief (20 minutes) presentation with punch and passion Tells your story clearly and succinctly Speaks the language of your audience A supplement to, not a substitute for, the business plan

16 Slide show tips Learn about audience and tailor to their interests
Rehearse: role play with mentors and ask for feedback Prepare answers to likely questions in advance Don’t hand out the hardcopy until you are finished Look directly at the audience, not at the screen behind you CONNECT – BE FRIENDLY AND LIKEABLE! Note to speaker: These are generally self explanatory but it would be very helpful if you can tell war stories about some of the tips. Particularly about: How to learn about the audience (ask who will be there, what their roles are, and use the web), and what can happen when you don’t. Dealing with tough audiences: the partner who constantly leaves and returns, or who interrupts before you even get started and wants to get to the ’bottom line’ -- how much money do you want and what percentage of equity are you willing to give up for it.

17 More slide show tips Prepare for technical glitches
Speak clearly and slowly Answer questions honestly--If you don’t know say so & tell them you’ll find out One main presenter is usually best, but other team members should answer questions Don’t be defensive, but don’t allow people to steamroll you Note to speaker: These are generally self explanatory but it would be very helpful if you can discuss and/or tell ”war stories” about some of the tips..particularly about: The pros and cons of one speaker The way that a dominating/know- it- all Leader/CEO can “turn-off” investors How to show spunk and stick to your guns when it is important without appearing defensive or abrasive

18 The elevator pitch A 30 to 60 second sales pitch designed to
Convey your idea Get the listener to ask for more information or schedule a meeting The pitch should describe The need or problem your venture addresses Why your solution is effective The benefits Who you are and how to contact you Note to speaker: If you can provide an example (or demonstrate) it would be very helpful. Or perhaps you can have a student entrepreneur present her/his elevator speech, discuss what made it good, and then give an example of a poor one and explain what about it needs improvement. But end on a positive note by contrasting your poor example with the student’s good one.

19 Elevator Pitch Example
Serra Capital Fund: Serra Capital Fund, L.P. seeks to provide venture capital to early-stage technology companies sourced in the Midwest, the Southwest, and the West Coast by identifying opportunities through extensive relationships with universities, entrepreneurs, and investors. The Fund’s objective is to generate high risk-adjusted returns by applying its investment framework to companies with innovative technologies across multiple sectors including Information Technology and Software, Life Sciences, Clean Technology and Agriculture Technology.

20 Elevator pitch tips Write it down, revise, revise, practice, practice until is is perfect Get feedback from mentors and other entrepreneurs All team members should know it cold Key points to emphasize: Preparing the elevator speech takes time, effort, and skill. You probably won’t get it right the first (or the second or the third) time you try. Persevere, and practice some more. The entire Team should feel comfortable with the speech and be able to deliver it at the drop of a hat. Note to speaker: A short closing statement summarizing what you have just covered would be helpful. See next slide.

21 Review of the elements for communicating your idea
Business Plan Executive Summary Slide Show Elevator Pitch Sample words might be: “We’ve just had a whirlwind tour of four major, interrelated and complementary elements used to communicate and sell your new venture: Business Plan (20 to 40 page road map and sales tool) Executive Summary (2 to 5 page summary and stand alone tool) Slide Show (20 minute visual presentation) Elevator Speech (30 to 60 second encapsulation of the essence of your venture) Before we move on, we have time for some questions.” Speaker or moderator: “Now let’s move onto the next section, Finding the Money, so that you can hear from some the people who represent the target audience for the elements we just discussed.”

22 Contact Information Tim Hoerr: P: M:

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