1. Joel Adams Ken Stuart Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8: The Business Plan March, 2004 (Abridged from version in Class)

2. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.1: Class Objectives 1.The Business Plan - a Process 2.The New Venture Business Plan - a Document 3.Getting Started with the Opportunity 4.The Entrepreneur’s Tool Box 5.Non-Disclosure Agreements For individual students, this class will provide you with insight on how you would start the Business Planning Process. We will also start to build up a collection of tools useful for future business endeavors. For business plan groups, this class will provide the the you with information on how to start your business plan assignment.

3. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.2: Lesson Plan First Hour: Introduction to the Business Plan –The Business Plan as a process –The Business Plan document –Getting started with the Business Opportunity Document Second Hour: The Entrepreneur’s Toolbox –What should be in your toolbox? –The Non-Disclosure Agreement Assignments: –Business groups: Business Opportunity Document

4. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 Three Major Steps: 1.The search for exploitable technology Recognition and Evaluation of OPPORTUNITIES Technology Risk 2.Planning the New Venture Marshalling RESOURCES in the presence of RISK Business Risk 3.Managing the New Venture Building the NEW business venture Execution Risk 8.3: Entrepreneurship as a Process

5. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.4: Business Planning – The Process As your business matures you will gain valuable feedback from the market which will change your strategy, your products and services, your execution and even the markets themselves. Market Pull Technology Products Markets Technology Push Market Feedback Modifies Technology and Products As a result you will utilize different business plans for different purposes throughout your company’s life.

6. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.5: Post-Market Research Scenario: Your preliminary market research has provided with positive feedback. You feel there’s something to your idea and your willing to make the commitment to starting a business. Now What? Write it Down!

7. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.6: Types of Business Plans Long Range Plan Used by an established company to project its activity over the next three – five years Operating Plan A description of the annual operating budget, the assumptions behind it and how it is to be achieved. Financial Plan Similar to the long range plan but it reads more like an offering memorandum.

8. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.7: Types of Business Plans – New Venture Plan New Venture Plan What is the Purpose of the New Venture Plan? Definition Used by the entrepreneurs to document a business opportunity so that it might attract investment capital. - Doyle

9. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.8: Types of Business Plans – New Venture Plan Ultimately written by the entrepreneur(s) who are responsible for the document and have the responsibility of ensuring that it is carried out. It shows potential investors and other parties interested in your venture that you have put some serious thought into what your goals are and how you are going to achieve them. It also shows a level of commitment. The New Venture Business Plan initiates a memorandum of understanding between you and an investor Written Business Plan + $$ = Your New Business

10. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 1.Executive Summary 2.Introduction 3.The Industry 4.The Opportunity 5.The Products/Services 6.The Market 7.Competition 8.Management 9.Financial Projections 10.Investment Requirements 8.9: Overview - New Venture Business Plan Your Group Business Plan project will include all of these components.

11. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.10: Ten Business Plan Tips – IVEY, Entrepreneur Sept/Oct 2001 2.Provide strong evidence to support why customers would want it. The goal is to bring credibility to your business plan Use feedback from secondary market research feedback to validate your idea. (Potential customers, experts, etc. ) 1.Start with a clear product concept. Proto-types, models, flowcharts, visuals, etc. Make sure you leave a clear impression on exactly what your business and technology is about Use analogies

12. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.11: Ten Business Plan Tips 3.Show the growth potential and know what is driving it. Do NOT say: “There is a HUGE market…” Primary research and Due diligence Use real numbers Back-up your claims and provide the evidence 4.Be very specific about why you think you have a basis for a sustainable competitive advantage. Frequently underdeveloped section of the business plan Is the strongest statement about why you have such a great opportunity Acknowledge your key resources and capabilities and asses competitor who are in a position to to develop these capabilities. How will you respond and/or limit their success.

13. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.12: Ten Business Plan Tips 5. Develop a compelling business model. How will you make MONEY! How will the products/services sustain this. Recognize barriers that may impact a buyer’s willingness to pay. 6. Map out the key steps in technical and market development and understand the resource requirements associated with each. Milestones – concept to commercialization What resources to you need to meet these milestones Provide a realistic timeline. R&DPre-commercializationCommercialization

14. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.13: Ten Business Plan Tips 7.Be honest about the strengths and weaknesses of your management team and use external resources to fill in the gaps. –Do NOT overstate your expertise but show your enthusiasm and passion –Recognize your weaknesses and have alternatives –Advisory Board, and support though you don’t have all the expertise 8.Identify the key assumptions/risks and have contingencies in mind to address them. –Acknowledge the downside of things. –Articulate the critical assumptions and risks –Provide contingency plans –Know how to mange these risks

15. The Business Plan Engineering Science 466b © J. Adams & K. Stuart 2002-2004 8.14: Ten Business Plan Tips 9. Have specific strategies for growth and exit. Product Migration Strategy. Know how you will support growth. So you’ve built a great business. Great! Now What? Have an exit strategy – merge, sell, IPO, keep operating the company and payout dividends 10. Know how much capital you want, what you will give up to get it and who is most likely to give it to you. Remember you can have 90 % of nothing or 10% of something!