Business Plans Made Simple

Center for Entrepreneurship and Innovation Alumni Relations Career Services September 14, 2013

Goals for Today

 Have fun!

 Learn the basics of business plans (early stage)  Develop a “rough” draft  Identify strengths and areas for development What’s in a Business Plan?

What is a Business Plan?

What is a Business Plan?

“A business plan is a road map that provides directions so a business can plan its future and avoid bumps in the road.” Author Unknown

What is a Business Plan?

“A business plan is a written description of your business's future. That's all there is to it--a document that describes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.” Entrepreneur.com

Users of the plan – Who cares?

Users – Business Plan

 Investors o o o Individual Institutional Strategic/Partner  Bankers (growth/maturity stage)  Management Team  Yourself!

“A lot of entrepreneurs think they only need to develop a formal business plan if they’re seeking investment . This is a costly folly. Writing a business plan gives you a chance to thoroughly evaluate your idea inside and out, uncover its upsides and potential pitfalls, and, most crucially, think up ways to avoid them before they happen. It’s your chance to stare long and hard at your ideas’ weaknesses and decide whether or not you can overcome them.” Forbes.com

Summary - Business Plan Concept

 Business roadmap (story)  Living document  Process driven  Forces you and to think holistically  Must make sense What’s in the Business Plan?

Table of Contents

1. Executive Summary 2. Market Opportunity 3. Product/Service/Technology 4. Competition 5. Sales/Marketing Strategy 6. Financials 7. Company/Management Overview 8. Summary

Let’s Start Writing – Version 1.0

(Expect to Revise – Many Times) (You may not be able to answer every question today)

Writing and Thinking

Once the idea is out of your head. It has the chance to evolve and be refined. It can be shared with others to get the idea validated and enhanced (or mocked). It means the idea has a chance of becoming more than just an idea.

Aden Davies

Friendly Advice

• Follow instructions – this is not rocket science!

• Use clear, concise language with no techno jargon. Your

mother/father must understand it!

• Avoid using hype words. • Must be a story (that makes sense) – Think of everything in context.

• The only thing you have is your credibility. Don’t risk it with false claims.

• Sophistication of the plan – varies with stage of development

Grants

Concept

Idea

Pre-Seed

Prototype

Seed

Customer Validation

Early Stage

Revenues

Growth

Market Extension Grants – SBIR, NSF, NIH, NYSERDA, etc.

3Fs Seed – Excell Partners Boot Strapping

Maturity

Profitability A/B Series– VCs Econ. Dev. / Factoring Senior/Bank Debt

Page 14

Executive Summary

 One short paragraph for each of the business plan sections  Include a summary of the financials  Include funding requirements to complete development and to begin sales.

 Prepare after completing the other sections.

Market Opportunity

 What problem are you solving? Who has it?

o Do not confuse with the solution  How are they solving it today?

 What is the market size?

 What user feedback do you have?

 What is your initial target market and why?

 What are the macro-trends?

Product/Service/Technology

 What is your solution?

 How does it solve market need?

 What IP do you own or plan on pursuing?

 What approvals do you need?

 What is the status of your solution?

 This should not be a technical treatise (write for a general audience).

Competition

• Who is your competition ?

• What do you know about them?

• How is your solution better?

• How much better?

• What prevents your competition from copying your solution?

Sales/Marketing Strategy

• How will you bring your solution to market?

• What is the average sales cycle? (if applicable) • What is the average cost of customer acquisition?

• What sales channel will you use?

• Who are your potential partners?

• How do you plan to generate demand?

Manufacturing/Operations

 Where will your product/service be manufactured/created?

 Explain your methods of:    Production techniques and costs Supply chain Quality Control

Financials

 What does your financial picture look like for the next five years?

     Revenue Cost of Goods Gross Income Expenses Net Income  Provide a cash flow analysis

a. Unit Volume b. Average Revenue/Unit Revenue (= a x b) c. Average cost/unit Cost of Goods (= a x c) Gross Profit Expenses



Engineering/R&D



Sales and Marketing



Gen and Admin Net Income Year 1 Year 2 Year 3 Year 4 Year 5

Cash Flow Statements

Total Cash Receipts Total Cash Paid Outs Cash Position

Management Overview

 Brief overview of company  Brief overview of team (expertise that relates to company/product  Qualifications must add value  Board of Advisors  Do not say “world class”  Funding needs

Summary

 Why should we invest?

 List a few compelling bullet points  Why is your business important?

 What happens if your business does not exist?

Exhibits and Appendices

 Be focused   Include content that supports the plan Don’t include what you don’t refer to  Reasonable contents     Summary Financials Management team resumes Customer letters of intent Existing marketing materials  Max: 10 to 15 pages

Important Guidelines

• Proof, proof, and proof again – – Grammar, punctuation, sentence structure, etc.

Mistakes and sloppiness are a death knell • A “good” picture (or graph) is worth a thousand words – – – – Omit images, tables, charts don’t instantly convey meaning.

Label graphics and significance Balance use of text and graphicc Lots of white space

Assess

 How well developed is my business idea?

 Which areas need additional development?