Business Plan Preparation Frank Moyes Leeds College of Business
Download
Report
Transcript Business Plan Preparation Frank Moyes Leeds College of Business
Business Plan
Preparation
Frank Moyes
Leeds College of Business
University of Colorado
Boulder, Colorado
Financial Plans
1
Tonight
Financial Plan
Customer acquisition costs
In the Fire – preliminary Customer
Survey results
Team meetings
Financial Plans
2
November 10 & 11
Financial Projection Model Workshop
Room 302
6:00 to 7:00pm
Download model v6.8.9 & play with
example
Financial Plans
3
November 12
In the Fire - Marketing plan
Prepare 6 to 10 slides (this is not a DECK)
10 minutes
2 marketing experts
Hand-in:
Marketing Plan - draft
Customer surveys & summary of results
Customer acquisition costs
Financial Plans
4
Title Slide
Name of venture
Team member names
Date
Introduce team
Financial Plans
5
Introduction
Grab investor’s attention
Describe the venture
Elevator speech (not on slide)
Value proposition (not on slide)
3 key points want investors to remember
Financial Plans
6
Presenting the Marketing Plan
Show that you really understand the target
customer
Make it real - tell a story
Show prototypes, exhibits, short videos
Focus on the key strategies that you want
the investor to remember
Less is better - use graphs & charts
Put content in bullets, not a marker
Financial Plans
7
Financial Plans
8
Attractive Market (Example)
Low barriers to entry
Large market and growing
Favorable trends
Financial Plans
9
Attractive Market
Fragmented, no brand loyalty
Addressable market $100 million, 10%
growth
Trends aging baby boomers, social
networking, cost of oil
Financial Plans
10
Marketing Plan
Customer Research
Target Customer Strategy
Channel Strategy
Positioning
Product/Service Strategy
Pricing Strategy
Internet Strategy
Communications Strategy
Sales Strategy
Revenue Model
Financial Plans
11
Business Plan Elements
Executive Summary
Company Overview
Product or Service Description
Industry and Marketplace Analysis
Marketing Plan
Operations Plan
Development Plan
Management
Financial
Plan
Offering, Funding Requirements, Valuation
Financial Plans
12
Financial Plan
Financial Projections
Key Assumptions
Business Risks
Financial Plans
13
Business Plan Perspective
“People write-up their business plan with a
top-down mentality. They invariably talk about
a particular vertical market that has X billions
of dollars in sales each year. They’ll tell us that
they can get 10% of that market. But when we
ask them for the average sale or the cost of
customer acquisition, the answer almost
always is “I’ll get back to you.”
Dan Beldy, Hummer Winblad Venture Partners
Financial Plans
14
Financial Projections
Income Statement
Balance Sheet by years for 5 years
Cash Flow
By years for 5 years
By months for years 1-2 & by quarters for years 3-5
By years for 5 years
By months for years 1-2 and by quarters for years 3-5
Break-even Analysis
Financial Plans
15
Focus Your Attention
Profitability
Assets (resources)
Cash Flow
Funding
Financial Plans
16
Focus Your Attention
Revenue
Margins – prices vs. costs
Major operating expenses
Cap Ex - Property & Equipment
Working capital
Profitability
Assets (resources)
Cash Flow
Increase/(Decrease) in Cash
Funding
Equity & Debt
Financial Plans
17
Common Weaknesses
Gross margins are too high
Operating expenses are too low
Working Capital (must be based on industry)
Fixed Assets & Capital Expenditures not
addressed
Seasonality
Growth not anticipated
Financial Plans
18
Financial Drivers (2-3 Key)
Revenue model – roll out, market share, new
products, customers/day
Margins (price/labor+materials) – cost goal
Operating Expenses – hire 10 sales persons,
prototype cost, legal expenses, etc.
Capital Expenditures – major
Working Capital – A/R days, Inventory days
(turns) & A/P days
Financial Plans
19
Risks I
What major risks does the venture face?
What can go wrong?
What must go right
How mitigate?
Financial Plans
20
Risks II
Market
Size of market
Competitor’s response
Sales cycle
Closing window (12 VC funded companies)
Strategic - establishing partnerships or
agreements
Operational - large number of interrelated
components
Financial Plans
21
Risks III
Technology
Financial
Will it work
Time and cost to development
Scalability
Risk/return
Dilution
Macro-economic
Volatile industry
Government approval
Exchange rates
Financial Plans
22
Financial Plan Sections
Financial Projections
Assumptions
Summary goes in Plan
All Financial Statements go in Appendix
2-3 key assumptions go in Plan
Detailed assumptions go in Appendix
Business Risks
Financial Plans
23
Summary of Financial Projections
Financial Plans
24
Break-even
Financial Plans
25
Customer Acquisition Costs
Costs to Get a Customer
Number of Customers
Costs to get a customer
Sales salaries & commissions
Advertising & promotion
Customer & tech support
Website
Travel & entertainment
Number of customers
Financial Plans
26
Business Plan Perspective
“Entrepreneurs have got to display a clearly articulated vision
for what they want to do. And they must tell their story from the
bottom up. A bottom-up approach means that they know with
absolute certainty whom they’ll sell to, how much it will cost,
and what the sales per week will be next March. Sure, a lot of
assumptions are involved, but entrepreneurs need to break
their business down to the molecular level. That information
leads logically to the next step which is saying to an investor, ‘I
am going to take this money and do X, Y, and Z with it and
here’s what will happen in the end.’ Your survival depends on
knowing that stuff cold.”
Dan Beldy, Hummer Winblad Venture Partners
Financial Plans
27
Critical Mistakes I
“Let’s go smoke something”
“These trees sure are pretty”
“We can get orders in a month”
“We
Sales cycle
No one knows you
can whip this puppy out in 6 months”
Development time-line longer
More expensive
“Look at how much they spend on marketing!
We won’t have to spend that much”
Financial Plans
28
Critical Mistakes II
“Sure, operating expenses are high at the
beginning, but then they will go down.”
Operating expenses don’t decline
Salaries must be realistic
Growth requires spending money
“We’ll lean on our suppliers and not pay
them for 90 days.”
“Our customer will pay us in 30 days.”
“
Financial Plans
29
Financial Dynamics
Who does the financial projections?
Should my projections be optimistic or
pessimistic?
What kind of questions do investors ask &
why?
Financial Plans
30