The Business Plan

Janis Machala, Paladin Partners Don Ferrel, SeaTec Cofounders of BigScreen

About Us

 • • • • Janis Managing Partner, Paladin Partners Serial entrepreneur, business advisory services Wang, Sun, Microsoft, IT Start-ups BA Psychology, MBA, University of Iowa    Long time active player in West Coast venture and angel scenes NWEN, Alliance of Angels, Seraph Done lots of deals  Don • President/CEO, SeaTec Consulting • Serial entrepreneur, business development, large scale IT systems integration • Scitor, Rockwell International • BA Math, BS Physics, Washington State    Strong technical acumen Excellent execution and team building skills Fiscally conservative

About Our Company - BigScreen

 Simplified computing and Internet for older adults   Extends social and care giving networks Trusted source for value added services

Purpose of a Business Plan

      Alignment of team(s) Operating plan Communication across company, division, department, business partners Investment capital Expansion capital (banks, leases) Merger/acquisition process

How to Use a Business Plan

   Executive summary  Solicit interest  Screen for investor candidates Mini business plan   Banking/leasing document Potential acquirers Full business plan   Team planning process Due diligence

What Investors Look For

      How does the team think?

How detail oriented is the team?

How big is this market?

Is there sustainable competitive advantage?

What’s the growth plan? What does the technology roadmap look like, short term or long term play

Financial Projections

      Build 5 years Detail near years, extrapolate out years Build from single unit economics Document assumptions Compare against top down Validate with market comparables

10 Must Answer Questions

          How large is your addressable market?

How fast is the market growing?

Who’s make up your management team?

What’s your “secret sauce?” What are the barriers to entry/competitive advantage?

What do your 5 year financials look like?

What’s your path to profitability?

Why is this a company versus a product/service?

Who’s your competition and how do you beat them?

Why can’t Microsoft do this? (or name any big,

established company…)

Creating Your Company’s Strategy

   Building a strategy is harder work than building your product Think about  What do you want your business to be when it grows up    Looking back from 5 years in future Perspectives of all stakeholders Anything that could go wrong Hope is not a strategy

Competitive Analysis

      You always have competitors Dig deep, be detailed, be honest Compare features and benefits Technology comparison Whole product offering (pricing, support, etc.) Channels, funding, customers…

Sustainable Competitive Advantage

    Create barriers to entry Continually add value for your customers (and your investors) Anticipate competition and make plans for dealing with it  Better widget, price erosion, market share, different business model…..

Avoid the trap of believing that your main competitor is your exit strategy

Business Plan Format

    Pages: 10 to 30 Kinko’s white bond is good enough Simple binding Examples  Handout – a good example B Plan  Discuss examples of bad ones Typical Outline

Executive Summary Introduction and Business Premise Market Analysis and Customer Needs Product Overview Value Proposition Business Model Business Operations Plan Marketing and Sales Market Entry Transition to Revenue Service Competitive Assessment Partnership Strategy Management Team and Advisors Financial Projections Key Business Metrics Capital Structure/Financing Plans Exit Strategy Risk Analysis Summary

User Friendly B-Plan is Key

    Investors receive hundreds of these Most plans don’t get fully read Reasons why:  Logic is difficult to follow   The business is not obvious Too much extraneous information or fluff Use the same techniques to write your plan that you would use to write a play, a song, software…..

Nuts and Bolts

         12 point type Use a clean font Don’t use bold or italics too much Make sure your visuals are readable No typos, proof-read thoroughly (including the visual!) Remember: not everyone has same printer Check for grammar Style consistency If you can’t write, hire someone

Due Diligence

    Market assessment is initial focus Customer market validation next Team references and resumes critical Secondary:    Financials and assumptions Corporate structure and legal docs Patent applications

Resources

 Reading list     Guy Kawasaki Geoffrey Moore Business 2.0

HBS Case Studies  Workshops     CIE Program NWEN WTC SBA  Archive   Venture blogs Kauffman Foundation  Consultants    Domain experts Funding experts Teambuilding experts

Questions and Discussion