Business Plans Made Simple

Center for Entrepreneurship and InnovationSchool of Management

Alumni RelationsCareer Services

Presented by:Gerard F. Zappia, DeanSchool of Management

September 2, 2014

Goals for Today

Have fun!

Demystify the business plan (complexity vs.

value)

Learn the basics - business plans (concept

stage)

Develop a “rough” draft

Identify strengths and areas for development

Access to docs

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 (Audience) of the Business Plan?

Audience – Business Plan

Investors

o Individual

o Institutional

o Strategic/Partner

Bankers (growth/maturity stage)

Management Team

Yourself - Most Important!

“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 (meaning?)

Process driven

Forces you and to think holistically

Must make sense

Contents of a 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)

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

Writing and Thinking

Friendly Advice• 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

Financing Sources

Concept Pre-Seed SeedEarlyStage

Growth

CustomerValidation

Maturity

ProfitabilityMarket

ExtensionIdea RevenuesPrototype

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

Angels - VCs

Ven

ture

Sta

ges

3Fs

Senior/Bank Debt

Econ. Dev. / Factoring

Grants

Eq

uit

yD

eb

t

A/B Series– VCs

Boot Strapping

Assumption - You are here

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

Year 1 Year 2 Year 3 Year 4 Year 5

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

Total Cash Receipts

Total Cash Paid Out

Cash Position

Cash Flow Statements

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 your business idea?

Which areas need additional development?

Thank You