Entrepreneurial Mangement Program Strategic PlanningRaising Money John R' Thorne

1
OUTLINE OF A BUSINESS PLAN FOR AN EARLY
STAGE VENTURE
COVER

• Simple -- Pages to lie flat
• Not too fancy -- but distinctive
• Include title, project name and
• city -- easily seen

TITLE PAGE

• Keep it simple.
• Company name and
• short statement of purpose
• Can add confidential statement and
• name of principal contact.

INDEX AND LAYOUT

• Index major sections to follow
• Include page numbers
• for ready reference
• Easy to read

2
OUTLINE OF A BUSINESS PLAN FOR AN EARLY
STAGE VENTURE
EXECUTIVE SUMMARY
Try to compose so it can also be used as a mini
proposal separately

• Summary of all key points
• Product
• Status
• Plans
• Market
• Management
• Financials
• Summary of deal suggested
• Summary of financials
• Present Yr.. 1 2 3 4
• Sales
• Profits
• Cash

3
OUTLINE OF A BUSINESS PLAN FOR AN EARLY
STAGE VENTURE
1. INTRODUCTION

• May be helpful, but keep it short
• Can be omitted

2. DESCRIPTION OF BUSINESS

• History of company
• Products / Services
• Basic technology, special competence, or
  unique features involved

3. MARKETS

• Be specific -- who and where are the customers
• Industry data, trends, pricing, competition,
  etc..
• How the product will be sold
• and distributed

Investors often conclude that the marketing is
the weakest section of business plans for new
ventures
4
OUTLINE OF A BUSINESS PLAN FOR AN EARLY
STAGE VENTURE
4. MANAGEMENT AND KEY PEOPLE

• Review key people and board
• Include summarized resumes -- appendix for
  details
• Statement of mgt.. philosophy
• Show motivation and competence

5. FACILITIES AND EQUIPMENT

• Needed, availability and cost
• Future needs

6. PATENTS, LEGAL COMMENTS

• Summarize patents and opinions
• Disclose legal problems
• Discuss any problems involving legal, tax, or
  regulatory issues

Many investors go to this section first.
Extremely important.
5
OUTLINE OF A BUSINESS PLAN FOR AN EARLY
STAGE VENTURE
7. FINANCIALS

• Complete historical financials
• Profitability, margins, pricing
• Product cost / price analysis
• Special financial strategies
• Auditors, investors, ownership
• Budgets and controls

8. BUSINESS PLAN AND FINANCIAL PROJECTIONS

• Strategies, alternatives, check points
• Detailed assumptions with notes
• Cash, Financial status all projected 3 - 5
  years
• Contingency factors and
• sensitivity analysis

9. FUNDS REQUIRED

• Summarize Deal
• How investor will get money back

6
OUTLINE OF A BUSINESS PLAN FOR AN EARLY
STAGE VENTURE
OVERVIEW NOTES

• Build credibility and a feeling of
• professional competence.
• Be sure, your plan clearly indicates
• when and at what cost clearly defined
  milestones will be reached.
• The plan should not be too long.
• Use appendices for supplementary materials.
• 20 -- 35 pages should suffice for body of plan.
• Proposal must capture real interest
• on quick (five minute) reading.
• It helps greatly to have you and your plan
• PRE-SOLD. In raising money, cold calling
  rarely wins.

7
Notebook
WHERE DO BUSINESS PLANS GO WRONG ?

• Hard to read, wordy, too long, print too
  small, not enough clear space, paragraphs too
  long
• Bound so pages will not lie flat
• Poor index -- title page does not clearly
  show company name, address, contact phone, etc..
• No supporting footnotes or appendices

First Impressions...
8
WHERE DO BUSINESS PLANS GO WRONG ?

• What is the business -- hard to understand --
  not clearly stated up front
• Executive summary poor, no financial summary
  included
• No tactical plan or milestones to show what
  needs to be done to develop the business
• pie in the sky exaggerated claims
• General lack of credibility -- just not
  believable

Basics...
9
WHERE DO BUSINESS PLANS GO WRONG ?

• Market analysis vague, not specific or
  documented. Not clear who is the customer,
  buying decision, etc.. General lack of
  customer/market awareness
• Assumption product will sell itself, little
  or no competition
• Competition not understood or analyzed
• Lack of focus, too ambitious, too many
  products, markets too varied

Marketing...
10
WHERE DO BUSINESS PLANS GO WRONG ?

• Finances hard to follow and understand. Spread
  sheets long and detailed, but no summaries and
  incomplete assumptions
• Little or no financial analysis, especially on
  gross margins/profits, and pricing. Cash flow
  missing or too much like source and application
  of funds and not detailed month by month for
  first year or so.
• Cash Flow, P / L, and Financial Statements not
  all included. Lack of clear financing
  strategy.
• The deal for investors not spelled out and no
  strategy for investors to cash out

Finance...
11
CREDIBILITY ENHANCERS FOR BUSINESS PLANS

• Show you know the market and that the market
  exists
• Customer involvement
• Real customers -- especially strong boosters
• People/management team very important. Show you
  have the ability to get other key people
• Directors, Advisory Boards -- shoot for top
  reputations
• Top professional advisors
• Institutional support -- go first class
• Well known early investors
• Supplier assistance
• Independent consulting reports