Creating a Winning Business PlanCreating a Winning Business Plan

ObjectivesObjectives

Why is a Business Plan important? Why is a Business Plan important?

What are the Key Business Plan Components?y p

Gain the tools you need to Write a Winning Business Gain the tools you need to Write a Winning Business Plan!

Three core sectionsThree core sections

1. Technology (Operations)

2. Marketing/Sales

3. Finance

Why You Need a Business PlanWhy You Need a Business Plan

A Business Plan is a Roadmap

How Will You Start and/or Grow

Where Will You Obtain Funding

Marketing/Sales Strategy Clarified

Financial Planning

Who Will Read The Plan

– Plan Organized to Convince Funding Sources

– Resource Providers (Funders) Expect• Consistent, Structured FormatConsistent, Structured Format• Professional Presentation

– Address your Audience’s Questions• How/When Will They Benefit?• Do They Believe You Can Make It Happen?• What Are the Costs/Risks For Them?

Before You Start Writinge o e ou S a W g

What Do You Want to Convey

Follow a Logical Progression

Refrain from Industry Jargon

Present Clear Conclusions

Emotional & Human Side Tell the Story

Table of ContentsTable of Contents• Company Summary

– Company OwnershipCompany Ownership– Start-up Summary

• Products and ServicesP d t D i ti– Product Description

– Service Description– Competitive Comparison

T h l– Technology• Market Analysis Summary

– Market Segmentation– Target Market Segment Strategy– Trends

Table of ContentsTable of Contents• Strategy and Implementation Summary

– Competitive Edge– Marketing Strategy– Sales Strategygy– Milestones

• OperationsEq ipment– Equipment

– Employees– Processes

• Management Summary– Key Personnel Plan

Table of ContentsTable of Contents• Financial Plan

– Important Assumptions– Important Assumptions– Break-Even Analysis– Projected Profit and Loss– Projected Cash Flow– Projected Balance Sheet

• Appendixpp– Assumptions– Licenses

Lease Info– Lease Info– Contracts– Testimonials

Executive Summaryy

A Stand Alone DocumentObjectives/ Mission/ Keys to SuccessMake Sure Your Summary is:y

– Concise - 2 Pages Maximum– Cohesive – Briefly Tells the Full StoryCohesive Briefly Tells the Full Story– Compelling – Get Them to Read the Details– Clear- How Much Money Are You Asking For?Clear- How Much Money Are You Asking For?

Business Description (Overview)Business Description (Overview) Your Company - Include Vision, History, Structure

Your Vision/Mission – Clear, Assertive

Overview of the Industry - Important Fact-based Trends

Your Value Proposition - What Makes Your Product or Service Unique AND Valuable

Estimated Revenues and Profit/Cash Flow (3 Years)

ManagementgLeadership

The Team

Back up plan

I l d O t id Ad i (L A t tInclude Outside Advisors (Lawyer, Accountant, Consultants, Insurance, Banker, Etc.)

Ownership (% of Each Partner, Owner)

Operations Plan – How will you run the BusinessOpe a o s a ow w you u e us ess

Can Be Complex and Require Special Expertise P d t M t i l H dli L i ti P k i– Product - Materials Handling, Logistics, Packaging, Purchasing, Etc.

– Service - Abstract ProcessesSeasonality and Other Demand PeaksMake vs. Buy (Outsourcing)Don’t Overlook the DetailsTransportation Considerations and CostsL b C id iLabor ConsiderationsNon-production Processes and Admin Process Flows

What Differentiates Your Product or Service?

What is your secret sauce?What is your secret sauce?

How To Develop Technology /Ops Skills?p gy / p

Family Business – Helped or RanEducation Training

– Hands-on Work, Classes, Courses– On-the-Job Training (Volunteer)

Relevant Work Experience

Can You Create A Difference? Low Cost

Targeted Need

Service or Convenience

Innovation

Offer a Product/Service Solution to a Customer Problem

MarketingMarketingMarket Research – Provides Information About the

Buyer/Customer, Competition, and Product/Service.

M k t Pl i P d t/S i I t d ti St tMarket Planning – Product/Service Introduction, Startup, Product Life Cycle

Advertising and Sales Promotion -- Define Audience & $$ Prior to Committing to Print, Radio, TV, InterNet

Who is Your Customer?

Who Buys Your Products and ServicesWho Buys Your Products and Services

Wh h h k Ab /What Do They Think About You/ Your Competitors?

Costs Far Less to Maintain an Existing Customer gThan to Generate a New One

Market InformationMa e o a o

What Is the TOTAL Market for the Product/Service Define YOUR Market for Products And/or ServicesDefine YOUR Market for Products And/or ServicesGeographic (Primary/ Tertiary) – by ZIP Code/

County yDemographic – What Are Average Incomes, Ages,

etc. /Growth Trends and Changes – Who’s Going In/out

of Business? And why?Potential Downside Who What Can Replace thePotential Downside – Who, What Can Replace the

Service? Cost/ Quality/ Service Aspects?

Marketing And Sales PlanMa e g d Sa es a

Who Is (and Isn’t) Your Target Customer?Need to Locate, Communicate, and Educate ProspectsHow Will You Get Them to Change Their Behavior?Wh t Will Y E h i ?What Will You Emphasize?How Will You Overcome Perceptions of Risk (Inertia and

Performance)?)Tools (Mail, Direct Sales, Etc.), and Why It Makes Sense?

Sales PlanSales Plan

How Do You Sell in Your Market?How Do You Sell in Your Market?

How Will You Ask for the Order?How Will You Ask for the Order?

Provide for Lead TimesProvide for Lead Times

S l St t d C ti ?Sales Structure and Compensation?

Selling Your Products/ServicesSelling Your Products/Services Develop A Sales Strategy – Who to Sell to, When, How, What

Products/Services

Develop a Sales Team – Start Small, Grow

Set Specific Objectives – by Month, Quarter, Year, 3 Year

Analyze Sales Results Periodically

Teach Sales Techniques - Training Is Essential for Product and/or Service Knowledge

Product / Services AnalysisProduct / Services Analysis

What Needs Does Your Product/Service Meet?/What Support Services Are Required? How Can You Reduce Customer Costs? Increase Customer

Revenues? How Does Your Product/Service Compare With Competition?Wh t A th P ibl S b tit t N A li ti ?What Are the Possible Substitutes, New Applications?

Competitive AnalysisCompetitive Analysis

Who Are Your Competitors?Who Are Your Competitors?What Are Their Strengths and Weaknesses?Wh h M k A h (CWhat Is Their Market Approach (Customer

Segmentation, Sales Focus)?How Are They Financed?What Is Their Reputation?pHow Are You Better?

PricingPricing

Know Break-Even Point -- May Have to Walk AwayKnow Break Even Point May Have to Walk Away

Pricing Strategy Vs Competition – Ask CustomersPricing Strategy Vs. Competition Ask Customers

Pricing Cost Competition Product UniquenessPricing – Cost, Competition, Product Uniqueness

C id All C t Di t I di tConsider All Costs – Direct, Indirect

Advertising and Sales PromotionAdvertising and Sales Promotion

Target Advertising g g

Use the Most Effective Medium for Your Audience

Must Be Cost Effective

Consider A Promotion Professional

Use Free Media

DistributionDistributors

Mail Order

TelemarketingTelemarketing

Compare With Competition

Marketing Program SummaryMa e g og a Su a y

Select Market StrategiesSelect Market StrategiesPrepare Marketing Plan S S l lPrepare Supporting Sales PlanFocus on DifferentiationCommunicate Internally and ExternallyMeasure Performance and Adjust Plans to MeetMeasure Performance and Adjust Plans to Meet

Market Conditions

Sell Yourself & Your PlanSell Yourself & Your Plan

Funding Sources Are SkepticalFunding Sources Are Skeptical– Bankers Are Risk Averse – Get to Know Them Early

in the Cycley– Equity Sources Are Tough to Impress, Want Proof of

ConceptpYou Are the Message – Present Yourself, Your Case,

Evidence, Backup Assertions

FundingFunding

Show How You Will Create ValueShow How You Will Create Value

Sh h C C l kShow That You Can Control Risks

Why Should Someone Believe You Are Better Equipped to Take Advantage of the q pp gOpportunity

Banks Look at 5 CsBanks Look at 5 Cs Character – Credit History (Have You Paid Your Bills on Time); Are

You Personally Involved and Responsible for Success? Collateral – Do You Have a House to Put up Against a Loan? The

Greater the Bank’s Risk, the Higher Your Interest Rate Cash Flow – Will the Business Cover Your Living and Business Expenses Cash Flow Will the Business Cover Your Living and Business Expenses

for 6 Months to One Year? Capitalization – What Does It Cost in Asset Investment to Get Started?

(L C t St t B i Cl i Wi d N d S d(Low Cost Startup Business: Cleaning Windows, Need Squeegee and Soap; High Startup Cost Businesses: Restaurants, Retail Stores)

Conditions – Working Capital, Ongoing Costs, Competition, Industry Trends, Regulations (Local, State, and National, OSHA, Handicapped)

What Equity Investors Look for in a Startupq y p

Timing- Short Term, 3-5 Years?Timing Short Term, 3 5 Years?Is Your Business Model Proven?How Long Have You Been in This Type of Business?How Long Have You Been in This Type of Business?Are You Going to Actively Work in the Business?How Much Do You Have Invested in the Business?How Much Do You Have Invested in the Business? What Are Your Risks?

Financial PlanWell-Documented Assumptions Are Crucial

– Acknowledge RisksP i i d P d t C t– Pricing and Product Costs

– Sales Forecasts and Market Share– Lead Times – Receivables, Payables, Working Capital– Interest Costs – Loans, Family & Friends

Test for Reasonableness (You Cannot Double Sales Every Month Without es o easo ab e ess ( ou Ca o oub e Sa es ve y Mo W ouSerious Working Capital Problems)

Get Help If You Need It – Accountants TA Get Help If You Need It – Accountants, TA

What Eats Up CashWhat Eats Up CashAccounts Receivables (A/R)

Difference Between Pay by Credit Card and Bill Monthlyy

Bill Monthly – Receive Payment Net 30 Days or ++ More

Wait Time Affects Working Capital

Accounts Payable (A/P) – What You Owe, Loans, etc.

Your Financial PlanYour Financial Plan 1. Personal Assets (What You Own to Pay for Startup)

2 P l Li bili i (Wh Y N d Li O )2. Personal Liabilities (What You Need to Live On)

3. Business Services (Needed Before Startup)

4. Business Expenses (Ongoing)

5. Balance Sheet (Where Do You Stand?)

6. Cash Flow Statement (How Are You Doing?)

7 Revenue/Expense (P&L) on a Cash Basis7. Revenue/Expense (P&L) on a Cash Basis

Traps to AvoidTraps to Avoid

Confusing Description of the Business/ VisionConfusing Description of the Business/ VisionUnsupported AssumptionsA k f M h O l MAsking for Too Much Or Too Little Money Use of Jargon and AcronymsHype, Overused Phrases“No Competition”; “No Brainer” No Competition ; No BrainerNumbers that Do Not Look Realistic

Don’t forget…..

Your plan is a livingYour plan is a living breathing document to be

modified significantmodified significant changes occur!

ResourcesResources

• http://www.sba.gov/smallbusinessplanner/plan/writea// / / /businessplan/index.html

• http://www.myownbusiness.org/s2/• http://www soros org/openaccess/oajguides/oaj suppl• http://www.soros.org/openaccess/oajguides/oaj_suppl

ement_0703.pdf• http://en.wikipedia.org/wiki/Content_of_a_business_pl

an• http://money.howstuffworks.com/business-plans16.htm• http://www.businessballs.com/freebusinessplansandmarhttp://www.businessballs.com/freebusinessplansandmar

ketingtemplates.htm• www.wsi.miniplan.com

ResourcesResources