A BUSINESS PLAN –

WHY BOTHER??

JULY 30, 2011

JARGON!!

Mission Statements

That ―Vision Thing‖

Statements of ―Intent‖

―BHAGs‖

A Real Mission Statement!!!

―To help our clients achieve their financial objectives by serving as their tax and financial

partner. As the world’s largest tax services company, H & R Block has one-to-one

relationships with millions of clients, helping them benefit from all of the deductions and

credits available to them and build a better financial future. It is the only major company

that offers a full range of software, online and in-office tax solutions, combined with financial

information and suggestions that enable clients to consider how they could achieve their

financial objectives. This advice — the H &R Block Advantage — includes suggestions

about retirement savings, home ownership, saving for their children’s college education,

eligibility for government programs and other alternatives. When clients request in-depth

financial plans and investment advice, their H &R Block tax professional refers them to H &

R Block Financial Advisors Inc., which can assist them with a detailed investment plan and

investment services. H &R Block Financial Advisors, member NYSE, SIPC, employs more

than 1,000 financial advisors serving clients in more than 150 offices in the U.S. H & R

Block Inc. is not a registered broker-dealer. Clients who request information about home

mortgages are referred to H &R Block Mortgage Corp., which offers a full range of retail

mortgage products. Our research shows that our H &R Block Advantage advice package

along with related financial services increased client satisfaction with H & R Block’s tax

services. H & R Block has long been a trusted tax partner to millions of taxpayers. Now we

are enhancing the value of our tax services by helping clients as their tax and financial

partner.‖

More Examples

―It is our job to continually foster world-class infrastructures as well as to quickly create principle-

centered sources to meet our customer's needs.‖

―Our challenge is to assertively network economically sound methods of empowerment so that we may

continually negotiate performance-based infrastructures.‖

―To improve lives by mobilizing the caring power of communities.‖

―Respect, integrity, communication, and excellence.‖

Another Example

“We work side-by-side with our clients in 27 countries, as members of their internal teams, to

help solve their most pressing business challenges; We do so by deploying our 2,600 Consultants only according to when clients

need them, how they need them, and what they need them for.”

-- RGP Mission Statement

What’s Requiredin a Strong Mission Statement?

• Quantification

• Direction

• Motivation (Inspiration)

• Challenge (Human beings don’t like boundaries!)

• Clarity (Not lengthy/Focused/Specific)

• Action

• Guidance

A Few Well-Known BHAGs

"A computer on every desk and in every home, all running Microsoft software."

"Every book ever printed, in any language, all available in less than 60 seconds.―

―We will put a man on the moon and bring him back before the end of this decade‖

BUSINESS PLANS

IF YOU WANT TO MAKE GOD LAUGH,

SHOW HIM YOUR BUSINESS PLAN!

WHAT YOU SAY…. WHAT THEY THINK…..

―The project is 98% complete‖ To complete the last 2% will take as

long as it took to complete the first 98%

―Our business model is proven….‖ If you take the very best evidence from

the very first week of prototyping and

extrapolate it out for the next 5 years

―Customers are desperate for our product‖ We haven’t asked them to pay for it yet,

and oh by the way, all of our customers

up to this point are relatives

―If you invest per our terms, you’ll get a If everything that could ever conceivably

50% IRR‖ go right does go right, you might get

your money back

STRATEGIC CHOICES

High CRAZY NO BRAINERS

Low WASTE OF TIME TACTICS -- ONLY SHORT TERM BENEFITS

Low High

Achievable

Att

ract

ive

ne

ss

WHAT INFORMATION DOES A

GOOD BUSINESS PLAN CONTAIN?

• PEOPLE (THE TEAM)

• OPPORTUNITY

• CONTEXT

• RISK AND REWARD

THE TEAM

• What do you know?

• How will you respond to adversity?

• How well are you known?

• Who do you know?

• Are you realistic?

• How committed are you?

• What’s driving you?

=== EXECUTION SKILLS

THE OPPORTUNITY

• Is the total market for the product/service large,

rapidly-growing, or both? Scalability?

• Is the industry structurally attractive (or does it have

the potential to become structurally attractive)?

===Rigorously describe why this is the case

THE OPPORTUNITY

=== Describe in detail how you will build and launch into the marketplace

• Who is/are the customer(s)

• Compelling for the customer?

• Pricing?

• How will you reach targeted customers?

• Cost to produce and deliver?

• Cost to acquire a customer?

• Cost to support customers?

• Ease/difficulty of retaining your customers?

• Cash flows/Timing?

• Competition?

=== Economically viable access to customers

THE CONTEXT

• All opportunities exist in a context

-- Macro environment (economic, inflation, interest rates, etc..)

-- Government rules & regulations

• You should show heightened awareness of context.

• Demonstrate that you know the context will inevitably change and how it might affect your venture.

• Spell out what your team can and will do if the context turns unfavorable (context from multiple angles).

• Can you affect context in a positive way?

THE RISK & REWARD

• Discuss People/Team, Opportunity, and Context as a moving target.

• Provide a sense of the type and class of risk your venture represents.

• It is ultimately your responsibility to improve the chances of success and mitigate problems.

• Greatest myth: ―Entrepreneurs are risk seekers‖. Actually, all sane people want to avoid risk!!

• Your business plan must confront the risks ahead.

• Your Exit Strategy –are you ―IPO’able‖? Get acquired?

FAIL, FORWARD, FAST!!

=> THINK BIG, START SMALL, SCALE IT UP.

=> LESS TO BE GAINED BY PERFECTING THE

―KNOWN‖, THAN BY IMPERFECTLY SEIZING

THE UNKNOWN.

=> PROTOTYPE, PROTOTYPE, PROTOTYPE!!!!

IT’S ALL ABOUT PEOPLE

HARD IS SOFT (PLANS, #s,)

SOFT IS HARD (PEOPLE, CUSTOMERS, RELATIONSHIPS, VALUES)

(Tom Peters)

WE ARE THE COMPANY WE KEEP!

YOU WILL BECOME LIKE THE 5 PEOPLE

YOU ASSOCIATE WITH THE MOST – THIS

COULD BE GOOD OR BAD.

(Tom Peters)

BE INTERESTED

EVERYONE WANTS TO BE INTERESTING,

BUT IT’S MUCH MORE ENERGIZING TO

BE INTERESTED. KEEP YOUR

CURIOSITY. DISCOVER NEW THINGS.

CARE, RISK, REACH OUT.

“A Goal is a Dream with a Timeline”