best and worst practices in developing a winning business plan
Post on 20-Jan-2015
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Who Needs a Business Plan?
• … And Why?
• Some Good Ideas
• …And Some Bad Ones!
To Successfully Launch a New Business...
• ...Requires Identifying and Bringing Together Necessary Resources– Human - Technological– Physical - Financial
• We Do This Through a Business Plan
What Is a Business Plan?• It’s a Process, Not a Product
• It’s Written to Develop a Successful Business– Not Just to Raise $– Should Be Used & Updated as a Mgmt Tool
• Most Business Failures Can Be Prevented …– If You Have a Good Business Plan
Why Do Startups Fail?
• How Often Can We Predict?
Who Do We Write Plans For?
• Resource Providers
• Might Be Investors
• Might Be Internal Sponsors
• Might Be Strategic Alliance Partners
• Always for Your Team
• Many Entrepreneurs Have Multiple Versions
What Does the “Product” Look Like?• Executive Summary (1-2 pages)
– It’s All They’ll Read– Must Communicate and Capture Attention
• Industry & Market Opportunity• Marketing Plan• Product / Operations• Management Team• Financials• Critical Risks• Timetable / Milestones• Exhibits
Appearance (Continued)
• Length Will Vary
• Average Today Around 25 Pages + Exhibits
• Usually Have a “Summary Version” of 10-12 Pages
• Generally:– More $$ Needed = More Pages– Less Well Known Audience = More Pages
What Are They Looking For?• What’s the Problem?
– How Big Is It?
• How Will You Solve It?– You and Who Else?
• Do I Believe You Can Do It?– The TEAM!
• Why Should I Help You?– Financials / ROI– Exit Strategy
What Do They Want to Hear?
Ingredients of a Successful Plan
(What It Takes to Create Successful Enterprises – TiE)
Ingredients of a Successful Plan
• Vision• Commitment• Strategy• Time to Market• Team• Passion• Customer Testimonial• Competition• Capital Need• Milestones
Vision
• Looking for:– Market Leadership– Proprietary Advantage– Realism
Commitment
• Prove You’re Serious About This:– Clearly Defined Priorities– Understandable Objectives
• Show You Know the Way!
Strategy
• Can You Execute the Vision?
• “Go to Market” Strategy
• Execution Plan
• Clearly Define Your:– Product/Service – Pricing– Explain How it Solves the Problem
Time to Market
• What is Window of Opportunity?
• What Features Are Critical Now?
• What Will Future Products Look Like?
Management Team
• Have a Winning Team
• We Know How to Execute
• Plan to Augment As We Grow
Passion
• “Fire in the Belly”
• Confidence
Customer Testimonial
• Proves Market Traction
• Referencable Customers
• In Order of Preference– Happy Users– MOU– Letter of Endorsement– They’ll Take a Call
Competition• Identifies Players
• Describes Strengths & Weaknesses
• Explains Our Advantage
• Describes Barriers to New Entrants
• Is Respectful of Competition!
Capital Need
• Clear About Amount Requested
• Clear About Timing
• Use of Funds Must Match Strategies
• Ask for Enough to Have a Slight “Cushion”
Milestones
• Both Short Term & Long Term
• Be Sure to Include:– Beta Testing– Ready for Shipping
What NOT to Do in a BP
• What is a “BAD” Business Plan?
• What Are Some of the Common Mistakes We See?
What is a “BAD” Business Plan?
• One That Doesn’t Meet Its Objectives• Fails to Help Launch a Successful Business• Fails to Identify Key Obstacles / Problems• Fails to Attract Interest:
– Of Investors– Of a Team– Of Partners– Of Other Resource Providers
It’s Possible to Launch a Good Business Without One!
• …And Vice-Versa
• …But a Good BP Improves Your Odds
First Clue That You’re Reading a “Bad Plan”…
You Don’t Want to Keep Reading!• It Doesn’t Capture Your Attention
• It’s Hard to Get Through
• You Just Don’t Get It!
Most Common Errors in a Plan
• Lack of Understanding of Value Proposition– …Or Significantly Overstates It
• Lack of Understanding of Customer– And How to Reach Them
• Lack of Focus• Underestimating Inertia• Underestimating Effort & Resources Required
Most Common Errors in a Plan (Cont’d)
• Failure to Identify Competition• Lack of a Competitive Advantage• Unproven Team• Inconsistent Facts or Logic• Over-Optimistic Financial Projections• Lack of a Robust Business Model
Business Model(How Will I Make Money Delivering My Product?)
• What Can I Charge?• How Will I Charge?• Who Will I Charge?• What Will It Cost Me to Deliver?• Where Do I Make the $$?
Your Business Model Will Define:• Critical Success Factors• How Much $$ You Need• Ultimate Value Creation
So, How Do I Develop a Business Plan ?
• There Is No “Right Way”
• The Following Generally Makes Sense
My 10 Step Process (1-4)• Start With “Why Am I Doing This?”
• Need To Define a Good Outcome to Achieve It
• Try To Answer the First 2 Questions• “What Problem Am I Solving”
• “What Is My Solution?”
• Outline Your Market Analysis• What Do I Know?
• What Do I Wish I Knew?
• Begin Talking to People• Advisors
• Potential Customers
• Friends
My 10 Step Process (5-7)
• Define Your Business Model• Both Revenues & Expenses• Consider Alternates (List Them)• Try to Begin a Rough Spreadsheet• Identify Critical Success Factors
• Begin Formal Market Research• What Questions DO You Need to Answer?• Where Can You Find This Information?• Consider Primary & Secondary Data
• List the Resources You Need to Succeed• Human, Physical, Financial, Etc.
My 10 Step Process (8-10)
• Outline the Business Plan• What Parts Can You Begin to Write?• How Much More Info Do You Need?
• Define A Successful Scenario• What Has to Happen?• What Do You Need to Do?• Simulate in Your Model
• Write the Plan• …and READ It!• Get Some Feedback• Revise and Update
How Will I Know When I’m Done?
• You’re NEVER “Done”!
• The Environment Is Constantly Changing
• You Are Constantly Gaining New Information
• Your Capabilities Are Changing
• How Do These Things Change Your Plan?
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