presented by the uh pacific business center program (pbcp) david m. gillespie pbcp is a partner with...

Presented by the

UH Pacific Business Center Program (PBCP)

David M. Gillespie

PBCP is a partner with the Shidler in providing economic technical assistance

throughout the Pacific Region. The PBCP also operates the Honolulu

Minority Business Enterprise Center. We have extensive experience and

expertise in business plan development.

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Document/Submission RequirementsPrefer PDF formatLess than 1mb single file

Single Spaced (min.), 12 Point Font (min.), 1” Margins all around (min.) & 8.5” X 11” paper size

Emailed as attachment to: pace@hawaii.edu by 5pm on 4/4/08, AND

Five hardcopies to PACE office If Mailed - postmarked by 4/4/08If Hand Delivered – At PACE by 5pm on 4/4/08

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Document Specification RequirementsCover Sheet – 1 pageExecutive Summary – Maximum 2 pages

Business Plan – Maximum 10 pages

Attachments or Appendices – Maximum 10 pages, open format

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Judging Criteria1) Overall Appeal -10%2) Attractiveness of Market Opportunity-

15%3) Value Created by the Product/Service-

15%4) Competitive Advantage of Venture-15%5) Operational & Technological Viability-

15%6) Management Team Capability-15%7) Capital Requirements & Financial

Forecast -15%4

Suggested Organization

1. Cover Sheet

2. Exec. Summary - Overall Appeal (10%)

3. Overview of the Firm

4. Market Analysis – Market Opportunity (15%)

5. Products/Services Offered – Value Created (15%)

6. Marketing Plan/Strategy – Competitive Advantage (15%)

7. Operations Plan – Operational & Technical Viability (15%)

8. Management Team – Team Capability (15%)

9. Financial Plan – Capital Requirements & Projections (15%)

10. Appendices & Attachments

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Data Requirements: Team Name Business Name Names of All Team Members

Other: Logo Development Balanced Sheet with Lots of

White Use of Color

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Judging Criteria 1 - Overall Appeal of the Plan (10%): Compelling “vision”; enthusiasm; greater than the sum of its parts.

The business plan judge will probably obtain most of his/her ‘appeal’ in reading your Executive Summary.

Write the Final Executive Summary Last Things will change as you write the plan The Executive Summary you already

turned in can be adjusted/changed.

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‘Elevator Pitch’ – The reader must ‘get it’ in the Executive Summary.

Who – Manoa Tansgenics, Inc., a start up life science company

What – Provide genetically modified mice, a novel gene insertional methodology and gene therapy research development.

How – Use a proprietary gene insertion technology invented by the two business founders

Why – Transgenic mice market at $180 million; once technology validated potential for gene therapy market projected at $5.7 billion in 2011

How Much & Return – Need $2.5 million for research; offer 15% equity in the firm. Once reach 20% market penetration, firm sold/merged/IPO. 8

Other Key Items to Address: Mission and Objectives Product, Process, or New Business

Model The ‘Pain’ the Above will relieve Target Market – Customers, Value

Added, Competitors, Competitive Advantage

Business Model – Who pays, how much, and how often. Model margins

The Executive Summary MUST stand on its own; don’t copy sections word for word

from the business plan narrative—a common mistake.

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Include/Expand By the Level of Importance to Your Business Plan

Technology & Intellectual Property

Management Team Milestones/Goals Revenue/Cash Projection Funding Needs & Use of Proceeds Investor Potential Return & How

and When Returned10

Major Sections to Consider – A way of introducing the firm

Value, Vision & Mission History Distinctive Competence Technology Competitive Advantage Strategy and Objectives of Firm Major Milestones Achieved to

Date11

Judging Criteria 2 - Attractiveness of Market Opportunity (15%)

Market size and growth potential

Your firm’s potential in this market

Expected margins and net profit long-term potential

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Market Profile - Show you know the market you are enteringDemographic/Geographic/Psychographic

or Business ProfileMaturity of Industry – Which Phase:

Start-Up, Growth, Maturity, DeclineSize of Market – Units and DollarsGrowth Potential – Tie it to research and

in units and dollars over time Market ‘Pain’

Needs – What is the ‘pain’ of this marketSet it up so that your product relieves

‘pain’13

Market/Industry ‘Business Model’What is the current set-up (business model) for businesses in this market.

What is the margin and net profit profile of this market/industry –financial research

Is there a niche unsatisfied, or a better business model— set it up so your product/service, and, or business model is the answer.

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Competition – Who else provides the service or product and what else do they provide their customers

Competitive Position of Leaders

Market Share Distribution - % of the market pie by leader, market share growth

Barriers to Entry – How difficult is it to enter the market you’re interested in.

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Judging Criteria 3 - Value Created by the Product/Service (15%)

How will you relieve the ‘pain’- what is the unique value of product/service

Importance of Product/Service to Customer

Product/Service Description or Prototype

Features and Benefits of Product/Service

Market Reaction to Product/Service16

Product/Service Description – Clear, concise and complete. Detail in Appendix

Product Benefits & Features – The things that will relieve the ‘pain’ you identified in Market Analysis.

Product/Service Customer Reaction – Sampling, interviews, testimonials

Product SWOT – If appropriate17

Cleary Describe Product NeedNeed may not be fully recognized

by the market at this timeDescribe how you see the ‘need’

developing

Product Development PlanCurrent level of product

developmentPhasing plan of product

development

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Judging Criteria 4 - Competitive Advantage of the Venture (15%)

How Will the Product Gain Market Share Against Competitors

Market Share and Growth Profile Potential

How Long to Get Product/Service to Market

What Business Model/Distribution Method Will Position the Firm Best

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Business Model Proposed Be as specific as possible. Clear,

concise explanation (B2B, B2C, etc.) Product Market Development Plan

Phases of development: drawing, prototype, pilot manufacturing

Overcoming Competition – How?Pricing, Business Model, Quality,

Market Tactics

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Focused Target Market(s) ProfileSize and Trends of MarketsDemographic, Geographic,

Psychographic or Business Profile

Buying SensitivityVulnerability to Economic Factors

Purchasing Patterns

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Pricing Strategy – Image Awareness, Cost RecoveryHow will you fit within the market? -

Above Market, Match Competition, Below Market ?

Promotional StrategyMedia – Web-based, Print, TV: what

does the competition do?Message – What will be your key

message; Is it focused on your core business?

Promotional Budget – Sales growth requires a matching promotional budget.

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Sales Strategy – How will sales be developed and processed

Sales Generation in the Business Model

Sales Force Management Order Processing Compensation Plan

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Sales Projections First Year – by quarter; then

yearlyBy Product/Service LineBy Units and Dollars

Other Marketing ActivitiesService and Support CapabilityStrategic Alliances

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Judging Criteria 5 - Operational & Technological Viability (15%)

Product/Service Production Product/Service Distribution Production obstacles and how

you will overcome them Any essential technology

property and how will it be protected

Develop a plan timeframe25

Production Plan – Where produced or developed – materials required & sources, outsourcing

Technical requirements of producing the product/service and how met.

Patent protection or other means of protection

Distribution Strategy – How will you get your product/service to the customer

Retail, Wholesale, Distributor, Internet, Licensing, Franchising – tie into the business model

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Manufacturing Requirements – by order of importance to the plan

Facilities – plan for growth

Equipment Outsourcing Third-Party Agreements Contracts Licensing

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Milestones – Make/Break Activities

Schedule of key activities to be accomplished – GANTT Chart

Specific/Crucial Objectives:TimeframeResponsibility of who?Results expected

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Judging Criteria 6 -Management Team Capability (15%)

Venture management/expertise needs

Education, experience, skills of team Acknowledge skill gaps and show

how you will overcome them – hire, contract, etc.

Role of each team member in the development of the venture – dual roles

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Names Roles and Positions Experience and Education Other Related Experience ‘Gap’ Experts – Technical

skills Strategic Alliances

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Show that Your Organization is Set to Meet the Growth You Planned For

Principal Players – Do you have the right people in the right places? Will the firm’s expertise requirements change as the firm grows?

Consultants and Specialist – Are industry changes severe enough to bring on experts?

Organizational Structure – What is your organizational structure and will it be appropriate for your firm’s growth?

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Judging Criteria 7 - Capital Requirements & Financial Forecast (15%)

Capital Needs – Capital asset purchases,

start-up expenses, working capitalSources – Venture Capitalist, lenders,

FFF?Phasing – Start-up, 1st, 2nd, other

rounds Entity Ownership structure Investment Exit Strategy Project Evaluators – ROI, NPV, IRR Cash Flow - when turn positive

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Financial ForecastP & L SummaryCash Flow Summary

Cash Flow Breakeven – When does firm turn to positive cash flow

Investor Return – ROI, Dividends, Capital Returns, NPV, IRR

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Stages of VC Funding: Seed – Develop proto-type Early Stage – Launch product Growth Stage – Expand

marketing Mezzanine – Add resources,

acquire other firmsDevelop a structure/mix of funding

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Income Projections – Revenues, COGS and major expense categories. $ and %.

Cash Flow Forecasts –Too little cash (common problem) for working capital.

Cash Flow Break-Even Analysis – Do you need to generate more or less sales to cover operating costs than what you originally planned for?

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Income Statement Format Major Revenue Categories –

Ascending OrderBy product/service typeShow Key % - Gross & Operating

Margins Major Expense Categories –

Ascending OrderCOGS, Personnel, Rent

Level of DetailBy Quarter for the first 12 monthsBy Year after first 12 monthsThree years minimum, five years

maximum 36

Cash Flow – Direct Method Operating Activities

Revenues, Direct Materials and Labor, General & Admin. Expenses

Investing Activities – Asset Purchases

Financing Activities – Dividends, Return on Investment

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Be sure you have a financial macro & micro understanding of your venture and that micro and macro are in sync.

Macro View – The financial big picture: Review, understand and analyze the financial statements you generate.

Micro View – The financial details: Pricing strategy, margins, mark-up of the product or service you are offering.

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Examples of what you can put in the Appendix

Detailed Financial Documents Start-up Cost Schedule Funding Sources Detail Detailed Income Projections Balance Sheet Projections Detailed Cash Flow Projections Cash Break-Even Analysis

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Assumptions Critical to Your PlanInterest Rates: Long & short-term

Sales on CreditInventory TurnoverPersonnel OverheadLicensing AgreementOther

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Product/Service Detailed Description, Drawings,

Production Processes

Management Team Resumes Consultants/Experts Qualifications

Other Market Research Data Relevant News Articles

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6 C’s Of A Winning Business Plan Complete – No missing sections, cover all

the judging points.

Clear – Concept of your product/service, its

market, and business model are explained completely during the first read of the plan.

Credible – The plan makes ‘sense’. No

crazy revenue projections, outrageous market share claims, belief in a lack of any competition, etc.

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6 C’s Of A Winning Business Plan Compelling – Draws the reader into the

business concept they way a good novel draws in a reader. The reader buys into your idea because your plan is convincing and your narrative is persuasive.

Customer Focused – Show you understand

your customer and how you will relieve their pain.

Concern for Investor/Lender – Show how,

and when, debt/equity is returned and ROI is developed.

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‘Form’ of the Plan Use of Charts and Graphs

Simple, Clean, Easy to Read Font Type and Size Changes

Limited Changes - subtle Color

Make sure it prints ‘ok’ in black and white

Shading and texture for graphs/charts

Number the pages 45

Plan Development Many contributors—one writing voice Proofread by non-team member Support assumptions when ever possible

Business Plan Team Skill Needs Marketing – Research, Market Size, Sales

Est. Financial – Projections & Statement

Development

Plan Wording Positive word choices; not “might”,

“maybe”, “probably”; but don’t overstate or exaggerate.

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Business Plan Judges Are Hawaii Business ProfessionalsBankers, Business Owners, Gov’t and Non-Gov’t Organization Employees

Business Service Providers – Accountants, Lawyers, Consultants

Investors, Venture CapitalistEntrepreneurs

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Software & Website Assistance: Business Plan Pro – palo-alto.com

Business Plan Builder – jianusa.com

Business Plan Writer Deluxe Bplans.com Businessplans.org – sample plans Microsoft Business Planner –

Office Pro 48

Good Luck to All!!

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