how to write business plan
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How to write business PlansTRANSCRIPT
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Writing Business Plans
Today’s Topic
March 10th 2010 Meetup #1
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Today’s Presenter
An Entrepreneur Invited to Dragon’s Den Co-founder of MosaStore Inc. Business Plan Expert – also winner of
largest business plan competition of Canada Master of Business Administration &
Bachelor of Engineering
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Why you need a business plan? For Investors
– Marketing document – Foot-in-the-door philosophy – e.g. Hotmail
Founders – Organize your ideas – Market Research
For others – Potential employees – Suppliers / customers
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What should a business plan communicate?
Sell the team of entrepreneurs! – Qualities – Network – Passion – Thought process
Sell the opportunity – Market and profit potential – Strategy
Sell a deal? – No! Negotiations come later! – How much money you need
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Template Structure Approximate structure
– Executive summary (1-3 pages) – Customer and market analysis (3-4 pages) – Business model and competitive strategy (3-4
pages) – Competitor analysis (2-3 pages) – Implementation plan (2-4 pages) – Risk section (1-2 pages) – Financials Highlights and Assumptions (1-2 pages) – Financials – Founder Résumés
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Executive summary Purpose: To convince the reader to read on
Length: Short! Less than 1000 words
Contents: All key elements in your business plan – Company Name – Positioning Statement – Product/service description (uniqueness) – Market size (data on size, growth & competition) – Brief Business model and strategy – The management team's qualifications – financial summary, required amount, use of funds and
exit strategy Style: Clear, dynamic, positive and exciting
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Sentence #1: Segmentation For (target customer) who (statement of the need or opportunity), the (product/service name) that (statement of benefit)
Sentence #2: Differentiation Unlike (primary competitive alternative), our product (statement of primary differentiation).
Developed by Geoff Moore, The Chasm Group
Positioning Statement
Example
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Positioning Statement
Example
(Product/Service) High performance, low cost and flexible software storage solution (for) small to mid-size companies and educational institutes (who) are facing storage challenges in the midst of electronic data explosion.
(Unlike) costly solutions, (our) product efficiently utilizes the existing storage and network resources to provide effortless expandability, and in turn, lowering capital and operational IT expenditures.
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Customer and market analysis Clearly articulate the customer need
– Explain importance of customer need – Is there a willingness/ability to pay?
Provide secondary market research – Estimate size and growth potential of your market – Provide relevant market segmentation
Provide primary evidence of market needs – Customer (and competitor) testimonials – Survey evidence, focus groups
Always lead the analysis with facts and figures…
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Source: U.S. Census Bureau, Current Population Survey, 1988 to 2007 Annual Social and Economic Supplements
0
5
10
15
20
25
30
35
40
45
50
1985 1990 1995 2000 2005 2010
Number Uninsured and Uninsured Rate: 1987 to 2006 Number in millions , rates in percentage
Number Uninsured
Uninsured Rate
Market Research
Example
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Source: U.S. Census Bureau, Current Population Survey, 2005 to 2007
Market Research
Example
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Competition analysis
Never belittle the competition – Worst possible statement: “There is no competition” – Second worst possible statement: “Criticize competition for their
strength” Actual competition
– Never hide what you know
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Competition Analysis
Example
MOSAIC OF STORAGE SPACE www.20minMBAs.com
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Business model and strategy
Statement of business model – Discuss basic business logic – Define scope of business – Discuss revenue model – Provide graphical analysis only if
business model complex
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Business Model
Example
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Implementation plan Marketing and Sales
– What channels? What sales force? Etc. – What advertising? What image? Etc.
Operations – How do you plan to build the company? – What resources do you need?
Employment – What kind of employees? Corporate culture? – What compensation structures?
Milestones – What are our concrete targets? – When do you plan to get there?
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Risk section Why should I disclose my risks? You choose:
– Either you identify and frame risks yourself… – …or other people will do that for you!
Candidly identify all major risks Explain your mitigation strategy What level of detail?
– Show awareness, not paranoia – Risk section ≠ legal risk disclosure
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Financials Clearly present highlights of financials
– Key assumptions, revenues, earnings, margins, funding needs, exit strategy… depends on business
Explain your main assumptions Financials focus on Profit and Loss (Income statement) Need Cash Flow statement for funding requirement Balance sheet rarely matters Frequency depends on type of business
– Most investors want five year projections – Broad-brush: first two years quarterly, then yearly – Fine-comb: first two years monthly, then quarterly – Many other variations… you can’t win
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Cash Flow/Net Income
Example
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Founders’ résumés
Very Important! Highlight and explain relevance not only the
quality of your résumé, but also its relevance for the business opportunity at hand!
Also discuss role of founders and future management as part of the plan!
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Thank You Comments/Suggestions
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