BUSINESS

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BUSINESS

  1. 1. WAYNE BROWN INSTITUTE BUSINESS planning guidelines & submission guidelines
  2. 2. The business plan should tell the potential • Summarize, but do not provide detail on investor why your venture will succeed. the most compelling parts of the business The criteria weights (located in parentheses), plan. developed by venture capitalists from • Use specific information. A name of a around the country, indicate the emphasis current investor or strategic partner can investors place on various parts of the plan. speak volumes. The same is true when For example, on a 100-point scale, financial you speak of management background. information is worth 10 points, while • Create an appetite – make an investor marketing is worth 35. A typical business want to read more. plan is approximately 25 to 35 pages in length and may have additional appendices THE COMPANY to support the plan. (15% Weight) The marketing strategy and the • Business purpose: Explain what business management team are the most important you are in and why (what market elements. At a minimum, the plan should opportunity to exploit). An investor include: A cover page with name, address, should be able to ascertain quickly phone and fax numbers, email and website what your venture does, what market(s) addresses and contact person. it “plays” in and in what stage of Use a font size NO smaller than 12pt. development your venture is and standard letter margins. The opening • Give a brief summary of your company’s paragraph should be a 25- to 50-word history and current status. Include description of your business. whether the company is publicly or privately held, or a start-up EXECUTIVE SUMMARY • List what has been accomplished Initially very important! If it doesn’t get an investor’s attention, all is lost. • State your company’s overall strategy and objective’s (i.e., go public in 7 years; • Length: 1-3 pages command 10% market share after 10 • Business purpose summary years; reach $100 million in sales after 5 • The compelling reasons that lead to an years) opportunity (markets, business growth • If you are currently in business, describe WAYNE BROWN INSTITUTE potential, etc.) revenue growth, approximate time to • Products/Services profitability and accomplishments • Management ability • Diagram, if possible, the business model and where you fit in the industry “food • Unique attributes and strengths of the chain.” Show how much value you add to company the chain • How much money you need • A simple statement of revenue growth page 2 www.venturecapital.org
  3. 3. PRODUCTS OR SERVICES extremely important and must be (15% Weight) addressed. • Discuss the development and the important attributes of your technology MARKETING STRATEGY and identify and compare the technology (35% Weight) with competing technologies. What does • Discuss the issues that create the market your product/technology do? How is it (market drivers -- or what compels better? Who will use it? Do not include people to buy) proprietary information. • Describe the market size, anticipated • Is it evolutionary or revolutionary and growth and key changes why? • Uniqueness - what makes you different? • What performance characteristics must What gives you an advantage? it demonstrate in order to be accepted in • Discuss barriers to entry the market? • Biotech companies must discuss strategic • Describe important features and user alliances benefits - relate features of the products and services to market needs and to the • Market penetration – What is your competition. marketing strategy; i.e., channels of distribution, promotion, pricing and the • Discuss pricing and margins for both cost of the marketing program? Outline your products and your competitors’ proposed, pending or ongoing strategic products. alliances or agreements • Explain proprietary position - • Competition - Who? Size of their trademarks, patents, trade secrets, special market? Their strategy? (IMPORTANT production skills, proprietary processes, NOTE: “No competition” to an investor etc. translates to: “no market” and “no • Describe specific products and projects management.”) planned, their status, expected product • Communicate and demonstrate that your life and potential revenues. plan is based on “market pull” rather • Articulate any applicable regulatory or than “technology push.” environmental issues and how they will • Operations - If your company is ready WAYNE BROWN INSTITUTE be addressed. for a major round of venture capital, or • For Biotech companies, proprietary ready for clinical trials or ramping up technology is extremely important. sales from $2 million to $15 million: Compare it with competing technologies. being able to demonstrate that you can Is the technology evolutionary, execute the tasks at hand is vital. revolutionary or commonplace? Does What does the venture need to support it need enabling technology or is it pending rapid growth. What is your enabling technology? FDA issues are growth strategy? www.venturecapital.org page 3
  4. 4. How, when and where will you get the justify your financial assumptions. Also human, physical and technical resource include income statement (showing you need to expand? cash flow) and balance by month for the What are the critical milestones and first year, by quarter for year two. Do a barriers to overcome to ramp up the sensitivity analysis on year one and two. venture? • Include a past financial history, if applicable. MANAGEMENT • Best estimate when the investor will get (25% Weight) a return on investment. Describe the exit strategy (mergers, acquisitions or initial • Backgrounds of key individuals - why public offerings). Describe, if possible, they can do this job, specific value they similar businesses and what their returns add to the company, their past successes to investors were. and achievements, relevant work experiences • Demonstrate sales growth and backlog if • History of working together as a team applicable. • Identification of immediate personnel needs and anticipated initial IMPORTANT NOTES organizational structure Do not include any statement valuing the • Include Boards of Directors and current round of financing. Such statements Advisors with their backgrounds and will never work in your favor with a responsibilities professional investor. The plan should be current, neatly presented, typed and error free. Use of FINANCIAL SUMMARY elaborate bindings, or overuse of color (10% Weight) will only cause your plan to be viewed as • Funds required - how much you want to form with no substance and it will not be raise, both initially and subsequently taken seriously. Carefully edit the plan for • History and detail of past investments. grammar and understandability. Include description of current corporate Remember that each section of the business structure. plan reflects on the competence of each team member. WAYNE BROWN INSTITUTE • Describe funding needs at each stage of development, with each stage’s While investors are sophisticated people, benchmarks or milestones. Use only don’t abuse their time by using complicated, value-added benchmarks such as technical jargon or acronyms. Remember, development, product and market testing time is a venture investor’s most important and sales milestones resource — don’t waste it! • Simple projection of sales, revenues, Venture capitalists look for reasons not to income and expenses over a 3-5 year do a deal. They assume nothing, and neither period (also balance sheet). State and should you. page 4 www.venturecapital.org
  5. 5. Put detailed vital sheets, extensive financials, lengthy technical discussions, operations plans and manuals and detailed marketing lists and reports on separate unattached appendices. The plan should be no more than 25 pages long; but your appendices may be lengthy and numerous. A business plan is like a contract. It is what the investor is “buying” and it is what his/ her expectations will be based on. Never submit a plan to an investor without an introduction. Unsolicited plans are inherently not credible. SUBMITTING YOUR BUSINESS PLAN Via Internet: info@venturecapital.org Subjectline should read: “Business Plan for Review” CONTACT INFO Wayne Brown Institute P.O. Box 2135 Salt Lake City, UT 84110-2135 Phone: 801.595.1141 Fax: 801.595.1181 www. venturecapital.org WAYNE BROWN INSTITUTE www.venturecapital.org page 5

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