This document provides guidance on writing a winning business plan. It emphasizes that the plan should clearly explain how the business will satisfy a market need or "pain" in a way that is superior to competitors. The plan should have a succinct executive summary that acts as a standalone mini-plan. It also stresses the importance of realistic financial projections and a business model that exploits the company's strengths. Overall, the document provides an outline and best practices for writing a plan that will attract investors by differentiating the business and demonstrating its prospects for success.

1. Objective of a “Winning”
Plan
Create a business that
provides potential customers
a better (value - price) proposition
than competitors
while managing costs and expenses
so as to make profits (earnings)
1

2. Writing a winning business
plan (Part I)
 Uses of plan
 Important characteristics
 Turn-offs and turn-ons
 Investor criteria
 Questions answered by plan
 Research before writing
 Elements and outline of business plan
 Executive summary
2

3. Uses of business plan
 Game plan for
company
 Raising capital
 Document for
credibility with
vendors, customers
 Operations plan
 Performance
measurement
3

4. Essential characteristics
 Most important: succinct
 Length: 30 pp + financials + appendix
 1st draft: write too much, then pare down
 Eliminate work for reader
 Stand out from the crowd
 Legal issue: disclose all material info
 Note: INVESTOR LOOKS FOR KEYS TO
SUCCESS
4

5. Differentiate your plan
 Most business plans
seen by investors
and bankers are
pathetic
 An outstanding
business plan is a
great differentiator
5

6. Investor/banker turn-offs
 “Pre-packaged” plan
 Product/service/technology orientation
 Insufficient research of market
 Insufficient knowledge of competition
 Unrealistic financial projections
 Failure to examine risks
 Unreasonable valuation
 Spelling, grammar, arithmetic errors
6

7. Investor/banker turn-ons
 Executive summary compelling reader to study plan
 Market opportunity that gives company distinct
competitive advantage
 Evidence of market acceptance
 Proprietary position
 Management team which can execute
 Producible and saleable product
 Reasonable valuation
 Achievable/believable projections – satisfying investor
ROI expectations
7

8. Key questions answered by a
winning business plan
 What need will you satisfy and how
large is that need?
 How will you satisfy that need, and how
will you make money doing it?
 What are the prospects for success?
 What do you need to do it?
 What’s in it for the investor?
8

9. Research before writing (1)
 What can company become in short and long
runs?
 Why does opportunity exist? How long will it
last?
 Is there a bullet proof business model?
 Who will be the first customer; why will
customer buy; how many will he buy?
 Why and how will company withstand
competition?
9

10. Research before writing (2)
 What are three most important assumptions
on which success is based? How to test
them?
 What is upside potential and downside risk?
 What has to happen to reach cash flow
break-even?
 How sensitive are projections to key
assumptions?
10

11. Vision
 An informed and forward-looking
statement of purpose defining the long-
term destiny of the company
11

12. Mission statement
 More complete description of
company’s goals and
customers, incorporating
vision statement
12

13. Value proposition
 The monetary worth of the benefits a
customer pays for a product or service
 Five key values:
 Product
 Price
 Access
 Service
 Experience
13

14. Business model
 Description of the business and how it
will work economically; set of planned
assumptions about how a company will
create value for all its stakeholders
 Elements:
 Customer selection
 Value proposition
 Differentiation and control
 Scope of product and activities
14

15. Stuck? Write a “mini-plan”
first
 Two-page plan which answers:
 What is concept?
 How will you market it?
 How much will it cost to produce/deliver?
 What will happen when sales begin?
 Write down assumptions
 Test assumptions
 Give yourself time to discover mistakes
15

16. Elements of business plan (1)
 Executive summary
 Opportunity: quality, growth potential
 Vision: mission, objective, core concept
 Product/service: value proposition, business model
 Context: industry, timeliness, regulations
 Strategy: entry, marketing, operations, market
analysis
 Organization: structure, culture, talent
16

17. Elements of business plan (2)
 Entrepreneurial team: capabilities, commitment
 Financial plan: assumptions, cash flow, P&L
 Required resources: financial, physical, human
 Uncertainties and risks
 Financial return: ROI
 Harvest: return of cash to investors, founders, and
employees
17

18. Outline of winning business
plan (1)
 Cover/title page
 Executive summary
 Tables of contents, illustrations, tables
 I. Company description
 II. Products and/or services
 III. Market description
 IV. Competition
 V. Marketing strategy
18

19. Outline of winning business
plan (2)
 VI. Management team, organization, staffing,
facilities
 VII. Financial plan
 VIII.Investment and ownership
 IX. Critical risks
 Appendices (separately bound)
19

20. Executive summary (1)
 Most important part of plan!!!
 Assume five-minute reader
 Therefore, 3-4 pages long
 Standalone “mini-plan”
 Most critical paragraphs:
 The pain
 How the pain is going to be cured
20

21. Executive summary (2)
1. Purpose of plan
2. Summary description of business
3. Opportunity/pain and strategy
4. Market analysis
5. R&D and production plans
6. Management team
7. Financial summary
21

22. Executive summary (3)
 1. Purpose of plan
 Attract investors/bankers or internal tool
 What’s in it for investor/banker
 “Credibility-builders” (customers…)
 2. Summary description of business
 One-sentence description
 Needs to be satisfied – the pain
 How needs will be satisfied
22

23. Executive summary (3)
 3. Opportunity and strategy
 Marketing and sales strategies
 Distinctive advantage
 4. Market analysis
 Target market
 Size, demographics, growth rate
 Market trends
23

24. Executive summary (4)
 5. R&D and production plans
 Current status and milestones
 Proprietary status
 6. Management team
 Founders, key people, board members
 Relevant experience
24

25. Executive summary (5)
 7. Financial summary
 Capitalization table
 Prior funding and valuations
 Required current funding and use of funds
 Summarized actual and pro forma
financials for 5 years (annualized):

P&L: revenues, net income

Cash flow: cash position at each year-end
25

26. Writing a winning business
plan (Part II)
 Body of plan
 Some thoughts on financial forecasting
 Appendices
 Turning business plan into PowerPoint
presentation
26

27. Roadmap for building plan
1. Opportunity/pain
2. Solution: product or service
3. Context, strategy, time horizon
4. Organizational, financial, and other
resources needed and available
5. Financial returns to participants and
risks
27

28. Body of plan
 Cover/title page
 Company name, address, phone number,
e-mail address, web site
 CEO name as contact
 Date
 Control number
 Proprietary statement
28

29. Sample proprietary statement
 “Proprietary and confidential. Not for
discussion or disclosure without written
permission of XYZ, Inc.”
29

30. Body of plan
 Executive summary
30

31. Body of plan
 I. Company description
 History
 Legal establishment
 Nature of business
 Strategic mission statement
 The vision
 Overall and specific objectives
31

32. Body of plan
 II. Products and/or services
 Description
 Application and value to customers
 Underlying technology
 Proprietary status
 Current/future products or services
 Development/go-to-market schedule
 Distinctive competence/differentiation
 Revenue model
32

33. Body of plan
 III. Market analysis
 Total market
 Target market
 Where are customers? How will you reach
them?
 Identify first 3-5 customers (by name)
 Market trends
33

34. Body of plan
 IV. Competition
 List of competitors
 Competitors’ characteristics, strengths,
weaknesses, market shares
 Summary table of competing products
 Your competitive advantage
 Your barriers to entry
34

35. Body of plan
 V. Marketing and sales strategies
 Promotion and advertising
 Pricing strategy
 Distribution channels
 Sales forecasts and budgets
 SWOT analysis
35

36. Body of plan
 VI. Management team, organization, staffing,
facilities
 Management team bios
 Organization chart
 Brief job descriptions
 Board of Directors
 Board of Advisors
 Staffing plan/schedule
 Facility plan/ schedule
 Service providers: bank/attorney/accountant
36

37. Body of plan
 VII. Financial plan (actual and pro forma)
 Financials:

Cash flow:
 Year 1: monthly
 Year 2: quarterly
 Years 3-5: annual

P&L:
 Same as cash flow

Balance sheet:
 Years 1-2: quarterly
 Years 3-5: annual
37

38. Creating a financial plan
 The numbers tell you how your
business is run…
 …not why.
38

39. Creating a financial
plan/forecast
 Learn the basic language of accounting
 Quantify present and future operations with
numbers
 Project realistically
 Use financial forecasts to:
 Plan cash needs
 Measure performance with ratio analysis
 Study effect on profitability of: marketing, R&D,
production, etc., costs
39

40. Needed in financial plan
 Cash flow
 Operating (Profit & Loss) statement
 Balance sheet
 Ratios and “magic numbers”
 Assumptions
40

41. Cash flow forecast
 Changes in company’s cash from:
 Operations, investments, financing
 Collections from:
 Operations, sale of assets, new financing
 Disbursements to:
 Purchase of assets, debt repayment, cost of
operations
 Cash flow = Collections - Disbursements
41

42. Profit & loss statement
42

43. Balance sheet
43

44. Ratio analysis
 Tests of profitability:
 Return on investment (ROI) = net
income/tangible net worth
 Return on equity (ROE) = net
income/owners’ equity
 Return on sales (profit margin) = net
income/gross sales
 Inventory turnover = cost of goods
sold/average inventory
44

45. Ratio analysis (2)
 Tests of financial health:
 Current ratio = current assets/current
liabilities
 Working capital turnover = sales/(current
assets-current liabilities)
 Debt-to-equity = total debt/total equity
 Collection period = days in
year/receivables turnover
45

46. Notes on financial plan
 Most business plans waste too much
time/space on numbers
 Most important: business model with key
drivers, such as (for example):
 Manufacturing: yield on production process
 Magazine publishing: renewal rate
 Software: distribution channels
 Most important info: when company will
become cash flow positive
46

47. Body of plan
 VIII. Ownership and investment
 Current ownership (cap table)
 Capital needs and use of funds
 Past investment(s) and valuation(s)
 Stock option plan
 Exit for investors
47

48. Body of plan
 IX. Critical risks (examples)
 Cost overruns, delays
 Supplier, distributor problems
 Competitive price-cutting
 Capital shortages
 Limited operating history
 Limited management experience
 Dependence on key management
48

49. Appendices (bind separately)
 Photos/sketches of product
 Test results/testimonials
 Documentation of proprietary status
 Published industry/market studies
 Price list/catalog/data sheet
 Advertisements/press releases
 Brochures
 Full resumes of management team
49

50. Summary of keys to winning
business plan
 Easy to read
 Clear explanation of market pain and company’s cure
 Market-driven company comes across
 Exploits company’s uniqueness and competitors’
weaknesses
 Realistic business model
 Attractive, but realistic, projections
 Spend majority of time on executive summary
 Prepare one-page teaser to send with executive
summary
50

51. Oral presentation of plan to
investors
Investor’s issues:
 Can I trust entrepreneur?
 Do I believe entrepreneur?
 Does entrepreneur appear
capable of executing plan?
 Does team have talent and
experience to make it happen?
 Can I make money on my
investment in a reasonable
time?
51

52. Oral presentation
 Use PowerPoint:
 Turn Executive Summary into bullet points
 Aim for 20-minute presentation (without
Q&A) = 10-12 slides
 Slides should not be excessively busy:
max. 12 lines/slide
52

53. Oral presentation outline
 Slide 1: Title (name, logo, presentation to …)
 Slide 2: Business description, history
 Slide 3: Management team, BOD
 Slide 4: Market pain and cure strategy
 Slide 5: Competitive advantage/barriers to entry
 Slide 6: Market analysis
 Slide 7: Sales strategy
 Slide 8: Product/service description
 Slide 9: Financial plan
 Slide 10: Investment and use of proceeds
53

54. Key Considerations in
Developing a Winning
Plan
 Importance of people/skills/resources
 Assessment: identifying “good” ideas
 Targeting specific customers/segments
 Dealing with the “whole” product
 Differentiation from competitors
 Risk analysis and reduction
 Investor payback
54

55. Business Planning is an Iterative
Process…
2
Run the numbers…
(Develop your Financial Plan)
3
1
Tell the story… Verify the story…
(Draft your narrative sections) (Examine the narrative sections)
55

56. Reviewing the Business
Plan Model
Opportunity Product/Service
Why this business? Why Industry, What are you going to provide
now? Why you? Buyer & Competitor and who wants to buy it?
Analyses
Operating Plan Marketing Plan
Cost Projections Sales Projections
What will it cost to produce What will it cost to sell any given
your product or service? amount of your product or service?
Financial Plan
Pro Forma Financial Statements
How will your business make money?
How much? For how long? Risks?
56