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  • 1. ffd8ffe000104a46494600010201006000600000ffec00114475636b7900010004000000500000ffee000e41646f626 50064c000000001ffdb0043000202020202020202020203020202030403020203040504040404040506050505050 505060607070807070609090a0a09090c0c0c0c0c0c0c0c0c0c0c0c0c0c0cffdb004301030303050405090606090d0 b090b0d0f0e0e0e0e0f0f0c0c0c0c0c0f0f0c0c0c0c0c0c0f0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0c0 c0c0c0cffc00011080410032003011100021101031101ffc4001f00000105010101010101000000000000000001020 30405060708090a0bffc400b5100002010303020403050504040000017d010203000411051221314106135161072 27114328191a1082342b1c11552d1f02433627282090a161718191a25262728292a3435363738393a43444546474 8494a535455565758595a636465666768696a737475767778797a838485868788898a92939495969798999aa2a3 a4a5a6a7a8a9aab2b3b4b5b6b7b8b9bac2c3c4c5c6c7c8c9cad2d3d4d5d6d7d8d9dae1e2e3e4e5e6e7e8e9eaf1f2f3 f4f5f6f7f8f9faffc4001f0100030101010101010101010000000000000102030405060708090a0bffc400b5110002010 2040403040705040400010277000102031104052131061241510761711322328108144291a1b1c10923
  • 2. growthink Growthink’s 2008 Business Plan Guide Table of Contents Introduction ............................................................................................................... 1 Executive Summary.............................................................................................. 3 Concise Explanation of the Business......................................................................... 3 Market Size and Market Need ................................................................................... 3 Company’s Unique Qualifications..............................................................................4 Company Analysis................................................................................................. 5 Company Profile ........................................................................................................ 5 Past Accomplishments .............................................................................................. 5 Unique Qualifications................................................................................................. 5 Industry Analysis .................................................................................................... 6 Market Size................................................................................................................ 6 Trends ....................................................................................................................... 6 Customers & Competition..........................................................................................7 Data Sources............................................................................................................. 7 Multiple Industries...................................................................................................... 7 Customer Analysis ................................................................................................ 8 Customer Identification/Definition .............................................................................. 8 Customer Demographics, Needs Assessment and Decision-Making........................ 8 Multiple Customer Targets & Partners....................................................................... 9 The Customers’ Customer.........................................................................................9 Competitive Analysis.......................................................................................... 10 Defining Competition ............................................................................................... 10 The Competition Dilemma ....................................................................................... 10 Solving the Dilemma................................................................................................ 10 Which Competitors to Include in The Analysis......................................................... 11 Describing Competitors and Showing Competitive Advantages .............................. 11
  • 3. growthink
  • 4. ffd8ffe000104a46 49460001020100cgrowthink 800c80000ffe20c5 Table of Contents (continued) Marketing Plan 84943435f50524f4 ...................................................................................................... 12 Promotions Price 6494c4500010100 Products and/or Services......................................................................................... .............................................................................................................. ........................................................................................................................ 12 12 13 Customer 000c484c696e6f02 Place........................................................................................................................ Retention................................................................................................. Partnerships ............................................................................................................ 14 13 13 Operations Plan 1000006d6e74725 .................................................................................................... 15 247422058595a20 Everyday Processes (Short-Term Processes).........................................................15 Business Milestones (Long-Term Processes) ......................................................... 15 Management Team ............................................................................................. 17 07ce00020009000 Description of Key Team Members.......................................................................... 17 Management Team Gaps ........................................................................................ 17 Description of Board Members ................................................................................ 17 Financial Plan 600310000616373 ........................................................................................................ 18 Detailed Revenue Streams...................................................................................... 18 The of Funds 704d53465400000 Pro-Forma Financial Statements......................................................................18 Validating Assumptions and Projections.................................................................. 19 Sources and Uses .................................................................................... 19 Exit Business Plan Appendix 000494543207352 Strategy ............................................................................................................ 19 ................................................................................... 20 NDAs 474200000000000 Other Key Business Plan Issues .................................................................. 21 ....................................................................................................................... Outsourcing the Business Plan Development.......................................................... 21 Plan 21 Formatting, Charts 000000000000000 Length ............................................................................................................. 22 Plan and Graphics..................................................................... Incorporating Investor Feedback....................................................................................... 22 22 About Growthink 00f6d60001000000 ................................................................................................... 23 00d32d485020200 . 2008 Growthink, Inc. Call Growthink today at 877-249-7526 for a confidential consultation or email us at 000000000000000 info@growthink.com 000000000000000 000000000000000
  • 5. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584  Proving barriers to entry: A business plan must include ffe 943435f strategies that demonstrate that the company can and will build Introduction 50524f4 long-term barriers around its customers. Claiming a first mover 6494c45 advantage is simply not compelling in today’s funding 00 0001010 environment. 0000c48 4c696e6 business plan is a roadmap for a growing company. It also serves to A  Developing realistic financial assumptions: Many 01 f021000 investors skipcompany’s value proposition to employees, advisors, communicate the straight to the financial section of the business plan. 006d6e7 It is critical that and assumptions and projections in the vehicle by partners, customers the investors. Business plans are this section be 4725247which companies “get in the door,” and are the documents most realistic. Plans that show penetration, operating margin and 04 4220585heavily scrutinized by investors, particularly in today’s financing revenues per employee figures that are poorly reasoned, internally 95a2007environment. inconsistent or simply unrealistic greatly damage the credibility of ce00020 the entire business plan. In contrast, sober, well-reasoned financial a4 0090006 establish credibility it is critical that a business plan does not To 0031000 assumptions and projections communicate operational maturity overestimate market sizes, underestimate competition, or project 0616373 andover-aggressively. Rather, they must present realistic game results credibility. 64 704d534plans for achieving success, including: 6540000 0000494  Highlighting past accomplishments: The best indicator of 5432073 future success is a 2008 Business track record. The business plans Growthink’s Plan Guide details the key 94 company’s past 5247420 of previously requiredcompanies must show what milestones It is elements funded by today’s sophisticated investors. they organized by ten key business plan sections as follows: 0000000 have achieved with those funds. New companies must show how 0000000 60 the past successes of the management team will enable the 0000000 1Executive Summary company to overcome expected challenges. 000000f 2Company Analysis 6d60001 3Industry Analysis 00 0000000 0d32d48  4Customer Analysis Understanding and defining the “relevant market”: 5Competitive Analysis 5020200 Improper sizing of aPlan 6Marketing company’s target market is a telltale sign of a 10 0000000 poorly reasoned business plan. For example, though the U.S. 7Operations Plan 0000000 healthcare market is a Team dollar market, there is no company 8Management trillion 0000000 that could reap $1 trillion in healthcare sales. Rather, a more 9Financial Plan 20 0000000 meaningful metric is the relevant market size, which equals the 0000000 company’s sales if it were to capture 100% of its specific niche of 0000000 the market. Defining and communicating a credible relevant 10 0000000 market size is far more powerful than presenting generic industry 0000000 figures. 0000000 0c 0000000 0000000  Understanding and catering to customer needs: Investors 0000000 have a laser sharp focus on the relationship between a company 80 0000000 and its customers. In its business plan, a company must clearly 0011637 communicate how its products and services meet specific 0727400 customers wants and needs, and identify which target markets 0001500 most exemplify these needs. The business plan must also outline 0c 0000033 an easy to follow and credible roadmap of how the company plans 6465736 to penetrate its customers. 3000001 80 8400000 06c7774 7074000 00 001f000 0000146 26b7074 0000020
  • 6. growthink ffd8ffe000104 a46494600010 20100c800c80 000ffe20c5849 43435f50524f4 6494c4500010 100000c484c6 96e6f02100000 6d6e74725247 422058595a20 10.Appendix 07ce00020009 It is more crucial then ever to present investors with a realistic, 000600310000 credible and compelling business plan. Such a business plan distinguishes a company from the thousands of other companies seeking to raise capital, and signals to investors that 616373704d53 the company is soberly managed and poised for success. 465400000000 494543207352 474200000000 Growthink’s 2008 Business Plan Guide G22 000000000000
  • 7. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584 ffe Executive Summary 943435f 50524f4 6494c45 Company’s Unique Qualifications Once the investor understands the business and agrees there is a need for the company’s products and services, the final step is 00 0001010Most investors are inundated with business plans, and often give them demonstrating that the company has an “unfair competitive advantage” 0000c48 the market.aExamples of unfair advantagesitcould include athe first no more than cursory review. Accordingly, is critical that in world- 4c696e6page of the Executive Summary stimulates and motivates the investor class management team, proprietary technology, proven operational 01 f021000 learn more about the company. to systems, key partnerships, long-term contracts with major customers, 006d6e7 well as other successes-to-date. The plan must document and detail as 4725247 first page of the Executive Summary must include the following: The these compelling advantages. 04 4220585 95a2007 Investors have varied opinions regarding the best length of an ce00020  A concise explanation of the business  A description of the Executive Summary. Some prefer a one-page summary, while others a4 0090006 market size and market need for the business  A discussion of feel that a three to four page summary is more appropriate. Including 0031000 how the company is uniquely qualified to fulfill this need 0616373these critical elements in the first page of the business plan satisfies 704d534 needs of virtually all investors. After reading this page, investors the 64 6540000 finish reading the Executive Summary or jump straight to the other 0000494 can sections. Concise Explanation of the Business 5432073 94 Believe it or not, after reading the first page of most business plans, 5247420Growthink believes that an Executive Summary should include one to investors often do not understand the business in which the company is 0000000three additional pages that boil down the essential elements of the operating! This is particularly true when a company is involved in a 0000000business plan. This includes paragraphs addressing each of the 60 complex, highly technical business. It may seem obvious, but it is 0000000following: critical to remember that investors cannot invest in what they do not 000000f understand. The Executive Summary must simplify the definition of 6d60001  Customer Analysis: What specific customer segments the 00 0000000 business to targeting interest and promote a clear understanding. the develop company is and their demographic profiles 0d32d48The rest of the plan can tell the full, complex story.  Competition: Who the company’s direct competitors are 5020200 10 and the company’s key competitive advantages 0000000 0000000  defining a business often requires simplification. For instance, Clearly Marketing Plan: How the company will effectively 0000000an “online book target market also be presented as “a firm involved in penetrate its seller” could 20 0000000 procurement and distribution of written materials across a wide the  Financial Plan: Summarizing the financial projections of geographic spectrum.” Obviously the former description is more 0000000 the company 0000000effective in setting the stage for the investor to learn what is unique 10 0000000  the company. about Management Team: Biographies of key management team 0000000 and Board members 0000000Market Size and Market Need 0c 0000000 is critical to show investors that the company is positioned in a large It 0000000 growing market and that there is a clear and compelling need for and 0000000 product or service. As such, it is important to define the market by the 80 0000000referencing credible sources as to its size and projected growth. It is 0011637especially critical that the plan prove the customers’ ability and 0727400willingness to pay for this need. 0001500 0c 0000033 6465736 3000001 80 8400000Growthink’s 2008 Business Plan Guide G44 06c7774 Growthink’s 2008 Business Plan Guide G 3 3 7074000 00 001f000 0000146 26b7074 0000020
  • 8. growthink ffd8ffe000104 a46494600010 20100c800c800 00ffe20c584943 435f50524f464 94c4500010100 000c484c696e6 f021000006d6e 747252474220 58595a2007ce0 002000900060 031000061637 3704d5346540 000000049454 320735247420 000000000000 000000000000
  • 9. ffd8ffe 000104a ffd8ffe000104a growthink 4649460 0010201 00c800c 80000ff e20c584 4649460001020 Company Analysis 943435f 50524f4 6494c45 100c800c80000f fe20c584943435 0001010 Executive Summary entices the investor to learn more about the The 0000c48company. The Company Analysis in turn educates the reader regarding 4c696e6 company’s history. the f021000 006d6e7 4725247 f50524f46494c4 Company Profile This section should start with a detailed profile of the company 500010100000c 4220585including its: 95a2007 ce00020  Date of formation  Legal structure (LLC vs. C-Corp., etc.)  484c696e6f0210 0090006 Office location(s)  Business stage (start-up vs. undergoing 0031000 R&D vs. serving 0616373 00006d6e74725 704d534 customers, etc.) 6540000 0000494Past Accomplishments 5432073 next section of the Company Analysis should include a chart of 247422058595a The 5247420 company’s past accomplishments, including descriptions and dates the 0000000when: 0000000 0000000 000000f 6d60001 2007ce0002000  Prior funding rounds were received  Products and services were launched  Revenue milestones were reached (e.g., date 9000600310000 when sales 0000000 0d32d48 surpassed the million dollar mark)  Key 5020200 partnerships were executed  Key 616373704d534 0000000 customer contracts were secured  Key 0000000 employees were hired 0000000 6540000000049 0000000This information is critical to investors as it indicates the company’s 0000000ability to execute upon a previous game plan. Attaining milestones is 0000000 excellent indicator for potential investors that their money will be an 4543207352474 0000000used to create value and lead to a liquidity event. 0000000 0000000Unique Qualifications 2000000000000 0000000Finally, the Company Analysis should detail why the company is 0000000uniquely qualified to succeed. This is often referred to as the 0000000company’s “unfair competitive advantage.” This advantage could 0000000000000 0000000include a world-class management team, proprietary technology, 0011637proven operational systems, key partnerships, long-term contracts with 0727400major customers, as well as other successes-to-date. 0001500 0000033 6465736 3000001 000f6d60001000 8400000 00000d32d4850 06c7774 Growthink’s 2008 Business Plan Guide G 5 5 7074000 001f000 0000146 26b7074 2020000000000 0000020
  • 10. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584 example, showing how the company will succeed in an uncertain For ffe Industry Analysis 943435f 50524f4 6494c45 economic climate relieves investor concern and will enhance the success of the business plan. 00 0001010 Industry Analysis describesin the Industry which a company be The the landscape in is/ While the facts and figures Analysis should 0000c48 be operating. It serves to prove it is critical that the data a genuine will presented to support the company, to the reader that there is presented need in the market for the company’s products and services, that the 4c696e6 believable and verifiable as investors (if interested in proceeding) be 01 f021000 conduct extensive due diligencesubstantial salesplan.the company, market is large enough to support by will on the business 006d6e7and that the industry parameters support the company’s strategy. 4725247 04 4220585 Customers & Competition 95a2007Market Size Even though the business plan includes specific sections for Customer ce00020 good starting point is to discuss the marketplace in which the A and Competitive Analysis, an overview of these two parameters should a4 0090006company’s products and services are offered and the size of this also be included in the Industry Analysis. 0031000marketplace. Critical to this analysis is determining the relevant 0616373market size. The relevant market size equals a company’s sales if it Regarding customers, the Industry Analysis should discuss who the 64 704d534were to capture 100% of its specific niche of the market. 6540000 customer groups are and the size of each. The specific needs, key wants and demographic profiles of the customers in which the 0000494 instance, if a company develops Internet appliances for doctors, For 5432073 relevant market will be detailed in thethe trillion Analysis. company will target Customer 94 the size clearly is not dollar healthcare 5247420market. Rather it is the size (in units and dollars) of computer and 0000000Regarding competition, the Industry Analysis should discuss the key Internet appliance sales to doctors, since it is these products against 0000000categories of competitors and the general competitive landscape. The 60 which the company competes. Arriving at the relevant market size is 0000000Competitive Analysis section will detail the key competitors. rarely easy, and often requires peeling many layers off a huge total 000000f industry size. 6d60001 00 0000000 0d32d48 5020200 Data Sources Trends The Industry Analysis contains many facts, figures and future Once the plan has defined the relevant market size, it should discuss projections. For this data to be credible, it should be sourced through 10 0000000 independent and how those whenever possible. company. Questions industry trends trends relate to the an research firm The opinions of the 0000000 answer include: to company’s management are simply inadequate to convince a 0000000sophisticated investor, and reliance on “anecdotal” data can greatly 20 0000000  from the overall credibility of size plan. How has the relevant market changed over the past one detract the 0000000 to five years?  What is the projected growth of the relevant market?  What factors will affect this growth? General 0000000 general market sizes and trends, Growthink suggests citing at least For 10 0000000 economic two independent research firms. 0000000 factors? Changing regulatory conditions? Changing consumer 0000000 needs? Etc. Multiple Industries 0c 0000000 Most companies compete in multiple industries. The company that 0000000 is important to remember that the Industry Analysis is not merely a It 0000000manufactures and markets Internet appliances for doctors, as research report – each fact, figure and projection should support the mentioned above, competes within the healthcare industry, the Internet 80 0000000company’s prospects for success. For example, consider a market 0011637appliance industry and the Internet connectivity industry (includes research firm that relies exclusively on opt-in (i.e., the consumer 0727400computer manufacturers, ISPs, etc.). In addition to focusing on chooses to participate) responses. This company’s business plan would defining and assessing the relevant market as detailed above, the 0001500 only explain new and proposed privacy regulations, but how this 0c not 0000033Industry Analysis should include descriptions of all of the markets in supports the company’s long-term competitive position. In addition, which the company competes. 6465736 plan should explain how the company would overcome trends that the 3000001 80 do not support the company. 8400000 Growthink’s 2008 Business Plan Guide G 7 7 06c7774 Growthink’s 2008 Business Plan Guide G 6 6 7074000 00 001f000 0000146 26b7074 0000020
  • 11. growthink ffd8ffe000104 a46494600010 20100c800c80 000ffe20c5849 43435f50524f4 6494c4500010 100000c484c6 96e6f02100000 6d6e74725247 422058595a20 07ce00020009 000600310000 616373704d53 465400000000 494543207352 474200000000 000000000000
  • 12. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584There is one last critical step in the Customer Analysis -- showing an ffe Customer Analysis 943435f 50524f4 6494c45 understanding of the actual decision-making process. Examples of questions to be answered here include: 00 0001010 Customer Analysis consult otherscustomer segment(s) that the The assesses the Will the customer in their organization 0000c48company serves. In this section, the company must convey the needs before making a decision? 4c696e6 its target customers. It must then show how its products and services of  Will the customer seek multiple bids? 01 f021000  these needs to an extent that the customer will pay for them. satisfy Will the product/service require significant operational 006d6e7 changes (e.g., will the client have to invest time to learn 4725247 new technologies? Will the product/service cause other 04 4220585Customer Identification/Definition members within the organization to lose their jobs? etc.) 95a2007The first step of the Customer Analysis is to define exactly which ce00020customers the company is serving. This requires specificity. It is not It is essential to truly understand customers to develop a successful a4 0090006adequate to say the company is targeting small businesses, for marketing strategy. As such, sophisticated investors require 0031000example, because there are several million of these types of customers. 0616373comprehensive profiles of a company’s target customers. Rather, the plan must identify precisely the customers it is serving, 64 704d534such as small businesses with 10 to 50 employees based in large 6540000Multiple Customer Targets & Partners metropolitan cities on the West Coast. 0000494Most businesses target multiple customer types or segments. Each 5432073customer segment that is critical to the business model must be 94 Customer Demographics, Needs Assessment and Decision-Making 5247420detailed in this section. In addition, if partners are critical to the Once the plan has clearly identified and defined the company’s target 0000000company’s marketing success, the plan must detail the specific customers, it is necessary to explain the demographics of these 0000000partners the company seeks, the wants and needs of these partners, and 60 customers. Questions to be answered include: 0000000 the partners’ decision-making process works. how 000000f  How many potential customers fit the given definition? Is 6d60001The Customers’ Customer 00 decreasing?  What is 0000000 this customer base growing or an assessment of their the Many companies must include customers’ 0d32d48 average revenues/income of these customers?  Where are customer in their business plan. Consider web development companies 5020200 these customers geographically based? When end-customers did that primarily served online marketplaces. 10 0000000 purchase the projected amounts from these marketplaces, many 0000000 0000000 not After explaining the customers’ demographics, the plan must then went out of business. As a result, the web development businesses lost detail the needs of these customers. Conveying customer needs could customers and inherited significant financial difficulties. 20 0000000 the form of past actions (X% have purchased a similar product in take 0000000 past), future projections (when interviewed, X% said that they the 0000000 cases like these, it is importantY) show an understanding of the end- would purchase product/service In to and/or implications (because X% 10 0000000 a product/service which our product/service enhances, then X% use customers who ultimately drive the business’ success. While a 0000000need our product/service). comprehensive needs assessment of end-customers is not critical, the 0000000 plan must show how a business’ customers are well positioned to meet 0c 0000000The business plan must also detail the drivers of the customers’ their customers’ needs now and in the future. 0000000decision-making. Sample questions to answer include: 0000000 80 0000000  Do customers find price to be more important than the 0011637 quality of the product or service? 0727400  Are customers looking for the highest level of reliability? 0001500 Or will they have their own support and just seek a basic level of 0c 0000033 service? 6465736 3000001 80 8400000 Growthink’s 2008 Business Plan Guide G 9 9 06c7774 7074000 Growthink’s 2008 Business Plan Guide G88 00 001f000 0000146 26b7074 0000020
  • 13. growthink ffd8ffe00010 4a464946000 1020100c800 c80000ffe20c 584943435f50 524f46494c45 00010100000 c484c696e6f0 21000006d6e 74725247422 058595a2007 ce000200090 00600310000 616373704d5 34654000000 00494543207 35247420000
  • 14. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584 ffe Competitive Analysis 943435fWhich Competitors to Include in the Analysis 50524f4 mentioned above, sophisticated investors will conduct substantial As 6494c45 diligence, including conducting their own competitive analysis, due 00 0001010Defining Competition before infusing capital into a company. As such, it is critical not to 0000c48 Competitive Analysis section is the most misunderstood section on The omit or downplay a competitor simply because it may reflect poorly of the business plan, mainly because companies and investors often 4c696e6 company’s opportunity. the 01 f021000define the term “competitor” differently. Companies frequently define 006d6e7“competitors” as firms offering similar products and services. Since There are often few direct competitors and many indirect competitors. 4725247 such, as aor servicerule,uniqueplan some ways, many each direct every product As general is the in should describe companies 04 4220585convey in their business plans that they have few or no competitors. competitor and sub-categorize the indirect competitors (and describe 95a2007 the sub-category as a whole). ce00020 a4 0090006Investors use a far more discerning definition of competition, defining A final point to keep in mind in listing competitors is that listing public 0031000 as any service or product that a customer can use to fulfill the same it 0616373companies in a competitive space is often a good sign. A public need(s) as the company fulfills. This includes firms that offer similar company implies that the market size is big and also gives the investor 64 704d534products, substitute products and other customer options (such as 6540000 assurance that if managementthe product well, the company this the performing the service or building executes themselves). Under has 0000494substantial profit and liquidity potential. broad definition, any business plan that claims there are no competitors 5432073 94 greatly undermines the credibility of the management team. 5247420Describing Competitors and Showing Competitive Advantages 0000000The next step is to describe competitors, particularly direct 0000000competitors. In doing so, it is important not to simply mention 60 The Competition Dilemma 0000000information about the competitor and its customers, products and/or In identifying competitors, companies often find themselves in a 000000fservices. Rather, the plan must also explain each competitor’s difficult position. On one hand, they want to show that they are unique 6d60001strengths and weaknesses and the key drivers of competitive 00 0000000(even under the investors’ broad definition) and list no or few differentiation in the marketplace. 0d32d48competitors. However, this has a negative connotation. If no or few 5020200 explaining in a market space, it implies that there use objective companies are In competitors’ weaknesses, be sure to may not be a 10 0000000large enough customer need to support the company’s products and/or information. Growthink has reviewed business plans that assert that the 0000000services. On the other hand, should there be too many competitors, competition “does not know what it is doing” or “is not as smart as 0000000 Thismarket may be too saturated to support the profitability of a then the us.” obviously positions the company’s management as immature 20 new entrant. 0000000 naïve, particularly if the competitors have strong track records. and 0000000 the other hand, it is incredibly powerful to offer market research On 0000000Solving the Dilemma results that prove the competition fails to satisfy customer needs. 10 0000000Solving the competition dilemma is relatively simple if the Customer 0000000Analysis is completed properly. That section reveals the customer wants 0000000 needs that the company is fulfilling. Any company (or self-action) and Note that serving a customer need or segment that the competition is 0c 0000000 also serves these needs is a competitor. that not is often a valid area of competitive differentiation. If this is the 0000000 0000000case, the Customer Analysis section must thoroughly detail these needs There are typically categories of competitors that compete in varying 0000000 segments. a company’s product/service offerings. As such, the and 80 degrees with 0011637competition section should include sections for direct and indirect 0727400Finally, in describing competitive advantages, it is important to competitors. Direct competitors are those that serve the same target 0001500demonstrate how the company’s business model creates barriers to 0c market with similar products and services. Indirect competitors are 0000033entry. “Barriers to entry” are reasons why customers will not leave those that serve the same target market with different products and 6465736once acquired. services, or a different target market with similar products and 3000001 80 services. 8400000 Growthink’s 2008 Business Plan Guide G 11 1 06c7774 Growthink’s 2008 Business Plan Guide G 10 1 7074000 00 001f000 0000146 26b7074 0000020
  • 15. growthink
  • 16. ffd8ffe000104a4649460001020 ff 100c800c80000ffe20c58494343 d8 5f50524f46494c4500010100000 growthink c484c696e6f021000006d6e747 might not be consistent with a desire to be considered an upscale ffe Marketing Plan 25247422058595a2007ce00020 brand. Price 009000600310000616373704d5 ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f5 00 This section of the plan should detail the price point(s) at which the 0524f46494c4500010100000c484c696e6f021000006d6e74725247 34654000000004945432073524 company’s products and services will be sold. If the products/ services 422058595a2007ce00020009000600310000616373704d53465400 74200000000000000000000000 are sold as bundles, these should be detailed in this section. Rationale 00000049454320735247420000000000000000000000000000f6d6 01 for the pricing should be given when applicable (e.g., why the 000100000000d32d48502020000000000000000000000000000000 00000f6d6000100000000d32d4 company has chosen an initiation fee plus monthly membership fees 000000000000000000000000000000000000000000000000000000 Products and/or Services versus a one-time lifetime membership fee). 000000000011637072740000015000000033646573630000018400 85020200000000000000000000 04 The first “P” stands for Product, but includes all products and services 00006c77747074000001f000000014626b70740000020400000014 that the company offers. This section of the business plan should detail all the features 00000000000000000000000000 Place 7258595a00000218000000146758595a0000022c00000014625859 of the products and services, how they work, their The final “P” refers to “Place” or “Distribution” and explains how a 5a0000024000000014646d6e640000025400000070646d64640000 a4 unique/proprietary attributes, etc. For products that are patented and/or 00000000000000000000000000 company’s products and/or services will be delivered to customers. 02c400000088767565640000034c0000008676696577000003d400 technical in nature, drawings and backup materials should be presented This section is crucial because if customers cannot access products and 0000246c756d69000003f8000000146d6561730000040c000000247 in the Appendix.00000000000000000000000116 services, they cannot purchase them. 4656368000004300000000c725452430000043c0000080c6754524 64 37072740000015000000033646 30000043c0000080c625452430000043c0000080c7465787400000 Most growing companies offer certain products and services today but This section is especially critical for high-growth, capital-constrained 000436f70797269676874202863292031393938204865776c65747 expect to offer more in the future. It is important to mention both 57363000001840000006c77747 companies. Attaining profit-effective distribution channels is often the 42d5061636b61726420436f6d70616e79000064657363000000000 94 current and future products/services here, but to focus primarily on the most vexing challenge for these businesses. 0000012735247422049454336313936362d322e310000000000000 074000001f000000014626b707 short-to-intermediate term horizon. 00000000012735247422049454336313936362d322e31000000000 400000204000000147258595a0 Examples of distribution methods include: 000000000000000000000000000000000000000000000The 60 Promotions Marketing Plan demonstrates how the activities thatpenetrate customer towith Promotions include each of a company will induce a the market buy the company’s 0000218000000146758595a000 its productsand services. The Marketing Plan should include “the four P’s” – Retail location products and services. Promotional activities could  Website Product, Promotions, Price, and Place.  Another 0022c000000146258595a00000 00 include advertising, public relations (PR), free samples, discounts, website host (e.g., products/services sold direct mail, telemarketing, partnerships, etc. 24000000014646d6e640000025 through/hosted by another website --application service provider/private label model) 10 This section of the business plan discusses which promotions will be  Another 400000070646d6464000002c40 retail location (e.g., products/services sold through used and how they will be used. For instance, if partnerships will be a third-party’s retail location)  Another 0000088767565640000034c000 used to secure new customers, the plan must explain which companies website location (e.g., products/services sold 20 are partners, how they will be able to provide new customers, how the 0008676696577000003d400000 through another website) partnership will work (from operational/ financial standpoints), etc.  Direct mail catalogs 0246c756d69000003f80000001 10 Many companies have multiple distribution methods to deliver their 46d6561730000040c000000247 This section must be as specific as possible, particularly as it relates to products and services to customers and each should be detailed here. discussing future promotions. To say that a company is going to 4656368000004300000000c725 0c generate PR in trade magazines is simply too vague. Rather, the plan must explain the type of article/feature that may be written about the Customer Retention452430000043c0000080c67545 firm and why, which specific trade journals that will be targeted and/or The four P’s mostly discuss attracting customers. Marketing 2430000043c0000080c6254524 80 the projected publication dates. departments must also develop long-term, revenue-generating 30000043c0000080c746578740 relationships with customers. The methods through which the In discussing how the company will promote itself, it is important to marketing department plans to retain customers should also be detailed 0c discuss how the company will position itself. This positioning 0000000436f707972696768742 in the Marketing Plan. Such methods could include implementing statement details the attributes that customers will assign to the customer relationship management (CRM) tools, building network 02863292031393938204865776 company, its products and services. The choice of promotional externalities (e.g., the more people that use the 80 activities must support this positioning. For example, discounts c6574742d5061636b617264204 Growthink’s 2008 Business Plan Guide G 13 1 Growthink’s 2008 Business Plan Guide G 12 1 36f6d70616e790000646573630 00 00000000000001273524742204 9454336313936362d322e31000
  • 17. ff d8 growthink product or service the harder it is for a competitor to penetrate the ffemarket), ongoing value-added services, etc. Partnerships 00 Forging partnerships to improve market penetration has become commonplace, particularly for “new economy” businesses. And, most new economy companies proudly mention their many partnerships in 01 their business plans. The fact is that, regardless of whom the partnership is with, 04 partnerships by themselves are meaningless. What are meaningful are the terms of the partnership. For instance, while it sounds great to have a partnership with a major search engine, the details of the partnership a4 are what investors find important. For instance, investors will look poorly upon a partnership in which the search engine earns 40% commissions on customers it refers. On the other hand, investors 64 would look favorably upon a more equitable partnership. 94 As such, if partnerships are a key part of the marketing plan, be sure to detail the specifics of the partnerships. This includes how the partnership will work, the type of customer leads expected from each 60 partner, etc. The next section, the Operations Plan, details the resources needed, the 00 processes employed, and the milestones for executing the Marketing Plan. 10 20 10 0c 80 0c 80 Growthink’s 2008 Business Plan Guide G 14 1 00
  • 18. growthink
  • 19. ffd8ffe000104a464946000102 ff 0100c800c80000ffe20c584943 d8 435f50524f46494c4500010100 growthink accomplishments) 000c484c696e6f021000006d6e these new milestones should include expected dates ffe Operations Plan 74725247422058595a2007ce0 when: 0020009000600310000616373  New products and services will be introduced to the ffd8ffe000104a4649460001020100c800c80000ffe20c584943435f5 00 marketplace 0524f46494c4500010100000c484c696e6f021000006d6e74725247 704d534654000000004945432  Revenue milestones will be attained (e.g., date when sales 422058595a2007ce00020009000600310000616373704d53465400 0735247420000000000000000 will surpass million dollar mark) 00000049454320735247420000000000000000000000000000f6d6 01  Key partnerships will be executed 000100000000d32d48502020000000000000000000000000000000 000000000000f6d60001000000  Key customer contracts will be secured 000000000000000000000000000000000000000000000000000000  Key financial events will occur (future funding rounds, 000000000011637072740000015000000033646573630000018400 IPO, etc.) 00d32d4850202000000000000 04 The Operations Plan details 1) the processes that must be performed to 00006c77747074000001f000000014626b70740000020400000014 serve customers every day (short-term processes) and 2) the overall 0000000000000000000000000  Key employees will be hired 7258595a00000218000000146758595a0000022c00000014625859 business milestones that the company must attain to be successful 5a0000024000000014646d6e640000025400000070646d64640000 a4 (long-term processes). 0000000000000000000000000 Additional text should be used, where necessary, to support the 02c400000088767565640000034c0000008676696577000003d400 projections laid out in the chart. 0000246c756d69000003f8000000146d6561730000040c000000247 0000000000000000000000000 Everyday Processes (Short-Term Processes) 4656368000004300000000c725452430000043c0000080c6754524 64 Every company has processes to provide its customers with products 0000000011637072740000015 The milestone projections presented in the Operations Plan must be 30000043c0000080c625452430000043c0000080c7465787400000 and services. For instance, Wal Mart has a unique distribution system 000436f70797269676874202863292031393938204865776c65747is consistent with the projections in the Financial Plan. In both areas, it to effectively move products from its warehouses, to its stores, and 0000000336465736300000184 important to be aggressive but credible. Presenting a plan in which the 42d5061636b61726420436f6d70616e79000064657363000000000 94 finally to its customers’ homes. Technology products manufacturers company grows too quickly will show the naiveté of the management 0000012735247422049454336313936362d322e310000000000000 have processes to 0000006c77747074000001f000 convert raw materials into finished products. And team, while presenting too conservative a growth plan will often fail to 00000000012735247422049454336313936362d322e31000000000 service-oriented businesses have processes to identify new areas of 000014626b707400000204000 000000000000000000000000000000000000000000000of return over excite the potential investor (who will require a high rate Up until this 60 customer interest, to continually update service features, etc. a relatively short time period). point, the business plan has defined and scoped the company’s vision, 000147258595a000002180000 described the company’s history, assessed the industry, customers and competition processes that out a marketing to serve its customers are what The and mapped00146758595a0000022c00000 a company uses plan to attract customers. The 00 Operations Plan presents the Company’s action plan for executing this vision.a transform a business plan from concept to reality. Anyone can have 0146258595a00000240000000 concept. And more importantly, investors do not invest in concepts 10 --they invest in reality. Reality is proving that the management team 14646d6e64000002540000007 can execute the concept better than anyone else, and the Operations 0646d6464000002c400000088 Plan is where the plan proves this. 20 767565640000034c000000867 While the Marketing Plan lays out the plan for attracting customers, the Operations Plan should lay out the key operational processes for 6696577000003d4000000246c 10 serving them. Charts supplemented with text are often the best way to 756d69000003f8000000146d65 explain the key relationships between the parties involved in ultimately serving the customers. These parties could include departments within 61730000040c0000002474656 0c an organization, partners, suppliers, distributors/resellers, etc. 368000004300000000c725452 430000043c0000080c6754524 80 Business Milestones (Long-Term Processes) The second piece of the Operations Plan is proving that the team will 30000043c0000080c62545243 execute the long-term company vision. This is best presented as a 0c chart. On the left side, list the key milestones that the Company must reach and on the 0000043c0000080c746578740 right, the target date for achieving them. Like the 0000000436f707972696768742 chart in the Company Analysis (detailing past 80 0286329203139393820486577 Growthink’s 2008 Business Plan Guide G 16 1 Growthink’s 2008 Business Plan Guide G 15 1 6c6574742d5061636b6172642 00 0436f6d70616e7900006465736 3000000000000001273524742
  • 20. growthink ffd8ffe000104 a46494600010 20100c800c80 000ffe20c5849 43435f50524f4 6494c4500010 100000c484c6 96e6f02100000 6d6e74725247 422058595a20 07ce00020009 000600310000 616373704d53 465400000000 494543207352 474200000000 000000000000
  • 21. ffd8ffe 000104a ffd8ffe000104a4 growthink 4649460 0010201 00c800c 80000ff e20c584 64946000102010 943435f 50524f4 6494c45 0c800c80000ffe20 Management Team c584943435f5052 0001010Even the best new concept or existing plan will fail if executed poorly. 0000c48 Management Team section of the business plan must prove to the The 4c696e6investor why the key company personnel are “eminently qualified” to 4f46494c4500010 f021000execute on the business model. 006d6e7 4725247Description of Key Team Members 100000c484c696e 4220585The Management Team section should include biographies of key 95a2007team members and detail their responsibilities. Biographies should ce00020include the past positions that the individuals have held and specific 6f021000006d6e7 0090006successes in each. These successes could include launching and 0031000growing new businesses or managing divisions of established 0616373companies. Biographies should also include educational backgrounds 47252474220585 704d534 other pertinent information. and 6540000 0000494Team member biographies should be tailored to the company’s growth 5432073 95a2007ce000200 stage. For instance, a start-up company should emphasize its 5247420management’s success launching and growing companies. A more 0000000mature company should emphasize how team members have 0000000 09000600310000 successfully operated within the framework of larger enterprises. 0000000 000000f Management Team Gaps 6d60001 616373704d5346 0000000Depending upon the stage of the company, key functional areas may 0d32d48 missing from the team. This is acceptable provided that the plan be 5020200clearly defines the roles that these individuals will play and identifies 54000000004945 0000000 key characteristics of the individuals that will be hired. However, it the 0000000 generally not favorable if personnel are missing for ultra-critical is 0000000roles. For example, a plan that is fundamentally a marketing play 43207352474200 0000000should not seek financing without a stellar marketing team. 0000000 0000000 00000000000000 0000000Description of Board Members 0000000 Management Team section should also include biographies of the The 0000000company’s Advisory Board and/or Board of Directors. While having 000000000000f6d 0000000well-known advisors/board members adds credibility, it is highly 0000000effective to explain how these advisors will directly impact the 0000000company through strategic advice and/or providing conduits to key 6000100000000d 0000000clients, partners, suppliers, etc. 0011637 0727400 0001500 0000033 6465736 3000001 32d48502020000 8400000 00000000000000 06c7774 Growthink’s 2008 Business Plan Guide G 17 1 7074000 001f000 0000146 26b7074 00000000000000 0000020
  • 22. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584Validating Assumptions and Projections ffe Financial Plan 943435f 50524f4 6494c45 The Financial Plan must also detail the key assumptions such as penetration rates, operating margins, headcount, etc. It is critical that these assumptions are feasible. For instance, if the company is 00 0001010The Financial Plan explains how the execution of the company’s categorized as a networking infrastructure firm, and the business plan 0000c48vision will reap great financial rewards for the investor. As such, it is projects 80% operating margins, investors will raise a red flag. This is 4c696e6 section that investors often spend the operating margins of publicly- the because investors can readily access the most time scrutinizing. 01 f021000 006d6e7 traded networking infrastructure firms and find that none have Detailed Revenue Streams operating margins this high. 4725247 Financial Plan should verbally present the revenue model of the The 04 4220585company including each area in which the company derives revenue. As mentioned in the Competitive Analysis section, while every 95a2007These revenue streams could include, among others: company is unique, each bears similarities to other companies. ce00020 Accessing and basing financial projections on those of similar firms a4 0090006  Sales of products/services  will greatly validate the realism and maturity of the financial 0031000 Referral revenues  Advertising sales  projections. 0616373 Licensing/royalty/commission fees  64 704d534 Data sales 6540000Sources and Uses of Funds 0000494 Financial Plan should detail the sources and uses of funds. The The 5432073 relativefunds primarily include outside investments (e.g., should sources of equity 94 The importance and timeliness of each revenue stream 5247420 noted to help investorsetc.) and operating revenues. Uses of funds investments, bank loans, be better judge the company. For instance, the 0000000could include expenses involved with marketing, staffing, technology investor may not believe in the company’s ability to immediately 0000000development, office space, etc. 60 generate significant sales of its data. This would be a problem if this 0000000 were the company’s core revenue stream. However, by noting in the 000000fExit Strategy plan that data sales will only comprise 2% of total revenue and will not 6d60001 investors greatly desire and are motivated by a clear picture of the All 00 0000000commence until Year 3, the investor’s concerns would be alleviated. company’s exit strategy, or the timing and method through which they 0d32d48 “cash in” on their investment. This picture best comes into focus can 5020200when the key valuation and liquidity drivers of the company are 10 0000000The Pro-Forma Financial Statements clearly delineated. An excellent method to accomplish this is through 0000000 Financial Plan must numerically detail the revenue modelliquidity The descriptions of comparable firms that have had successful through 0000000past (if applicable) and pro-forma (projected) Income Statements, events, either through acquisition, merger of public offerings. 20 0000000Balance Sheets and Cash Flow Statements. It is critical that the figures 0000000used in these statement flow from the analyses in every other section 0000000 the business plan.exit strategies the relevant market size (Industry of The most common For instance, in business plans are IPOs or 10 0000000Analysis) should be reflected, as should competitors’ operating acquisitions. While the method of exit is not always crucial, the 0000000margins (Competitive Analysis), customer acquisition costs investor often wants to see the decision to better understand the 0000000(Marketing Plan), employee requirements (Operations Plan), etc. management team’s motivation and commitment to building long-term 0c 0000000 value. 0000000 0000000 summary of the financial projections should be presented in the text A 80 0000000portion of the plan, while full projections should appear in the 0011637Appendix. For existing companies, the Financial Plan should note any 0727400significant deviations (e.g., increases in margins) between past and 0001500 0c projected results. 0000033 6465736 3000001 80 8400000 Growthink’s 2008 Business Plan Guide G 19 1 06c7774 Growthink’s 2008 Business Plan Guide G 18 1 7074000 00 001f000 0000146 26b7074 0000020
  • 23. ffd8ffe000104a4649 growthink 460001020100c800c 80000ffe20c5849434 35f50524f46494c450 0010100000c484c69 6e6f021000006d6e7 4725247422058595a 2007ce00020009000 60031000061637370 4d534654000000004 94543207352474200 00000000000000000 000000000f6d60001 00000000d32d48502 02000000000000000 00000000000000000 00000000000000000 00000000000000000 00000000000000000
  • 24. ffd8ffe 000104a growthink 4649460 0010201 00c800c 80000ff e20c584 Appendix ffd8ffe 943435f 50524f4 6494c45 0001010 Appendix is used to support the rest of the business plan. Every The 0000c48 4c696e6 f021000 000104 business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan. 006d6e7 4725247 4220585 a46494 Other documentation that could appear in the Appendix include: 95a2007  ce00020 0090006  600010 Technology: Technical drawings, patent information, etc. Partnership and/or Customer Letters: Letters from partners 20100c 0031000 and/or customers stating their interest in working with the 0616373 company can add enormous credibility and validation. 704d534 6540000  800c80 Expanded Competitor Reviews: Most companies have 0000494 several direct and/or indirect competitors. While the Competitive 5432073 Analysis section of the plan reviews the most direct competitors, 000ffe2 5247420 adding a more thorough list and description in the Appendix 0000000 shows that management truly understands the players in the 0000000 market. 0c5849 0000000 000000f  Customer Lists: Including a list of key customers that the 6d60001 company is serving in addition to their status and/or type or 43435f 0000000 0d32d48 quantity of product/service being offered. 5020200 0000000 0000000 0000000 0000000 50524f 0000000 0000000 0000000 46494c 0000000 0000000 0000000 450001 0000000 0000000 0000000 010000 0011637 0727400 0001500 0c484c 696e6f 0000033 6465736 3000001 021000 8400000 06c7774Growthink’s 2008 Business Plan Guide G 20 2 7074000 006d6e 001f000 0000146 26b7074 0000020
  • 25. ffd8ffe ff 000104a growthink 4649460 0010201 d8 00c800c 80000ff e20c584  Allowing the management team to focus on growing the ffe Other Key Business Plan Issues 943435f 50524f4 6494c45 business rather than spending the hundreds of hours it takes to develop an investor-quality business plan.  Providing a “reality check” regarding how investors might 00 0001010Five topics which are often discussed in the business plan development respond. 0000c48 capital raising process are 1)business plan includes all of the key and  Making sure the Nondisclosure Agreements (NDAs) 4c696e6and/or Confidentiality Agreements, 2) outsourcing the business plan elements the investor seeks. 01 f021000development, 3) the length of the business plan, 4) plan formatting,  Improving the market research and strategy development 006d6e7charts and graphics and 5) how to incorporate investor feedback. presented in the business plan. 4725247 04 4220585 Plan Length 95a2007NDAs How long should the business plan be? A business plan needs to be ce00020Most investors will not sign NDAs. This is because a business’ whatever length is required to excite the investor, prove that a4 0090006strategy and/or concept are typically not confidential. It is possible that management truly understands the market, and details the execution 0031000 key partnership is confidential, for example, but for the most part the a 0616373strategy. Growthink has found that 15 to 25 pages of text are sufficient execution of the strategy and concept is what will make the company 704d534 accomplish this. Any more and the time-constrained investor will be to 64 successful. 6540000forced to skim certain sections of the plan, even if they are generally 0000494 addition, if thecould leadand/or to miss essential elements.this often interested, which In concept them strategy are confidential, Any less 5432073and the investor will think that the business has not been fully thought 94 implies that there are no barriers to competitive entry. If after launch, a 5247420through, or will simply not have enough information to make an competitor or host of competitors can quickly copy the concept, then investment decision. 0000000 business model is probably not sustainable. the 0000000 60 0000000 000000f 6d60001 Many management teams feel that their company is too complex to On the other hand, proprietary technology is confidential. However, describe in 15 to 25 pages. While this is sometimes true, the business the business plan should not discuss the confidential aspects of the plan is not meant to tell the whole story. Rather, the company must be 00 0000000technology. Rather, the business plan should discuss the benefits of “boiled down” into its essential elements. If the investor is interested, 0d32d48 technology and how these benefits to tell the whole story. need. An the there will be plenty of additional time fulfill a large customer 5020200interested investor will review the actual technology during the due 10 0000000diligence process. At this point, a discussion regarding signing an 0000000NDA would be appropriate. Plan Formatting, Charts and Graphics 0000000Business plans, like other marketing communications documents, should 20 Outsourcing the Business Plan Development 0000000 visually appealing and easy-to-read. This can be accomplished by be 0000000 business and graphics and by formatting the plan it explains the The using charts plan is a very “personal” document in that for readability. 0000000intimate details of a business. On one hand, because it is so “personal” These techniques will enable the investor to more quickly and easily 10 0000000many companies prefer to complete the business plan themselves. On understand the company’s value proposition. 0000000 other hand, because it is so “personal” most companies fail to the 0000000present the company in a way that outsiders can understand. This is Incorporating Investor Feedback 0c 0000000because the management team is so “close” to the company that they Investors, like the rest of us, have different tastes. One investor may 0000000have trouble explaining it in terms that outsiders can quickly grasp. 0000000love a concept and/or business plan while the next may hate both. It is important to understand this as business plans are working documents 80 0000000 0011637 independent undergoing iterations. Management serves the same and are always An business plan development team teams must not 0727400rush to incorporate each potential investor’s comments. Instead, have purpose as an outside PR or advertising agency typically does – it 0001500several investors, partners and other business colleagues review the 0c expertly determines the company’s value proposition and conveys it 0000033plan and provide feedback. Then incorporate common concerns and most concisely and compellingly to the target audience. An 6465736probe other comments to determine if they are valid. independent business plan development team also provides advantages 3000001 80 including: 8400000 Growthink’s 2008 Business Plan Guide G 22 2 06c7774 Growthink’s 2008 Business Plan Guide G 21 2 7074000 00 001f000 0000146 26b7074 0000020
  • 26. growthink