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Art of Business Planning<br />Darlene Newman, Founder, Ivy Capital Technologies<br />Email: darlene@ivycapitaltechnologies...
Who am I?<br />Someone who loves the art of starting up. . .<br />Classically Trained<br /><ul><li>Bachelors of Science fr...
MBA from the University of Oxford in venture capital and social entrepreneurship</li></ul>Practical Experience<br /><ul><l...
Competed in over 10 business plan competitions
Worked with three venture capital funds
Taught business plan development at                                                  Fordham University and the Grace Inst...
Now I spend my days helping entrepreneurs launch new businesses</li></li></ul><li>Why do a business plan?<br />If you want...
Serve as a feasibility study for the chances of success and growth
Define your purpose, your competition and your management team
Act as a communication tool for investors, suppliers, employees and others interested in your business
Be a strong reality check!</li></li></ul><li>Who should write it?<br />The founder of the business should ALWAYS write the...
Templates and guidelines: www.Wickedstart.comor www.Bplans.com
Consultants: Various companies and individuals to help, although you should do most of the work</li></li></ul><li>The role...
Why you are in business
What you do and how you do it
Where you operate
How you will generate money
Who your customers are
Why your business is needed!</li></li></ul><li>Where do I start?<br />“The secret of getting ahead is getting started. The...
Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
Table of Contents
Vision and Mission Statement
Industry and Product Description
Market Analysis and Competitive Advantage
Marketing and Sales Plan
Operating Plan
Management Team
Risk and Contingency Plan
Financial Plan
Summary and Conclusion
Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
Table of Contents
Vision and Mission Statement
Industry and Product Description
Market Analysis and Competitive Advantage
Marketing and Sales Plan
Operating Plan
Management Team
Risk and Contingency Plan
Financial Plan
Summary and Conclusion
Appendix</li></li></ul><li>Executive summary<br />No. of Pages     2<br />The executive summary is the most important part...
It should be less than two pages, single space
It should be the last thing you write, pulling it all together in a clearly and concisely</li></ul>Executive summary templ...
Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
Table of Contents
Vision and Mission Statement
Industry and Product Description
Market Analysis and Competitive Advantage
Marketing and Sales Plan
Operating Plan
Management Team
Risk and Contingency Plan
Financial Plan
Summary and Conclusion
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Art of Business Planning

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Presentation by Darlene Newman, founder of Ivy Capital Technologies, on how to write a business plan, presented at the Business4U event in New York City on February 5, 2011.

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Transcript of "Art of Business Planning"

  1. 1. Art of Business Planning<br />Darlene Newman, Founder, Ivy Capital Technologies<br />Email: darlene@ivycapitaltechnologies.com<br />Copyright 2011, Ivy Capital Technologies<br />
  2. 2. Who am I?<br />Someone who loves the art of starting up. . .<br />Classically Trained<br /><ul><li>Bachelors of Science from the top seeded McGuire Entrepreneurship Program at the University of Arizona
  3. 3. MBA from the University of Oxford in venture capital and social entrepreneurship</li></ul>Practical Experience<br /><ul><li>Helped launch over 7 startups
  4. 4. Competed in over 10 business plan competitions
  5. 5. Worked with three venture capital funds
  6. 6. Taught business plan development at Fordham University and the Grace Institute
  7. 7. Now I spend my days helping entrepreneurs launch new businesses</li></li></ul><li>Why do a business plan?<br />If you want to drive from NYC to Las Vegas, would you use a navigational tool? <br />Of course, and starting a business is no different! A business plan should;<br /><ul><li>Act as a blue print for your business, a roadmap to help you get to where you want to go
  8. 8. Serve as a feasibility study for the chances of success and growth
  9. 9. Define your purpose, your competition and your management team
  10. 10. Act as a communication tool for investors, suppliers, employees and others interested in your business
  11. 11. Be a strong reality check!</li></li></ul><li>Who should write it?<br />The founder of the business should ALWAYS write the business plan. . .<br />Why? You are the one that knows the most about the business idea and needs to know the most about the direction it’s going. . .<br />What can you do to help ease the pain of writing it? There are many resources that are available to help guide you;<br /><ul><li>Business Planning Software:www.Bplans.com
  12. 12. Templates and guidelines: www.Wickedstart.comor www.Bplans.com
  13. 13. Consultants: Various companies and individuals to help, although you should do most of the work</li></li></ul><li>The role of a business plan<br />A good business plan is a compelling storyboard about your business<br />In short, it explains. . .<br /><ul><li>Who you are
  14. 14. Why you are in business
  15. 15. What you do and how you do it
  16. 16. Where you operate
  17. 17. How you will generate money
  18. 18. Who your customers are
  19. 19. Why your business is needed!</li></li></ul><li>Where do I start?<br />“The secret of getting ahead is getting started. The secret of getting started is breaking your complex overwhelming tasks into small manageable tasks, and then starting on the first one”<br />– Mark Twain<br />
  20. 20. Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  21. 21. Table of Contents
  22. 22. Vision and Mission Statement
  23. 23. Industry and Product Description
  24. 24. Market Analysis and Competitive Advantage
  25. 25. Marketing and Sales Plan
  26. 26. Operating Plan
  27. 27. Management Team
  28. 28. Risk and Contingency Plan
  29. 29. Financial Plan
  30. 30. Summary and Conclusion
  31. 31. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  32. 32. Table of Contents
  33. 33. Vision and Mission Statement
  34. 34. Industry and Product Description
  35. 35. Market Analysis and Competitive Advantage
  36. 36. Marketing and Sales Plan
  37. 37. Operating Plan
  38. 38. Management Team
  39. 39. Risk and Contingency Plan
  40. 40. Financial Plan
  41. 41. Summary and Conclusion
  42. 42. Appendix</li></li></ul><li>Executive summary<br />No. of Pages 2<br />The executive summary is the most important part of your business plan<br />Why? Most people will make a decision about your company simply by reading the executive summary<br /><ul><li>It should provide a snapshot of your business plan, including who you are, what you do and why you’ll be successful
  43. 43. It should be less than two pages, single space
  44. 44. It should be the last thing you write, pulling it all together in a clearly and concisely</li></ul>Executive summary template available at <br />https://docs0.google.com/document/d/1zX_eg39hyjkk-FSEFNDj_-ii6ijuIjxtVkpBtfLq1g4/edit?hl=en&authkey=CPWjvokE# <br />
  45. 45. Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  46. 46. Table of Contents
  47. 47. Vision and Mission Statement
  48. 48. Industry and Product Description
  49. 49. Market Analysis and Competitive Advantage
  50. 50. Marketing and Sales Plan
  51. 51. Operating Plan
  52. 52. Management Team
  53. 53. Risk and Contingency Plan
  54. 54. Financial Plan
  55. 55. Summary and Conclusion
  56. 56. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  57. 57. Table of Contents
  58. 58. Vision and Mission Statement
  59. 59. Industry and Product Description
  60. 60. Market Analysis and Competitive Advantage
  61. 61. Marketing and Sales Plan
  62. 62. Operating Plan
  63. 63. Management Team
  64. 64. Risk and Contingency Plan
  65. 65. Financial Plan
  66. 66. Summary and Conclusion
  67. 67. Appendix</li></li></ul><li>Vision and mission statement<br />No. of Pages ½ <br />In short, the mission and vision provide your company with direction<br /><ul><li>Vision: Where do you see your business in the future? Think in terms of something you’ll always strive for, but never quite reach. . .
  68. 68. Mission: Where do you see your over the next few years? Think in terms of the goals that will get you to achieve your vision. . .</li></li></ul><li>Vision statement in use<br />When preparing you vision statement, think “BIG”<br /><ul><li>YES: We provide “state-of-the-art” duplication technology for schools
  69. 69. NO: We provide duplication technology for schools
  70. 70. YES: We “bring high-quality music” to the home
  71. 71. NO: We install record players and speakers</li></ul>“Organize the world’s information and make it universally accessible and useful”<br />
  72. 72. The mission statement<br />Think in terms of “goals” that are measureable<br />Mission statements should. . .<br /><ul><li>Summarize the core competencies of your business
  73. 73. Give employees a sense of purpose
  74. 74. Help to concentrate your efforts on the desired focal points</li></ul>Test of a good mission statement. . .<br /><ul><li>It should be simple and precise
  75. 75. No more than one to three sentences
  76. 76. Act as an internal guideline, not public
  77. 77. Cover a two-year timeframe
  78. 78. Stretching but realistic </li></li></ul><li>Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  79. 79. Table of Contents
  80. 80. Vision and Mission Statement
  81. 81. Industry and Product Description
  82. 82. Market Analysis and Competitive Advantage
  83. 83. Marketing and Sales Plan
  84. 84. Operating Plan
  85. 85. Management Team
  86. 86. Risk and Contingency Plan
  87. 87. Financial Plan
  88. 88. Summary and Conclusion
  89. 89. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  90. 90. Table of Contents
  91. 91. Vision and Mission Statement
  92. 92. Industry and Product Description
  93. 93. Market Analysis and Competitive Advantage
  94. 94. Marketing and Sales Plan
  95. 95. Operating Plan
  96. 96. Management Team
  97. 97. Risk and Contingency Plan
  98. 98. Financial Plan
  99. 99. Summary and Conclusion
  100. 100. Appendix</li></li></ul><li>The Industry and Product Description section of the business plan should include;<br /><ul><li>Industry analysis
  101. 101. Company description
  102. 102. Product and / or service description
  103. 103. Key accomplishments</li></ul>Section details<br />No. of Pages 2<br />
  104. 104. Importance of knowing your industry<br />“A problem well-defined is a problem half-solved” - John Dewey<br />Knowing your industry helps determine<br /><ul><li>The viability of the business
  105. 105. Your potential for growth
  106. 106. Who your competitors are
  107. 107. Who your target market is</li></ul>Gives the “Big Picture” of what NEED your company fills and WHY you’ll be successful<br />
  108. 108. What about the industry makes it attractive for new entrants<br /><ul><li>Chief characteristics: Industry profile, size, growth, barriers to entry, etc.
  109. 109. Major players: Competitors you’re up against, both direct and indirect, where do you fit among those competitors</li></ul>Industry analysis basics<br /><ul><li>Trends:Where is the industry going
  110. 110. Problems:What are the challenges facing the industry
  111. 111. Opportunities:Where can new players enter the market</li></li></ul><li>Company & product basics<br />Describe, to the most basic user, what you do and what you sell<br />At a minimum;<br /><ul><li>Describe your company in easy to understand language
  112. 112. Cover the basics of your product or service;
  113. 113. “What” you sell
  114. 114. “Where” will you sell it
  115. 115. “How” you will sell it
  116. 116. “Why” it exists as designed
  117. 117. What’s your pricing
  118. 118. Provide diagram, graphics or examples</li></li></ul><li>Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  119. 119. Table of Contents
  120. 120. Vision and Mission Statement
  121. 121. Industry and Product Description
  122. 122. Market Analysis and Competitive Advantage
  123. 123. Marketing and Sales Plan
  124. 124. Operating Plan
  125. 125. Management Team
  126. 126. Risk and Contingency Plan
  127. 127. Financial Plan
  128. 128. Summary and Conclusion
  129. 129. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  130. 130. Table of Contents
  131. 131. Vision and Mission Statement
  132. 132. Industry and Product Description
  133. 133. Market Analysis and Competitive Advantage
  134. 134. Marketing and Sales Plan
  135. 135. Operating Plan
  136. 136. Management Team
  137. 137. Risk and Contingency Plan
  138. 138. Financial Plan
  139. 139. Summary and Conclusion
  140. 140. Appendix</li></li></ul><li>The Market Analysis and Competitor section of the business plan should include;<br /><ul><li>Market Opportunity
  141. 141. Target Market / Customer Profile
  142. 142. Competition
  143. 143. Competitive Advantage</li></ul>Section details<br />No. of Pages 3<br />
  144. 144. “Keep Your Friends Close and Your Enemies Closer”<br />At a minimum this section should cover;<br />Your friends. . .<br /><ul><li>Who are you selling to
  145. 145. Why are you selling to them</li></ul>Your enemies. . . <br /><ul><li>Who are you up against
  146. 146. What makes you better</li></ul>Why do I care. . .<br />
  147. 147. You can’t be everything to everyone so. . .<br />Understand your target market and what motivates them;<br /><ul><li>Who: Who’s going to buy what you have (i.e. age, demographics, etc. . . be narrow and specific)
  148. 148. How: How do they buy it now, or will they most likely go to buy it in the future (i.e. retail store, Internet, etc.)
  149. 149. Where:Where do they go to find information about it (i.e. magazines, television, social network sites, etc.)
  150. 150. What: Is the motivation for buying (i.e. necessity or a luxury)
  151. 151. When: When do they go to buy it (i.e. when needed, when desired, etc.)
  152. 152. How often: What’s the frequency in which they purchase it (i.e. daily, monthly, seasonally)</li></ul>The target market, who are they?<br />
  153. 153. It’s amazing what you can find with just a little bit of leg work<br /><ul><li>Libraries
  154. 154. Trade Associations
  155. 155. Business Periodicals
  156. 156. State and Federal Resources
  157. 157. Local Resources (Chamber of Commerce, SBDCs, BICs)
  158. 158. Professional Research Companies
  159. 159. Studying the Competition
  160. 160. Surveys (focus groups and interviews)
  161. 161. Observations</li></ul>The market, where do I look?<br />
  162. 162. The competition, need to know. . .<br />Knowing who your competing against and how they do what they do is important<br />What should you know about your competition;<br /><ul><li>Who they are, both direct and indirect?
  163. 163. What do they offer, products and services?
  164. 164. Years they’ve been in business?
  165. 165. What are their price points?
  166. 166. What are their strengths?
  167. 167. What are their weaknesses?
  168. 168. Recent trends?</li></ul>Consider Creating a Matrix<br />
  169. 169. Competitive advantage, what’s yours?<br />You need to be better, faster or cheaper in a way that is difficult to replicate<br />No idea is truly unique, so what makes yours better?<br /><ul><li>Uncompromising obsession with “One Thing” that’s hard to replicate (e.g. Apple & design)
  170. 170. Personal authority on the subject (e.g. Dell)
  171. 171. The “Dream Team” that has expertise hard to bring together (e.g. Google)
  172. 172. Existing customers that give you unparallel information (e.g. Facebook)</li></li></ul><li>Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  173. 173. Table of Contents
  174. 174. Vision and Mission Statement
  175. 175. Industry and Product Description
  176. 176. Market Analysis and Competitive Advantage
  177. 177. Marketing and Sales Plan
  178. 178. Operating Plan
  179. 179. Management Team
  180. 180. Risk and Contingency Plan
  181. 181. Financial Plan
  182. 182. Summary and Conclusion
  183. 183. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  184. 184. Table of Contents
  185. 185. Vision and Mission Statement
  186. 186. Industry and Product Description
  187. 187. Market Analysis and Competitive Advantage
  188. 188. Marketing and Sales Plan
  189. 189. Operating Plan
  190. 190. Management Team
  191. 191. Risk and Contingency Plan
  192. 192. Financial Plan
  193. 193. Summary and Conclusion
  194. 194. Appendix</li></li></ul><li>The Marketing and Sales Plan section of the business plan should include;<br /><ul><li>Unique Value Proposition
  195. 195. Pricing Strategy
  196. 196. Sales and Distribution Plan
  197. 197. Marketing Plan
  198. 198. Budget</li></ul>Section details<br />No. of Pages 4<br />
  199. 199. First thing you need to do is determine your secret ingredient, your “special sauce” <br />Develop your unique value proposition in two phases;<br />Your unique value proposition<br />Better<br />Faster<br />Cheaper<br />Internally : You and your senior management team need to decide what makes you unique from your competitors<br />Externally: Craft your value proposition into an outbound message to your market<br />
  200. 200. Pricing is not only a key to your sales success but also for the health of your startup<br />Your pricing strategy depends on the following key factors;<br /><ul><li>First, determine the PER UNIT COST of your product or service,
  201. 201. then, compare your products and services to COMPARABLE OFFERINGS from other companies, and
  202. 202. finally, understand what VALUE your product or service offers the CUSTOMER</li></ul>How to price your product / service<br />Possible pricing structures<br /><ul><li>Bundled packaging
  203. 203. Flat price
  204. 204. Subscription
  205. 205. Intro Packages
  206. 206. Free offerings or samples</li></li></ul><li>What’s your distribution strategy?<br />How you are going to move products from creation to consumption, cost-effectively<br />Distribution decisions have significant implications for<br /><ul><li>Product margins and profits
  207. 207. Marketing budgets
  208. 208. Final retail pricing
  209. 209. Sales management practices</li></ul>Possible distribution channels<br /><ul><li>Wholesale
  210. 210. Retail (Physical / Online)
  211. 211. Distributors
  212. 212. Sales Force</li></ul>Distribution partners are a great way for a small business to enter a market<br />
  213. 213. Marketing plan basics<br />Marketing is EVERYTHING you do to promote your business! <br />Don’t brush through your marketing plan, include at a minimum;<br /><ul><li>What specific marketing mediums will you use to reach your customer? What are the costs of each?
  214. 214. How often will each be used? What will they cost? Why did you choose these marketing avenues over others?
  215. 215. What marketing materials will you need? What will it cost you? (brochures, website, etc)
  216. 216. Who will design your marketing materials? What will they cost?
  217. 217. What is the cost of marketing materials per prospect or client
  218. 218. Detail out your budget – is it realistic?
  219. 219. What is your customer acquisition cost (cost to acquire each customer)</li></li></ul><li>Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  220. 220. Table of Contents
  221. 221. Vision and Mission Statement
  222. 222. Industry and Product Description
  223. 223. Market Analysis and Competitive Advantage
  224. 224. Marketing and Sales Plan
  225. 225. Operating Plan
  226. 226. Management Team
  227. 227. Risk and Contingency Plan
  228. 228. Financial Plan
  229. 229. Summary and Conclusion
  230. 230. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  231. 231. Table of Contents
  232. 232. Vision and Mission Statement
  233. 233. Industry and Product Description
  234. 234. Market Analysis and Competitive Advantage
  235. 235. Marketing and Sales Plan
  236. 236. Operating Plan
  237. 237. Management Team
  238. 238. Risk and Contingency Plan
  239. 239. Financial Plan
  240. 240. Summary and Conclusion
  241. 241. Appendix</li></li></ul><li>The Operating Plan section of the business plan should include;<br /><ul><li>Design and development
  242. 242. Production / Operations process
  243. 243. Start-up schedule
  244. 244. Regulatory and intellectual property (IP)
  245. 245. Capital requirements and budget</li></ul>Section details<br />No. of Pages 2<br />
  246. 246. The operational plan should layout exactly how you will operate;<br /><ul><li>Design & Development: Outline how your product is designed and how you foresee getting your design into a working prototype
  247. 247. Production & Operation Processes: Outline the process by which you will produce, distribute and sell your product or service, include;
  248. 248. Facilities and equipment you’ll need
  249. 249. Quality assurance processes
  250. 250. Labor requirements
  251. 251. Startup Schedule: How long will it take to get your product market ready and what are your key milestones you want to hit?
  252. 252. Intellectual Property: Will you file for patent, trademarks / service mark?
  253. 253. Budget: What will it take to startup and maintain operations?</li></ul>The operational plan<br />
  254. 254. Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  255. 255. Table of Contents
  256. 256. Vision and Mission Statement
  257. 257. Industry and Product Description
  258. 258. Market Analysis and Competitive Advantage
  259. 259. Marketing and Sales Plan
  260. 260. Operating Plan
  261. 261. Management Team
  262. 262. Risk and Contingency Plan
  263. 263. Financial Plan
  264. 264. Summary and Conclusion
  265. 265. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  266. 266. Table of Contents
  267. 267. Vision and Mission Statement
  268. 268. Industry and Product Description
  269. 269. Market Analysis and Competitive Advantage
  270. 270. Marketing and Sales Plan
  271. 271. Operating Plan
  272. 272. Management Team
  273. 273. Risk and Contingency Plan
  274. 274. Financial Plan
  275. 275. Summary and Conclusion
  276. 276. Appendix</li></li></ul><li>The Management Team section of the business plan should include;<br /><ul><li>Legal structure
  277. 277. Key executive team members
  278. 278. Executive compensation and ownership
  279. 279. Board of directors
  280. 280. Board of advisors and / or consultants
  281. 281. Organization chart (if appropriate)</li></ul>Section Details<br />No. of Pages 2<br />
  282. 282. Importance of this section<br />It’s not only about who’s on your team, but how their skills will contribute to the bottom line<br />Include key management and their profile;<br /><ul><li>Role they play in the company
  283. 283. Strengths that align with the company’s product or service
  284. 284. Prior startup successes</li></ul>If management team needs more strength, consider other ways in which to fill the gaps;<br /><ul><li>Board of directors: Equity and voting rights
  285. 285. Board of advisors: Possible equity but no voting rights
  286. 286. Consultants: Paid, no equity or voting rights</li></li></ul><li>Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  287. 287. Table of Contents
  288. 288. Vision and Mission Statement
  289. 289. Industry and Product Description
  290. 290. Market Analysis and Competitive Advantage
  291. 291. Marketing and Sales Plan
  292. 292. Operating Plan
  293. 293. Management Team
  294. 294. Risk and Contingency Plan
  295. 295. Financial Plan
  296. 296. Summary and Conclusion
  297. 297. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  298. 298. Table of Contents
  299. 299. Vision and Mission Statement
  300. 300. Industry and Product Description
  301. 301. Market Analysis and Competitive Advantage
  302. 302. Marketing and Sales Plan
  303. 303. Operating Plan
  304. 304. Management Team
  305. 305. Risk and Contingency Plan
  306. 306. Financial Plan
  307. 307. Summary and Conclusion
  308. 308. Appendix</li></li></ul><li>Section Details<br />No. of Pages 1<br />The Risk & Contingency section of the business plan should include;<br /><ul><li>Risks: The key risks facing the company
  309. 309. Contingencies: The plans to avoid them</li></li></ul><li>Being prepared is important. . .<br />Preparing for the “What if” scenario could mean the difference between success & failure<br />What risks should you focus on;<br /><ul><li>Those with high likelihood of occurrence
  310. 310. From that, those with the more sever outcomes</li></ul>How to handle the contingencies;<br /><ul><li>Speak to people with experience, management team, advisors, mentors</li></ul>Remember: Anticipating every possible risk factor is neither possible nor practical, so don’t obsess, just be prepared<br />
  311. 311. Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  312. 312. Table of Contents
  313. 313. Vision and Mission Statement
  314. 314. Industry and Product Description
  315. 315. Market Analysis and Competitive Advantage
  316. 316. Marketing and Sales Plan
  317. 317. Operating Plan
  318. 318. Management Team
  319. 319. Risk and Contingency Plan
  320. 320. Financial Plan
  321. 321. Summary and Conclusion
  322. 322. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  323. 323. Table of Contents
  324. 324. Vision and Mission Statement
  325. 325. Industry and Product Description
  326. 326. Market Analysis and Competitive Advantage
  327. 327. Marketing and Sales Plan
  328. 328. Operating Plan
  329. 329. Management Team
  330. 330. Risk and Contingency Plan
  331. 331. Financial Plan
  332. 332. Summary and Conclusion
  333. 333. Appendix</li></li></ul><li>Section Details<br />No. of Pages 4<br />The Financial Plan section of the business plan should include;<br /><ul><li>Business model
  334. 334. Statement of assumptions
  335. 335. Key financial data
  336. 336. Break-even analysis
  337. 337. Desired financing and structure
  338. 338. Use of funds
  339. 339. Valuations and return
  340. 340. Exit strategy</li></li></ul><li>How do you plan to make money?<br />Starting the company is relatively simple, actually making money is completely different<br />What are all the avenues you plan to generate revenue?<br /><ul><li>Are you B2B or B2C?
  341. 341. Are you selling a product or service?
  342. 342. Are you going to be home-based / online or will you have a store front / physical location?
  343. 343. Are you going to license or offer subscription based pricing or pay as you go?
  344. 344. Are you going to use multi-level marketing / affiliates?</li></ul>How do you plan on keeping your business afloat? <br />
  345. 345. Calculating your assumptions<br />To come up with your financial projections, start by listing out the basics. . . <br />Determine your estimated costs for year 1 to 3;<br /><ul><li>Startup expenses: what do you need before even opening the doors
  346. 346. Cost of goods sold (COGS): what does each unit sold cost you?
  347. 347. Operating costs: what do you need each month to maintain operations?</li></ul>‘BURN RATE’<br />KNOW your burn rate – what do you spend each month, know it 6, 12 even 18 months out<br />
  348. 348. Calculating your assumptions, con’t<br />To come up with your financial projections, start by listing out the basics. . . <br />Determine your estimated revenues for year 1 to 3;<br /><ul><li>Price per unit: how much will each unit sold bring in terms of revenue
  349. 349. No. of units sold: how many units of your product will you sell each month </li></ul>Note: may want to base your sales off of your marketing spend<br />BE REALISTIC!<br />Few companies make money right out of the starting gate<br />
  350. 350. Key financial data basics<br />Don’t let preparing your pro-forma scare you, but don’t move forward without it<br />Key statements you’ll need for 1 to 3 years (year 1 monthly)<br /><ul><li>Income statement
  351. 351. Cash flow statement
  352. 352. Balance sheet (less important)</li></li></ul><li>Preparing your statements<br />Learn the basics, but let someone help you if you aren’t familiar<br />Basic income statement and cash flow statements;<br />
  353. 353. Break even. . .<br />Companies need money to make money and they need to make more than they spend <br />Make sure you know your break-even point;<br /><ul><li>Total Sales = Total expenses
  354. 354. Break-Even = Total fixed costs / margin
  355. 355. Margin = Revenue per unit - Cost per unit</li></ul>Knowing how much you have to sell to cover your costs is key<br />
  356. 356. Desired structure: debt or equity?<br />There are various ways in which you can fund your startup<br />Funding sources<br /><ul><li>Debt: Loans that must be repaid over time, usually with interest.
  357. 357. Friends / family
  358. 358. Banks / SBA (Small Business Association)
  359. 359. Equity: Money obtained from investors in exchange for an ownership
  360. 360. Friends / family
  361. 361. Angel investors
  362. 362. Venture capitalist
  363. 363. Convertible Debt: Financing is simply a loan that can be turned into equity</li></li></ul><li>Exit strategy<br />An exit strategy is exactly that; the method by which you “cash out” of the investment <br />There are several methods by which most entrepreneurs exit;<br /><ul><li>Let it run dry
  364. 364. Sell your shares
  365. 365. Liquidate; although not recommended as part of your business plan if you’re looking for investors
  366. 366. IPO (Initial Public Offering): sell shares on the open market
  367. 367. Trade Sale: selling to a larger, primarily strategic partner</li></li></ul><li>Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  368. 368. Table of Contents
  369. 369. Vision and Mission Statement
  370. 370. Industry and Product Description
  371. 371. Market Analysis and Competitive Advantage
  372. 372. Marketing and Sales Plan
  373. 373. Operating Plan
  374. 374. Management Team
  375. 375. Risk and Contingency Plan
  376. 376. Financial Plan
  377. 377. Summary and Conclusion
  378. 378. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  379. 379. Table of Contents
  380. 380. Vision and Mission Statement
  381. 381. Industry and Product Description
  382. 382. Market Analysis and Competitive Advantage
  383. 383. Marketing and Sales Plan
  384. 384. Operating Plan
  385. 385. Management Team
  386. 386. Risk and Contingency Plan
  387. 387. Financial Plan
  388. 388. Summary and Conclusion
  389. 389. Appendix</li></li></ul><li>The Summary and Conclusion section of the business plan should include;<br /><ul><li>Exactly that, a few paragraphs that summarize and conclude the key points – but not to the level of the executive summary</li></ul>Section details<br />No. of Pages ½ <br />
  390. 390. Structure of a business plan<br />Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  391. 391. Table of Contents
  392. 392. Vision and Mission Statement
  393. 393. Industry and Product Description
  394. 394. Market Analysis and Competitive Advantage
  395. 395. Marketing and Sales Plan
  396. 396. Operating Plan
  397. 397. Management Team
  398. 398. Risk and Contingency Plan
  399. 399. Financial Plan
  400. 400. Summary and Conclusion
  401. 401. Appendix</li></ul>Break it down in to key, manageable sections;<br /><ul><li>Executive Summary
  402. 402. Table of Contents
  403. 403. Vision and Mission Statement
  404. 404. Industry and Product Description
  405. 405. Market Analysis and Competitive Advantage
  406. 406. Marketing and Sales Plan
  407. 407. Operating Plan
  408. 408. Management Team
  409. 409. Risk and Contingency Plan
  410. 410. Financial Plan
  411. 411. Summary and Conclusion
  412. 412. Appendix</li></li></ul><li>The Appendix of the business plan should include;<br />Section details<br />No. of Pages 15 <br />
  413. 413. Summary<br />Your business plan should be thorough yet simple and concise;<br /><ul><li>Aim for 25 pages of content, no more than 15 pages of appendices
  414. 414. 1.5 line spacing, except the executive summary
  415. 415. Use clear font and fonts size that can be read, Arial, 11 pt or larger
  416. 416. Set generous margins
  417. 417. Use bullets – makes it easier for people to pinpoint what they need to know
  418. 418. Use simple terms, no big words
  419. 419. Use graphics whenever possible</li></ul>Executive summary template available at <br />https://docs0.google.com/document/d/1zX_eg39hyjkk-FSEFNDj_-ii6ijuIjxtVkpBtfLq1g4/edit?hl=en&authkey=CPWjvokE# <br />Investor deck template available at <br />https://docs.google.com/present/edit?id=0AaXsMsxhFJBuZGM3YzRnazNfMTdncHJmbmhjeg&hl=en&authkey=CNb3sboK <br />
  420. 420. Questions?<br />
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