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Writing and Presenting Effective Business Plans Dr. Anne S. York Associate Professor of Entrepreneurship Creighton Univers...
Agenda for Today <ul><li>Why write a business plan? </li></ul><ul><li>Mystery product exercise </li></ul><ul><li>The impor...
Business Plan Components <ul><li>Executive summary </li></ul><ul><li>Concept statement (position, industry) </li></ul><ul>...
Business Plan for Mystery Product…. <ul><li>What is your product? </li></ul><ul><li>Who are your likely competitors? </li>...
Why Forecasting Cash Flow Is Important! <ul><li>P&L Summary </li></ul>
What Happened? Signs of Rapid and Unplanned Growth <ul><li>Sales Growth: major awards </li></ul><ul><li>Operations: schedu...
Cash Flow
Options <ul><li>Improve earnings </li></ul><ul><li>Borrow more money </li></ul><ul><li>Capital investment </li></ul>
Financial Forecasting <ul><li>Purposes </li></ul><ul><ul><li>Planning for start-up </li></ul></ul><ul><ul><li>Adjusting fo...
Cash Flow Budgets <ul><li>Simpler, More Logical than Financial Statements </li></ul><ul><li>Purpose:  To Determine How Muc...
Questions that Affect Cash Flow <ul><li>What initial investments are required before you open the door? </li></ul><ul><li>...
More Questions… <ul><li>What choices can you make to improve your cash flow? </li></ul><ul><li>What options do you have if...
Example <ul><li>Assume you want to start a restaurant </li></ul><ul><ul><li>Initial investment </li></ul></ul><ul><ul><li>...
Cash Flow vs. Profit <ul><li>Cash Flow </li></ul><ul><li>+Sales (cash/credit/terms) </li></ul><ul><li>+Bank Loan </li></ul...
Assumptions <ul><ul><li>You purchase your eqpt./invent. for $9,000. </li></ul></ul><ul><ul><li>Month 1 you sell $25,000. <...
Accounting Income Statement June July   August Revenues 25.0 50.0 100.0 Cost of goods sold 12.5 25.0   50.0  Gross margin ...
Cash Budget May June July  August Cash Sales    0  12.5 25.0  50.0 Corp. Sales     0   12.5  25.0 Net Cash In     0  12.5 ...
Why Are the Two So Different? <ul><li>Same Reason as First Case </li></ul><ul><ul><li>Inventory/Materials Paid Ahead of Sa...
What You Can Do…. <ul><li>Credit Policy/Discounts for Cash </li></ul><ul><li>Lease Equipment </li></ul><ul><li>Reduce Empl...
Common Presentation Issues <ul><li>Using common language to describe product/service </li></ul><ul><li>Identifying the tar...
Common Presentation Issues <ul><li>Being realistic about adoption hurdles </li></ul><ul><li>Estimating longevity of the pr...
AI, Inc. Business Plan Presentation Example
AI, Inc.  <ul><li>Concept Statement </li></ul><ul><li>Business Plan Objectives </li></ul><ul><li>Industry Need </li></ul><...
AI, Inc. : Concept Statement <ul><li>Mission: to be the premier supplier of sperm sorting technology for gender selection ...
Business Plan Objectives <ul><li>To describe the current market and the growth potential for the market </li></ul><ul><li>...
Cattle Industry Need <ul><li>Standard breeding techniques result in 50% male and 50% female offspring </li></ul><ul><li>So...
Need for Sorting: Dairy <ul><li>Selective breeding of high-producing lactating cows </li></ul><ul><li>Increased calf incom...
Need for Sorting: Beef <ul><li>Males for steers for commercial unit </li></ul><ul><li>Replacement females from select popu...
The Market: Immediate <ul><li>2005 Inventory   </li></ul><ul><ul><li>Dairy 9 million </li></ul></ul><ul><ul><ul><li>Approx...
The Market: Long-term <ul><li>Increased use of AI creates access to: </li></ul><ul><ul><li>35% of Dairy sector </li></ul><...
The Market: Competition TransOva XY Inc. AI, Inc. Commercially Available FY06 Acceptable Conception Rate Industry Interest...
The Market: AI, Inc. <ul><li>Market research </li></ul><ul><ul><li>20 National Association of Animal Breeders members  </l...
<ul><li>AI Suppliers </li></ul><ul><ul><li>Genex Cooperative (CRI Int’l) </li></ul></ul><ul><ul><li>Select Sires, Inc. </l...
<ul><li>Quick entry into market </li></ul><ul><ul><li>Expect FY2006 </li></ul></ul><ul><li>Multiple revenue sources  </li>...
AI, Inc.: Milestones <ul><li>Technology R&D  </li></ul><ul><ul><li>Demonstrate proof of principle </li></ul></ul><ul><ul><...
  AI, Inc.: Team <ul><li>XXXX, PhD: founder, inventor, Medical School faculty, 30 + yrs  research experience, scientific a...
AI, Inc.: Financials
AI, Inc.: Funding Needed <ul><li>Pessimistic - $400,000 </li></ul><ul><ul><li>100% from angel investors and venture capita...
AI, Inc. For Additional Information… XXXXXXXXXXX Office phone:  Direct phone: Email:
Creighton Options <ul><li>Ask to be considered as an outside project (semester time frame, call early) </li></ul><ul><li>T...
Omaha Options…. <ul><li>Nebraska Business Development Center </li></ul><ul><li>Small Business Administration/Score </li></...
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  • Unless you’ve been in the closet for the past couple years, you know that this is a bloody battle with a very intense rivalry.
  • Unless you’ve been in the closet for the past couple years, you know that this is a bloody battle with a very intense rivalry.
  • Unless you’ve been in the closet for the past couple years, you know that this is a bloody battle with a very intense rivalry.
  • Each of the above reasons has perceived value for using sexed semen. In a commercial situation where sex ratio is skewed towards males, the value is the difference between the weaning weight of the steers vs heifers plus the higher selling price for steers. When a higher ratio of females is desired fro replacements, the increased value of the maternal characteristics should be considered. When females are desired to reduce calving difficulties the value lies in the reduced losses in calves and virgin heifers during calving. The perceived value of sexed semen to a seed stock producer will focus on being able to use greater selection pressure on the animal to be sold for breeding stock or to be able to sell additional animals of the desired sex.
  • If OligoTrips enters the market at a slow pace it will give its competitor (XY Inc.) an opportunity to realign itself in a market that it is already a monopoly. License fee gains customer loyalty Income of Franchising, requires relatively little capital up front and would establish OligoTRIPs in a strategic alliance with AI providers. Allows OligoTrips the potential to reach all markets of livestock. Builds and stimulates demand, provides brand name recognition for the technology and shares the costs of pioneering.
  • Transcript of "Anne York"

    1. 1. Writing and Presenting Effective Business Plans Dr. Anne S. York Associate Professor of Entrepreneurship Creighton University Nebraska EPSCoR Innovation Forum March 21, 2007
    2. 2. Agenda for Today <ul><li>Why write a business plan? </li></ul><ul><li>Mystery product exercise </li></ul><ul><li>The importance of cash flow </li></ul><ul><li>Presenting your business plan </li></ul><ul><li>Resources at Creighton and in Omaha… </li></ul>
    3. 3. Business Plan Components <ul><li>Executive summary </li></ul><ul><li>Concept statement (position, industry) </li></ul><ul><li>Industry analysis </li></ul><ul><li>Marketing (research, pricing, promotion) </li></ul><ul><li>Operations (start-up and ongoing growth) </li></ul><ul><li>Management (team) </li></ul><ul><li>Financial (profit, cash flow, funding) </li></ul><ul><li>Critical risks and milestones </li></ul>
    4. 4. Business Plan for Mystery Product…. <ul><li>What is your product? </li></ul><ul><li>Who are your likely competitors? </li></ul><ul><li>Who are your target customers? </li></ul><ul><li>How will you price and promote it? </li></ul><ul><li>What skills do you need on your team? </li></ul><ul><li>How and where will you produce? </li></ul><ul><li>How much money do you need? </li></ul><ul><li>Critical risks? </li></ul>
    5. 5. Why Forecasting Cash Flow Is Important! <ul><li>P&L Summary </li></ul>
    6. 6. What Happened? Signs of Rapid and Unplanned Growth <ul><li>Sales Growth: major awards </li></ul><ul><li>Operations: scheduling impact </li></ul><ul><li>Staffing: increasing and turnover </li></ul><ul><li>Inventories: increasing and outsourcing </li></ul><ul><li>Equipment: unfamiliar, distant </li></ul><ul><li>Receivables: increasing </li></ul><ul><li>Capital: needed!!!!! </li></ul>
    7. 7. Cash Flow
    8. 8. Options <ul><li>Improve earnings </li></ul><ul><li>Borrow more money </li></ul><ul><li>Capital investment </li></ul>
    9. 9. Financial Forecasting <ul><li>Purposes </li></ul><ul><ul><li>Planning for start-up </li></ul></ul><ul><ul><li>Adjusting for changes in plans </li></ul></ul><ul><ul><li>What-if exercises, sensitivities </li></ul></ul><ul><li>Point: Need Something That Can Be Easily Changed! </li></ul><ul><li>Tools: Excel Mostly </li></ul><ul><li>Often Used to Create Financial Statements, but Best Used for Cash Flow Budgeting </li></ul>
    10. 10. Cash Flow Budgets <ul><li>Simpler, More Logical than Financial Statements </li></ul><ul><li>Purpose: To Determine How Much Cash You Need and When </li></ul><ul><li>Involves Same Forecasting Tools as Financials </li></ul><ul><li>Elements </li></ul><ul><ul><li>Assumptions </li></ul></ul><ul><ul><li>Initial Investment/Startup Costs </li></ul></ul><ul><ul><li>Cash Receipts (record when cash comes in) </li></ul></ul><ul><ul><li>Cash Disbursements (record when cash goes out) </li></ul></ul>
    11. 11. Questions that Affect Cash Flow <ul><li>What initial investments are required before you open the door? </li></ul><ul><li>What are your ongoing sales and costs? </li></ul><ul><li>How and when will people pay you? </li></ul><ul><li>How and when will you pay suppliers? </li></ul>
    12. 12. More Questions… <ul><li>What choices can you make to improve your cash flow? </li></ul><ul><li>What options do you have if you need more cash? </li></ul><ul><li>Can your business fail if you are making a profit? </li></ul>
    13. 13. Example <ul><li>Assume you want to start a restaurant </li></ul><ul><ul><li>Initial investment </li></ul></ul><ul><ul><li>Ongoing sales and costs </li></ul></ul><ul><ul><li>Sources of capital: loans, investors, savings </li></ul></ul><ul><li>Where do you get this information? </li></ul><ul><ul><li>Ask people </li></ul></ul><ul><ul><li>Do research at the CU/UNO library, SBA </li></ul></ul><ul><ul><li>Internet </li></ul></ul>
    14. 14. Cash Flow vs. Profit <ul><li>Cash Flow </li></ul><ul><li>+Sales (cash/credit/terms) </li></ul><ul><li>+Bank Loan </li></ul><ul><li>- Eqpt./Invent. (lease/buy) </li></ul><ul><li>- Materials (cash/credit) </li></ul><ul><li>- Labor (plus training) </li></ul><ul><li>- Interest/Principal </li></ul><ul><li>- Taxes </li></ul><ul><li>- Advertising and admin. </li></ul><ul><li>Only record when cash </li></ul><ul><li>comes in or goes out ! </li></ul><ul><li>Accounting Profit </li></ul><ul><li>Revenue </li></ul><ul><li>Expense </li></ul><ul><ul><li>Supplies and materials </li></ul></ul><ul><ul><li>Labor </li></ul></ul><ul><ul><li>Depreciation </li></ul></ul><ul><ul><li>Advertising and admin </li></ul></ul><ul><ul><li>Interest and taxes </li></ul></ul><ul><li>Asset (eqpt./inventory) </li></ul><ul><li>Liability (loan) </li></ul><ul><li>Expenses must be matched with revenues! </li></ul>
    15. 15. Assumptions <ul><ul><li>You purchase your eqpt./invent. for $9,000. </li></ul></ul><ul><ul><li>Month 1 you sell $25,000. </li></ul></ul><ul><ul><li>Your sales are doubling every month. </li></ul></ul><ul><ul><li>You make 50% of sales to corporate customers, who take 30-45 days to pay. </li></ul></ul><ul><ul><li>Your direct costs (labor,materials) are 50% of sales. </li></ul></ul><ul><ul><li>Your suppliers require cash on delivery. </li></ul></ul><ul><ul><li>You lease your building for $1,000 per month. </li></ul></ul><ul><ul><li>You need two weeks to get your restaurant ready to go and help trained. </li></ul></ul>
    16. 16. Accounting Income Statement June July August Revenues 25.0 50.0 100.0 Cost of goods sold 12.5 25.0 50.0 Gross margin 12.5 25.0 50.0 Adv/admin 5.0 10.0 20.0 Operating profit 7.5 15.0 30.0 Depreciation (3 yr.) .3 .3 .3 EBIT 7.2 14.7 29.7 Interest 0.0 0.0 0.0 Taxes (40%) 2.9 5.9 11.9 Net profit 4.3 8.8 17.8
    17. 17. Cash Budget May June July August Cash Sales 0 12.5 25.0 50.0 Corp. Sales 0 12.5 25.0 Net Cash In 0 12.5 37.5 75.5 Labor/Mtls. 12.5 25.0 50.0 100.0 Equipment 9.0 Adv./Admin. 5.0 10.0 20.0 40.0 Interest/Principal ? ? ? ? Taxes 2.9 5.9 11.9 Net Cash Out ( 26.5) (37.9) (75.9) (151.9) Net cash flow (14.0)* (25.4) (38.4) (76.4) Loan Needed 14.0 39.4 77.8 153.8
    18. 18. Why Are the Two So Different? <ul><li>Same Reason as First Case </li></ul><ul><ul><li>Inventory/Materials Paid Ahead of Sales </li></ul></ul><ul><ul><li>Corporate Accounts Receivable </li></ul></ul><ul><ul><li>Equipment Paid Ahead of Sales </li></ul></ul><ul><ul><li>Training Paid Ahead of Work </li></ul></ul><ul><ul><li>Employee Turnover </li></ul></ul>
    19. 19. What You Can Do…. <ul><li>Credit Policy/Discounts for Cash </li></ul><ul><li>Lease Equipment </li></ul><ul><li>Reduce Employee Turnover </li></ul><ul><li>Slow Growth Rate (less advertising) </li></ul>
    20. 20. Common Presentation Issues <ul><li>Using common language to describe product/service </li></ul><ul><li>Identifying the target market </li></ul><ul><li>Describing how product adds value </li></ul><ul><li>Knowing how you compare with your competition </li></ul><ul><li>Identifying alternative markets </li></ul>
    21. 21. Common Presentation Issues <ul><li>Being realistic about adoption hurdles </li></ul><ul><li>Estimating longevity of the product </li></ul><ul><li>Clarifying role of founder/inventor </li></ul><ul><li>Understanding what will excite customers </li></ul><ul><li>Identifying interim sources of funding </li></ul>
    22. 22. AI, Inc. Business Plan Presentation Example
    23. 23. AI, Inc. <ul><li>Concept Statement </li></ul><ul><li>Business Plan Objectives </li></ul><ul><li>Industry Need </li></ul><ul><ul><li>Dairy </li></ul></ul><ul><ul><li>Beef </li></ul></ul><ul><li>Market Potential </li></ul><ul><ul><li>Competition </li></ul></ul><ul><ul><li>Positioning </li></ul></ul><ul><li>Business Model </li></ul><ul><li>Company Status </li></ul><ul><ul><li>Milestones </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><li>Financial </li></ul><ul><ul><li>Projections </li></ul></ul><ul><ul><li>Requirements </li></ul></ul>
    24. 24. AI, Inc. : Concept Statement <ul><li>Mission: to be the premier supplier of sperm sorting technology for gender selection in the livestock industry. </li></ul><ul><li>Patented technology will allow AI, Inc. to claim the position of superior product provider at equal or lower cost. </li></ul>
    25. 25. Business Plan Objectives <ul><li>To describe the current market and the growth potential for the market </li></ul><ul><li>To define the competition within the market </li></ul><ul><li>To outline the research and business development milestones to be met for commercial availability of the technology </li></ul><ul><li>To demonstrate the financial viability of AI, Inc. for success in the market </li></ul>
    26. 26. Cattle Industry Need <ul><li>Standard breeding techniques result in 50% male and 50% female offspring </li></ul><ul><li>Sorted semen/sperm allows producer to select the sex of the offspring </li></ul>Sperm Offspring Sector X Heifer Dairy Y Bull Beef
    27. 27. Need for Sorting: Dairy <ul><li>Selective breeding of high-producing lactating cows </li></ul><ul><li>Increased calf income- half no. of cows bred </li></ul><ul><li>Herd management- biosecure & easier calving </li></ul><ul><li>Faster progress- meeting breeding goals </li></ul>Got Milk? Heifer Calf Bull calf Sperm X Y
    28. 28. Need for Sorting: Beef <ul><li>Males for steers for commercial unit </li></ul><ul><li>Replacement females from select population of herd </li></ul><ul><li>Female breeding to reduce calving difficulties </li></ul><ul><li>Males for bulls for seed stock producers </li></ul>Superior Heifer Superior Bull Where’s the Beef? Sperm X Y
    29. 29. The Market: Immediate <ul><li>2005 Inventory </li></ul><ul><ul><li>Dairy 9 million </li></ul></ul><ul><ul><ul><li>Approximately 5.9 million (65%) bred by AI </li></ul></ul></ul><ul><ul><li>Beef 33 million </li></ul></ul><ul><ul><ul><li>Approximately 3.3 million (10%) bred by AI </li></ul></ul></ul><ul><li>2004 Total Semen Sales by Sector </li></ul><ul><ul><li>Dairy 26.8 million units @ $5/unit </li></ul></ul><ul><li>$134,116,710 </li></ul><ul><ul><li>Beef 3.9 million units @ $10/unit </li></ul></ul><ul><li>$39,212,180 </li></ul><ul><li>Source: National Association of Animal Breeders </li></ul><ul><li>March 11, 2005 </li></ul>
    30. 30. The Market: Long-term <ul><li>Increased use of AI creates access to: </li></ul><ul><ul><li>35% of Dairy sector </li></ul></ul><ul><ul><li>90% of Beef sector </li></ul></ul><ul><li>Technology R&D efforts to develop gender selection capabilities for additional sectors of livestock industry including: </li></ul><ul><ul><li>Swine </li></ul></ul><ul><ul><li>Sheep </li></ul></ul><ul><ul><li>Equine </li></ul></ul>
    31. 31. The Market: Competition TransOva XY Inc. AI, Inc. Commercially Available FY06 Acceptable Conception Rate Industry Interest Efficient and Effective Sorting Affordable Price
    32. 32. The Market: AI, Inc. <ul><li>Market research </li></ul><ul><ul><li>20 National Association of Animal Breeders members </li></ul></ul><ul><ul><li>8 Certified Semen Services members </li></ul></ul><ul><ul><li>Nebraska Resources </li></ul></ul><ul><ul><ul><li>Feed lot owners </li></ul></ul></ul><ul><ul><ul><li>Seed stock suppliers </li></ul></ul></ul><ul><ul><ul><li>Cattle breeders </li></ul></ul></ul><ul><ul><ul><li>Trade association representatives </li></ul></ul></ul><ul><ul><ul><li>Congressman’s office </li></ul></ul></ul>
    33. 33. <ul><li>AI Suppliers </li></ul><ul><ul><li>Genex Cooperative (CRI Int’l) </li></ul></ul><ul><ul><li>Select Sires, Inc. </li></ul></ul><ul><ul><li>Accelerated Genetics </li></ul></ul><ul><ul><li>Androgenics </li></ul></ul><ul><ul><li>Taurus Service, Inc. </li></ul></ul><ul><li>Seed Stock Supplier </li></ul><ul><ul><li>Vogler Semen Centre </li></ul></ul><ul><li>Reagent Supplier </li></ul><ul><ul><li>Minitubes of America </li></ul></ul>The Market: AI, Inc. Ready Customers:
    34. 34. <ul><li>Quick entry into market </li></ul><ul><ul><li>Expect FY2006 </li></ul></ul><ul><li>Multiple revenue sources </li></ul><ul><ul><li>Technology license fees </li></ul></ul><ul><ul><li>Proprietary reagent sales </li></ul></ul><ul><ul><li>Potential for royalty income </li></ul></ul><ul><li>Compatible with Industry </li></ul><ul><ul><li>Consolidation trends </li></ul></ul><ul><ul><li>Uses existing infrastructure </li></ul></ul><ul><ul><li>Shared risk </li></ul></ul>Business Model: Franchising
    35. 35. AI, Inc.: Milestones <ul><li>Technology R&D </li></ul><ul><ul><li>Demonstrate proof of principle </li></ul></ul><ul><ul><li>Field trials with AI Industry partners </li></ul></ul><ul><ul><li>Establish improved separation approach </li></ul></ul><ul><ul><li>Develop technology for different species </li></ul></ul><ul><li>Business Development </li></ul><ul><ul><li>Negotiate license for technology rights </li></ul></ul><ul><ul><li>Submit SBIR/STTR funding proposals </li></ul></ul><ul><ul><li>Formalize AI subsector partnerships </li></ul></ul><ul><ul><li>Establish first franchise </li></ul></ul><ul><ul><li>Identify and secure management team </li></ul></ul><ul><ul><li>First round of fundraising </li></ul></ul><ul><li> </li></ul>
    36. 36. AI, Inc.: Team <ul><li>XXXX, PhD: founder, inventor, Medical School faculty, 30 + yrs research experience, scientific advisory role </li></ul><ul><li>CEO: position open, entrepreneur experienced in launching company & products in high technology agriculture business environment, and fundraising </li></ul><ul><li>Research Scientist: position open for PhD in biochemistry </li></ul><ul><li>XXXX.: business development support, equity partner, technology licensor </li></ul>
    37. 37. AI, Inc.: Financials
    38. 38. AI, Inc.: Funding Needed <ul><li>Pessimistic - $400,000 </li></ul><ul><ul><li>100% from angel investors and venture capitalist for a % of ownership in the company </li></ul></ul><ul><li>Optimistic - $400,000 </li></ul><ul><ul><li>100% from grants. </li></ul></ul><ul><li>Expected - $400,000 </li></ul><ul><ul><li>75% from grants </li></ul></ul><ul><ul><li>25% from investors for ownership in the company ( Approximately $100,000) </li></ul></ul>
    39. 39. AI, Inc. For Additional Information… XXXXXXXXXXX Office phone: Direct phone: Email:
    40. 40. Creighton Options <ul><li>Ask to be considered as an outside project (semester time frame, call early) </li></ul><ul><li>Take an elective course </li></ul><ul><ul><li>Undergrad: entrepreneurial planning (fall, spring) </li></ul></ul><ul><ul><li>Grad: entrepreneurial planning (spring), business innovation consulting (fall), technology commercialization (spring), technology entrepreneurship (fall) </li></ul></ul>
    41. 41. Omaha Options…. <ul><li>Nebraska Business Development Center </li></ul><ul><li>Small Business Administration/Score </li></ul><ul><li>Internet </li></ul><ul><li>The Successful Business Plan: Secrets and Strategies , Abrams </li></ul><ul><li>Other? </li></ul><ul><ul><li>Search http://entrepreneurship.creighton.edu </li></ul></ul><ul><ul><li>[email_address] </li></ul></ul><ul><ul><li>402-280-2440 </li></ul></ul>
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