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Business plans

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How to Write a Business Plan. Focusing on high tech businesses that will be raising money. As presented to the Hawaii Inventors Clubs on July 10, 2012 by Ken Berkun.

How to Write a Business Plan. Focusing on high tech businesses that will be raising money. As presented to the Hawaii Inventors Clubs on July 10, 2012 by Ken Berkun.

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  • 1. Ken BerkunPresident, Labels That Talk berkun@soundpaper.com http://www.slideshare.net/kenberkun/ business-plans-13598877 1
  • 2. Who am I? President, Labels That Talk Co-Founder Singingfish.com  Wrote business plan  Successful (10X) exit Old Timer – 34 years in high tech  Software development  Project Management  Technical Marketing  Business Strategy 2
  • 3. Who are you? 3
  • 4. Why have a business plan? 4
  • 5. Change“Zero percent of businesses perform to plan.” - Gordon Bell 5
  • 6. The Real Reasons  For yourself  Change!  The Process, not the goal?  For your team  Focus!  For your investors  Because they insist on it  They aren’t going to read itIf it is not in the business plan either don’t do it or change the plan. If it is too much trouble to change the plan – then DON’T DO IT! 6
  • 7. Key Elements Executive Summary Main Body Financial Plan  Text  Spreadsheet Elevator Pitch Be Honest! 3 Minute Pitch 5 Minute Pitch Don’t let me forget to talk about NDAs 7
  • 8. Executive Summary One Page  Or not  Bare minimum  Doesn’t matter, they aren’t going to read it either You/Management Product/Service Market Business Model The Deal 8
  • 9. Main Body I. Presentation &  Operating Plan Organization  SWOT Analysis  Cover Page  V. Financial Information  Table of Contents  Overview II. Executive Summary  Income Statement III. Sales & Market Potential  Cash Flow  Products / Services  Balance Sheet  The Market  Capitalization and Use of  Sales and Marketing Plan Funds IV. Operating Plan  VI. Wrapping it Up  Management Team  Exit Strategy or Payback Analysis  Go-To-Market Strategy  Notices and DisclaimersSource: http://www.greatbusinessplans.com/ 9
  • 10. Mission Plan and Statement of EthicsThe only thing I have ever found this good for is hiring. 10
  • 11. LTT Business Plan1. Executive Summary2. Soundpaper® - A Technological Break-Through3. Intellectual Property4. Product Features5. The Opportunity – Market Size6. The Competition7. Execution Plan8. Soundpaper Go to Market Plan9. The Team10. The Financial Plan11. Pro-Forma Financials12. Risk Factors 11
  • 12. How Long? Just Long Enough And then a little bit shorter 12
  • 13. Sales and Marketing Sales & Market Potential  Products / Services  The Market  Competition  Sales and Marketing Plan 13
  • 14. Sales & Market Potential Description of the Market Growth Rates and Key Trends Target Market (Including Location, if Retail) Size of Target MarketDO YOU HAVE A MARKET? 14
  • 15. Products and Services Product/Service  What exactly are you selling? Intellectual property Do you have a product or a company? This is really about focus! Don’t try to be all things to all people. 15
  • 16. Competition Technology Company Ease of Use Price High-Density Labels That Talk Easy to Use; $100 Barcode (small) no contact scanner scanner; all- in-one unit $.01 labels Microchip with Scrapbook Alive Easy to Use; $7 per unit Battery (small) bulky; battery required RFID En-Vision Awkward to $325WHAT’S MISSING? America (small) Use; Pharma scanner set-up $$$$ Barcode En-Vision Awkward to $1295 (database look- America (small) Use; Bulky; scanner up) Database is outdated Barcode and AD Information Awkward to $395 Text to Speech & Use; Contact Communication Scanner (Korean – small) Intel Text to Speech Intel Awkward to $1500 Reader/Kurzweil hold, slow Reader Kurzweil operation 16
  • 17. Sales and Marketing Plan Marketing Sales Research The actual deal Competition One to one Market size and make up Product Communications/Creating Closing the deal Demand Pricing Incentives Long Term Short Term What makes a good sales and marketing plan?  I don’t know. 17
  • 18. Operations Operating Plan  Management Team  Go-To-Market Strategy  Operating Plan  SWOT Analysis 18
  • 19. Management Team Bios  1 Page and 1 Paragraph Advisory Board Board of Directors Include:  Lawyer(s)  Accountants  Other References Highlight empty positions 19
  • 20. Go To Market Strategy Distribution Channels Have you thought about how you will sell and deliver your product or service? Direct or Indirect? Consider licensing – esp. if you have a product not a company Often your biggest competition is Do Nothing! (I stole this) Focus groups, first sales, giveaways – anything to prove that the market exists If your answer is “go virile” then go home. 20
  • 21. Operating Plan Execution  Cost  Servers and Bandwidth  Cost  Manufacturing  Plant, inventory, equipment, etc.  Cost  Software Development  Did I mention cost? 21
  • 22. http://www.businessballs.com/swotanalysisfreetemplate.htm#SWOT analysisinventors, origins and history of SWOTanalysis SWOT  Be f-cking honest  Run this past your advisors  Run it past your mother Not This This 22
  • 23. Financial Text Financial Information  Overview  Assumptions  Projections  Income Statement  Cash Flow  Balance Sheet  Capitalization and Use of Funds 23
  • 24. AssumptionsAll assumptions are wrong.If an investor doesn’t like your projections then you canchange the assumptions.You must go back and fix them as you learn reality. 24
  • 25. Projections Projected Revenue and Income EBITDA 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 (10,000,000) Revenue Income 25
  • 26. Income Statement The Income Statement shows your Revenues, Expenses, and Profit for a particular period. Its a snapshot of your business that shows whether or not your business is profitable at that point in time; Revenue - Expenses = Profit/Loss.Source:http://sbinfocanada.about.com/cs/businessplans/a/bizplanfinanc_2.htmSource:http://www.accountingcoach.com/online-accounting-course/04Xpg04.html 26
  • 27. The Cash Flow Projection shows how cash isCash Flow expected to flow in and out of your business. Ibid. Source: http://www.accounting4management.com/preparation_ of_statement_of_cash_flows.htm 27
  • 28. Balance Sheet The Balance Sheet presents a picture of your business net worth at a particular point in time. It summarizes all the financial data about your business, breaking that data into 3 categories; assets, liabilities, and equity. Ibid.Source:http://www.accountingcoach.com/online-accounting-course/05Xpg04.html 28
  • 29. Capitalization Labels That Talk - Pro Forma Capitalization Warrants Warrants Warrants(Cap Table) Ken Berkun (D) Dollars Revenue Participation Units Outstanding Shares 1,834,000 Issued Convertible Notes (A) Revenue Participation Offering (B) Options and Equity Pool (C ) Total 1,834,000 % Fully Diluted 45.85% Harvey Storms 520,000 520,000 13.00% Peter Weiss 20,000 20,000 0.50% Harvey Storms (E) 80,000 80,000 2.00% Hank Turner (F) 75,000 75,000 1.87% Michael Berkun (A)(D) $519,648 20.78593 332,575 332,575 8.31%The Cap Table OtherSpreadsheet is a table used Relatives Other Conv. (A) $157,492 6.29967 100,795 100,795 2.52% Debtby partners or Holders (A) $123,749 4.94997 79,199 79,199 1.98%shareholders in a business Revenue Participation Units (B) $1,200,000 48.00000 486,000 486,000 12.15%to list who owns what in a Reserve forstartup Future Issuance (B) 472,431 472,431 11.81% Total $2,000,889 80.03557 1,834,000 540,000 512,569 486,000 627,431 4,000,000 100.00% Note A Pro forma warrants to be issued if first closing occurs on September 30, 2010; final amount will determined by interest accrued through date of first closing. Note B Under the terms of the Offering 16 Revenue Participation Units accepted at the First Closing will receive warrants to purchase 16,000 common shares, the next 14 Units accepted will receive warrants to purchase 10,000 common shares per Unit and the remaini Note C The Company anticipates a limited number of option grants will be made to advisors and other parties prior to the first closi ng. Note D Ken Berkun is the Companys Founder and CEO. Michael Berkun is Ken Berkuns brother. Note E Mr. Storms is the Companys VP of Business Development. Note F The Company anticipates hiring Mr. Turner as its Chief Operating Officer 29
  • 30. Use of FundsIT HAD BETTER BE GOOD! Series A Deliverables: Year 1 Functional Recorder/Scanner (manufacturing prototype) Reference hardware design (for manufacturing) Finalized Barcode design Software running on PC Software running on ASIC or embedded processor of choice Decoding software on iPhone or other smart phone Manufacturing ramped up and first shipments made Full documentation Marketing materials 30
  • 31. Summary Wrapping it Up  Exit Strategy or Payback Analysis  Notices and Disclaimers  Risk Factors If you are planning on raising money you need to talk to a lawyer about this. Period. 31
  • 32. ‹#›
  • 33. Optional The Deal Call to Action 33
  • 34. Financial Plan Detailed Spreadsheet 5 Year projections by quarter First 18 months month by month• Tabs: • Taxes • Summary • Headcount • Sales & Revenue • Personnel • Margins • Departmental • Cash Flow • Charts • Balance Sheet 34
  • 35. Summary Think about why you are making a plan Review the plan quarterly (fat chance!) If it is not in the plan, don’t do it, or take the time to change the plan Be willing to walk away from bad business Focus! Focus! Focus! 35
  • 36. Resources SCORE  http://hawaii.score.org/ HVCA  http://hvca.org/ Hawaii Angels  http://hawaiiangels.org/ High Tech Development Corp.  http://www.htdc.com/ HiBEAM  http://www.hibeam.org/ 36

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