Best and Worst Practices in Developing a Winning Business Plan

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Best and Worst Practices in Developing a Winning Business Plan

  1. 1. Who Needs a Business Plan? <ul><li>… And Why? </li></ul><ul><li>Some Good Ideas </li></ul><ul><li>…And Some Bad Ones! </li></ul>
  2. 2. To Successfully Launch a New Business... <ul><li>...Requires Identifying and Bringing Together Necessary Resources </li></ul><ul><ul><li>Human - Technological </li></ul></ul><ul><ul><li>Physical - Financial </li></ul></ul><ul><li>We Do This Through a Business Plan </li></ul>
  3. 3. What Is a Business Plan? <ul><li>It’s a Process, Not a Product </li></ul><ul><li>It’s Written to Develop a Successful Business </li></ul><ul><ul><li>Not Just to Raise $ </li></ul></ul><ul><ul><li>Should Be Used & Updated as a Mgmt Tool </li></ul></ul><ul><li>Most Business Failures Can Be Prevented … </li></ul><ul><ul><li>If You Have a Good Business Plan </li></ul></ul>
  4. 4. Why Do Startups Fail? <ul><li>How Often Can We Predict? </li></ul>
  5. 5. Who Do We Write Plans For? <ul><li>Resource Providers </li></ul><ul><li>Might Be Investors </li></ul><ul><li>Might Be Internal Sponsors </li></ul><ul><li>Might Be Strategic Alliance Partners </li></ul><ul><li>Always for Your Team </li></ul><ul><li>Many Entrepreneurs Have Multiple Versions </li></ul>
  6. 6. What Does the “Product” Look Like? <ul><li>Executive Summary (1-2 pages) </li></ul><ul><ul><li>It’s All They’ll Read </li></ul></ul><ul><ul><li>Must Communicate and Capture Attention </li></ul></ul><ul><li>Industry & Market Opportunity </li></ul><ul><li>Marketing Plan </li></ul><ul><li>Product / Operations </li></ul><ul><li>Management Team </li></ul><ul><li>Financials </li></ul><ul><li>Critical Risks </li></ul><ul><li>Timetable / Milestones </li></ul><ul><li>Exhibits </li></ul>
  7. 7. Appearance (Continued) <ul><li>Length Will Vary </li></ul><ul><li>Average Today Around 25 Pages + Exhibits </li></ul><ul><li>Usually Have a “Summary Version” of 10-12 Pages </li></ul><ul><li>Generally: </li></ul><ul><ul><li>More $$ Needed = More Pages </li></ul></ul><ul><ul><li>Less Well Known Audience = More Pages </li></ul></ul>
  8. 8. What Are They Looking For? <ul><li>What’s the Problem? </li></ul><ul><ul><li>How Big Is It? </li></ul></ul><ul><li>How Will You Solve It? </li></ul><ul><ul><li>You and Who Else? </li></ul></ul><ul><li>Do I Believe You Can Do It? </li></ul><ul><ul><li>The TEAM! </li></ul></ul><ul><li>Why Should I Help You? </li></ul><ul><ul><li>Financials / ROI </li></ul></ul><ul><ul><li>Exit Strategy </li></ul></ul>
  9. 9. What Do They Want to Hear? <ul><li>Ingredients of a Successful Plan </li></ul>(What It Takes to Create Successful Enterprises – TiE)
  10. 10. Ingredients of a Successful Plan <ul><li>Vision </li></ul><ul><li>Commitment </li></ul><ul><li>Strategy </li></ul><ul><li>Time to Market </li></ul><ul><li>Team </li></ul><ul><li>Passion </li></ul><ul><li>Customer Testimonial </li></ul><ul><li>Competition </li></ul><ul><li>Capital Need </li></ul><ul><li>Milestones </li></ul>
  11. 11. Vision <ul><li>Looking for: </li></ul><ul><ul><li>Market Leadership </li></ul></ul><ul><ul><li>Proprietary Advantage </li></ul></ul><ul><ul><li>Realism </li></ul></ul>
  12. 12. Commitment <ul><li>Prove You’re Serious About This: </li></ul><ul><ul><li>Clearly Defined Priorities </li></ul></ul><ul><ul><li>Understandable Objectives </li></ul></ul><ul><li>Show You Know the Way! </li></ul>
  13. 13. Strategy <ul><li>Can You Execute the Vision? </li></ul><ul><li>“Go to Market” Strategy </li></ul><ul><li>Execution Plan </li></ul><ul><li>Clearly Define Your: </li></ul><ul><ul><li>Product/Service </li></ul></ul><ul><ul><li>Pricing </li></ul></ul><ul><ul><li>Explain How it Solves the Problem </li></ul></ul>
  14. 14. Time to Market <ul><li>What is Window of Opportunity? </li></ul><ul><li>What Features Are Critical Now? </li></ul><ul><li>What Will Future Products Look Like? </li></ul>
  15. 15. Management Team <ul><li>Have a Winning Team </li></ul><ul><li>We Know How to Execute </li></ul><ul><li>Plan to Augment As We Grow </li></ul>
  16. 16. Passion <ul><li>“Fire in the Belly” </li></ul><ul><li>Confidence </li></ul>
  17. 17. Customer Testimonial <ul><li>Proves Market Traction </li></ul><ul><li>Referencable Customers </li></ul><ul><li>In Order of Preference </li></ul><ul><ul><li>Happy Users </li></ul></ul><ul><ul><li>MOU </li></ul></ul><ul><ul><li>Letter of Endorsement </li></ul></ul><ul><ul><li>They’ll Take a Call </li></ul></ul>
  18. 18. Competition <ul><li>Identifies Players </li></ul><ul><li>Describes Strengths & Weaknesses </li></ul><ul><li>Explains Our Advantage </li></ul><ul><li>Describes Barriers to New Entrants </li></ul><ul><li>Is Respectful of Competition! </li></ul>
  19. 19. Capital Need <ul><li>Clear About Amount Requested </li></ul><ul><li>Clear About Timing </li></ul><ul><li>Use of Funds Must Match Strategies </li></ul><ul><li>Ask for Enough to Have a Slight “Cushion” </li></ul>
  20. 20. Milestones <ul><li>Both Short Term & Long Term </li></ul><ul><li>Be Sure to Include: </li></ul><ul><ul><li>Beta Testing </li></ul></ul><ul><ul><li>Ready for Shipping </li></ul></ul>
  21. 21. What NOT to Do in a BP <ul><li>What is a “BAD” Business Plan? </li></ul><ul><li>What Are Some of the Common Mistakes We See? </li></ul>
  22. 22. What is a “BAD” Business Plan? <ul><li>One That Doesn’t Meet Its Objectives </li></ul><ul><li>Fails to Help Launch a Successful Business </li></ul><ul><li>Fails to Identify Key Obstacles / Problems </li></ul><ul><li>Fails to Attract Interest: </li></ul><ul><ul><li>Of Investors </li></ul></ul><ul><ul><li>Of a Team </li></ul></ul><ul><ul><li>Of Partners </li></ul></ul><ul><ul><li>Of Other Resource Providers </li></ul></ul>
  23. 23. It’s Possible to Launch a Good Business Without One! <ul><li>…And Vice-Versa </li></ul><ul><li>…But a Good BP Improves Your Odds </li></ul>
  24. 24. First Clue That You’re Reading a “Bad Plan”… <ul><li>You Don’t Want to Keep Reading! </li></ul><ul><ul><li>It Doesn’t Capture Your Attention </li></ul></ul><ul><ul><li>It’s Hard to Get Through </li></ul></ul><ul><ul><li>You Just Don’t Get It! </li></ul></ul>
  25. 25. Most Common Errors in a Plan <ul><li>Lack of Understanding of Value Proposition </li></ul><ul><ul><li>…Or Significantly Overstates It </li></ul></ul><ul><li>Lack of Understanding of Customer </li></ul><ul><ul><li>And How to Reach Them </li></ul></ul><ul><li>Lack of Focus </li></ul><ul><li>Underestimating Inertia </li></ul><ul><li>Underestimating Effort & Resources Required </li></ul>
  26. 26. Most Common Errors in a Plan (Cont’d) <ul><li>Failure to Identify Competition </li></ul><ul><li>Lack of a Competitive Advantage </li></ul><ul><li>Unproven Team </li></ul><ul><li>Inconsistent Facts or Logic </li></ul><ul><li>Over-Optimistic Financial Projections </li></ul><ul><li>Lack of a Robust Business Model </li></ul>
  27. 27. Business Model (How Will I Make Money Delivering My Product?) <ul><li>What Can I Charge? </li></ul><ul><li>How Will I Charge? </li></ul><ul><li>Who Will I Charge? </li></ul><ul><li>What Will It Cost Me to Deliver? </li></ul><ul><li>Where Do I Make the $$? </li></ul><ul><li>Your Business Model Will Define: </li></ul><ul><li>Critical Success Factors </li></ul><ul><li>How Much $$ You Need </li></ul><ul><li>Ultimate Value Creation </li></ul>
  28. 28. So, How Do I Develop a Business Plan ? <ul><li>There Is No “Right Way” </li></ul><ul><li>The Following Generally Makes Sense </li></ul>
  29. 29. My 10 Step Process (1-4) <ul><li>Start With “Why Am I Doing This?” </li></ul><ul><ul><li>Need To Define a Good Outcome to Achieve It </li></ul></ul><ul><li>Try To Answer the First 2 Questions </li></ul><ul><ul><li>“ What Problem Am I Solving” </li></ul></ul><ul><ul><li>“ What Is My Solution?” </li></ul></ul><ul><li>Outline Your Market Analysis </li></ul><ul><ul><li>What Do I Know? </li></ul></ul><ul><ul><li>What Do I Wish I Knew? </li></ul></ul><ul><li>Begin Talking to People </li></ul><ul><ul><li>Advisors </li></ul></ul><ul><ul><li>Potential Customers </li></ul></ul><ul><ul><li>Friends </li></ul></ul>
  30. 30. My 10 Step Process (5-7) <ul><li>Define Your Business Model </li></ul><ul><ul><li>Both Revenues & Expenses </li></ul></ul><ul><ul><li>Consider Alternates (List Them) </li></ul></ul><ul><ul><li>Try to Begin a Rough Spreadsheet </li></ul></ul><ul><ul><li>Identify Critical Success Factors </li></ul></ul><ul><li>Begin Formal Market Research </li></ul><ul><ul><li>What Questions DO You Need to Answer? </li></ul></ul><ul><ul><li>Where Can You Find This Information? </li></ul></ul><ul><ul><li>Consider Primary & Secondary Data </li></ul></ul><ul><li>List the Resources You Need to Succeed </li></ul><ul><ul><li>Human, Physical, Financial, Etc . </li></ul></ul>
  31. 31. My 10 Step Process (8-10) <ul><li>Outline the Business Plan </li></ul><ul><ul><li>What Parts Can You Begin to Write? </li></ul></ul><ul><ul><li>How Much More Info Do You Need? </li></ul></ul><ul><li>Define A Successful Scenario </li></ul><ul><ul><li>What Has to Happen? </li></ul></ul><ul><ul><li>What Do You Need to Do? </li></ul></ul><ul><ul><li>Simulate in Your Model </li></ul></ul><ul><li>Write the Plan </li></ul><ul><ul><li>… and READ It! </li></ul></ul><ul><ul><li>Get Some Feedback </li></ul></ul><ul><ul><li>Revise and Update </li></ul></ul>
  32. 32. How Will I Know When I’m Done? <ul><li>You’re NEVER “Done”! </li></ul><ul><li>The Environment Is Constantly Changing </li></ul><ul><li>You Are Constantly Gaining New Information </li></ul><ul><li>Your Capabilities Are Changing </li></ul><ul><li>How Do These Things Change Your Plan? </li></ul>

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