Planning & Communicating Your Business Concept

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Part of the 2005/06 MaRS Entrepreneurship 101 series
http://www.marsdd.com/ent101

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  • Planning & Communicating Your Business Concept

    1. 1. Planning & Communicating your Business Concept Andrew Harrison March 2006
    2. 2. Presentation Overview <ul><li>Tools of the Trade </li></ul><ul><li>Myths and Truths </li></ul><ul><li>Overview of the Tools </li></ul><ul><ul><li>The Elevator Pitch </li></ul></ul><ul><ul><li>The ‘One-Pager’ </li></ul></ul><ul><ul><li>Executive Summary </li></ul></ul><ul><ul><li>White Paper </li></ul></ul><ul><ul><li>PowerPoint Presentation </li></ul></ul><ul><ul><li>The Business Plan </li></ul></ul><ul><li>Outlines and Content </li></ul><ul><li>Advice </li></ul>
    3. 3. Tools of the Trade
    4. 4. Tools of the Trade <ul><li>The ‘Elevator Pitch’ – 30 second outline of business concept </li></ul><ul><li>The ‘One-Pager’ – 1 page overview of your business </li></ul><ul><li>Executive Summary – 3-5 page overview of your business </li></ul><ul><li>White Paper – Layman’s summary of your technology, product(s), the uniqueness and the value </li></ul><ul><li>PowerPoint Presentation – ~15 slide outline of your business plan </li></ul><ul><li>Business Plan – Detailed description of your business plan: product plan, go-to-market strategy, detailed management team profiles and financials. </li></ul>
    5. 5. Why do we need these tools? <ul><li>These tools are generally used to: </li></ul><ul><ul><li>Solicit investment – by communicating to investors why your idea is good, how you will execute and what return they can expect </li></ul></ul><ul><ul><li>Communicate to customers – why they should do business with you </li></ul></ul><ul><ul><li>Communicate to partners – why they should do business with you </li></ul></ul><ul><ul><li>Communicate to employees or potential hires – what is the mission and plan is and what role they will play </li></ul></ul><ul><ul><li>Lay out a vision and plan for building the business </li></ul></ul>These tools are used for communication and planning
    6. 6. Communication vs. Business Planning <ul><li>The primary purpose of these documents is to communicate the value of your business idea – EXCEPT THE BUSINESS PLAN </li></ul><ul><li>Be conscious of the huge difference between communicating your business concept and building your business plan </li></ul><ul><li>A business plan is an internal planning document seldom shown to anyone outside the company </li></ul><ul><li>The other documents are external communication documents used to sell the value of your business idea to outside parties </li></ul>Business plans are an internal execution tools The other documents are external communications tools
    7. 7. Keys to Communication <ul><li>Know your audience: </li></ul><ul><ul><li>Institutional (Financial) investor, Strategic investor, Angel investor, Strategic partner, Customer, etc. </li></ul></ul><ul><li>Speak to your audience in language that they understand: </li></ul><ul><ul><li>Institutional investor – do not speak ‘techie’, tie everything back to money </li></ul></ul><ul><ul><li>Strategic investor – may be more technical; will be interested in your idea’s as they impact their business </li></ul></ul><ul><ul><li>Strategic Partner – mix of technical and business; understand how a relationship will be mutually profitable to both parties </li></ul></ul><ul><ul><li>Angel Investors - access their background; understand their interests </li></ul></ul><ul><ul><li>Customer – understand their needs </li></ul></ul><ul><li>Give your audience the information they are looking for: </li></ul><ul><ul><li>Do not assume they want to see the depth of your scientific knowledge </li></ul></ul><ul><ul><li>Speak to them with their interests in mind, not your interests in mind </li></ul></ul>
    8. 8. Myths and Truths
    9. 9. Myths and Truths <ul><li>Myths: </li></ul><ul><ul><li>That you only have 30 seconds to get a VC’s attention </li></ul></ul><ul><ul><ul><li>If you get develop your communication tools right, you will have longer than that </li></ul></ul></ul><ul><ul><li>That a VC will ask you for all of these documents </li></ul></ul><ul><ul><li>That you should start by building your business plan </li></ul></ul><ul><li>Truths: </li></ul><ul><ul><li>What you can provide depends on how far along you are in developing your business concept </li></ul></ul><ul><ul><ul><li>The vision you are communicating must be grounded in reality </li></ul></ul></ul><ul><ul><li>You should be strategic about what you provide and when you provide it </li></ul></ul><ul><ul><li>That your documentation should radiate professionalism – grammar, spelling, diction, illustration, layout, etc. </li></ul></ul>
    10. 10. Overview of The Tools
    11. 11. The Elevator Pitch <ul><li>What: </li></ul><ul><ul><li>A 30 second overview of your business concept </li></ul></ul><ul><ul><li>To a certain extent, an internet bubble invention – at least in terms of raising money </li></ul></ul><ul><ul><li>Strangely enough - 60% of the worlds venture capital is in the bay area in low-rise office buildings without elevators </li></ul></ul><ul><li>Why: </li></ul><ul><ul><li>To quickly communicate your business concept in a chance meeting or phone call </li></ul></ul><ul><li>When: </li></ul><ul><ul><li>In a cold call to an investor, customer, potential partner, etc. </li></ul></ul><ul><ul><li>Good for networking at trade shows, networking events, etc. </li></ul></ul><ul><li>Dos and Don’ts: </li></ul><ul><ul><li>Do not spend forever practicing and refining this – should come naturally; may sound plastic </li></ul></ul><ul><ul><li>Figure out a few key messages you would like to get across to use as a loose script </li></ul></ul><ul><ul><li>Distribute key messages to outward facing employees – standardize message </li></ul></ul>
    12. 12. The ‘One-Pager’ <ul><li>What: </li></ul><ul><ul><li>A concise one-page summary of your business concept and management team </li></ul></ul><ul><li>Why: </li></ul><ul><ul><li>A ‘teaser’ document meant to generate a request for more information </li></ul></ul><ul><ul><li>To offer a very general non-confidential overview of your business </li></ul></ul><ul><li>When: </li></ul><ul><ul><li>When blasting out to many potential investors – select interested VCs from large list </li></ul></ul><ul><ul><li>When you don’t want to offer any confidential details – chance encounter, potential competitor,etc </li></ul></ul><ul><li>Dos and Don’ts: </li></ul><ul><ul><li>I’m not a big fan – Part of ‘shotgun’ approach to fundraising, not my preferred method </li></ul></ul><ul><ul><li>Often just enough detail to say no </li></ul></ul><ul><ul><li>Often adds an additional and debatably unnecessary stage to a process - VCs might sit on the one-pager for a few weeks </li></ul></ul><ul><ul><li>If you are going to build one, make it fairly non-contentious and allude to missing information </li></ul></ul>
    13. 13. The Executive Summary <ul><li>What: </li></ul><ul><ul><li>A concise 3-5 page summary of your technology, product, sales plan, revenue path and financial requirements </li></ul></ul><ul><ul><li>Significantly more detailed but succinctly expressed, coherent and highly readable </li></ul></ul><ul><li>Why: </li></ul><ul><ul><li>Again, a ‘teaser’ document meant to generate a request for more information or a meeting </li></ul></ul><ul><ul><li>VCs will want to get their head around the concepts quickly – short attention span </li></ul></ul><ul><ul><li>Primer for a more detailed explanation of your product plan and business strategy </li></ul></ul><ul><li>When: </li></ul><ul><ul><li>When you have a ‘warm’ intro or an invitation to contact someone </li></ul></ul><ul><ul><li>Integral first interaction with an investor </li></ul></ul><ul><ul><li>Rides the line between confidential and non-confidential – some degree of trust </li></ul></ul><ul><li>Dos and Don’ts: </li></ul><ul><ul><li>This is a critical communications tool – imperative that it is strong and well written </li></ul></ul><ul><ul><li>Has to have the right emphasis given the maturity of the business concept - Tech, Sales, Revs </li></ul></ul>
    14. 14. The Whitepaper <ul><li>What: </li></ul><ul><ul><li>A fairly concise layman’s summary of your technology, product(s), the uniqueness and the value </li></ul></ul><ul><li>Why: </li></ul><ul><ul><li>Not all (or few) investors will be scientists, engineers or experts in your area of innovation </li></ul></ul><ul><ul><li>You have to go easy on the technical details in the communications documents </li></ul></ul><ul><ul><li>This is the place to fully display your technical knowledge and product vision </li></ul></ul><ul><li>When: </li></ul><ul><ul><li>After investors are curious or have bought into the big picture business vision </li></ul></ul><ul><ul><li>Great to give to customers and partners to help them communicate internally </li></ul></ul><ul><ul><li>General education of analysts, customers, potential partners, etc. </li></ul></ul><ul><li>Dos and Don’ts: </li></ul><ul><ul><li>Stay high level - Don’t go so deep as to give away all of your secrets </li></ul></ul><ul><ul><li>Keep it as short as possible and fully explain all acronyms </li></ul></ul>
    15. 15. The PowerPoint Deck <ul><li>What: </li></ul><ul><ul><li>A ~15 slide outline of the key aspects of your business plan </li></ul></ul><ul><li>Why: </li></ul><ul><ul><li>Provide an overview of the business plan in point form </li></ul></ul><ul><ul><li>Allows people to absorb a lot of key information in a short period of time </li></ul></ul><ul><ul><li>Easy to adjust and adapt to a new audience </li></ul></ul><ul><li>When: </li></ul><ul><ul><li>Usually the second piece of information a VC will receive after the exec summary </li></ul></ul><ul><ul><li>VC’s love these because they can flip through them very fast </li></ul></ul><ul><ul><li>Medium to highly proprietary – requires a greater degree of trust </li></ul></ul><ul><li>Dos and Don’ts: </li></ul><ul><ul><li>Critical document in the fundraising process –present a sound story; make it look good </li></ul></ul><ul><ul><li>Practice speaking to it, preferably in front of friendly people who will ask lots of questions </li></ul></ul><ul><ul><li>Use graphics as much as possible – max absorbance of information </li></ul></ul><ul><ul><li>Tune emphasis given the maturity of the business concept </li></ul></ul>
    16. 16. The Business Plan <ul><li>What: </li></ul><ul><ul><li>A rigorously prepared and executable description of how you will build your business </li></ul></ul><ul><li>Why: </li></ul><ul><ul><li>This is your roadmap for how you are going to build your business </li></ul></ul><ul><ul><li>Describes roles and responsibilities for building various aspects of the business </li></ul></ul><ul><ul><li>Outlines revenue targets, financial details and investment requirements </li></ul></ul><ul><li>When: </li></ul><ul><ul><li>When you have assembled enough solid information to write it </li></ul></ul><ul><ul><li>Highly proprietary – requires a high degree of trust to give it out; later stages of diligence </li></ul></ul><ul><ul><li>Wait for the VC to ask for it </li></ul></ul><ul><li>Dos and Don’ts: </li></ul><ul><ul><li>Often made a condition of financing or a board requirement – can provide after the fact </li></ul></ul><ul><ul><li>Re-write with every major change in strategic tack – living document </li></ul></ul><ul><ul><li>Avoid the temptation to turn this into a sales tool – preserve its integrity as an executable </li></ul></ul>
    17. 17. Outlines and Contents
    18. 18. Executive Summary ~ 3-5 pages <ul><li>Company Description – 1 paragraph </li></ul><ul><li>Basic Need and Company Solution – 1 paragraph </li></ul><ul><li>Technology and Product(s) – 1 paragraph; diagram </li></ul><ul><li>Value Proposition – couple of bullets </li></ul><ul><li>Market Size and Growth – diagram </li></ul><ul><li>Sales Plan – 1 paragraph </li></ul><ul><li>Competitive Advantages – couple of bullets </li></ul><ul><li>Management – detailed bullets </li></ul><ul><li>Revenue Growth and Margins – diagrams </li></ul><ul><li>Financing Requirements – 1 paragraph </li></ul>
    19. 19. PowerPoint Deck ~ 15 slides <ul><li>Company Overview, Management and Vision – 2-3 slides </li></ul><ul><li>Need and Existing Solutions – 1-2 slides </li></ul><ul><li>Technology, Products and Product Rollout – 2-3 slides </li></ul><ul><li>Market Opportunity – 1 Slide (Graphical) </li></ul><ul><li>Competitive Overview – 1 Slide – (Largely Graphical) </li></ul><ul><li>Sales Strategy and Channels - 2-3 slides </li></ul><ul><li>Partnerships and/or Partnerships strategy – 1 slide </li></ul><ul><li>Financials and Path to Liquidity – 2-3 Slides (Largely Graphical) </li></ul>
    20. 20. The Business Plan ~ 30 pages <ul><li>Executive Summary </li></ul><ul><li>Company and Opportunity Summary </li></ul><ul><li>Product and Technology </li></ul><ul><li>Market Size and Growth </li></ul><ul><li>Sales and Marketing Plan </li></ul><ul><li>Competitive Overview </li></ul><ul><li>Operations Plan </li></ul><ul><li>Management Team </li></ul><ul><li>Financials and Investment Requirements </li></ul>
    21. 21. Advice
    22. 22. Advice… <ul><li>Do not start by building your business plan </li></ul><ul><ul><li>You will not have the information you need </li></ul></ul><ul><ul><li>You will examine issues out of priority </li></ul></ul><ul><ul><li>You will expose lack of understanding </li></ul></ul><ul><li>Do not offer to supply a business plan off the bat </li></ul><ul><li>Start dumping your ideas into the Powerpoint Deck </li></ul><ul><li>Use the Powerpoint Deck as receptacle for all ideas and information that comes to light – easy to manipulate, organize and adapt </li></ul><ul><li>Build your executive summary and eventually your business plan based on your Powerpoint deck </li></ul><ul><li>Give investors your exec summary and offer to walk them through the Powerpoint slides in person or on the phone </li></ul>
    23. 23. More advice … <ul><li>The main idea of all of this is to entice investors to take a deeper look </li></ul><ul><ul><li>Leave the details for diligence (except in the business plan) </li></ul></ul><ul><li>Do not assume that your audience is technically literate or savvy </li></ul><ul><ul><li>Investors predominantly come from a financial background </li></ul></ul><ul><li>Do not overload the documentation </li></ul><ul><ul><li>Try to get across a few key messages instead of telling the whole story </li></ul></ul><ul><ul><li>Your audience will only absorb the key messages </li></ul></ul><ul><ul><li>Do not make your information detail rich / noisy – Use graphics as much as possible </li></ul></ul><ul><li>Templates exist for all of these documents </li></ul><ul><ul><li>Don’t re-invent the wheel </li></ul></ul><ul><ul><li>Surf the web or go to www.primaxis.com </li></ul></ul>
    24. 24. Questions / Discussions
    25. 25. Planning & Communicating your Business Concept Andrew Harrison Vice President [email_address] 416.643.2214

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