How to write business plan

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How to write business Plans

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How to write business plan

  1. 1. Today’s Topic Writing Business Plans March 10th 2010 Meetup #1 Join us on Facebook & Meetup http://www.facebook.com/pages/MosaStore-Entrepreneur-Center/126135372120 http://www.meetup.com/20min-MBAs http://www.facebook.com/pages/20minMBAs/106223556090061 www.20minMBAs.com
  2. 2. Today’s Presenter   An Entrepreneur   Invited to Dragon’s Den   Co-founder of MosaStore Inc.   Business Plan Expert – also winner of largest business plan competition of Canada   Master of Business Administration & Bachelor of Engineering www.20minMBAs.com
  3. 3. Why you need a business plan?   For Investors –  Marketing document –  Foot-in-the-door philosophy – e.g. Hotmail   Founders –  Organize your ideas –  Market Research   For others –  Potential employees –  Suppliers / customers www.20minMBAs.com
  4. 4. What should a business plan communicate?   Sell the team of entrepreneurs! –  Qualities –  Network –  Passion –  Thought process   Sell the opportunity –  Market and profit potential –  Strategy   Sell a deal? –  No! Negotiations come later! –  How much money you need www.20minMBAs.com
  5. 5. Template Structure   Approximate structure – Executive summary (1-3 pages) – Customer and market analysis (3-4 pages) – Business model and competitive strategy (3-4 pages) – Competitor analysis (2-3 pages) – Implementation plan (2-4 pages) – Risk section (1-2 pages) – Financials Highlights and Assumptions (1-2 pages) – Financials – Founder Résumés www.20minMBAs.com
  6. 6. Executive summary Purpose: To convince the reader to read on Length: Short! Less than 1000 words Contents: All key elements in your business plan –  Company Name –  Positioning Statement –  Product/service description (uniqueness) –  Market size (data on size, growth & competition) –  Brief Business model and strategy –  The management team's qualifications –  financial summary, required amount, use of funds and exit strategy Style: Clear, dynamic, positive and exciting www.20minMBAs.com
  7. 7. Example
 Positioning Statement  Sentence #1: Segmentation For (target customer) who (statement of the need or opportunity), the (product/service name) that (statement of benefit)  Sentence #2: Differentiation Unlike (primary competitive alternative), our product (statement of primary differentiation). www.20minMBAs.com Developed by Geoff Moore, The Chasm Group
  8. 8. Example
 Positioning Statement (Product/Service) High performance, low cost and flexible software storage solution (for) small to mid- size companies and educational institutes (who) are facing storage challenges in the midst of electronic data explosion. (Unlike) costly solutions, (our) product efficiently utilizes the existing storage and network resources to provide effortless expandability, and in turn, lowering capital and operational IT expenditures. www.20minMBAs.com
  9. 9. Customer and market analysis   Clearly articulate the customer need –  Explain importance of customer need –  Is there a willingness/ability to pay?   Provide secondary market research –  Estimate size and growth potential of your market –  Provide relevant market segmentation   Provide primary evidence of market needs –  Customer (and competitor) testimonials –  Survey evidence, focus groups   Always lead the analysis with facts and figures… www.20minMBAs.com
  10. 10. Example
 Market Research Number Uninsured and Uninsured Rate: 1987 to 2006 Number in millions , rates in percentage 50 45 40 35 30 Number Uninsured 25 Uninsured Rate 20 15 10 5 0 1985 1990 1995 2000 2005 2010 Source: U.S. Census Bureau, Current Population Survey, 1988 to 2007 Annual Social and Economic Supplements www.20minMBAs.com
  11. 11. Example
 Market Research www.20minMBAs.com Bureau, Current Population Survey, 2005 to 2007 Source: U.S. Census
  12. 12. Competition analysis   Never belittle the competition –  Worst possible statement: “There is no competition” –  Second worst possible statement: “Criticize competition for their strength”   Actual competition –  Never hide what you know www.20minMBAs.com
  13. 13. Example
 Competition Analysis MOSAIC OF STORAGE SPACE www.20minMBAs.com
  14. 14. Business model and strategy   Statementof business model – Discuss basic business logic – Define scope of business – Discuss revenue model – Provide graphical analysis only if business model complex www.20minMBAs.com
  15. 15. Example
 Business Model www.20minMBAs.com
  16. 16. Implementation plan   Marketing and Sales –  What channels? What sales force? Etc. –  What advertising? What image? Etc.   Operations –  How do you plan to build the company? –  What resources do you need?   Employment –  What kind of employees? Corporate culture? –  What compensation structures?   Milestones –  What are our concrete targets? –  When do you plan to get there? www.20minMBAs.com
  17. 17. Risk section   Why should I disclose my risks?   You choose: –  Either you identify and frame risks yourself… –  …or other people will do that for you!   Candidly identify all major risks   Explain your mitigation strategy   What level of detail? –  Show awareness, not paranoia –  Risk section ≠ legal risk disclosure www.20minMBAs.com
  18. 18. Financials   Clearly present highlights of financials –  Key assumptions, revenues, earnings, margins, funding needs, exit strategy… depends on business   Explain your main assumptions   Financials focus on Profit and Loss (Income statement)   Need Cash Flow statement for funding requirement   Balance sheet rarely matters   Frequency depends on type of business –  Most investors want five year projections –  Broad-brush: first two years quarterly, then yearly –  Fine-comb: first two years monthly, then quarterly –  Many other variations… you can’t win www.20minMBAs.com
  19. 19. Example
 Cash Flow/Net Income www.20minMBAs.com
  20. 20. Founders’ résumés   Very Important!   Highlight and explain relevance not only the quality of your résumé, but also its relevance for the business opportunity at hand!   Also discuss role of founders and future management as part of the plan! www.20minMBAs.com
  21. 21. Thank You Comments/Suggestions Join us on Facebook & Meetup http://www.facebook.com/pages/MosaStore-Entrepreneur-Center/126135372120 http://www.meetup.com/20min-MBAs www.20minMBAs.com

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