Lwl write a successful business plan [compatibility mode]
Creating a Winning Business Plan
Objectives Why is a Business Plan important? What are the Key Business Plan Components? y p Gain the tools you need to Write a Winning Business Plan!
Three core sections1. Technology (Operations)2. Marketing/Sales3. Finance
Why You Need a Business PlanA Business Plan is a RoadmapHow Will You Start and/or GrowWhere Will You Obtain FundingMarketing/Sales Strategy ClarifiedFinancial Planning
Who Will Read The Plan– Plan Organized to Convince Funding Sources– Resource Providers (Funders) Expect • Consistent, Structured Format • Professional Presentation– Address your Audience’s Questions • How/When Will They Benefit? • Do They Believe You Can Make It Happen? • What Are the Costs/Risks For Them?
Before You Start Writing e o e ou S a W g What Do You Want to Convey Follow a Logical Progression Refrain from Industry Jargon Present Clear Conclusions Emotional & Human Side Tell the Story
Table of Contents• Company Summary – Company Ownership – Start-up Summary• Products and Services – Product D P d t Description i ti – Service Description – Competitive Comparison – Technology T h l• Market Analysis Summary – Market Segmentation – Target Market Segment Strategy – Trends
Table of Contents• Financial Plan – Important Assumptions – Break-Even Analysis – Projected Profit and Loss – Projected Cash Flow – Projected Balance Sheet• Appendix pp – Assumptions – Licenses – Lease Info – Contracts – Testimonials
Executive Summary yA Stand Alone DocumentObjectives/ Mission/ Keys to SuccessMake Sure Your Summary is: y – Concise - 2 Pages Maximum – Cohesive – Briefly Tells the Full Story – Compelling – Get Them to Read the Details – Clear- How Much Money Are You Asking For?
Business Description (Overview) Your Company - Include Vision, History, Structure Your Vision/Mission – Clear, Assertive Overview of the Industry - Important Fact-based Trends Your Value Proposition - What Makes Your Product or Service Unique AND Valuable Estimated Revenues and Profit/Cash Flow (3 Years)
Management gLeadershipThe TeamBack up planInclude Outside Advisors (LI l d O t id Ad i (Lawyer, A Accountant, t t Consultants, Insurance, Banker, Etc.)Ownership (% of Each Partner, Owner)
Ope a o s a Operations Plan – How w you run the Business ow will u e us essCan Be Complex and Require Special Expertise – P d t - M t i l H dli L i ti P k i Product Materials Handling, Logistics, Packaging, Purchasing, Etc. – Service - Abstract ProcessesSeasonality and Other Demand PeaksMake vs. Buy (Outsourcing)Don’t Overlook the DetailsTransportation Considerations and CostsLabor C idL b Considerations iNon-production Processes and Admin Process Flows
What Differentiates Your Product or Service? What is your secret sauce?
How To Develop Technology /Ops Skills? p gy / pFamily Business – Helped or RanEducationTraining – Hands-on Work, Classes, Courses – On-the-Job Training (Volunteer)Relevant Work Experience
Can You Create A Difference? Low Cost Targeted Need Service or Convenience Innovation Offer a Product/Service Solution to a Customer Problem
MarketingMarket Research – Provides Information About the Buyer/Customer, Competition, and Product/Service.Market Planning Product/Service Introduction, Startup,M k t Pl i – P d t/S i I t d ti St t Product Life CycleAdvertising and Sales Promotion -- Define Audience & $$ Prior to Committing to Print, Radio, TV, InterNet
Who is Your Customer?Who Buys Your Products and ServicesWh Do They Think About You/ YourWhat h h k Ab / Competitors?Costs Far Less to Maintain an Existing Customer g Than to Generate a New One
Ma e Market Information o a oWhat Is the TOTAL Market for the Product/ServiceDefine YOUR Market for Products And/or ServicesGeographic (Primary/ Tertiary) – by ZIP Code/ CountyyDemographic – What Are Average Incomes, Ages, etc.Growth Trends and Changes – Who’s Going In/out / of Business? And why?Potential Downside – Who What Can Replace the Who, Service? Cost/ Quality/ Service Aspects?
Ma e g d Sa es a Marketing And Sales PlanWho Is (and Isn’t) Your Target Customer?Need to Locate, Communicate, and Educate ProspectsHow Will You Get Them to Change Their Behavior?Wh t Will Y E h i ?What You Emphasize?How Will You Overcome Perceptions of Risk (Inertia and Performance)?)Tools (Mail, Direct Sales, Etc.), and Why It Makes Sense?
Sales PlanHow Do You Sell in Your Market?How Will You Ask for the Order?Provide for Lead TimesSales Structure and Compensation?S l St t dC ti ?
Selling Your Products/Services Develop A Sales Strategy – Who to Sell to, When, How, What Products/Services Develop a Sales Team – Start Small, Grow Set Specific Objectives – by Month, Quarter, Year, 3 Year Analyze Sales Results Periodically Teach Sales Techniques - Training Is Essential for Product and/or Service Knowledge
Product / Services Analysis What Needs Does Your Product/Service Meet? / What Support Services Are Required? How Can You Reduce Customer Costs? Increase Customer Revenues? How Does Your Product/Service Compare With Competition? Wh t A th Possible S b tit t N A li ti ? What Are the P ibl Substitutes, New Applications?
Competitive AnalysisWho Are Your Competitors?What Are Their Strengths and Weaknesses?Wh Is Their Market AWhat h M k Approach (C h (Customer Segmentation, Sales Focus)?How Are They Financed?What Is Their Reputation? pHow Are You Better?
PricingKnow Break Even Point -- May Have to Walk Away Break-EvenPricing Strategy Vs. Competition – Ask Customers VsPricing – Cost Competition Product Uniqueness Cost, Competition,C id All C t – Di t IndirectConsider Costs Direct, I di t
Advertising and Sales Promotion Target Advertising g g Use the Most Effective Medium for Your Audience Must Be Cost Effective Consider A Promotion Professional Use Free Media
DistributionDistributorsMail OrderTelemarketingCompare With Competition
Ma e g og a Su a y Marketing Program SummarySelect Market StrategiesPrepare Marketing PlanPrepare S Supporting Sales Plan S l lFocus on DifferentiationCommunicate Internally and ExternallyMeasure Performance and Adjust Plans to Meet Market Conditions
Sell Yourself & Your PlanFunding Sources Are Skeptical – Bankers Are Risk Averse – Get to Know Them Early in the Cycle y – Equity Sources Are Tough to Impress, Want Proof of ConceptpYou Are the Message – Present Yourself, Your Case, Evidence, Backup Assertions
FundingShow How You Will Create ValueShow hSh That You C C Can Control Risks l kWhy Should Someone Believe You Are Better Equipped to Take Advantage of the q pp g Opportunity
Banks Look at 5 Cs Character – Credit History (Have You Paid Your Bills on Time); Are You Personally Involved and Responsible for Success? Collateral – Do You Have a House to Put up Against a Loan? The Greater the Bank’s Risk, the Higher Your Interest Rate Cash Flow – Will the Business Cover Your Living and Business Expenses for 6 Months to One Year? Capitalization – What Does It Cost in Asset Investment to Get Started? (Low C t St t B i (L Cost Startup Business: Cleaning Wi d Cl i Windows, N d S Need Squeegee and d Soap; High Startup Cost Businesses: Restaurants, Retail Stores) Conditions – Working Capital, Ongoing Costs, Competition, Industry Trends, Regulations (Local, State, and National, OSHA, Handicapped)
What Equity Investors Look for in a Startup q y pTiming- Short Term, 3-5 Years?Timing 35Is Your Business Model Proven?How Long Have You Been in This Type of Business?Are You Going to Actively Work in the Business?How Much Do You Have Invested in the Business?What Are Your Risks?
Financial Plan Well-Documented Assumptions Are Crucial – Acknowledge Risks – Pricing d Product Costs P i i and P d t C t – Sales Forecasts and Market Share – Lead Times – Receivables, Payables, Working Capital – Interest Costs – Loans, Family & Friends Test for Reasonableness (You Cannot Double Sales Every Month Without es o easo ab e ess ( ou Ca o oub e Sa es ve y Mo W ou Serious Working Capital Problems) Get Help If You Need It – Accountants TA Accountants,
What Eats Up CashAccounts Receivables (A/R)Difference Between Pay by Credit Card and BillMonthly y Bill Monthly – Receive Payment Net 30 Days or ++ More Wait Time Affects Working CapitalAccounts Payable (A/P) – What You Owe, Loans,etc.
Your Financial Plan1. Personal Assets (What You Own to Pay for Startup)2. Personal Li bili i (Wh Y N d to Li O )2 P l Liabilities (What You Need Live On)3. Business Services (Needed Before Startup)4. Business Expenses (Ongoing)5. Balance Sheet (Where Do You Stand?)6. Cash Flow Statement (How Are You Doing?)7.7 Revenue/Expense (P&L) on a Cash Basis
Traps to AvoidConfusing Description of the Business/ VisionUnsupported AssumptionsAsking fA k for Too Much Or Too Little M M hO l Money Use of Jargon and AcronymsHype, Overused Phrases No Competition ; No Brainer“No Competition”; “No Brainer”Numbers that Do Not Look Realistic
Don’t forget….. Your plan is a livingbreathing document to be modified significant changes occur!