Tips for understanding Business Plan scope and practical suggestions for its design. The new company Importance of patents The role of the business plan Content of the business plan Contributions of analysis Private funding The funding through calls and laws

1. Pragmatic
Introduction to
writing a Business
Plan
Feel free to contact me ∗1

2. Index
1. The new company
2. Importance of patents
3. The role of the business plan
4. Content of the business plan
5. Contributions of analysis
6. Private funding
7. The funding through calls and laws
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3. Pragmatic Introduction To Writing A Business Plan
1. The new company
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4. The Company ecosystem
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5. The New Company
The New Company is mainly :
•IDEA - A Good Idea related to products or services
• The idea is developed with the establishment of new business or by existing
companies that may be interested in the development of existing products or to
diversify their activities. In all these cases the Idea needs to be deeply investigated
• Examples:
• Low Cost Flights - no frills
• Sony Walkman - portability
•SKILLS - Entrepreneurial skills
• Spirit of initiative and creativity
• Willingness to do
• Organizational skills
• Decision maker
• Ability to deal with the Corporate risk
• Leadership
• Coordination skills
•IDEA and SUPPORTING FUNCTIONS are equally important
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6. The Startup phase
• Design:
• Business Plan
• Identification of financial resources
• Definition of legal form, corporate purpose, scope
• Organizational Structure
• Execute:
• Business startup
• Continuous monitoring, adjustment, revision, development
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Build your business plan on what the market will buy is always a better strategy and
more successful than developing a new product or service without knowing exactly
who will use it and hope to be bought because it is good.
If the needs is not required … before people realize that they need the new product,
you often have to take a long time (and money) to "educate" about why they need
it.

7. A Succesful Idea
• What Products, Services
• Why What are the needs met
• Who Reference market
• When ... business seasonal? subject to cycles of sale
• Where regulations and limits
• How What is the organization (partners, team, ..) and the
logistics
• ...
• Investigate the needs of consumers to identify services and products
• Analyze the technical characteristics, materials and production process
• Identify headquarters, the necessary facilities and resources
• Study for a better understanding of the Reference Market
• Evaluate the regulations, rules and obligations
• Collect data analytically and build a development plan
• Identify partners and stakeholders inside and outside the company
• Define the Activity Plan and milestones
• Critically evaluate sales prospects
• Identify and collect required private or public funding
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8. History of a success ... not only a good
product
• An effective management team working in a cooperative way.
Managers selected to provide a wide range of knowledge.
• Appropriate funding.
• Managers who take business decisions based on a clear
understanding of the market and competition, rather than on their
"love" for the product or services.
• Managers who follow best business practices, surrounding
themselves with competent people and keep an open door to
suggestions and ideas.
• Passionate entrepreneurs and their companies are able to
communicate their enthusiasm to potential investors, clients and
employees.
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9. Some Reasons of Failure
• Not appropriate Business planning.
• Initial capital insufficient for the period of start-up and development stages,
due to inadequate planning.
• Wrong estimate of the market demand for the product or the service.
• Lack of capacity in management.
• Failure to select and use appropriate external professional services.
• Inability to launch effectively market products or services.
• Too much dependence on a single individual or a particular event awaited.
• Error in estimating the necessary capital to support company growth.
• ... And … if you are successful ...
• The success in the sale of a product / service can mask the
inadequacies of : Strategy, Management, Marketing channels,
Dependencies on individual resources, Inappropriate Funding.
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10. Case Study - Sony – Walkman Source
Wikipedia
... The first Sony Walkman was sold in 1979. Gradually, the Sony Walkman was sold so widespread
that, the term '' Walkman '' becomes synonymous for “any portable cassette player”, although not
produced by Sony . ... The word Walkman is Sony registered trademark. More recently, Sony has
decided to capitalize on the popularity of the brand, attributing it to many other products that can
play music, regardless of whether the support was an audio cassette or other.
•A German inventor, Andreas Pavel, claimed to be the real father of the Walkman, given that in
1977 it would create a very similar device, called stereo belt. After several court battles in 1999,
Sony and Pavel reached an extrajudicial agreement.
The Original Walkman
•The first was the Walkman model TPS-L2, blue-silver, on sale in Japan in July 1979.
•The Walkman allow the people the chance to take their music anywhere, the Walkman became
one of the top sellers products of the 80's, becoming the icon of a generation. The Walkman were
also dedicated the success of some pop music (like "Wired for Sound" by Cliff Richard), while the
market quickly spread hundreds of clones. Often, in promotion campaigns, the Walkman was
represented as the perfect companion for joggers or for lovers of roller-skating. Sony has sold
more than 330 million Walkman, 150 of them in the US.
•The first Walkman was based on Pressman, a portable recorder used in the business world. While
maintaining a similar appearance, however, the Walkman replaced with the ability to record a
stereo playback capability and the ability to connect two sets of headphones (even if it was
included in the package only one). Instead of the record Pressman button, the Walkman had a
button "hotline", which allowed two hypothetical users, who were using two pairs of headphones,
talking to each other through a small microphone. In the model of the next Walkman double audio
output and the function hotline they were never implemented.
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11. Case Study - Sony – Walkman Source
Wikipedia
• ... In the late 90s there was a sharp decline in sales, especially in favor of portable CD
players, and then of mp3 players.
A Minidisc player, Walkman branded
• Sony initially attributed the Walkman brand to its Minidisc readers, a format in which
the company has believed in it. Despite the potential of new media, Sony focused
excessively on the ATRAC format, losing sight of the potential of the MP3 format.
• So, trying in vain to promote to the market its new Minidisc Walkman, the company
left the field open to its competitors, most notably Apple, on the other channels of
portable music.
• The popularity of mp3 players, first of all the iPod, highlighted the strategic error of
Sony that, in fact, definitively lost the leadership in the sector.
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12. Comment to the Sony Case
• A successful idea that fill a hidden customer need. At the beginning of the 80’s
surveys did not highlights this hidden need of “music in mobility”. The average
consumer would not have thought possible (accustomed to large radio and to
correlate the sound quality with the size of compact speakers and music
players).
• A claim of intellectual property remedied with settled out of court
• A top selling product that became a symbol of a generation that has made
success in similar markets (songwriters) 350 million units sold!
• Ability to innovate a device from business-professional to consumer
• Attention to the market and the use – introduction of the hotline function
• Strategic error – Product Trap - the focus was to impose proprietary formats
and media owners rather than follow the customer needs.
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The success is full of pitfalls ...

13. Pragmatic Introduction To Writing A Business Plan
2. Importance of patents
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14. Intellectual Property
• When you find or invent a new process you must ensure that there is sufficient
clarity on who will own the intellectual innovation
• Ensure that the invention is not spread to others, other than employees , or
published until it has applied for a patent
• It is a must to put in place all the necessary measures to protect key resources
• Support, help and information for patents are available in public databases (eg.
Ep.espacenet.com, www.uspto.gov, www.wipo.int)
• You can also refer to the Technology Transfer offices and to professionals who
can help you avoid making small mistakes with big impacts
• Patents rules and processes are country specific. Patents is one of the
components for your country Development index and are generally managed by
specific offices that sometimes provides the first consultancy free of charge. ∗14

15. Patents and Industrial Property Protection
• A patent for an invention is granted by a government institution to the inventor,
and gives, for a limited time, rights intended to prevent others from making,
using or selling the invention without the permission of the inventor
• The success for the application requires at least that it is:
• new (was not previously made public in any way)
• innovative (the invention must not be obvious to someone with a good
knowledge of the industry)
• have industrial utility
• A patent application to the national office is very cheap but the writing for the
patent application is generally a complex task, best done by a specialized agent.
Its cost may be about 3.000 to 6.000 Euros, depending on the complexity of the
invention. The total cost for patents in Europe, USA and Japan normally exceeds
100,000 euro and therefore a lender should be found as soon as possible after
the initial request
• The patent protection, if achieved, lasts 10-20 years from the date of the initial
request to the national patent office ("priority date“). A yearly tax for renewal is
can be requested after an initial period of 5 years.
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16. Pragmatic Introduction To Writing A Business Plan
3. The role of the business plan
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17. ...
• “If we could first know where we are, and whither we are
tending, we could then better judge what to do, and how to
do it.”
• Abraham Lincoln
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18. Business Plan
The business plan can be described as a document that summarizes
the content and characteristics of an entrepreneurial project
• plan to set up a new business
• diversification of an existing business
• Enforce and develop a business plan already started
GOALS
•Tool for: Analysis, learning and control
• The business planning performed by the entrepreneur and his
associates as an opportunity for learning and development of the
business simulation before moving on the market
•Presentation tool
• formalization of a business project when the initiative should be
submitted to shareholders or to third parties (New members or
potential funders) for evaluation
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19. Entrepreneurial Formula
∗19A business plan is feasible if you can reach a balanced revenue-cost ratio
within a reasonable period of time and then, to achieve a positive income
result.

20. The Business Model
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21. The Business Plan
• Translate business strategy into a detailed plan to create value
• It allows to evaluate if there are sufficient resources to
achieve the strategy identified
• It establishes a link between the economic and the main
indicators of strategy implementation
WHY IT IS USEFUL?
• If you seek external financing, a business plan is a must!
• If you are planning a self-financing, a business plan helps you
to define how much money you need to leave, you need to do
when you have to do, and where you're heading
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22. External Funding
The Business Plan and the Executive Summary have an important role
in the search for funding or partnership.
•A small percentage of the documents is read over the Executive
Summary
•A small percentage of the read proposals pass the initial selection
•A small percentage of pre-selected passes the due-diligence and
receives funding
Key factors for BP evaluation:
•Management Team
•Business Idea
•Rating
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23. Drafting of the Business Plan
In order to draft the business plan may be more effective to turn
to those who have no knowledge of the idea / product / service.
•Provides a critical and objective business view
•It is not influenced by the “love for the product”
•It performs quantitative analysis - not subjective
•It is available to listen and advise
•It helps to explain in a simple and jargon free
•It has a 360 ° knowledge of markets and competition system
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24. Pragmatic Introduction To Writing A Business Plan
4. Content of the business plan
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25. Business Plan in practice
• The business plan must identify and motivate the choices
through qualitative and quantitative analysis.
• There is no a single pattern of “universal” Business Plan. every
idea / company must analyze and describe the ecosystem.
• Much attention must be paid to the drafting of the executive
Summary
• In the following pages is a list of possible arguments for the
preparation of an operational plan in support of a business
idea. ∗25

26. Business Plan Index 1/3
• Summary of business project or “Executive Summary”
• Project description
• What products / services and the strengths and risks
• Market opportunities to be seized
• Main financial results
• (What is required to the recipient of the business plan)
• The Company and Team
• Location and history
• Company type and Team
• Financial data, linkages / collaborations/lobbying
• The management team and key positions
• The product / service
• Description of the need that you intend to meet
• Description of the product / service and the "product system"
• Presence of any licenses or patents
• Stage of development of the product
• Services and products, Complementary, Accessories
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27. Business Plan Index 2/3
• Competition - Analysis of Sector
• Description of the structure of the offer
• Status and degree of turbulence in the industry
• Profile of the leading competitors
• Identification of gaps between competitors
• Identification / evaluation of substitutes
• The sales market
• Description of the market and of its segments
• Size and growth of demand
• Identification and description of market segments selected
• Bargaining power of customers target
• The market supply
• Raw materials
• Other resources
• Characteristics of the market supply
• The marketing plan
• Choices and pricing policies
• Distribution channels and marketing arrangements
• Export prospects
• Sales budget
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28. Business Plan Index 3/3
• The technical-industrial structure
• Description of the production structure
• Production processes and "bottlenecks"
• Analytical data regarding the equipment, their costs and their level of productivity
• Processes and Resources
• ICT support
• Organizational aspects
• the company operating and its ramp-up
• Logistics, warehouse and transport. Attention to perishability / obsolescence
• Network / alliances
• Management
• Partnership
• Collaborations or projects / phases managed in synergy
• Resources, production, trade, distribution, sales, ...
• Financial Projections (3 years)
• Costs: Fixed Costs, Variable Costs, startup costs
• Revenues: For sale Products / Services
• Sources for financing funding
• Break Even Point
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29. Pragmatic Introduction To Writing A Business Plan
5. Contributions of analysis
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30. Market Analysis
• What are the size and the potential growth of the target segments?
• What are the drivers of growth in the various market segments?
• What percentage of sales the entrepreneur expect from various product / services
and / or market segments?
• How the new company achieves its customers?
• What kind of competitors exist? How easy is it to imitate the business model of the
new company?
• What are the entry barriers for competitors?
• What is the process of purchasing and consumption?
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31. The Competitive ecosystem
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•Premium price differentiation: differentiated
product (perfume) or undifferentiated (petrol)
•Customer criteria for evaluation
•Evaluate Product Anomaly e.g. Coca Cola in
soft drinks: Real value vs. Perceived value
•Cost Structure Fixed vs. Variables - It is generally a
sector structure
•Economies of scale
•Market access and supply
•Conversion cost
•Sector Profitability Rate
Other products that meet the same need:
e.g. videoconference vs. business travel
Possible Choiches
Make, Buy, Connect

32. Market and Product
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33. Marketing Plan
• For an accurate prediction of sales, companies need to consider many of the external and internal
variables as part of the analysis of the dynamics of a competitive market, including:
• macroeconomic factors
• regulations
• competitors' actions
• customer demand
• the mix and the pricing of the product categories
• marketing programs
• the introduction of a new product and the elimination of an existing product
• changes to the characteristics and quality of the product
• the production and distribution capacity
• levels of customer service
• With the proliferation of the number and variety of products offered and the speed with which
they are introduced, it is increasingly difficult for manufacturers and resellers to accurately
predict sales. The accuracy of these estimates influence production plans and the level of the cost
of the support functions. If actual sales are less than the expected level, you'll end up with excess
inventory, with the risk of having to sell below cost; if actual demand exceeds the estimates, the
company will lose potential revenue and customers, disappointed not to find the desired product
available will be less satisfied.
• Businesses have faced this difficulty in different ways. Dell Computer Corporation has successfully
developed the ability to respond very quickly to the actual demand of the customers. In 1997 it
has disposal of stocks for only twelve days of sales. Other companies have taken steps to
drastically reduce the number of products in the catalog, in order to simplify the planning process.
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34. Required resources
• How the offer reach the customers?
• What are the sales targets (per year, per quarter)?
• What are the resources (quantity and quality) required to
create products / services?
• How flexible is the organization?
• What are the experiences or the abilities of the team?
• What experience or abilities are lacking? How to find them?
• What are the main cost drivers
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35. Pragmatic Introduction To Writing A Business Plan
6. Private funding
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36. Funding Types
• Funding can come from various sources. The most appropriate
depends on many factors:
• The business Stage
• The forecast and results
• The amount requested
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The two main types of financing are shares ("equity")
and loans
SHARES: representing the capital of the company,
and normally give full voting rights. Also carry the
higher risk and potentially the highest remuneration
because they are rewarded in terms of dividends after
all other costs have been paid
LOANS: can be secured by the assets of the
company. They are the first actions in the repayment
of capital. Interest is at a fixed rate regardless of the
profits or losses of the company.
A mixture of the two types is often appropriate

37. Shares
• Equity investments affect the decisions of the founders of the
company.
• Founders and entrepreneurs
• Contribute all they can afford
• Provide grants to non-financial (waiving wage, local usufruct, etc.)
• Business Angel
• Invest between 10,000 and 100,000 USD
• Generate useful business contacts
• They decide quickly
• Venture Capitalists (Early Stage)
• Invest between 1,000,000 and 5,000,000 USD
• They provide added value and not just funding
• They decide not very fast, but they are very accurate in tests
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38. Loans
• Friends and partners
• They put everything they can invest
• They provide grants to non-financial (waiving wage, local usufruct,
etc.)
• Banks
• Invest between 10,000 and 1,000,000 USD
• Require various guarantees (mortgages, etc.)
• Decide slowly
• Public funding agencies
• Invest between 100,000 and 5,000,000 USD
• Provide easier loan conditions (low interest rates)
• Decide very slowly ∗38

39. Crowfunding
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• From Wikipedia, the free encyclopedia
• Crowdfunding is the practice of funding a project or venture by
raising monetary contributions from a large number of people,
today often performed via internet-mediated registries, but the
concept can also be executed through mail-order subscriptions,
benefit events, and other methods. Crowdfunding is a form of
alternative finance, which has emerged outside of the traditional
financial system.
• The Crowdfunding model is based on three types of actors:
• the project initiator who proposes the idea and/or project to be
funded;
• individuals or groups who support the idea;
• a moderating organization (the "platform") that brings the parties
together to launch the idea.

40. ∗40
Company Value – how to do it?
- Equity method
- Simple
- Complex
- Economic Income Based
- Simple
- Complex
- Mixed methodologies
- Average value as the mix of methods and earnings
• Financial method
• Empirical methods (eg. Market multiples)
- comparable companies
- comparable transactions
- subjective evaluation
- Innovative methods (eg. Economic Value Added)
?

41. Pragmatic Introduction To Writing A Business Plan
7. The funding through calls and laws
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42. Public Financing
• Depending on your country of business startup many
opportunities should be available to access loans at a
discounted price or facilities to buy equipment.
• Search on your local administration offices, regional and
Country public registry
• Pay attention to the rules for accessing loans and rules for
having refund. You have to follow them very strictly to avoid
loss of rights.
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43. Examples: EU finance & Funding
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http://europa.eu/youreurope/business/funding-grants/access-to-finance/index_en.htm

44. END
Davide Cilano – email: davide.cilano gmail.com
Feel Free to contact
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