The document provides an overview of key components and considerations for an effective business plan, including: 1) A business plan pulls together operational and financial details, marketing opportunities, and management capabilities into a written summary that helps take a realistic look at a proposed business and guide or convince investors. 2) Key sections include an executive summary, business concept, management team, market analysis, financial plan, and growth plan. 3) When seeking funding, investors are most interested in the founding team's track record and potential for growth, while lenders focus on repayment abilities like margins, cash flows, and collateral.

1. Innovation and New Business Ventures X Prof. Dr. Arthur Sybrandy Cairo, Egypt January 2007

2. The Business Plan The business plan pulls together the information developed up to this point and adds more. It’s a written summary of the entrepreneurial Business venture Operational and Financial details Marketing opportunities Strategy Management team’s capabilities The business plan helps to Have the entrepreneur take a realistic look at the proposed business Guide the venture while in operation Convince investors to provide capital – equity and loans: Reality test Competitive test Value test

3. Business Plan Advantages Reality check Details not part of the feasibility analysis may show additional problems. There’s still time to back out! May reveal new opportunities on the operational side of the business not revealed by feasibility analysis “Living Guide” to the business All aspects are included Needs regular (quarterly/semiannually) updating Statement of intent to others Investors Bankers Potential management Strategic partners Suppliers Lessors

4. Investors Look more at quality of the founding team and factors that predict growth  They want to increase value of their investment They want to know What deal structure you are offering (equity interest) How they can liquidate their investment in the future (sell shares) Whether your team has a proven track record and can make the venture successful Common mistakes include Projecting growth that exceeds the capability of the founding team Trying to be a jack-of-all-trades Projecting business performance beyond industry averages Underestimating the need for capital Confusing strategy and tactics Focusing too much on price Being proud of not investing cash in the business

5. Lenders & Bankers More concerned with how you are going to repay the loans they made to you They tend to look at gross margins, cash flows, and capital base Revenues – COGS (Cost of Goods Sold) Slim margins (5-10%) won’t leave much room for error Common errors include Not supporting the amount of capital required Using the loan to pay off old debt Not having any assets to use as collateral Not showing an ability to repay the loan Not demonstrating the bank how it is protected in case of failure Not demonstrating an adequate stake in the business

6. Five Cs of Credit Capital Banks will lend you money when you don’t need it Banks will look for a strong equity base Capacity Cash Flow (remember, this is not profitability!) Lenders require the business to be liquid enough to make payments Collateral Assets to back loans Banks make very few unsecured loans Character Intangible Present yourself and your credentials adequately Conditions How big is the opportunity, how risky, etc.

7. Business Plan Contents Proof of Concept (1 page summary) Expanded Executive Summary (6 pages) Business Concept Management Team Market Analysis Process Analysis Organization Plan Marketing Plan Financial Plan Growth Plan Appendices Contingency Plan

8. Business Concept Business Concept Product/Service Customer Benefit (value proposition) Distribution Purpose of the business Why you’re in the business Core values Description and uses, unique features/benefits of the product or service Primary customer Spin-offs Environment impact (if relevant)

9. Management Team Team itself, with Knowledge in Marketing Finance Operations Knowledge of industry Good credit ratings Network of contacts Board of Advisors/Board of Directors Other parties Lawyer Accountant Banker Insurance broker

10. Market Analysis Industry description Target market Competitors Your product/service differentiation & competitive advantage Pricing

11. Process Analysis Technical description of products/services Engineering specs where appropriate Status of development and related costs Prototype description Distribution channels & Physical distribution plan

12. Organization Plan Philosophy of management and company culture Legal structure of the company Organizational chart Especially key management personnel Compensation and Policies

13. Marketing Plan Purpose of the plan differs from feasibility analysis Market analysis already looked at customer in general; how they buy, when, where, and how much as background for structuring strategy Plan to reach first customer Niche selected Customer perceptions of product and company Tools/Tactics to reach customer Budget Strategy: Who, What, How Tactics: Specific implementation

14. Financial Plan Summary of key points and capital requirements Refers to complete set of statements in appendix Needs assessment breakout Hard costs Working capital Start-up Break-even analysis and payback period Plan for funding Should support all the other claims made in the business plan, showing that your business can survive and grow in the long run

15. Growth Plan Looking ahead past the start-up phase Start-up Initial growth High growth Stable growth Possible new markets Possible new products Global markets

16. Appendices Financial Statements Assumptions underlying the statements Proforma financial statements Process Plan Supporting Documents Manufacturing or Operating requirements and associated costs Marketing Plan Supporting Documents Marketing tools Media plan Marketing budget Organizational Plan Supporting documents Compensation programs and incentives Business plans are more concise these days, putting more information in the appendices

17. Contingency Plan Sometimes included to show you are aware that things may not go as planned Reacting to market/demand downturns Lawsuits, including product liability Losing a key employee Etc.

18. Executive Summary & Proof of Concept Written last, when the plan is done  in about 6 pages Read first by investors, lenders, etc! Making it the most important part of the whole plan The summary (and proof of concept) must capture the reader’s attention immediately (less than 30 seconds) Make sure to Describe concepts Define customers Establish market sizes Show ability to scale out You can sometimes use the summary separately, handing it out without the complete plan. Proof of concept is a shorter, 1-pager in the front of the plan

19. Summary Checklist Did you immediately grab the reader’s attention? Did your concept generate excitement? Is the business concept absolutely clear? (purpose, customer, value proposition, and distribution strategy) Is the reader convinced you have the right team? Does the Industry/Market analysis support the concept and show demand? Are you clear on how the product can be produced and distributed? Does the organization plan support the objectives? (Form follows function) Does the marketing plan clearly show how you are going to reach customers and create long-term relationships? The financial plan shows potential of high ROI? Is the potential for growth clear to the reader?

20. Final Tips Get started, anywhere (Internet?) Don’t be discouraged if all information is not instantly available Answer key questions Always include sources Use outlining/mindmapping Make the plan look good Investors read lots of them, yours has to stand out Prepare a presentation Match presentation to requirements Be ready to answer questions, but don’t bluff Think about your one-minute business plan