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Writing an Effective Business Plan Presented to: UW CIE "The Business Plan" Resource Night

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Provide a clear, succinct picture of where you intend the Company to go and your ... opportunity & the assumptions reveal a lot about management's business acumen. ... – PowerPoint PPT presentation

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Title: Writing an Effective Business Plan Presented to: UW CIE "The Business Plan" Resource Night


1
Writing an Effective Business Plan Presented to
UW CIE "The Business Plan"
Resource Night
  • James R. Moore
  • Avogadro Partners, LLC

2
Business Plan Overview
  • Provide a clear, succinct picture of where you
    intend the Company to go and your ability to
    marshall the necessary people and resources to
    get it there.
  • Vision
  • Opportunity/Need
  • Product/Service, business model
  • Management Team (relevant experience)
  • Capital Requirements, Risks and Rewards

3
The Investors Perspective
  • What investors look for
  • Big market opportunity/compelling solution
  • Strong management team
  • Proof of market acceptance
  • Unique sustainable competitive advantage/bus.
    model
  • Proven ability to form business partnerships/
    relationships
  • Clear path to profitability
  • Reasonable time horizon to liquidity.

4
The Investors Perspective
  • What gets read
  • Executive Summary
  • Management Section and Resumes
  • Industry/Markets (skim)
  • Summary financial projections
  • What gets discounted
  • Financial projections
  • Non-specific market estimates
  • Advisors contributions influence

5
Business Plan Outline (one size doesnt fit all!)
  • Executive Summary
  • The Company
  • Market and Industry Summary (the opportunity)
  • Products/ Service(s)
  • Suppliers Partners
  • Marketing Sales Plan
  • Manufacturing/Operations Plan
  • Financial Plan, Capital Requirements Risks
  • Appendices (due diligence)

6
Executive Summary - VERY IMPORTANT -- will be
read first - SUMMARY -- no more than 2-3 pages
  • Company vision (mission goals)
  • Problem statement description of the market
    pain and its extent
  • Opportunity summarize the size of the market
    and characteristics of the customers suffering
    the pain
  • Solution describe the product(s)/service(s)
    that the Company offers and compelling value
    proposition
  • Management Team demonstrate how key personnel
    are the right team to bring the solution to
    market
  • Financial summary, capital requirements, exit.

7
The Company
  • Brief description of the Companys history
  • Current status of the Company (corp. form, size,
    development stage)
  • Company vision (mission, values, goals)
  • Management team (including key advisors) next
    slide
  • Ownership structure
  • Facilities and special equipment

8
The Management Team
  • List CEO and key management by name, including
    thumbnail bios to show these are people with a
    record of success.
  • Summarize the of years of experience in this
    industry and/or in the type of position that they
    fill in the Company.
  • Include boards of directors and advisors
  • Identify those who have worked together before
  • Identify holes management team how theyll be
    filled
  • Key relationships--teaming up with other partners.

9
Industry and Market Summary
  • Pain (problem) in the market that your
    product(s)/service(s) solve or will solve?
  • Market Past, Present, Future
  • - Size, demographics, key customer profiles,
    trends
  • Position of your product/service in the market
    the distribution channels to be used
  • - Identify who your customers are and will be
  • Value proposition for customers channels
  • - Is there market research to proving the
    attractiveness of the proposition?

10
Description of Product(s)/Service(s)
  • Describe current product or service features
  • Product positioning
  • Compare to competitions products/services
    discuss barriers (IP, knowledge, switching
    costs,etc)
  • Pricing to channel and end customer
  • Current development status future prospects


11
Supplier Partner Relationships
  • Outline supply chain
  • Identify key suppliers or supplier requirements
  • Demonstrate knowledge of supplier pricing and
    interest in producing this product.


12
Marketing and Sales Plans
  • Marketing and sales strategy--overview
  • Companys projected total market(s) and market
    share(s)
  • Who are the customers and what value are they
    buying?
  • Is there a brand strategy? What steps to build
    it?
  • Marketing mix
  • Positioning
  • Distribution channels
  • Pricing
  • Promotion
  • Describe the sales structure and cycle.

13
Operations/Manufacturing Plan
  • Organization chart (show key positions to be
  • R D and production ramp-up
  • Supply chain relationships, fulfillment
  • Resource requirements (personnel, facilities,
    etc.)

14
Financial Plan
  • Financial history (summary P Ls, current B/S)
  • High-level financial plan that defines financial
    model, key assumptions, and reviews yearly
    expected sales and profits for the next
    three-five years (detail goes in the appendix)
  • Balance sheet, income statement, cash flow
    statement
  • Sensitivity analysis (sensitivity of financial
    projections to changes in key assumptions or
    variables)
  • Breakeven
  • Impact on cash flow capital requirements

15
About Financial Projections
Projections are heavily discounted Projections
will be adjusted for assumptions risks by VCs,
other institutional investors, or private
investors (angels). But…..projections indicate
the potential size of the business opportunity
the assumptions reveal a lot about managements
business acumen. Year 1 projections are basis for
year 1 ops budget
16
Capital Requirements
  • Description of the capital needs (offering) and
    financing strategy.
  • Capitalization table with offering(s), fully
    diluted.
  • Use of proceeds from capital being raised and key
    milestones that will be achieved.
  • Financial return analysis if managements
    forecasts are met
  • Liquidity plan or exit strategy and valuation
    range for most probable financial projections
  • Risk analysis mitigation strategies

17
Appendices (due diligence packet)
  • Management team resumes
  • Financial data (most recent financials, detailed
    projection model spreadsheets)
  • Corporate documents, contracts, tax returns,
    patents, key agreements, commitment letters
  • Founders financial statements (if
    appropriate--e.g. banking)
  • Valuation report (if available)
  • Industry and markets data, including market
    research
  • Sales collaterals, advertising, media articles
  • Testimonials

18
Business Plan Format Issues
  • 15 - 30 pages plus graphics (depending on
    purpose). Keep it brief and to the point.
  • Leave room on your pages for notes and
    questions.
  • Provide quality cover and binding
  • Be sure that your numbers tie out and are
    consistent
  • Reach a conclusion at end of every section
  • Place details in appendices
  • Number your copies and keep a log of to whom
    they went.

19
Business Plan Style Issues
  • Nicely presented, but focused on substance
    (make it visual)
  • Use active, positive voice
  • Use 11 or 12 pt type face
  • Avoid lengthy paragraphs (brevity, clarity)
  • Show momentum
  • Omit guarantee language
  • Include confidentiality language

20
7 Deadly Sins of Business Plans
  • Claiming to be wonderful without proving it
  • Alleging that theres no competition.
  • Too long and boring, no graphics
  • Failure to show compelling value proposition for
    customer
  • Wet finger market/revenue projections
  • Capital needs not supported by cash flow
    projections.
  • Risks unacknowledged.

21
  • Questions?

22
Why Prepare A Business Plan?
  • To articulate the companys vision and plan the
    strategies, actions and resource requirements to
    achieve it (a Roadmap).
  • To present the business case for a project or
    other major resource commitment to management.
  • To raise venture capital for development and/or
    expansion of the company.
  • To raise bank financing for the company.

23
Business Plan Must Answer
  • Who are the customers in each significant market
    segment?
  • How do the customers make purchase decisions for
    this type of product/service?
  • Is the product or service a compelling purchase
    for customers?
  • How will the product/service be priced?
  • How will the Company penetrate each customer
    segment?
  • How much does it cost to acquire a customer and
    how much time does it take?
  • How much does it cost to make and deliver the
    product/service?
  • How much does it cost to support the customer?
  • Once the Company has a customer, how easy is it
    to retain?
  • How much capital equipment is required to produce
    each dollar of sales?
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