Entrepreneurship Canadian Edition William D Entrepreneurship Canadian Edition William D. Bygrave, Andrew Zacharakis, Sean Wise

THE BUSINESS PLANNING PROCESS Chapter 8

Learning Objectives The Planning Process Learning Objective 8.1 Describe the business planning process. The Story Model Learning Objective 8.2 Explain what is a story model. The Business Plan Learning Objective 8.3 Describe each section of a business plan. Types of Plans Learning Objective 8.4 Describe the different types of business plans. Style Pointers for the Written Plan and Oral Presentation Learning Objective 8.5 Describe how to do a written or oral business plan presentation.

Today’s Key Concepts Business Plan The Planning Process Back of the Napkin Diagram (BoND) KPIs UVP Defensible Competitive Advantage Elevator Pitching

You Need a Business Plan It is a small investment in time and cost when compared to the time and cost of starting a business. It forces the entrepreneur to think critically about all aspects of the business venture. It can later be used as a benchmark to monitor the progress of the business. ***new slide*** “Plans are nothing, but planning is everything” - GEN Dwight D. Eisenhower

Wait! No One Reads a Business Plan Many established ventures use business model canvas instead of a business plan. Many startups use a lean startup canvas not a business plan So why write one? Helps stakeholders align. It forces the entrepreneur to think critically about all aspects of the business venture. It can later be used as a benchmark to monitor the progress of the business. Not the paper, but the ideas that matter. ***new slide*** “No plan survives first contact with customer” Steve Blank

Business Planning Is a Continuous Process Start business planning when starting to think about a new venture Organize information into topic areas Focus on critical aspects of the business model and follow basic/common plan formats Keep in mind—the business plan is a “living document.” It will continue to evolve as you progress.

Your Plan Should Flow Like a Story How will stakeholders interpret your plan? A tagline creates a unifying plot line that organizes your thinking Keep your plan as close to the “general format” as possible

What Do Readers Want To Know? What is your primary reason for starting a business? What are some personal objectives you have for the business? Is the Industry growing or declining? How do you know and where will the industry be in 5 years? What are the past, present and future industry rends? Have you anticipated technological changes? How will technology affect the business? In geographic terms, how large is the market area you intend to serve with your product or services?

What Do Readers Want To Know? (continued) What percentage of the market share do you hope to obtain in each of the first three years? How are you going to capture it? Who are you major potential business customers? Where are they located? How often will they buy your product or service? Do you know the strength and weaknesses or advantages and disadvantages of your competition? What will be the image if your business? How much will it cost you to acquire one customer? How much profit will you make from that one customer? How long will that customer remain a customer?

What Do Investors Really Want To Know? The 9 parts of the Business Model Canvas The milestones you have hit so far What you will do with the money, what KPIs will be hit, by when? Why you? your team? What is the UVP? What is the defensible competitive advantage? Who else is committed? What stage is the business at? MVP? Product/Market Fit

The 7 Ps People –Who are the people behind the venture? Can they successfully build a company? Pain – The bigger the “pain” the company is solving, the better Product – Is the product or service 10 times better, 10 times faster, 10 times cheaper. Placement (industry) – Is the cumulative annual growth rate (CAGR) of the industry > 25% Go to market Plan – Is the plan reasonable, not right Pitch – Is the pitch clear, confident and concise Proposal – Is the reward worth the risk

Business Plans May Be Judged By Their Covers … Have a Good One The Cover Design an eye-catching front page State company name and your contact information Include the date Control distribution

Summarize Your Business Plan With an Executive Summary Write Executive Summary last Hook the reader Provide compelling information on: Description of Opportunity Competitive Advantage Business Concept Business Model and Economics Industry Overview Team and Offering Target Market

Your Plan Should Cover Eight Main Areas Executive Summary Critical Risks Company/ Product Description Operations Marketing Plan Team Development Plan Industry/ Competitor Analysis Financial Plan Appendix

Start With Your Business Model Canvas

Then From a Table Of Contents

You’ll Need Three Types Of Business Plans Operational Plan for internal use 80+ pages Formal Plan for external use 25 to 40 pages Expanded Executive Summary for enticing interested stakeholders 3 to 5 pages

Other Tools: The Elevator Pitch Elevator Pitch = Customer Pain + Startup Solution Must be: Irrefutable – the pain statement should not be subjective Greed Inducing – should illustrate how an investor can make money Easily Understandable - simple enough that both an investor and your grandmother can understand Succinct – short enough to be said in 3 to 4 sentences or 1 to 2 minutes http://www.youtube.com/watch?v=Tq0tan49rmc

Elevator Pitch Samples eBay: One person’s trash is another’s treasure. Our online global garage sale brings together buyers and sellers from around the world through our proprietary trust-based platform. Wikipedia: Not everyone can afford US$1000+ to access information. Our online platform offers encyclopedic knowledge, available on demand, in the cloud, 24/7 and free. We are 100 x larger than the Encyclopedia Britannica and growing exponentially. Our content is updated by thousands of editors daily. We are the world’s largest repository of human knowledge.

Others Tools: BoNDs Source: Janvier, Magali (2010, July 30). Our Story. Retrieved April 14, 2014, from Wajam Blog, http://blog.wajam.com/2010/07.

Today’s Case

Case: P′kolino Does the business plan tell a coherent and compelling story? Does the plan capture all of the learning that Antonio and J.B. have accumulated? What three questions do you think Antonio and J.B. need to answer through further planning before they launch the venture? What are the three strongest aspects of the plan? What areas need improvement?

Recap Business planning allows the entrepreneur to better anticipate instead of react Entrepreneurs can get feedback from experts, including investors, vendors and customers A Business Plan: Help stakeholders align. Force the entrepreneur to think critically about all aspects of the business venture. Can later be used as a benchmark to monitor the progress of the business. It’s not the paper, but the ideas that matter.

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