Writing a business plan

What we will cover What is a business plan? Why do we need to write a plan? What elements are in a business plan? What is an executive summary? How long should a business plan be?

Why we need a business plan The business plan is the blueprint for your business. You wouldn't walk over to an empty lot and just start nailing boards together if you wanted to build a house. Starting a business without a business plan is just as foolish.

Components of a business plan Executive Summary (2-3 pages) • Company Description (0.5-1 page) • Products and Services (2-4 pages) • Markets (1-2 pages) • Technology (2-3 pages) • Competition/Competitive Advantage (1-2 pages) • Business Model/Key Customers (2-3 pages) • Operations (1-2 pages) • Management (1 page) • Financial Projections (1 page) • Financing and Use of Proceeds (0.5-1 page)

Executive summary To write the executive summary of the business plan, start by following the list above and writing one to three sentences about each topic. (No more!)

Company Description Vision Basic product offering Company history Markets to be served Company location Stage of business

Products and services Basic outline: What is the product? What are the benefits to users? (vs. features) How does it work? What’s next on your roadmap? Tips: Must be meaningful to laypeople and experts. Don’t use too much technical jargon Use diagrams and photos

Know your Markets Market Dynamics Why is this a good opportunity now? Customer trends, regulations, technological advances Market Sizing Analyst reports AND bottom-up analysis Customer Insights Customer interviews, focus groups, discussions with experts, etc… Define the Customer Is the end-user also the purchaser? Market Prioritization and Rationale

Technology • Describe the following: •Main components of solution •Features and functionality •Underlying technology •Development environments •Compatibility with other relevant products •How your product fits the relevant technology value chain • Patents and Patents Pending • Save the deep technical description for a white paper

Competition/Competitive Advantage Competitors include: •Direct competition • Substitute solutions • Potential entrants Barriers to Entry may include: • Patents (pending) •Key partnerships •Key customer relationships •Expert management team • Superior product, functionality •Time to Market •Cost advantages • Switching Costs

Set your goals Have short-term and long-term goals You might want to set weekly goals, quarterly goals, annual goals, and even 3-year or 5-year goals

Make your goals specific and measurable with a deadline "Increase my sales" is a good goal, but it's so vague that it does not provide a means by which you can judge your success. Modify your goals by making them specific. All goals should be specific

Don't set yourself up for failure Make sure your goals are attainable. If you aim too high, you're dooming yourself to defeat.

Don't be lazy On the other hand, some entrepreneurs set goals that are too easily attained. If you tend in this direction, look for ways to challenge yourself. If you usually aim to add one new client every quarter, push yourself to shoot for two or three.

Be relevant Goals should help you attain a specific aim. Look out for goals that are just going to keep you busy, but are not appropriate to the overall success of your business. If you don't believe your goals are worthwhile, you won't make the necessary effort to achieve them.

Be patient and persistent It your system of setting goals does not seem to be working because you are not attaining much of what you write down, do not give up. Keep setting goals for several months and you will find that your goal setting skills improve.

Review your goals constantly Keep your weekly or other short-term goals in plain view -- by your desk, or next to your computer, for example -- so you know what you need to attain. Look at your annual goals monthly to see if you're on track. If your business' focus changes, don't be afraid to alter your goals. Flexibility is a crucial component of goal-setting.

Review again Executive Summary—roughly 10% of the length of your plan, or two pages, whichever is shorter!

Business description Who are you? What are you? What do you do? Why do you do it?

What is the current situation? (context) Industry analysis Who are the players? How large? In order to create a compelling sell document, we must answer these questions: What is the current situation? (context) What is the Problem? (opportunity) What is your solution? Why is this better? What is it worth in dollars? What are the hot areas?

Drill down to your target customer Market analysis How large is your market: Aggregate customers Aggregate dollar/ sales volume Drill down to your target customer

Marketing plan Who: the target customer Where is the focus? Four Ps: Product/ service Place/ distribution Price/ terms of sale Promotion/ advertising/ sales support

Competitive analysis Direct competition Indirect competition Size Scope Product/ service offering Indirect competition Future competition SWOT analysis: Strengths Weaknesses Opportunities Threats Business or economic conditions, good or bad; political?

Organization Who’s involved? Competencies/ experience

Operations/ logistics How do you deliver your product or service? After-the-sale issues

Exit strategies—investors and owners Acquisition, IPO, or other liquidity event?

Funding needs How much? How soon? What for?

Financial plan Highlights Sensitivity analysis