McCloskey Business Plan Competition Business Plan Preparation …a judge’s perspective December 7, 2010 Gigot Center for Entrepreneurial Studies ■ NASDAQ Educational Foundation

David Brenner 1973 ND Grad, married to ND alum, parent of three alums Gigot Advisory Board and IrishAngels network member Former Managing Partner, IdeaWorks New business incubator in Grand Rapids McCloskey competition judge, 2001 – present President & CEO, Innovation Park

Business Plan—Core Truth ?

PERMISSION TO BELIEVE

Business Planning g Process Core Idea 2-Page Synopsis PowerPoint Elevator Pitch Business Plan = 5 Breath Test Copyright 2003 IdeaWorks, LLC

5 Breath Test 1.What is your business idea? 2.Who needs it, and why? 3.Why you? 4.Why is now the right time? 5.How will you (or your investors) make money?

Example FreshEnergy ™ Air-to-Air Exchanger

Example--FreshEnergy What is the business idea? The FreshEnergy™ air-to-air exchanger system improves indoor air quality by exhausting stale, polluted air out of the building and replacing it with filtered, fresh, outdoor air with its unique, better-performing, more efficient design. Who needs it, and why? New homes and office buildings are constructed to conserve energy by stopping the flow of outside air into the structure. As a result, pollutants from outgassing of construction materials, cleaning solvents, radon, cooking, mold and pesticides are trapped inside the building. FreshEnergy™ solves this problem while minimizing energy loss with little or no maintenance. Why is your management group the right team to make this venture successful? Our team has worked together on the FreshEnergy™ program from the start, and includes nationally known industry and academic experts in HVAC on our advisory board. Why is now the right time for this new venture? The EPA says the indoor air environment in new buildings is more polluted than outdoor air, yet we spend approximately 90% of our time indoors. While there are many products on the market designed to filter particles in the air, the best way to improve indoor air quality is to exchange it with fresh outside air according to the HVAC industry association, ASHRAE. How will you (and your investors) make money? By Year III we expect to sell 45,000 FreshEnergy™ units with a gross profit of 56% and a net profit of 15%. M&A interest is anticipated from strategic investors in the HVAC sector within 3-5 years of market entry.

Business Planning g Process Core Idea 2-Page Synopsis PowerPoint Elevator Pitch Business Plan = 5 Breath Test Copyright 2003 IdeaWorks, LLC

McCloskey Guidelines No longer than 10 pages, plus up to 6 pages of appendices and covernote Standard margins OK to include drawings, pictures, etc. to clarify

Business Concept--example Mission statement ~ explain your motives Key values you bring to the business Key goals and objectives for the business

Value Proposition Proven opportunity, i.e. solution fits problem Macro trends? Localized trends? Market “pain” this business addresses? Supporting evidence?

Target Market Define in detail, but be specific! Clarify why this group is your target Key attributes driving decision to buy Main competitors and their fit to target needs

Path to Market Define step by step—who does what when Where do they get their information? How do they want to obtain your product or service? Source?

Customer Relationships Spell out leadership role Importance of customer service? Customer versus end-user?

Business Model--$$$ Define in detail What generates business revenues? Pricing strategy and elasticity? Pricing structure versus competition? Supporting evidence?

Key Resources Required PEOPLE (don’t minimize or overly generalize!!)

Key Resources Required PEOPLE (don’t minimize or overly generalize!!) Intellectual property (e.g., patent or secret) –Barrier to entry?

Key Resources Required PEOPLE (don’t minimize or overly generalize) Intellectual property (e.g., patent or secret) –Barrier to entry? Equipment Suppliers Inventory Physical space Working capital

“Must Do’s” Define key milestones to launch Steps required to secure first customer? Second customer? Required steps to scale business to sustainable growth?

Key Stakeholders Who genuinely cares if you succeed or fail? Define their interest/motivation Steps being taken to secure their interest Required action to retain their interest

Cost Structure Define all direct and indirect costs per unit Overhead costs to operate? Break-even? Source?

Final Thoughts Does the logic hold together?

Final Thoughts Does the logic hold together? Can you pass the 5 Breath test?

Final Thoughts Does the logic hold together? Can you pass the 5 Breath test? PERMISSION TO BELIEVE??

Questions?