The Business Plan

Janis Machala, Paladin Partners Don Ferrel, SeaTec Cofounders of BigScreen

About Us
Janis
Managing Partner, Paladin Partners Serial entrepreneur, business advisory services Wang, Sun, Microsoft, IT Start-ups BA Psychology, MBA, University of Iowa

Don

President/CEO, SeaTec Consulting Serial entrepreneur, business development, large scale IT systems integration Scitor, Rockwell International BA Math, BS Physics, Washington State

Long time active player in West Coast venture and angel scenes NWEN, Alliance of Angels, Seraph Done lots of deals

Strong technical acumen Excellent execution and team building skills Fiscally conservative

About Our Company - BigScreen

Simplified computing and Internet for older adults

Extends social and caregiving networks Trusted source for valueadded services

Purpose of a Business Plan

Alignment of team(s) Operating plan Communication across company, division, department, business partners Investment capital Expansion capital (banks, leases) Merger/acquisition process

How to Use a Business Plan

Executive summary
Solicit interest Screen for investor candidates

Mini business plan

Banking/leasing document Potential acquirers

Full business plan

Team planning process Due diligence

What Investors Look For

How does the team think? How detail oriented is the team? How big is this market? Is there sustainable competitive advantage? Whats the growth plan? What does the technology roadmap look like, short term or long term play

Financial Projections
Build 5 years Detail near years, extrapolate out years Build from single unit economics Document assumptions Compare against top down Validate with market comparables

10 Must Answer Questions

How large is your addressable market? How fast is the market growing? Whos make up your management team? Whats your secret sauce? What are the barriers to entry/competitive advantage? What do your 5 year financials look like? Whats your path to profitability? Why is this a company versus a product/service? Whos your competition and how do you beat them? Why cant Microsoft do this? (or name any big, established company)

Creating Your Companys Strategy

Building a strategy is harder work than building your product Think about
What do you want your business to be when it grows up Looking back from 5 years in future Perspectives of all stakeholders Anything that could go wrong

Hope is not a strategy

Competitive Analysis
You always have competitors Dig deep, be detailed, be honest Compare features and benefits Technology comparison Whole product offering (pricing, support, etc.) Channels, funding, customers

Sustainable Competitive Advantage

Create barriers to entry Continually add value for your customers (and your investors) Anticipate competition and make plans for dealing with it
Better widget, price erosion, market share, different business model..

Avoid the trap of believing that your main competitor is your exit strategy

Business Plan Format

Pages: 10 to 30 Kinkos white bond is good enough Simple binding Examples
Handout a good example B Plan Discuss examples of bad ones
Typical Outline
Executive Summary Introduction and Business Premise Market Analysis and Customer Needs Product Overview Value Proposition Business Model Business Operations Plan Marketing and Sales Market Entry Transition to Revenue Service Competitive Assessment Partnership Strategy Management Team and Advisors Financial Projections Key Business Metrics Capital Structure/Financing Plans Exit Strategy Risk Analysis Summary

User Friendly B-Plan is Key

Investors receive hundreds of these Most plans dont get fully read Reasons why:
Logic is difficult to follow The business is not obvious Too much extraneous information or fluff

Use the same techniques to write your plan that you would use to write a play, a song, software..

Nuts and Bolts

12 point type Use a clean font Dont use bold or italics too much Make sure your visuals are readable No typos, proof-read thoroughly (including the visual!) Remember: not everyone has same printer Check for grammar Style consistency If you cant write, hire someone

Due Diligence
Market assessment is initial focus Customer market validation next Team references and resumes critical Secondary:
Financials and assumptions Corporate structure and legal docs Patent applications

Resources
Reading list
Guy Kawasaki Geoffrey Moore Business 2.0 HBS Case Studies

Archive
Venture blogs Kauffman Foundation

Workshops
CIE Program NWEN WTC SBA

Consultants
Domain experts Funding experts Teambuilding experts

Questions and Discussion