how to write a business plan

how to write a
business plan
•chance to think
•business guide
•requirement for
funding
why am I doing this?
what is it?
an umbrella term
Operational plan
Marketing Material
Requirement for funding
angels
VCs
banks
the ETF
• ...so think about your audience
before you begin writing!
operational plans
YOU are the audience
Help you run your business
Contain the same information as other
plans, but in much greater detail
Should include a yardstick for evaluating
business performance on a regular basis
• ...but the purpose of other types of business
plans is different.
the mechanics
1. Background & purpose
2. Market analysis
3. Product development
4. Marketing
5. Financial Data
6. Organization and mgmt.
7. Ownership
8. Critical risks
9. Summary
10. Any appendices
background &
purpose
value
proposition
What is it?
Pain in the marketplace?
Unmet needs?
Hard $ vs. soft $
Bottom line - how do
you make money?
background & purpose
Business concept
History of company formation
& technology
Current Conditions
Objectives - big picture and detail
market
analysis
market research
overall market
market segments
competitive factors
other market influences
market research
industry studies
focus groups
customers, customer surveys
• WARNING!
• Use data that is both recent and relevant.
Old data is just that - out of date. Extraneous
data might be received as a bunch of hype.
the market
•overall market
total sales & five-year projections
profit margins typical for the industry
growth rates forecasted by analysts
•specific market sector
describe in detail, including size ($)
list leading companies, financial condition &
market share
competitive factors
current & future competitors
buyers/clients/customers
suppliers/vendors
substitute products & services
other market influences
economic factors
technological factors
government influences/regulations
social factors
seasonal fluctuations
marketing
strategy
choice of market segment
attracting customers
corporate image, branding
pricing strategy
distribution & sales
channels
promotional tactics
marketing
sales
forecasts
projections for the
next 3 years
best, worst & most
likely cases
development
&
production
research & development
intellectual property
production requirements
& process
research &
development
current state of development
research path, future improvements
new products in development
intellectual property
the moat around your castle
patents pending and issued
give an indication of subjects covered
give application numbers where possible
cite priority dates
licensed technologies & terms
trademarks
trade secrets
production
requirements
materials & supplies
labor & skills needed
capital equipment
production costs
production process
QA/QC
contingency plans
financial data
financial data
Current financial condition
P&L statement
Balance sheet
Cash flow statement
Start-up costs
Break-even analysis
Financial Projections
Provide assumptions
underlying projections
Give 3 years of data
organization
& management
Key management personnel
Board of directors
Scientific advisory board
• Include brief bios on key people
Staffing requirements for foreseeable future
Current head count and positions
Key positions to fill in near term
ownership
Structure of business
LLC, S-Corp, C-Corp
State of incorporation
Financing & Equity considerations
current owners and capitalization table
money raised to date
funding needs to reach break-even or next
major milestone(s)
critical risks
•List the major risks and how to mitigate them.
These risks can include:
Research or engineering issues
Market adoption and customer education
Regulatory issues, esp. for life sciences
Up-and-coming competing technologies
summary
Be brief!
Unique features of company
Strategic direction
Summary financials
capital required
executive
summary
Be brief!
Re-write the business
plan in 2-4 pages.
Cover the same topics.
Include capital sought.
Be sure to include contact
information
example
Yes, you can do it one
page:
do’s and don’t’s
DO focus
DO weave a story
DO understand who your audience really is
DO arrive via a referral
DO be thorough on researching competition
DO be realistic with financial projections
DO know realistic exit opportunities
DON’T go longer than 25 to 30 pages
DON’T obsess about company valuations
resources
Lots of books available
The Entrepreneur’s Guide to Preparing a
Winning Business Plan and Raising Venture
Capital by Keith Schilit
The Ernst and Young Business Plan Outline
HTC website: www.houstontech.org
Lots of software packages available, too
• ...but beware of being forced into a format
that’s not right for you or your company!