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Best and Worst Practices in Developing a Winning Business Plan

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Information about Best and Worst Practices in Developing a Winning Business Plan

Published on August 8, 2007

Author: mgaiss

Source: slideshare.net

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Who Needs a Business Plan? … And Why? Some Good Ideas …And Some Bad Ones!

… And Why?

Some Good Ideas

…And Some Bad Ones!

To Successfully Launch a New Business... ...Requires Identifying and Bringing Together Necessary Resources Human - Technological Physical - Financial We Do This Through a Business Plan

...Requires Identifying and Bringing Together Necessary Resources

Human - Technological

Physical - Financial

We Do This Through a Business Plan

What Is a Business Plan? It’s a Process, Not a Product It’s Written to Develop a Successful Business Not Just to Raise $ Should Be Used & Updated as a Mgmt Tool Most Business Failures Can Be Prevented … If You Have a Good Business Plan

It’s a Process, Not a Product

It’s Written to Develop a Successful Business

Not Just to Raise $

Should Be Used & Updated as a Mgmt Tool

Most Business Failures Can Be Prevented …

If You Have a Good Business Plan

Why Do Startups Fail? How Often Can We Predict?

How Often Can We Predict?

Who Do We Write Plans For? Resource Providers Might Be Investors Might Be Internal Sponsors Might Be Strategic Alliance Partners Always for Your Team Many Entrepreneurs Have Multiple Versions

Resource Providers

Might Be Investors

Might Be Internal Sponsors

Might Be Strategic Alliance Partners

Always for Your Team

Many Entrepreneurs Have Multiple Versions

What Does the “Product” Look Like? Executive Summary (1-2 pages) It’s All They’ll Read Must Communicate and Capture Attention Industry & Market Opportunity Marketing Plan Product / Operations Management Team Financials Critical Risks Timetable / Milestones Exhibits

Executive Summary (1-2 pages)

It’s All They’ll Read

Must Communicate and Capture Attention

Industry & Market Opportunity

Marketing Plan

Product / Operations

Management Team

Financials

Critical Risks

Timetable / Milestones

Exhibits

Appearance (Continued) Length Will Vary Average Today Around 25 Pages + Exhibits Usually Have a “Summary Version” of 10-12 Pages Generally: More $$ Needed = More Pages Less Well Known Audience = More Pages

Length Will Vary

Average Today Around 25 Pages + Exhibits

Usually Have a “Summary Version” of 10-12 Pages

Generally:

More $$ Needed = More Pages

Less Well Known Audience = More Pages

What Are They Looking For? What’s the Problem? How Big Is It? How Will You Solve It? You and Who Else? Do I Believe You Can Do It? The TEAM! Why Should I Help You? Financials / ROI Exit Strategy

What’s the Problem?

How Big Is It?

How Will You Solve It?

You and Who Else?

Do I Believe You Can Do It?

The TEAM!

Why Should I Help You?

Financials / ROI

Exit Strategy

What Do They Want to Hear? Ingredients of a Successful Plan (What It Takes to Create Successful Enterprises – TiE)

Ingredients of a Successful Plan

Ingredients of a Successful Plan Vision Commitment Strategy Time to Market Team Passion Customer Testimonial Competition Capital Need Milestones

Vision

Commitment

Strategy

Time to Market

Team

Passion

Customer Testimonial

Competition

Capital Need

Milestones

Vision Looking for: Market Leadership Proprietary Advantage Realism

Looking for:

Market Leadership

Proprietary Advantage

Realism

Commitment Prove You’re Serious About This: Clearly Defined Priorities Understandable Objectives Show You Know the Way!

Prove You’re Serious About This:

Clearly Defined Priorities

Understandable Objectives

Show You Know the Way!

Strategy Can You Execute the Vision? “Go to Market” Strategy Execution Plan Clearly Define Your: Product/Service Pricing Explain How it Solves the Problem

Can You Execute the Vision?

“Go to Market” Strategy

Execution Plan

Clearly Define Your:

Product/Service

Pricing

Explain How it Solves the Problem

Time to Market What is Window of Opportunity? What Features Are Critical Now? What Will Future Products Look Like?

What is Window of Opportunity?

What Features Are Critical Now?

What Will Future Products Look Like?

Management Team Have a Winning Team We Know How to Execute Plan to Augment As We Grow

Have a Winning Team

We Know How to Execute

Plan to Augment As We Grow

Passion “Fire in the Belly” Confidence

“Fire in the Belly”

Confidence

Customer Testimonial Proves Market Traction Referencable Customers In Order of Preference Happy Users MOU Letter of Endorsement They’ll Take a Call

Proves Market Traction

Referencable Customers

In Order of Preference

Happy Users

MOU

Letter of Endorsement

They’ll Take a Call

Competition Identifies Players Describes Strengths & Weaknesses Explains Our Advantage Describes Barriers to New Entrants Is Respectful of Competition!

Identifies Players

Describes Strengths & Weaknesses

Explains Our Advantage

Describes Barriers to New Entrants

Is Respectful of Competition!

Capital Need Clear About Amount Requested Clear About Timing Use of Funds Must Match Strategies Ask for Enough to Have a Slight “Cushion”

Clear About Amount Requested

Clear About Timing

Use of Funds Must Match Strategies

Ask for Enough to Have a Slight “Cushion”

Milestones Both Short Term & Long Term Be Sure to Include: Beta Testing Ready for Shipping

Both Short Term & Long Term

Be Sure to Include:

Beta Testing

Ready for Shipping

What NOT to Do in a BP What is a “BAD” Business Plan? What Are Some of the Common Mistakes We See?

What is a “BAD” Business Plan?

What Are Some of the Common Mistakes We See?

What is a “BAD” Business Plan? One That Doesn’t Meet Its Objectives Fails to Help Launch a Successful Business Fails to Identify Key Obstacles / Problems Fails to Attract Interest: Of Investors Of a Team Of Partners Of Other Resource Providers

One That Doesn’t Meet Its Objectives

Fails to Help Launch a Successful Business

Fails to Identify Key Obstacles / Problems

Fails to Attract Interest:

Of Investors

Of a Team

Of Partners

Of Other Resource Providers

It’s Possible to Launch a Good Business Without One! …And Vice-Versa …But a Good BP Improves Your Odds

…And Vice-Versa

…But a Good BP Improves Your Odds

First Clue That You’re Reading a “Bad Plan”… You Don’t Want to Keep Reading! It Doesn’t Capture Your Attention It’s Hard to Get Through You Just Don’t Get It!

You Don’t Want to Keep Reading!

It Doesn’t Capture Your Attention

It’s Hard to Get Through

You Just Don’t Get It!

Most Common Errors in a Plan Lack of Understanding of Value Proposition …Or Significantly Overstates It Lack of Understanding of Customer And How to Reach Them Lack of Focus Underestimating Inertia Underestimating Effort & Resources Required

Lack of Understanding of Value Proposition

…Or Significantly Overstates It

Lack of Understanding of Customer

And How to Reach Them

Lack of Focus

Underestimating Inertia

Underestimating Effort & Resources Required

Most Common Errors in a Plan (Cont’d) Failure to Identify Competition Lack of a Competitive Advantage Unproven Team Inconsistent Facts or Logic Over-Optimistic Financial Projections Lack of a Robust Business Model

Failure to Identify Competition

Lack of a Competitive Advantage

Unproven Team

Inconsistent Facts or Logic

Over-Optimistic Financial Projections

Lack of a Robust Business Model

Business Model (How Will I Make Money Delivering My Product?) What Can I Charge? How Will I Charge? Who Will I Charge? What Will It Cost Me to Deliver? Where Do I Make the $$? Your Business Model Will Define: Critical Success Factors How Much $$ You Need Ultimate Value Creation

What Can I Charge?

How Will I Charge?

Who Will I Charge?

What Will It Cost Me to Deliver?

Where Do I Make the $$?

Your Business Model Will Define:

Critical Success Factors

How Much $$ You Need

Ultimate Value Creation

So, How Do I Develop a Business Plan ? There Is No “Right Way” The Following Generally Makes Sense

There Is No “Right Way”

The Following Generally Makes Sense

My 10 Step Process (1-4) Start With “Why Am I Doing This?” Need To Define a Good Outcome to Achieve It Try To Answer the First 2 Questions “ What Problem Am I Solving” “ What Is My Solution?” Outline Your Market Analysis What Do I Know? What Do I Wish I Knew? Begin Talking to People Advisors Potential Customers Friends

Start With “Why Am I Doing This?”

Need To Define a Good Outcome to Achieve It

Try To Answer the First 2 Questions

“ What Problem Am I Solving”

“ What Is My Solution?”

Outline Your Market Analysis

What Do I Know?

What Do I Wish I Knew?

Begin Talking to People

Advisors

Potential Customers

Friends

My 10 Step Process (5-7) Define Your Business Model Both Revenues & Expenses Consider Alternates (List Them) Try to Begin a Rough Spreadsheet Identify Critical Success Factors Begin Formal Market Research What Questions DO You Need to Answer? Where Can You Find This Information? Consider Primary & Secondary Data List the Resources You Need to Succeed Human, Physical, Financial, Etc .

Define Your Business Model

Both Revenues & Expenses

Consider Alternates (List Them)

Try to Begin a Rough Spreadsheet

Identify Critical Success Factors

Begin Formal Market Research

What Questions DO You Need to Answer?

Where Can You Find This Information?

Consider Primary & Secondary Data

List the Resources You Need to Succeed

Human, Physical, Financial, Etc .

My 10 Step Process (8-10) Outline the Business Plan What Parts Can You Begin to Write? How Much More Info Do You Need? Define A Successful Scenario What Has to Happen? What Do You Need to Do? Simulate in Your Model Write the Plan … and READ It! Get Some Feedback Revise and Update

Outline the Business Plan

What Parts Can You Begin to Write?

How Much More Info Do You Need?

Define A Successful Scenario

What Has to Happen?

What Do You Need to Do?

Simulate in Your Model

Write the Plan

… and READ It!

Get Some Feedback

Revise and Update

How Will I Know When I’m Done? You’re NEVER “Done”! The Environment Is Constantly Changing You Are Constantly Gaining New Information Your Capabilities Are Changing How Do These Things Change Your Plan?

You’re NEVER “Done”!

The Environment Is Constantly Changing

You Are Constantly Gaining New Information

Your Capabilities Are Changing

How Do These Things Change Your Plan?

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