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Writing The Winning Business Plan

Writing The Winning Business Plan. Jack Derby Derby Management. Why create a Business Plan?. Most importantly, for you & your team You need one for a startup You need one for a corporation The actual process of planning is the key. It consolidates management direction.

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Writing The Winning Business Plan

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  1. Writing The Winning Business Plan Jack DerbyDerby Management

  2. Why create a Business Plan? • Most importantly, for you & your team • You need one for a startup • You need one for a corporation • The actual process of planning is the key. • It consolidates management direction. • It provides debate & finally consensus. • It’s used as a guide when speed bumps happen. • It’s your company & your personal scorecard.

  3. Why else? • No Business Plan…No money. • The Six Stages of Successful Sources: • FF&A: Friends, Family & Acquaintances • Private angels • Venture capitalists • Corporate investors • Strategic partners • Banks

  4. Writing a plan is tough work • It requires disciplined balance • It’s visionary, but logical. • It’s financially perfect, but flexible. • It’s for today, but also for 3-5 years out • It’s a formal Plan, but it’s easy to read. • It’s creative, but it follows The Rules.

  5. How do you start? • Pay attention to The Do’s & Don’ts. • Above all else… • Be compelling • Be brief, focused, & deliberate • Focus on customers & how you will sell them. • Provide market research & hard data • Be innovative & describe barriers to others. • Create an experienced managementteam

  6. The 25 Do’s… • Be brief & direct & detailed. • Get to the bottom line quickly. • Identify what the business is immediately • Identify the business model immediately. • Focus on your customers. • Define what’s compelling. • Define what’s unique.

  7. The 25 Do’s… • Be realistic with yourself. • Remember, you're investing your career. • Define long term objectives for 3 to 5 years. • Describe the 3 to 4 primary strategies. • Focus on your sales model & channel strategies. • Include your ecommerce strategies. • Make realistic, but exciting, projections.

  8. The 25 Do’s… • Support strategies with detailed tactics. • Substantiate with accepted market research. • Discuss very objectively your risks. • Answer the question of why customers buy. • Describe the barriers to entry for others • Convince your reader about success.

  9. The 25 Do’s… • State how much money you will need. • Define exactly how the funds will be used. • State clearly your exit strategy. • Stick with proven and accepted plan formats. • Don't try to be cute!

  10. The 15 Don’ts… • Write about history. Focus on the future. • Focus only on you & your technology. • Use highly technical buzz & descriptions. • Forget about objective customer research. • Make unsubstantiated statements or claims. • Create revenues that you won’t make. • Include detailed budgets.

  11. The 15 Don’ts… • Forget what makes your plan different… • Experienced management • Large and growing markets • Proven sales models & channels • Experienced sales penetration tactics. • Innovative technologies

  12. The 15 Don’ts… • Assume anything. • Forget what your reader wants. • Define valuations in the actual plan. • Attempt to write the business plan alone. • Extend the process more than two months. • Include copies of resumes & technical papers. • Forget to proofread, proofread & proofread.

  13. Don’t just start writing • Preparation…The Key to Success. • What’s my Vision? • Can I say it so that anyone understands it? • What business are we in today? • What about in 3 years? • Are we really innovative? • What about in 3 years?

  14. Don’t just start writing… • Preparation…The Key to Success. • What do we really know about… • Our future product roadmap • What our service offerings could be. • The market data, trends, & forecasts. • The new technologies in development • The competition • Who are our customers will be in 3 years?

  15. One more preparation task… • Think about your starting assumptions. • Externally, what do I think will happen about… • Economic trends • Markets that I am entering • Technology changes • Regulations

  16. One more preparation task… • Define your starting assumptions • Internally, what do I want & expect for… • Sales revenue growth rates • Product costs and margins • Sales expense percentages • G&A expense percentages • Receivables, payables, financing, & capital models.

  17. Now, you can finally start writing. • What you need… • A quiet place and time. • All of your data easily available. • Start working by yourself. • Get the content down quickly. • Send a first rough draft to others quickly. • Write draft after draft after draft after…..

  18. You have two options today • The Traditional Business Plan • 7-8 sections • 20-30 pages with financials • More detail: markets, products & technologies • Business Plan Lite • 2 sections: • 8-10 pages with financials • An extended Executive Summary

  19. The traditional plan • Certainly preferred by us • Provides an opportunity to provide clear details • Brings out the richness of the business idea. • Details the business and sales models • What follows here is the traditional format • 7-8 sections • 20-30 pages

  20. Business Plan Lite • A result of the times • Today, time to read is the driver. • Requires you to… • Be an excellent writer • Provide great detail with very well chosen words • Get your points across succinctly & with clarity. • Sections 1 & 2 & 7 create the BP Lite

  21. What’s included? Vision Strategies Tactics Operations Actions

  22. What’s included? • 7-8 Sections… • Executive Summary • Introduction to the business • Definition of your products & services • Overview of your markets • Overview of your sales & marketing plans These become the Business Plan Lite.

  23. What’s included? • Overview of product development roadmap • Summary of manufacturing & operations • Bios of your management team • Four pages of financials • Brief appendices if necessary

  24. Section 1: The Executive Summary • 2-3 pages • Make it compelling… • Your Idea • Your Markets • Your business and sales models • Your competitive advantages • Your management team • Your use of the funds

  25. Section 2. What’s the Business? • This section is focused on… • The Business Opportunity • The Markets • The Technology • The Products

  26. Section 2. What’s the Business? • This section must define… • a clear Vision • clear strategies • a well defined business model • a dedicated, believable Mission • a strong sense of management experience

  27. Section 2. What’s the Business? • The products & their value add services • features & benefits, innovation, technology • The markets • research data • competition • The customers • who they are & their needs

  28. Section 3: Sales & Marketing • The most important section • 3.1 What’s the Market? • Customer analysis & their needs • Worldwide market size & trends • Competitive strengths & weaknesses • Value creation for your products & services

  29. Section 3: Sales & Marketing • 3.2 The Marketing Plan • What are your marketing strategies? • What are the data points to measure success? • What is your price positioning & why? • What are your primary tactics in years 1 & 2? • What are your primary events in year 1?

  30. Section 3: Sales & Marketing • 3.3 The Sales Plan • What’s your Sales strategy? • What standard channels will you use? • Is there an innovative channel? • What are your penetration tactics? • What’s your sales model? • What’s your hiring & training plan? • What’s your measurement & reporting?

  31. Section 4: Engineering and R&D • What are your core technologies? • Provide sufficient, but not numbing, detail. • What is your development status? • Describe your primary milestones. • Be conservative. • Assume development will be late. • Detail the technical team’s background.

  32. Section 4: Engineering and R&D • What is your strategy for future products? • Define in text with graphics your roadmap • Define common platforms and architectures. • What your IP & patent strategy? • What is your IP strategy? • If you have patents, provide a status table. • If not, define why not in a positive manner.

  33. Section 5: Operations/Manufacturing • What’s your Manufacturing strategy? • Outsource or not? • Why & why not? • What is core in Manufacturing? • What are your unique capabilities • What are your unique processes?

  34. Section 5: Operations/Manufacturing • Focus on your customers in your… • Distribution strategy • Quality strategy • Value added services that you will employ

  35. Section 5: Operations/Manufacturing • What is your Customer Support strategy? • Customer order fulfillment tactics • Primary objectives • Delivery • Response time • Primary policies • Outsource or not? • Future services that you will provide?

  36. Section 6: Senior Management • Management • The #1 reason that investors do not invest. • Experience counts first. • Dedication counts second. • Ability to rapidly learn is third • Too strong an ego is a negative.

  37. Section 7: The Financials • The Rule: Everything Must Hang Together • Your vision and strategies in text must tie in. • Your market growth objectives must tie in. • Your business and sales models must tie in. • Your margin percentages must tie in. • Your cost of goods must tie in. • Your expenses must reflect standard percentages.

  38. Section 7: The Financials • You need… • P&L’s • 1st year by month • 2nd year by quarter • 3rd year by year • Balance Sheets for each year • Cash Flows for each year • 3-4 pieces of paper only

  39. Section 7: The Financials • You need to list your… • Primary assumptions • Primary categories for the use of the funds • What are the primary risks? • Other than the normal of early stage companies • If nothing specific, do not list any. • What’s your exit strategy?

  40. Section 8: The appendices • Provide only the compelling things… • Product data sheets for primary products • Any critical publication. • Do not provide resumes. • Do not include patents.

  41. Where do I go for help? • Good textbooks • Rich, Gumpert • Anything from HBS Press • Anything from Inc. • Inc Magazine & inc.com • Startup.wsj.com • MIT Enterprise Forum workshops

  42. Where do I go for help? • MIT Enterprise Forum & TCN seminars • The best local entrepreneurship schools • MIT Sloan , Babson, HBS, Bentley • Professional Mentors & Coaches • Venture capital investors • The big CPA firms: • PWC, Deloitte, Ernst, Andersen. • The big law firms • Testa, • INC, Fortune Small Business

  43. Derby Management • Coaching • One on One senior management • One on Team senior management • Strategic Planning • Business Plan writing & editing • Fundraising • Recruiting and replacing players

  44. How to find us… Derby Management 20 Park Plaza Boston, MA 02116 Office: 617-266-9266 Cell: 617-504-4222 jack@derbymanagement.com

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