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 Old data is just that - out of date.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!