Machala ferrel - Business Plan

The Business Plan

Janis Machala, Paladin PartnersDon 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 care-giving networks

Trusted source for value-added 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? What’s 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? Who’s make up your management team? What’s your “secret sauce?” What are the barriers to entry/competitive

advantage? What do your 5 year financials look like? What’s your path to profitability? Why is this a company versus a product/service? Who’s your competition and how do you beat them? Why can’t Microsoft do this? (or name any big,

established company…)

Creating Your Company’s 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 Kinko’s white bond

is good enough Simple binding Examples

Handout – a good example B Plan

Discuss examples of bad ones

Typical OutlineExecutive SummaryIntroduction and Business PremiseMarket Analysis and Customer NeedsProduct OverviewValue PropositionBusiness ModelBusiness Operations PlanMarketing and SalesMarket EntryTransition to Revenue ServiceCompetitive AssessmentPartnership StrategyManagement Team and AdvisorsFinancial ProjectionsKey Business MetricsCapital Structure/Financing PlansExit StrategyRisk AnalysisSummary

User Friendly B-Plan is Key Investors receive hundreds of these Most plans don’t 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 Don’t 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 can’t 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

Workshops CIE Program NWEN WTC SBA

Archive Venture blogs Kauffman

Foundation

Consultants Domain experts Funding experts Teambuilding

experts

Questions and Discussion