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7/18/2019 Winning Business Plan
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A Winning Business Plan
Susan A. Block
Technology Management Program
BLOCK
BOWMAN &
ASSOCIATES, LLC
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BLOCK
BOWMAN &
ASSOCIATES, LLC
What Is a Business Plan?
Structured thought process/market validation
Structure to collect thoughts
Test assumptions
Leads to otherwise overlooked realizations(markets, pricing, etc.)
Capital Raising Document
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BOWMAN &
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Capital Raising Document
Conveys:
Idea – Product/Service and target Market
Prospects – Market Potential
Why you will be successful
• Competitive advantage
• Management team
Purpose: Sell the idea, yourself and the
magnitude of the opportunity
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Ideal Business Plan
Addresses an Identified Need
Is Customized With Different Versions
Is Well Thought out and Researched
• Takes a minimum of 2-3 months (200-300 hours)
• Length: Typically 30-50 pages (excluding exhibits)
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A Winner
Great Executive Summary
High potential revenue projections
Addresses defined need
Huge market potential
Thoroughly researched (did their homework)
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What I Look For
Is it a good idea?
Market potential
Revenue potential
Is it fundable?
Can the team do it? (or can a team bepulled together?)
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Tips to Differentiate Your Plan
Easy to read
Exploit uniqueness
Qualify competition
Emphasize
management strength
Market drivenapproach
Cite distribution plan
Substantiate
statements with
market informationand references
Use of funds
Exit strategy
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General Profile of a “Winner” Business Plan:
Addresses a defined need
Strong Management Team (or Board)
Great Executive Summary
High Revenue Projections ( but totally
justified and conservative)
Huge Potential Market
Thoroughly Researched Plan – with
References to Statistics/Published Studies
Industry is still in growth phase
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Address Defined Need
If Unfulfilled Need Exists:
• Providing product/service to a market sittingthere waiting to buy
• Easier marketing task
• Less competition initially• Constraint is how quick can scale up rather
than marketing
• Often better margins available (higher prices)
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Other cases:
Customer doesn’t know they need it
• Huge educational task – need to educate market and then sell
to them
• Will take a long time and a lot of $
• Often first one is not successful
A “Me Too” product (need already being fulfilled)• Need to show how you are better/less expensive etc.
• Need to take the customer away from existing solution
• Takes a lot of marketing time and money
• Margins lower (prices lower)
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Strong Management Team
For most investors, Management Team is themost important indicator of success
• Experience• Diversity
• Synergy
Ideally includes a successful entrepreneurthat has done this before
Reduces Risk
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Importance Of Executive Summary
Less than 5% of those plans are ever reviewed beyond
Executive Summary
Typical VC invests in < 1% of the business plans they
reviewGuidelines:
• Should be 1 – 3 pages in length
• Written LAST
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Key Components of an Executive Summary
1. What is the problem?
2. How are you solving that problem?3. Why can YOUR COMPANY win in
this business?4. How real is the product and
technology?
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Key Components of an Executive Summary
5. How real is the market? Who is the
customer, how much will they pay,do they pay for similar products now
etc. etc?
6. How will you enter the market - who
are the competitors, what is the
channel?
7. Why do you need money and how
will it help you?
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Detailed Evaluation of Business Plan
What investors want to see or
will look at
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Market Validation
First step to evaluating a business plan
Is there a desirable market opportunity?
Can they profitably exploit this?
Is their sufficient long term potential or an
attractive exit?
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Industry Attractiveness
Size - now and
estimated future
Growth rate
Competitive structure
Price
Branding
Quality
Technology
Economies of
scale
Firm dominance
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Market Opportunity
Competition - Firms
Size of competitors
Profitability
Is there a niche for you?
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Market Validation
Competition - Products
Direct competitors or substitutes
• Feature/benefit comparison with your
product/service
Pricing
BusinessPlanNeeds toConvey:
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Business Plan Needs to Convey:
Business Model
How are you going to make $
License technology
Sell product to someone else to package and sell
Buy components and repackage
BusinessPlanNeeds toConvey:
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Business Plan Needs to Convey:
Promotion Plan
The communication channels you will use
to make the customer aware of your
product/service and convince them to purchase
e.g.: advertising, on-line demonstrationvideos, packaging
PR
Collateral
BusinessPlanNeeds toConvey:
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Business Plan Needs to Convey:
Distribution Plan
The distribution channel you will
use to move the product or service
to the customer
e.g.: direct sales, wholesaledistributors, brokers
BusinessPlanNeeds toConvey:
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Business Plan Needs to Convey:
Demand Forecast
Estimates of product or service
sales, based on the market analysis
and assumptions about the
effectiveness of the pricing, promotion, and distribution
strategies
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Common Oversight
Do not take market analysis far
enough
Do not define addressable and
target markets
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Proper Scope
Determining the proper scope of the targetmarkets is critical.
If the definition of a target market is too broad, it will be hard to identify theirinformation needs and you will waste
money on promotion that won't get theresults you want.
If the target market is too narrowly defined,
it will be difficult to find and generate acustomer base that is profitable.
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Potential Market
The total number of people who could buy
from your business.
For example, if you are selling solely over
the Web and only accepting credit cards for
payment the potential market would beeveryone in the world who owns a credit
card and has access to the Internet.
Obviously, this is a huge, but illusory,market.
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Addressable Market
The group of individuals in the
potential market who are likely to havean interest in what your business has to
offer.
For example, for Santa Barbara Roasting
Company the addressable market is persons
who live in Santa Barbara or travel thru here.
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Target Market
The group(s) of individuals in the
addressable market that are likely to buy,
based on the segmentation factors.
In other words, who will buy your product
or service provided consumer-environmentconditions are perfect and there is no
competition.
Not everyone in target market will buy fromyou
S
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Market Share
The individuals in the target market who can be
expected to make a purchase from your business.
Your market share is affected by the structure of the industry, the impact of
competition,
strategies for market penetration, and
the amount of capital the business is willing to
spend in order to increase its market share.
Market share is estimated in the demand forecast
section of the marketing plan, which is beyond
the scope of this lesson.
Id tif i T t M k t
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Identifying Target Markets
With this background and market-
definition description in mind, it is
time to identify your primary,
secondary, and, if necessary,tertiary markets.
P i M k t
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Primary Market
The primary market is the group of
individuals in the addressable market most
likely to buy your product or service.
Think of the primary market as your
"premium customer" or "who is most likelyto find my site and buy something from it"
or "who is chiefly interested in what I have
to sell".
S d M k t
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Secondary Market
The secondary market is another class of
individuals who are "second most" likely
to buy your product or service. In other words, look for another distinct
group in the addressable market withdifferent segmentation factors from the
primary target market.
T t M k t R h
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Target Market Research
With 1-2 target markets identified, the
next step is to conduct market research to
provide some concrete data about them.
In this section you are seeking answers to
questions such as: What are the specific demographics (age,
education, income, etc.) of these markets?
How many individuals are in the target
market?
Are these markets growing? stable?declining?
R hR
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Research Resources
Trade associations and
publications
Company websites
Hoovers -
http://www.hoovers.com
Edgar Online - http://www.edgar-online.com
ResearchResources (cont)
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Research Resources (cont)
Research consultants
Boston Consulting Group -
http://www.bcg.com
Cahners - http://www.cahners.com
Forrester Research -http://www.forrester.com
Gartner Group - http://www.gartner.com
IDC - http://www.idc.com
Jupiter Communications -
http://www.jup.com
EntrepreneurialResources
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Entrepreneurial Resources
Business Magazines
http://www.redherring.com
http://www.thestandard.com
http://www.entrepreneur.com
http://www.inc.com
http://www.business2.com
Organizations http://www.lava.org
http://www.socalTECH.com
http://www.nvca.org
http:/www.larta.org
VC Listings and
Information http://www.vfinance.com
http://www.corpfinet.com
http://www.pwcmoneytree.co
m
http://www.internetvcwatch.c
om
http://privateequity.dowjones.
com
OnlineBusinessPlanResources
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Online Business Plan Resources
http://www.sba.gov/starting_business/planning/basic.html
http://www.bizplanit.com/vplan.htm
http://www.businessplans.org
http://www.americanexpress.com/smallbusiness/resources
/starting/biz_plan/
http://www.entrepreneur.com/article/0,4621,287355-
1,00.html
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