Ch. 8 Business Plans: Seeing Audiences and your Business Clearly

Proprietary technology

A product or service or an aspect of one that is kept as a trade secret or protected legally using patent, copyright, trademarked, or service mark.

Private placement memorandum

A specialized legal form of business plan crafted by lawyers for the purpose of soliciting formal investments.

Screening Plan

Also called a min-plan; gives the basic overview of the firm and a detailed look at the financials

Proof-of-concept Website

An internet-based type of business plan providing information or demonstration of product or service designed to solicit information on customer interest.

Research and Development

(R&D) The part of a business (and business plan) that is focused on creating new products or services and preparing new technologies, ideas, products, or services for the firm's market.

Tagline

(also known as slogan) Memorable catchphrase that captures the key idea of a business, its service, product, or customer.

Tips for Presenting Your Plan

1. Passion for the Business 2. Expertise about the Business and the Plan 3. How Professional you are in your work 4. How easy it would be to work with you

7 Slides on Classic Pitch Deck

1. Intro Slide, 2. Product/Service Slide, 3. People Slide, 4. Strategy Slide, 5. Risk Slide, 6. Financial Slide, 7.Summary Slide.

Most Common Critical Risks in a Plan

1. Overstated numbers 2. Numbers that are wrong 3. Inadequate cushion 4. Inadequate payback 5. Narrative and financials do not fit 6. No direct customer connection 7. Uncertain Sales (especially conversion rates) 8. Overlooked competition 9. Experience deficits 10. Deadly aggravations

Strategizing for the Business Plan

5-M used to structure business plan thinking- Mantra Mission Measures Method Mechanics

Business plan

A document designed to detail the major characteristics of a firm- its product or service, its industry, its market, its manner of operating (production, marketing, management), and its financial outcomes with an emphasis on the firm's present and future.

Elevator pitch

A 30-second (100 word or less) action-oriented description of a business designed to sell the idea of the business to another.

Invention Plan

A business plan that provides information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.

New Entrant Business

A firm whose product or service is established elsewhere, but is new to this market.

Pioneering Business

A firm whose product or service is new to the industry or is itself creating a new industry.

Cover letter

A one page document on business stationery (also called letterhead) that introduces the business plan and the business owner to the recipient and indicates why the recipient is being asked to read the plan.

Executive Summary

A one- two- page (250-500 words) overview of the business, its business model, market, expectations, and immediate goals. It is typically put at the start of a business plan and is the most popular summary form for a business plan.

Vision statement

A very simple 5-10 word sentence or tagline that expresses the fundamental idea or goal of the firm.

Operational Plan

Business plan designed to be used internally for management purposes.

Audience: Family and friend investors

Concerns: Amounts and schedules for returns, stability of firm, funds use, your investment

Audience: Bankers

Concerns: Cash flow and cash cycle, Asset/collateral base, Long-term prospects

Audience: Government Agencies and Institutions

Concerns: Compliance with regulations and laws, Monitoring compliance

Audience: Joint venture partners

Concerns: Fit between the firms, competitive advantage, benefits, intellectual property protection, R&D

Audience: Silent Partners/Angel Investors

Concerns: Growth rate, market, business team, amounts and schedules for returns

Audience: Potential customers

Concerns: Service/product quality, Benefits, Competitive Advantage, Responsiveness to customers

Audience: Key employees

Concerns: Stability of firm, Growth (as applies to increased opportunities within the firm), Long-term prospects.

Informational Plans

Gives potential customers or suppliers information about the company and its product or service.

Pre-selling

Involves introducing your products to potential customers and taking orders for later delivery.

Executive Summary Catagories

Product Market Competitive advantages Management Business Finances

Key Employee/Partner Plan

Provides information on a company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees.

Test Marketing

Selling your product or service in a limited area, for a limited time.

External Legitimacy

The extent to which a small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family.

Internal Understanding

The extent to which employees, investors, and family members involved in the business know the business's purposes and operations.

Risks

The parts of a business or business plan that expose the firm to any kind of loss- profits, sales, reputation, assets, customers, and so on.

Mission Statement

A paragraph that describes the firm's goal and competitive advantages.