SE Chapter 8
What is "the task" section of the Financial summary?
- A set of financial reports or projections comprise most of the appendix - Develop the financial in the most conservative way possible - Explain assumptions and be ready to give the source of every number
What is "the ask" section of the financial summary?
- Address any prior or existing investments and current ownership - Explain the funding type offered, give the price and any assurances - Describe how investors will be able to harvest their money and exit - Explain how management will be responsive to investor concerns
What is the product/service and value proposition section?
- An important section — where the reader understands your business - Starts with the pain and gain - If the product/service is a proprietary technology, mention you patent, trademark, or copyright here
What is the legal and organizational structures and IP and locations section?
- Describe the firm's legal form, where it is registered, and located - List licenses, certifications, or intellectual property protections
What is the market and target customer section?
- Describe the market in terms of size, scope, and channels - Describe target customers by demographics, product use, purchase schedule, and experience with similar items - Describe each target segment
What is the R&D/growth plan section?
- Explains how you will maintain a competitive advantage - Discuss long-term partnerships, new markets, or ways to leverage assets
What are the four successful factors of an elevator pitch?
- First find the hook — describe a problem people face - Second, focus on the solution your product provides - Third, provide support to prove your solution works — traction is best - Finally, always close with an ask — get the listener to make a micro-commitment — contact information so you can build your network
What is the marketing strategy section?
- Focus on overall strategy, sales plans to apply strategies, and long-term plans - Give pilot test results, or reselling efforts
What is the competition and competitive advantage section?
- Identify competitors by name - Focus on your firm's competitive advantages
What is the related service providers section?
- Identify your banker, attorney, accountant, consultants - Any major relationships with suppliers or customers - Board of directors
What is the key activities and operations section?
- Identifying familiar operations is useful - Highlight something in how you operate that is distinctive - Mention any specialized operations here
What is included in the appendixes?
- Income statement and cash flow tables — year 1 monthly, years 2-3 annually - Balance sheet for years 1-3 by year Include assumptions in endnotes or footnotes - Include a start-up budget - Include a timeline or a milestone list - Any supporting materials that helps you tell your story better
What is included in the cover letter?
- One page - Introduces the plan and owner - Indicates why the recipient is asked to read the plan - Traditionally done on letterhead, but can be an email if submitted electronically - If so, use a signature block for your business
What is the key personnel section?
- Owners and senior managers - Those handling key aspects - Talk about accomplishments rather than just experience - Also mention total employees and their status
What is the company description section?
- State the vision or tagline and a brief description of the business - Its age, current status (and milestones), location, and its markets
What is the Industry section?
- The formal name and NAICS number - Its size and whether the industry is growing, stable, or in decline
What contents should the title page contain?
- company name - contact information - date this version of the plan was completed - proprietary statement to protect your ideas - You may need to include a securities disclaimer - The person who wrote the plan, if other than the owner - A copyright notice is optional
What are the sections included in the business plan?
- cover letter - title page and table of contents - executive summary - company, product/service, and industry - market - organization - financial summary - appendixes
What are the greatest problems of pioneering businesses?
- helping people understand how it works - showing them how they would use it - estimating how many people would want it - estimating how much they would be willing to pay for it
What topics do executive summaries usually cove?
- problem - product - market - competitive advantages - business/team - financial summary
What are the four types of business planning presentations?
- vision - elevator pitch - executive summary - Business plan
What key things do people look for in entrepreneurs?
- your passion for the business - your expertise about the business and the plan - how professional you are in your work - how easy it would be to work with you
What is a pioneering business?
A firm whose product or service is new to the industry or is itself creating a new industry
What are the most common critical risks in a plan?
1. Overstated numbers 2. Numbers that are wrong 3. Inadequate cushion — you need working capital 4. Inadequate payback 5. Narrative and financials that do not fit 6. No direct customer connection 7. Uncertain sales (especially conversion rates or hit rates) 8. Overlooked competition 9. Experience deficits 10. "What" problems 11. Deadly aggravations
What is the elevator pitch?
A 30 second (100 words or less) action-oriented description of a business designed to sell the idea of the business to another
What is an operational plan?
A business plan designed to be used internally for management purposes.
What is an informational plan?
A business plan that gives potential customers or suppliers information about the company and its product or service
What is a key employee/partner plan?
A business plan that provides information on the company, product/service, market, and critical risks to prospective business or marketing partners or to prospective key employees
What is an invention plan?
A business plan that provides information to potential licensees. Invention plans focus on the details of an invention, including intellectual property rights.
What is a 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 on the firm's present and future
What is an offering circular (OC)?
A legal document required by firms seeking funding through equity crowdfunding platforms created under the JOBS Act. An OC contains SEC required forms, an offering memorandum (which is almost identical to a PPM), and the financial statements of the firm.
What is an executive summary?
A one to 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 for a business plan.
What is a cover letter?
A one-page document on business stationary (or 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
What is the mission statement?
A paragraph that describes a firm's goals and competitive advantages
What is a signature block?
A snippet of text (or text and images), typically inserted at the bottom of an email, that contains contact information for the sender of the email
What is a private placement memorandum (PPM)?
A specialized legal form of business plan created by lawyers for the purpose of soliciting formal investments
What is the vision statement?
A very simply 5 to 10 word sentence or tagline that expresses the fundamental idea or goal of the firm
What is a screening plan?
Also called a mini-plan, gives the basic overview of the firm and a detailed look at the fiancials
What is a proof-of-concept website?
An internet-based type of business plan providing information or demonstration of a product or service designed to solicit information on customer interest
What is data room?
An online repository for the documentation that backs up and details the specifics of your business and business plan. The contents of the data room are very similar to those of the three ring binder personal edition of the plan held and used by the founder
What are storytelling arcs?
There are several classic structures to stories, such as beginning, middle, and end, or a multiple-step journey, or a situation-complication-resolution.
What is internal understanding?
Th extent to which employees, investors, and family members involved in the business know the business's purposes and operations
What is external legitimacy?
The extent to which small business is taken for granted, accepted, or treated as viable by organizations or people outside the small business or the owner's family
What is a pitch?
The name given to the formal presentation of a slideshow summarizing your business plan given before judges or potential investor or partners
What is a pitch deck?
The name of a slideshow presentation that summarizes a business or more often a business plan
What is due diligence?
The process of investigating a business to determine its value and potential for investment
How long should a business plan be?
Usually runs around 18 pages
What is a new entrant business?
a firm whose product or service is established elsewhere, but is new to this market
When is a business plan needed?
external legitimacy and internal understanding
What is a tagline?
memorable catchphrase that captures the key idea of a business, its service, product, or customer (also known as slogan)
What is test marketing?
selling your product or service in a limited area, for a limited time
What are the two main sections of the financial summary?
the task section and the ask section