The Business PlanJanis Machala, Paladin PartnersDon Ferrel, SeaTecCofounders of BigScreen

About UsJanisManaging Partner, Paladin PartnersSerial entrepreneur, business advisory servicesWang, Sun, Microsoft, IT Start-upsBA Psychology, MBA, University of Iowa DonPresident/CEO, SeaTec ConsultingSerial entrepreneur, business development, large scale IT systems integrationScitor, Rockwell InternationalBA Math, BS Physics, Washington StateLong time active player in West Coast venture and angel scenesNWEN, Alliance of Angels, SeraphDone lots of dealsStrong technical acumenExcellent execution and team building skillsFiscally conservative

About Our Company - BigScreenSimplified computing and Internet for older adults

Extends social and care-giving networksTrusted source for value-added services

Purpose of a Business PlanAlignment of team(s)Operating planCommunication across company, division, department, business partnersInvestment capitalExpansion capital (banks, leases)Merger/acquisition process

How to Use a Business PlanExecutive summarySolicit interestScreen for investor candidatesMini business planBanking/leasing documentPotential acquirersFull business planTeam planning processDue diligence

What Investors Look ForHow does the team think?How detail oriented is the team?How big is this market?Is there sustainable competitive advantage?Whats the growth plan? What does the technology roadmap look like, short term or long term play

Financial ProjectionsBuild 5 yearsDetail near years, extrapolate out yearsBuild from single unit economicsDocument assumptionsCompare against top downValidate with market comparables

10 Must Answer QuestionsHow large is your addressable market?How fast is the market growing?Whos make up your management team?Whats your secret sauce?What are the barriers to entry/competitive advantage?What do your 5 year financials look like?Whats your path to profitability?Why is this a company versus a product/service?Whos your competition and how do you beat them?Why cant Microsoft do this? (or name any big, established company)

Creating Your Companys StrategyBuilding a strategy is harder work than building your productThink aboutWhat do you want your business to be when it grows upLooking back from 5 years in futurePerspectives of all stakeholdersAnything that could go wrongHope is not a strategy

Competitive AnalysisYou always have competitorsDig deep, be detailed, be honestCompare features and benefitsTechnology comparisonWhole product offering (pricing, support, etc.)Channels, funding, customers

Sustainable Competitive AdvantageCreate barriers to entryContinually add value for your customers (and your investors)Anticipate competition and make plans for dealing with itBetter widget, price erosion, market share, different business model..Avoid the trap of believing that your main competitor is your exit strategy

Business Plan FormatPages: 10 to 30Kinkos white bond is good enough Simple bindingExamplesHandout a good example B PlanDiscuss examples of bad onesTypical 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 KeyInvestors receive hundreds of theseMost plans dont get fully readReasons why:Logic is difficult to followThe business is not obviousToo much extraneous information or fluffUse the same techniques to write your plan that you would use to write a play, a song, software..

Nuts and Bolts12 point typeUse a clean fontDont use bold or italics too muchMake sure your visuals are readableNo typos, proof-read thoroughly (including the visual!)Remember: not everyone has same printerCheck for grammarStyle consistencyIf you cant write, hire someone

Due DiligenceMarket assessment is initial focusCustomer market validation nextTeam references and resumes criticalSecondary:Financials and assumptionsCorporate structure and legal docsPatent applications

ResourcesReading list Guy Kawasaki Geoffrey Moore Business 2.0 HBS Case Studies

WorkshopsCIE Program NWEN WTCSBA

ArchiveVenture blogs Kauffman Foundation

ConsultantsDomain experts Funding experts Teambuilding experts

Questions and Discussion