Sul Kassicieh
Anderson School of Management

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 Focus your thinking
 Establish realistic strategy – operating company on paper
 Financing and other support – give them good reason to invest
 Reaction by others
Kassicieh: New Ventures 2

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 Build it for its intended purpose
 Lots of work
 Do not approach it as a necessary evil: you are looking to convince someone to give you something
 Changes to plan are part of life: entrepreneur should be intimate with plan
Kassicieh: New Ventures 3

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 Many sites are out there
 Use them for help in design
 The content should be totally yours so that you are able to answer the probing questions of your investors, bankers, advisors, etc.
 Be careful in using packaged software to build your plan: content knowledge is key
Kassicieh: New Ventures 4

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 Document that can convince the reader that the business can produce enough revenue to make a satisfactory profit and therefore attractive as an investment opportunity
 Benefits in writing plan:
 Record of ideas and justification
 Way to get feedback
Kassicieh: New Ventures 5

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 Information about competition, choices, growth, markets, etc.
 Information   knowledge
 Knowledge promotes confidence
 Confidence   enthusiasm
 Enthusiasm promotes success
Kassicieh: New Ventures 6

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 Lack of planning
 Poor management: due to lack of planning, anticipation of events and alternative solutions
 Lack of adequate information: what is going on in industry, economy, competition, etc.
 Undercapitalization: not enough money planned for survival, expansion, meeting competition
Kassicieh: New Ventures 7

 BP should sell the writer/reader on the business: so that you can go out and do it, and for reader to invest in it
 Confidence of knowing the issues
 Improve chances of success
Kassicieh: New Ventures 8

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 Investment by VC or Angels
 Strategic alliances
 Large contracts
 Key employees
 Mergers and acquisitions
Kassicieh: New Ventures 9

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 Look inward: what do you want?
 What kind of a business person are you? A
“people” person or “shy/aloof” person
 Do you want money now or later?
 Lifestyle vs. high flyer: venture capital funds technology high growth ones only
Kassicieh: New Ventures 10

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 Small group/person and early money is lifestyle business
 Large group and later money is growth business
 Mismatches
 Turning from one to another
 Both are OK
Kassicieh: New Ventures 11

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 Make it easy to read
 Market driven approach: Know your competition and market
 Uniqueness of company
 Management strength
 Attractive realistic projections
 Funding sources
Kassicieh: New Ventures 12

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 No right way: plans can differ
 Be creative but set a limit
 Concise and focused
 Captures energy and personality of business leader
 Include negatives and issues
 Spend some time on it
Kassicieh: New Ventures 13

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 Cover Page: contact name, legal disclosures
 Table of contents: page numbers
 Executive summary
 The market and competition
 The management team
 Financial information: must include the
“ask” and “how to exit”
Kassicieh: New Ventures 14

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 What are you selling?
 How is it “better”, “faster”, “cheaper”?
 Company history
 Sales and Promotion
 Exit options
Kassicieh: New Ventures 15

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 Risk factors: shows that you know what could go wrong and plan to avert it
 Marketing plan: if this is new to the world
“innovative”, how are you going to get people to know about it and use it?
Kassicieh: New Ventures 16

Sul Kassicieh

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 Miniature business plan: investors see a large number of business plans. You need to get them to read more
 a full view in the two pages of the executive summary
 Capture attention
 Your passion/personality
Kassicieh: New Ventures 18

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 Spend time on it
 Guide for rest of plan
 More confidence about the rest
 Lead to a better product
 If you were the reader,
 Would you invest?
 Would you follow up with other questions?
 Would you pursue?
Kassicieh: New Ventures 19

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 Says little about company strategy
 No coverage of marketing issues
 Focus on needs: people who invest are not in the charity business, they are investors!
 Internally rather than externally directed
Kassicieh: New Ventures 20

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 Explains why market opportunity is there
 Establishes strategy
 Deals with competing effectively
 Shows external readers why they should be interested
 Using “to the point” language
Kassicieh: New Ventures 21

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 Overall approach to producing and selling
 Overall purpose encapsulated in mission statement
 Using technology is important success factor
 Management team
 Compatibility between these elements is a must, otherwise you cannot sell the company’s plan.
Kassicieh: New Ventures 22

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 Break into
 Past
 Present
 Future
 Make sure the link between these is justified
 Problems if you want to accomplish things that were not accomplished before without much change
Kassicieh: New Ventures 23

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 One man band: OK in life style or small
(<$1m revenue) companies but harder to justify with bigger goals
 Same background for all participants
 Define life accomplishments for team
 Specialized knowledge /honors, awards, etc.
 Board of directors: accomplishments and skills
Kassicieh: New Ventures 24

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 Important issue that drive
 Revenue potential
 Activities needed to reach customers
 Without understanding its dynamics, it is hard to build a good business plan or one that will receive funding.
Kassicieh: New Ventures 25

Sul Kassicieh

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 Cash Flow
 Income: P/L
 Balance Sheet
 Cover the past and the future
Kassicieh: New Ventures 27

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 Assumptions: how did you arrive at estimates? Use industry standards
 Do not use naïve method: market is $14 billion,
I will get 1% of that, …
 Put forward the most realistic scenario
 Concise statements
 Get an accountant to help
Kassicieh: New Ventures 28

Sul Kassicieh

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 Several plans tailored to different audiences
 Investor: growth, 20 pages (some say more?)
 Strategic partner: synergy, 20
 Large customer: stability, 20
 Key employees: security, 20
 M&A: past record, 20
Kassicieh: New Ventures 30

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 It is a ”living” document
 No right/wrong way: remember need of reader
 What are the challenges/ questions that can be raised by reader: answer these.
Kassicieh: New Ventures 31

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 Include supporting materials
 Don’t make unsupported statements
 Designate an outside reviewer/ reader that can critique plan
 Limit access: number plans, copying is prohibited, confidentiality (?)
Kassicieh: New Ventures 32