business planning

Business planning
An investor’s outlook
A presentation for the EIIL workshop
LPG 2 on Business planning
Brussels, March 15th 2010
by Mr Ties van der Laan
Ties Corporate Finance
10, rue des Alouettes, L-1121 Luxembourg-Cents
m +352 691 427 566, t/f +352 427 566
e [email protected], i
Who am I?
After nearly ten years in Dutch venture
capital companies (ING Group) I have
been coaching entrepreneurs and
management teams since 1999 to
raise finance, first through LIFT and
from mid 2002 as an independent
financial consultant (interim
controller/CFO and raising finance)
 The how and why of business plans
 Some do's and don'ts
 Outline and contents
 Conclusion
Please feel free to interrupt me @ any time
Selling yourself
A business plan is a document in which
you sell yourself, your team and your
company in such a manner that you
receive an appointment with a
potential financier
Other functions
 Operating manual for you, your team
 Tool to
organise your thoughts and ideas
examine basic assumptions in detail
Attention: regular updates necessary
Information and assistance
 Internet
 Libraries
 Bookshops
 Market research specialists
 Legal experts (IPR, ...)
 Technicians
 Accountants / financial consultants
 Etc.
Some do's and don'ts (I)
Content (I):
 Fully written by you (and your team)
 Your “brain”, your vision, not reality
 Focus on market, marketing, sales
 Practical: focus on doing
 No Q&A
 Minimise use of graphics
 Logical story and no bullets
Some do's and don'ts (II)
Content (II):
 Not a thesis so no footnotes
 No repetition
 Attention: grammar and typing
 Avoid the use of negative words
 Concise, to-the-point
 Easy to understand language (no jargon)
Some do's and don'ts (III)
 Send by mail in hard copy, no email
 No NDA (except to prevent sending on)
 Separate documents (ES, BP, Annex)
ES: maximum 1-2 pages
BP: maximum 20-25 pages
Annexes: unlimited
Business plan outline
Executive summary
 Market
 Product
 Management
 Marketing
 Cash flow: history and forecasts
 Investor
Executive Summary
 The single, most important chapter
 First part read (and maybe the last)
 Powerful and persuasive message
 < 500 words (1-2 pages, 5 min.)
 Whole argument
 Danger: last written
 Attention: grammar, typing
 Concise, to-the-point
 Easy to understand language (no jargon)
The place where it is happening:
 Definition
 Customers
 Competitors
NB. Around 5/7 pages
Market: definition
 No generic stories
 Be very exact and practical both in
Geography (local market)
Sector (“no competition”)
 Potential to go global
Market: customers
 Potential customers in detail
 Figures:
present size
projected growth
 Independent sources
Market: competitors
 Companies not technologies
 Describe them precisely and in detail
 Don’t be negative
 Barriers of entry
 Do not go up against the “big guys”
 No jargon and KISS!
 Focus on competitive advantage = unique
selling points (USP) = why would customers
buy your product
 Technology, features etc. in annex
 IPR protection (if relevant)
NB. Maximum 1-2 pages
 Investors are looking for experienced
(“serial”) entrepreneurs and teams
 CVs in annex
 1. Why you and you alone can make this
happen (investors invest in people so sell
 2. (Non financial) achievements: more than
just an idea or proof of concept
NB. Around 2 pages
Marketing / sales
 Attracting new customers
 Practical e.g. in B2B
No. of visits per week/month
Value of sale
Success rate
 Projected milestones
 Reaction of competitors
 Partnerships
 No prices of products or services
NB. Around 6/7 pages
Cash flow: history, forecasts (I)
“Cash is king”
Focus on cash not P&L/balance-sheet
Monthly / quarterly liquidity analysis
Full history plus three years future
Neutral in time
Sensitivity analysis
Minimal salary demands
Cash flow: history, forecasts (II)
Spreadsheets in annex
Especially now: DIY or do-it-yourself
1. Assumptions
2. Summary of ratios
3. Conclusion
NB. Maximum 2 pages
 Cash
 Exit analysis
 Risk analysis
NB. Around 2-3 pages
Investor: cash
 Derived from your liquidity forecast
 How much money (cash only!):
invested by you (and the team)
raised already and from whom
do you need, when and for what
 Staggering your cash need
 For marketing or growth
 Board seat for investor
 Nothing on VALUATION
 Focus on making a “value proposal”
Investor: exit analysis
 The business of an investor is buying shares
and selling shares
 “Built to be bought”
 No emphasis on IPO
 Trade sale: extensive analysis of possible
buyers and why they will be interested
Investor: risk / SWOT analysis
 Risks connected to investing or
 SWOT analysis
 Focus on mitigation
 Financial situation is no risk/weakness
Put your vision on paper in such a way
that you convince an outsider that
there is money to be made by
investing in your company
One very important note
If an investor decides not to invest in
you, your team and your company
it does not mean
you can not be
Investors vs. entrepreneurs
Investors know a lot about markets
but not a lot about products
Entrepreneurs know a lot about
products but not a lot about markets
Consequence: misunderstanding
My passions
Bridging the gap between investors
and entrepreneurs
Coaching entrepreneurs and
management teams
Personal financial planning
Interim controller/CFO
Contact details
Ties Corporate Finance
Ties van der Laan
10, rue des Alouettes
L-1121 Luxembourg-Cents
Mobile: (+352) 691 427 566
Fax: (+352) 427 566
Email: [email protected]
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