By Sid Chambless
schambless@nashvillecapital.com
615-322-3154
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Management
Customer problem that is solved
Product or services offered
The market and marketing strategy
Competitive analysis
Funding needs and use of funds
Financial summary
Exit strategy
• Brief backgrounds of management and key
individuals
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What is their role and relevant experience?
Past successes and achievements
History of working together
Venture backing or successful exits
Any necessary hires?
• Nature of the problem
• What is the customer problem solved?
• Why do customers need your product or service?
• Why will they pay for it?
• Scope of the problem
• Who cares? How costly of a problem is it for them?
• How many possible customers have the problem?
• Use hard numbers not assumptions
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How does your solution resolve the problem?
How is your offering different, better, faster, or cheaper?
Differentiating features and benefits - How is your solution
better than others?
Proprietary assets – trademarks, patents, trade secrets, special
production skills, process, etc.
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Summary of market research conducted
How many possible customers are there?
What are the total dollars available for this product or service?
How do you attack that market?
How do you make money?
How will you sell it?
Customers - The best proof of a market is a paying customer
• Who else is solving the problem?
• Who is your direct competition?
– “No one else is doing it this way” is not an answer
• Is there indirect competition?
– Could be do nothing
• Competitive grid?
– How does your solution stack up?
Uses of Proceeds
Sales Personnel and Support
Inventory Purchases
Trade Shows and Marketing
Total
$500, 000
$350, 000
$150,000
$1,000,000
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Projected summary income statement
Build from reasonable assumptions
Assumptions based on what you know are better than estimates
Factor in the funds you are trying to raise
Base your assumptions on customers and units sold
• Don’t use % of the market
2009A
2010E
2011P
2012P
2013P
46,147
12
$ 106,447
27
$ 3,324,189
846
$ 11,519,103
2,931
$ 19,291,767
4,910
Direct Operating Expenses
General & Administrative
Sales & Marketing
19,911
218,545
226,352
285,830
508,993
654,306
1,534,537
961,543
961,286
3,370,923
1,245,154
1,742,266
6,752,118
2,347,650
2,893,765
Total Operating Expenses
464,808
1,449,129
3,457,366
6,358,344
11,993,533
$ (418,661)
$ (1,342,682)
$ (133,177)
$ 5,160,760
$ 7,298,233
Revenues
Units
Net Operating Income (Loss)
$
• How much cash is needed to reach positive cash
flow?
• What is your lowest negative cash point?
• Will there be additional financing over time?
Here are some examples of recent acquisitions for our industry:
Buyer
Target
Date
Price/Revenue Price/EBITDA
Thoma Bravo, LLC
SonicWALL, Inc.
6/2/2010
2.40
16.60
MedQuist Inc. (MEDQ)
Spheris, Inc.
2/2/2010
2.00
12.00
Merge Healthcare, Inc. (MRGE) AMICAS, Inc.
1/22/2010
2.00
26.50
Transcend Services, Inc. (TRCR) Medical Dictation Services, Inc. (MDI)8/25/2009
1.20
38.50
Advanced Computer Software (ASW)StaffPlan, Ltd.
7/15/2009
0.90
Transcend Services, Inc. (TRCR) Transcription Relief Services
3/26/2009
1.20
Transcend Services, Inc. (TRCR) DeVenture Global Partners, Inc.
12/20/2008
1.70
Advanced Computer Software (ASW)Adastra Software, Ltd.
7/23/2008
1.10
6.30
Transcend Services, Inc. (TRCR) OTP Technologies, Inc.
1/16/2007
1.00
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Average
1.50
19.98
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Don’t negotiate in the plan
Don’t use a lot of jargon and acronyms
Spell check and watch grammar
Use images or graphs to break up the reading
Present professionally
Put your contact information on the plan
By Sid Chambless
schambless@nashvillecapital.com
615-322-3154