Business Plan 101
MIKE FERNANDEZ, EVAN MOORE, MICHELLE PARATORE
Business plan outline
Key Components
Things to focus on for VCs
Executive
Summary
•
1-2 pages highlighting the most
important parts of your idea
•
Keep it brief and captivating
Company
Description
•
Brief description that could include
ownership and startup plans
•
For new ideas/companies, not much
to write here
Product or Service
•
Describe the product or service you are
selling
•
Focus on consumer benefits
Market Analysis
•
Focus on target market, unmet
•
customer needs, how to reach customers
Many VCs value this part the most
Strategy and
Implementation
•
Distribution and sales strategies and
milestones, use timelines and budgets
•
Here’s where those milestone memos
come in handy!
Web Plan Summary
•
For e-commerce, focus on site map and
technical development
•
A working web prototype can help
here
Management Team
•
Describe key management team
members
•
Remember David Hornik – some VCs
care about this a lot!
Financial Analysis
•
Some projected financial numbers –
profits and cash flows
•
VCs care about making money!
Business plan MP
What VC’s look for
• Is it a big opportunity?
- VC’s need one or two home runs for their funds to succeed
• Personal connection or domain knowledge?
- What gives this team an advantage
- Something that will keep the entrepreneur going during dark periods
• How much money is needed?
- Use monthly burn rate to figure out how long the cash will last
- Raise more than you think you need
• Be able to answer: how many users do you need to break even?
- Costs are easier to predict than revenue
- Order of predictability: Costs, User Value, Number of Users.
Business plan MP
Financials
Business plan MP
Drivers, metrics and tactics
• Drivers: assumptions you’ve made that drive your financial projections
-Usually more interesting than the revenue/income forecasts themselves
-Reveal how you’re thinking about your business
-E.g., fixed and variable costs, total addressable market
• Metrics: measureable aspects of the business that, if achieved, create value, e.g.,
-Provide concrete insight into the organization’s plans
-E.g., customer count, number of locations, number of distributors or resellers, unique
visitors, page views
• Tactics: the specific actions you’ll take to achieve the key metrics
Business plan MP
Thinking like a VC: sample pitches
• We’ll hear two short pitches from entrepreneurs (both graduating GSB
students)
• You’ll have $60K which you can use to fund the entrepreneurs
-Your choices are:
$60K and $0
$40K and $20K
• You can ask questions to the entrepreneurs after their pitches to inform your
funding decision
Business plan MP