Writing The
Winning Business Plan
Jack Derby
Derby Management
Why create a Business Plan?
• Most importantly, for you & your team
– You need one for a startup
– You need one for a corporation
– The actual process of planning is the key.
• It consolidates management direction.
• It provides debate & finally consensus.
– It’s used as a guide when speed bumps happen.
– It’s your company & your personal scorecard.
Why else?
• No Business Plan…No money.
– The Six Stages of Successful Sources:
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FF&A: Friends, Family & Acquaintances
Private angels
Venture capitalists
Corporate investors
Strategic partners
Banks
Writing a plan is tough work
• It requires disciplined balance
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It’s visionary, but logical.
It’s financially perfect, but flexible.
It’s for today, but also for 3-5 years out
It’s a formal Plan, but it’s easy to read.
It’s creative, but it follows The Rules.
How do you start?
• Pay attention to The Do’s & Don’ts.
– Above all else…
• Be compelling
• Be brief, focused, & deliberate
• Focus on customers & how you will sell them.
• Provide market research & hard data
• Be innovative & describe barriers to others.
• Create an experienced management team
The 25 Do’s…
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Be brief & direct & detailed.
Get to the bottom line quickly.
Identify what the business is immediately
Identify the business model immediately.
Focus on your customers.
Define what’s compelling.
• Define what’s unique.
The 25 Do’s…
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Be realistic with yourself.
Remember, you're investing your career.
Define long term objectives for 3 to 5 years.
Describe the 3 to 4 primary strategies.
Focus on your sales model & channel
strategies.
• Include your ecommerce strategies.
• Make realistic, but exciting, projections.
The 25 Do’s…
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Support strategies with detailed tactics.
Substantiate with accepted market research.
Discuss very objectively your risks.
Answer the question of why customers buy.
Describe the barriers to entry for others
Convince your reader about success.
The 25 Do’s…
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State how much money you will need.
Define exactly how the funds will be used.
State clearly your exit strategy.
Stick with proven and accepted plan formats.
Don't try to be cute!
The 15 Don’ts…
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Write about history. Focus on the future.
Focus only on you & your technology.
Use highly technical buzz & descriptions.
Forget about objective customer research.
Make unsubstantiated statements or claims.
Create revenues that you won’t make.
Include detailed budgets.
The 15 Don’ts…
• Forget what makes your plan different…
– Experienced management
– Large and growing markets
– Proven sales models & channels
– Experienced sales penetration tactics.
– Innovative technologies
The 15 Don’ts…
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Assume anything.
Forget what your reader wants.
Define valuations in the actual plan.
Attempt to write the business plan alone.
Extend the process more than two months.
Include copies of resumes & technical papers.
Forget to proofread, proofread & proofread.
Don’t just start writing
• Preparation…The Key to Success.
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What’s my Vision?
Can I say it so that anyone understands it?
What business are we in today?
What about in 3 years?
Are we really innovative?
What about in 3 years?
Don’t just start writing…
• Preparation…The Key to Success.
– What do we really know about…
• Our future product roadmap
• What our service offerings could be.
• The market data, trends, & forecasts.
• The new technologies in development
• The competition
• Who are our customers will be in 3 years?
One more preparation task…
• Think about your starting assumptions.
– Externally, what do I think will happen about…
• Economic trends
• Markets that I am entering
• Technology changes
• Regulations
One more preparation task…
• Define your starting assumptions
– Internally, what do I want & expect for…
• Sales revenue growth rates
• Product costs and margins
• Sales expense percentages
• G&A expense percentages
• Receivables, payables, financing, &
capital models.
Now, you can finally start writing.
• What you need…
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A quiet place and time.
All of your data easily available.
Start working by yourself.
Get the content down quickly.
Send a first rough draft to others quickly.
Write draft after draft after draft after…..
You have two options today
• The Traditional Business Plan
– 7-8 sections
– 20-30 pages with financials
– More detail: markets, products & technologies
• Business Plan Lite
– 2 sections:
– 8-10 pages with financials
– An extended Executive Summary
The traditional plan
• Certainly preferred by us
– Provides an opportunity to provide clear details
– Brings out the richness of the business idea.
– Details the business and sales models
• What follows here is the traditional format
– 7-8 sections
– 20-30 pages
Business Plan Lite
• A result of the times
– Today, time to read is the driver.
• Requires you to…
– Be an excellent writer
– Provide great detail with very well chosen words
– Get your points across succinctly & with clarity.
• Sections 1 & 2 & 7 create the BP Lite
What’s included?
Vision
Strategies
Tactics
Operations
Actions
What’s included?
• 7-8 Sections…
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Executive Summary
These become the
Business Plan Lite.
Introduction to the business
Definition of your products & services
Overview of your markets
Overview of your sales & marketing plans
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Overview of product development roadmap
Summary of manufacturing & operations
Bios of your management team
Four pages of financials
Brief appendices if necessary
Section 1: The Executive Summary
• 2-3 pages
– Make it compelling…
• Your Idea
• Your Markets
• Your business and sales models
• Your competitive advantages
• Your management team
• Your use of the funds
Section 2. What’s the Business?
• This section is focused on…
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The Business Opportunity
The Markets
The Technology
The Products
Section 2. What’s the Business?
• This section must define…
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a clear Vision
clear strategies
a well defined business model
a dedicated, believable Mission
a strong sense of management experience
Section 2. What’s the Business?
• The products & their value add services
– features & benefits, innovation, technology
• The markets
– research data
– competition
• The customers
– who they are & their needs
Section 3: Sales & Marketing
• The most important section
– 3.1 What’s the Market?
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Customer analysis & their needs
Worldwide market size & trends
Competitive strengths & weaknesses
Value creation for your products & services
Section 3: Sales & Marketing
• 3.2 The Marketing Plan
– What are your marketing strategies?
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What are the data points to measure success?
What is your price positioning & why?
What are your primary tactics in years 1 & 2?
What are your primary events in year 1?
Section 3: Sales & Marketing
• 3.3 The Sales Plan
– What’s your Sales strategy?
• What standard channels will you use?
• Is there an innovative channel?
• What are your penetration tactics?
– What’s your sales model?
– What’s your hiring & training plan?
– What’s your measurement & reporting?
Section 4: Engineering and R&D
• What are your core technologies?
– Provide sufficient, but not numbing, detail.
• What is your development status?
– Describe your primary milestones.
– Be conservative.
– Assume development will be late.
• Detail the technical team’s
background.
Section 4: Engineering and R&D
• What is your strategy for future products?
– Define in text with graphics your roadmap
– Define common platforms and architectures.
• What your IP & patent strategy?
– What is your IP strategy?
– If you have patents, provide a status table.
– If not, define why not in a positive manner.
Section 5: Operations/Manufacturing
• What’s your Manufacturing strategy?
– Outsource or not?
– Why & why not?
• What is core in Manufacturing?
• What are your unique capabilities
• What are your unique processes?
Section 5: Operations/Manufacturing
• Focus on your customers in your…
– Distribution strategy
– Quality strategy
– Value added services that you will employ
Section 5: Operations/Manufacturing
• What is your Customer Support strategy?
– Customer order fulfillment tactics
– Primary objectives
• Delivery
• Response time
– Primary policies
– Outsource or not?
– Future services that you will provide?
Section 6: Senior Management
• Management
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The #1 reason that investors do not invest.
Experience counts first.
Dedication counts second.
Ability to rapidly learn is third
Too strong an ego is a negative.
Section 7: The Financials
• The Rule: Everything Must Hang Together
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Your vision and strategies in text must tie in.
Your market growth objectives must tie in.
Your business and sales models must tie in.
Your margin percentages must tie in.
Your cost of goods must tie in.
Your expenses must reflect standard percentages.
Section 7: The Financials
• You need…
– P&L’s
• 1st year by month
• 2nd year by quarter
• 3rd year by year
– Balance Sheets for each year
– Cash Flows for each year
– 3-4 pieces of paper only
Section 7: The Financials
• You need to list your…
– Primary assumptions
– Primary categories for the use of the funds
– What are the primary risks?
• Other than the normal of early stage companies
• If nothing specific, do not list any.
– What’s your exit strategy?
Section 8: The appendices
• Provide only the compelling things…
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Product data sheets for primary products
Any critical publication.
Do not provide resumes.
Do not include patents.
Where do I go for help?
• Good textbooks
– Rich, Gumpert
– Anything from HBS Press
– Anything from Inc.
• Inc Magazine & inc.com
• Startup.wsj.com
• MIT Enterprise Forum workshops
Where do I go for help?
• MIT Enterprise Forum & TCN seminars
• The best local entrepreneurship schools
– MIT Sloan , Babson, HBS, Bentley
• Professional Mentors & Coaches
• Venture capital investors
• The big CPA firms:
– PWC, Deloitte, Ernst, Andersen.
• The big law firms
– Testa,
• INC, Fortune Small Business
Derby Management
• Coaching
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One on One senior management
One on Team senior management
Strategic Planning
Business Plan writing & editing
Fundraising
Recruiting and replacing players
How to find us…
Derby Management
20 Park Plaza
Boston, MA 02116
Office: 617-266-9266
Cell: 617-504-4222
jack@derbymanagement.com