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Table of Contents

Executive Summary Implementation Details Industry Analysis Competitive Analysis Marketing Strategy Project Plan Financials Milestones Exit Strategy Social Return on Investment Summary

Executive Summary

The Executive Summary is your chance to tell a story. It should be no more than 2 pages long, detailing an existing opportunity or problem in an industry and how your business will meet a need, take advantage of an opportunity, or solve a problem. A good business plan reads like a story. In this section, you persuade and entice your readers into reading your entire plan. The solution should include a brief description of why your solution is unique, how much it will cost to develop, and how much profit you expect. It is not unusual for partners, angel investors, and venture capitalists to read only the Executive Summary. Therefore, it is vital that you concisely describe your entire company here. The opening line should be one or two catchy sentences describing your business. Such as: Light House Entertainment will lead the industry in the development of innovative and trend setting educational tools. The flagship product will be an educational game for students in grades kindergarten through eight grade. Now describe the problem. Is there an unmet need? Is there an inefficiency in the market?

The Solution - Executive Summary Page 2

Describe your solution in one page. Describe in detail how you want to address the problem or opportunity you laid out in the executive summary.

Analysis of your Solution and your Business

This section must contain a detailed description of how you are going to run your business, what you are going to build, sell, or provide. Subdivide this section as needed.

Industry Analysis

Lighthouse Entertainment must understand the educational software market and must also comprehend the customers and competitors in other traditional educational markets. This section will first describe the educational software market and then shift focus to the traditional tools used today.

Section Title should be that of your Industry Current Size

How many customers exist currently? How much money do they spend? What products or services do they use today?

Industry Trends

What changes are currently happening in your market that might effect your business?

Growth Potential

What is the value of your business based on? Here you should describe how industry growth will affect your business potential.

Table 1 Based on Data from Reliable Data, Inc, the Educational Software Market Size Year 2008 Total Students Total Revenue Spent By Students 299,800 $43,434,600

2009 350,000 $85,416,150

2010 452,000 $113,581,225

Section Title for any related industries

If there is an industry that effects your business that you are hoping customers will leave to come to you, or if another industry's growth will harm or improve your own company's, then you should include an analysis that includes the same sections as your primary Industry Analysis.

Current Size

How many customers exist currently? How much money do they spend? What products or services do they use today? How much money do they spend?

Industry Trends

What changes are currently happening in your market that might effect your business?

Growth Potential

What is the value of your business based in? Here you should describe how industry growth will affect your business potential.

Competitive Analysis

Who is your competition? A competitive analysis should describe your competitions' strengths and weaknesses. Compare your business to them. What things do you do better and what things do they do better. Admitting weaknesses is OK - in fact, investors will see right through a competitive analysis section that says, "We have no competition." or "We are better in every respect than everyone else!". If you are a nonprofit, your competition may be less obvious - where do the donations go today or where are these services provided today?

Direct Competition

Who offers a product or service very similar to your own?

Indirect Competition

Your potential customers are spending their money somewhere today, so there is always competition. You should include an indirect competition section if you believe there may be competition from other industries that you'll need to address.

Marketing Strategy

How do you plan to tell the world about your product or service?

Marketing and Promotion

Describe what avenues you plan to use to promote your business.

Channels of Distribution?

If you are selling a product, how will the product reach the customer? If you are a service, do you need a store-front? Where will it be? Do you need partnerships with distributors or manufacturers? Will you build your widget in your garage and sell it on the Internet?

Customer Retention

Once you gain customers, how do you plan to keep them. This is especially important where barriers of entry are low and new competitors can copy your business model easily.

Alliances

What partnerships have you or will you form to become successful? If you didn't discuss advisers in a previous section, you may want to include here who will advise you. These may be mentors, bankers, or friendly partnerships that plan to help you get started.

Project Plan

How do you plan to build this business or service. Describe who will be involved and give a detailed timeline.

Timeline for Launch

Figure 1: Timeline for Launch Year 1 Year 2 Months 1 through 12 Months 12 through 18 Months 18 through 24 Year 3 Months 24 through 30 Months 30 through 33 Months 34 through 36 Months 37 through 48 Months 49 through 60 Development tools Alpha Stage Testing Promotion, conventions Have 30,000 users Goal reached: 120,000 users Raise Money Hire staff and begin design phase Begin designing game levels

Year 4 Year 5

Alternative Launch Approach

It shows good planning on your part to plan for failure. Here you should describe your alternative plans if any of your key milestones are missed.

Location of Operation

Where will your business be located? Why will your business be located there?

Company Structure

What will your legal company structure be? Proprietorship, partnership, LLC? If you will have more than a handful of employees, describe your business hierarchy, departments, or divisions.

Financials

In order for your business to be successful, you'll will need X million invested into the company by what dates? Your financial section should explain your financial plans in prose and in table form.

Financials typically include five year projections. What? Don't know how much money you'll make in five years? At this point, it is understood that your financials are only estimates. You should be able to concretely define your operating expenses, but you'll need to rely on your research into the industry and market analysis to decide on your possible growth rates and income potential. Be sure that any assumptions you make (number of customers, growth rates, etc) are clearly explained. The financials that follow are intended to provide a general idea of how much it will cost to develop and launch your business, and where the money goes. The financials are estimates, and are intended to be used as a guide, they are neither goals nor guarantees. Use this space to further describe how much money you need invested and what it will enable you to do.

Income Statement Figure 2: Five Year Income Statement Projection

Year 2 Sales: Sales Allowance Net Sales

Year 3

Year 4

Year 5

Operating Expenses: Wage Expense Depreciation Expense: Hardware Depreciation Expense: Software Rent & Furniture Expense Supplies Expense Total Operating Expense: Other Expenses: Miscellaneous Expenses Selling Expense Marketing Expenses Total Other Expenses: Total Expenses: Tax

NET INCOME These numbers are based on information from the following sources: (a) Wages based on headquarters in Seattle, WA determined through monstersalaries.com (b) Hardware priced determined from <a hardware vendor's website> (c) Software prices determined through Google Searches: Linux, Maya, Oracle (d) etc. Summarize your results here: Revenue of X million will be realized in year 4, followed by revenue of nearly Y million in year 5. Net income will be positive for the first time in year 4. Paying employees and purchasing the hardware and software to support employees form the majority of business expenses.

Balance Sheet

Figure 3: Five Year Balance Sheet Projection

(At Year End) Assets: Cash Hardware Less A/D1 Software Less A/D1 Total Assets Liabilities Wages Payable Rent & Furniture Payable Taxes Payable Total Liabilities
1

Year 1

Year 2

Year 3

Year 4

Year 5

Subtract appreciation and depreciation costs from the previous line.

Cash Flow Projections

Discuss your cash flow strategy here: Cash is the lifeblood of any new venture. We are committed to maintaining a positive cash flow from day one. Lighthouse has carefully projected the payment of expenses in a manner which preserves cash at all times. Payments on wages, rent, and furniture for the last months of one year will be paid in the next year. Taxes will also be paid in the year after they are incurred, which is normal for a partnership.

Figure 4: Five Year Cash Flow Projection

(At Year End) Cash Inflow: Cash, Investments Cash, Beginning Cash Inflow from Operations Total

Year 1

Year 2

Year 3

Year 4

Year 5

Cash Outflow: Wages Paid from Year Before

Wages Paid this Year Purchase of Equipment Rent & Furniture Paid from Year Before Rent & Furniture Paid from This Year Supplies Miscellaneous Payments Conventions, Selling, & Marketing Taxes from the Year Before Total Cash, End:
Summarize your expenses in prose below the cash flow table.

SaleS Projections
How will my sales grow over the next five years? What are these projections based on? You may wish to include a table that describes each year of your five year plan that will have sales. The example below is for a business that doesn't expect sales until year 3.

Figure 5: Sales Projections Year 3 Jan - March April - Dec Sales for Year 3 Sales Allowance for Debt (10%) Net Sales for Year 3 Number of New Customers 30,000 @ $5 each 10,000 @ $5 each Number of Returning Customers 0 10,000 @ 9.50 each, 20,000 @ $100 Sales Total % Growth in Revenue 150,000 478,333 $628,333 62,833.30 $565499.70 76%

Staffing
Describe your staffing needs and costs. You may wish to include a graph like the one pictured below. Delete it and replace it with your own image.

Sustainability

The final section of your charts should include a chart detailing cash flow and net income. When will you reach positive cash flow? When will you break even? When will you pay back investors?

Milestones

Describe your milestones in a bullet list. Within one year raise $4 million (approximately 70% of the total funding needed). Within six months of game development, begin work on tools and game mechanics. Six months before launch, finish alpha testing and begin beta testing. By the end of year three, launch game. Three months after launch, have 300,000 users. Five years after embarking on this task, reach your goal of having 120,000 dedicated users.

Exit Strategy

Describe all of your exit strategies. It is possible that you don't have one (you are a Mom & Pop store and plan to work until retirement and close the store), but most larger businesses have them. This may simply mean growing the business yourself to pay off all of your investors or selling your business to a competitor.

Social Return on Investment

Whether you are a for-profit or non-profit, everyone should consider what their social impact on their community will be. For a non-profit, the SROI is the main tool to advocate to funders how dollars will be converted into social impact. It includes a detailed explanation of the possible impacts that the project will have on society and often contains quantitative analysis. Quantitative analysis might

calculate tax savings for government welfare agencies to less tangible measurements such as the impact of improving community relations with their homeless population. It is a tool to answer the question What will our impact be on the community?". This analysis can include financials, but need not if the impact is too difficult to predict. But I'm a for-profit, I don't have a social return? I just want to make a profit. Entrepreneurs create businesses for many reasons. From a desire to get rich to being part of something new, the reasons are diverse. The absence of a SROI from most business plans is the tell-tale sign that entrepreneurs dont consider this a necessary step to start a company. All businesses have a return on investment, where they attempt to predict what the financial return will be given X dollars invested. The same should be done with social impact. Given X dollars, what will the social impact be? Entrepreneurs often forget to reflect upon what this good may be, but that does not mean it is absent. A new venture doesnt need to save the world, but it is crucial that the entrepreneur discover what the good is they wish to create. Maybe the entrepreneur wishes to create a good work environment and support the employees and families of their employees and customers. Perhaps the entrepreneur wishes to earn a profit so that they may make donations to a favorite charity or maybe the services itself offered by the company can have a positive social impact. Regardless, there is no entrepreneur without some innate desire to do good the mission is to discover what this good may be.

Summary of Social Impact

Bullet list of areas your venture will have a positive social impact on.

Example: Educate Local City on homelessness Employ homeless and provide an alternative income Reduce panhandling Provide positive outlet for employee's children to volunteer

Description of whom or what will be impacted.

Example: E-Mentoring will provide mentoring to high school students in non urban settings. These students will be provided with a mentor in a career they have interest in, but may not be represented in their rural area. Each student and mentor will be guided through a process of mentoring and career guidance by E-Mentoring counselors, culminating in a capstone project by the student describing their post graduation goals.

Metric to evaluate Return on Investment (Optional)

Example: If the social impact can be quantified, you should describe it in a manner similar to your financials. Redf (redf.org) has a fantastic SROI model that you should consider using as a starting point.

Short Term Impact

At the end of the week, what will your venture have accomplishments?

Long Term Impact

In five years, what will your venture have accomplished?

Conclusion

You have reached the home stretch. At this point, you should take at most one page to summarize your business. Describe your solution, how you will it accomplish it, and how much money you need. This is one last chance to appeal to potential investors, so remember to recap a high-level description of needed funding rounds and potential returns for those investors. Now that you have reached the end, be sure to go back and reread your Executive Summary. Does it still make sense? Did you discover information on the way that changed your approach and plans? Update the summary to reflect that.