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The Ultimate

Business Plan
The 10 minute business plan

What Every Investor Really


Wants To Read
(C) 2005 HJ Ventures International, Inc.
The Ultimate Business Plan

The Ultimate Business Plan


The 10 minute business plan

Introduction

What is The Ultimate Business Plan? Good question!

First I will tell you what it is NOT:


 It is not a cut and paste template that you write in your company name and poof!
 It is not a 100 page thesis / phone book weight document
 It is not an art gallery – don’t put tons of graphics and pictures

OK - So what is The Ultimate Business Plan? It is simple – it is a clear and concise


document that:
 In 30 seconds – any investor will know WHAT YOU DO
 In 45 seconds – any investor will know WHAT PROBLEM YOU SOLVED
 In 1 minute – any investor will know HOW MUCH CAPITAL YOU NEED
 In 2 minutes any investor will know YOUR DEVELOPMENT STAGE
 In 3 minutes – any investor will know WHO WILL BUY WHAT YOU SELL
 In 4 minutes – any investor will know HOW YOU REACH CUSTOMERS
 In 5 minutes – any investor will know WHO YOUR COMPETITORS ARE
 In 6 minutes – any investor will know WHAT IS YOUR DEFENSE
 In 7 minutes – any investor will know WHO IS ON YOUR TEAM
 In 8 minutes – any investor will know HOW MUCH WILL YOU MAKE
 In 9 minutes – any investor will know WILL THEY MAKE MONEY
 In 10 minutes – any investor will know IF THEY WANT TO FOLLOW UP

The Ultimate Business Plan = The 10 Minute Business Plan


The 10 Minute Business Plan?
Yes, the 10 Minute Business Plan – this is really the maximum amount of time that an
investor will give you when taking an initial look at your company.

The GOAL of your business plan is to get a meeting – NOT a check


What? I am not looking for a check? That is right you should not be looking for a check
with your business plan – just a meeting. No investor will write a check off a business
plan – they want to MEET YOU. And the only way to get a meeting is to have your
business plan pass the initial screen (which is the 10 minute read).

OK now that you see what investors REALLY want in a business plan – here we go!

© 2005 HJ Ventures International, Inc. 2


The Ultimate Business Plan

WHAT YOU DO
I have seen hundreds (yes hundreds) of business plans and investor presentations that
after 3 minutes (and sometimes even 10 minutes) – I had NO IDEA what the company
did. Don’t make this mistake. You NEED to clearly articulate in the first paragraph of
your business plan – what exactly you do. No smoke and mirrors, no big industry
buzzwords, just a simple – often called your Mission Statement or Vision Statement: My
company will sell web-based software to help individual tax payers file their own tax
returns electronically.

WHAT PROBLEM YOU SOLVED


Investors need to know WHAT PROBLEM YOU ARE SOLVING. If there is no
“problem” or “pain point” than customers will not NEED to buy your product / service.
Customers don’t buy products that would be “cool” to have, they buy products that they
NEED: The individual tax payer today has to spend hours trying to file their return
electronically, with our solution we cut this time down to 10 minutes and additionally
save our customers 20-40%.

HOW MUCH CAPITAL YOU NEED


Investors have minimums and maximums in the amount of capital that they want and
have to invest. If you are only seeking $50,000 –DON’T present to venture funds who
are looking to invest $3 Million in a company ----- and DON’T talk to Angel Investors
who invest up to $100,000 when you need $10 Million: Our company is seeking $1
Million to roll-out our completed software, hire sales and marketing personnel, and for
additional research and development.

YOUR DEVELOPMENT STAGE


Venture Funds have very specific investment criteria – including stage of development
AND revenue requirements. If you are a concept stage startup, don’t waste your time or
the investors’ time who is looking for established companies with $3 Million in annual
sales: Our company is at the startup stage, the first version of our software is complete,
and we have 5 beta customers.

WHO WILL BUY WHAT YOU SELL


Almost every CEO assumes that everyone NEEDS to buy their product / service. The
reality is that you really need to analyze what your customer NEEDS, who they are, and
where they live: Our target customer is Internet savvy, 30 – 50 years of age, with
broadband access.

HOW YOU REACH CUSTOMERS


In addition to whom your customers are and where they live – you HAVE to know HOW
to reach them. If you are selling IT software to the Fortune 500, how will you get to their
CIO, who makes the buying decisions? Or for our tax software example: We will reach
our customers through online marketing (search advertising) and radio advertisements in
the top 30 markets in the U.S.

© 2005 HJ Ventures International, Inc. 3


The Ultimate Business Plan

WHO YOUR COMPETITORS ARE


What is the best way to get an investor to THROW YOUR BUSINESS PLAN IN THE
GARBAGE? We have NO competition – say that once and you will never have an
investor EVERY call you back. Every company has competition - competition is good it
PROVES that there is a market and need for your product / service: Our company
competes with other players in the personal tax and small to mid-size enterprise market.
The majority of our competitors are selling “box” products that customers install on
their computer, with a minor focus online / the web. Our company focuses 100% on web-
based applications, we believe that this is a competitive advantage as our customers can
access and review their taxes on any computer anytime and anywhere.

WHAT IS YOUR DEFENSE


Since every company has competition. You need to show investors that you have
“barriers to entry” – which is a fancy way of saying that you can either keep your
technological lead over your competitors, or continue to provide a much higher level of
customer service that other companies cannot compete on, etc: Our company has 3
patents pending for our proprietary software and we will continue to focus and invest in
our research and development to maintain our leadership position in the market.

WHO IS ON YOUR TEAM


Management, Management, Management – investors invest in people NOT ideas. You
need to show that you have the experience needed to build this company from the ground
up – and to make it through the good times and the bad. If you need to hire key
employees for your management team then you better talk about them in your plan: As
the CEO, I have 10 years of experience in developing software for the accounting
industry. I was a lead software developer on the Quick Book® product line. Our
company has 3 full-time developers on staff and 10 part-time contractors. We need to
recruit and hire a VP of sales and marketing with online marketing and direct to
consumer experience.,

HOW MUCH WILL YOU MAKE


The second fastest way to get your business plan thrown in the garbage is to show
investors a graph of your sales projections that looks like an “inverted hockey stick”.
Which means that year 1 you will have $2 million in sales, year 2 you will have $20
million in sales, and year 3 you will race up to $100 million – this is NOT realistic, NO
company can reach these sales levels from the ground up: Our company plans on selling
licenses of its software for a $20 annual fee.
Projected Revenue:
Year 1: 20,000 licenses = $400,000
Year 2: 50,000 licenses = $1,000,000
Year 3: 110,000 licenses = $2,200,000

© 2005 HJ Ventures International, Inc. 4


The Ultimate Business Plan

WILL THEY MAKE MONEY


By “THEY” I mean the investors. Remember investors are not looking for a charity and
they are not giving out grants. They are investing in your company for a RETURN. The
average venture fund wants to make 10 times on their money. So if they give you $2
Million then want to see back $20 million (or maybe even $200 million). For your
investors to see a return – you need to have an EXIT STRATEGY – and remember 99
out of 100 companies are acquired only 1 will ever see an IPO so don’t feel that you have
to say this: Management believes that the company will be an attractive acquisition
within 3- 5 years because of its proprietary technology, excellent customer service, and
fast growth rate. There are several public companies that may be interested in acquiring
our company in this timeframe.

IF THEY WANT TO FOLLOW UP


Here is the kicker – you email or mail your business plan off and you NEVER hear back.
Venture Funds are notoriously bad at sending feedback on deals that they are rejecting.
You most likely will only hear back if they want to follow up and meet with you. So how
do you get a meeting? Here are my 3 tips:

1) Follow my 10 Minute Business Plan rule in this document


2) Research the investors you are contacting – don’t email / mail your plan to every
fund with a website (If you are opening a restaurant don’t send your plan to a
technology venture fund)
3) Most importantly – don’t give up! If you truly believe that there is a match with
an investor than do follow up – give them a call, send them an email with an
update on new customers, milestones, etc.

Remember, it takes 6-9 months minimum for companies to raise capital in today’s market
– so be patient, focus on growing your customer base / revenue and review each of the
resources listed below:

Resources to help you research, setup, and fund your business


(HOLD THE CNTRL KEY AND CLICK ON EACH LINK):

*** Important ***


Make sure that you INCORPORATE your company right away before you even
think about talking to investors or the bank – and it helps protect your assets and
your family.

1) Funding Resources:

Venture Capital Network

Angel Investor Directory

SBA Loan programs

© 2005 HJ Ventures International, Inc. 5


The Ultimate Business Plan

2) Business Services:

Are you interested in a Franchise – you SHOULD BE?

Where can I get professional business cards made?

How can I protect my Trademark?

Where can I find legal forms for my business?

How do I patent my invention?

3) Statistics / Research:

Demographics of the U.S. market – important for every business plan (Census.gov)

Wage statistics by the Department of Labor

The Ultimate
Business Plan
The 10 minute business plan

What Every Investor Really Wants


To Read
(C) 2005 HJ Ventures International, Inc.

© 2005 HJ Ventures International, Inc. 6