Components of a

Business Plan

CHAPTER 3
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Why develop a
Business Plan?
All the work you do in thinking up your
idea, testing it, studying it, and producing
it, has been for nothing if you cant sell it.
Whether you start you own business to
produce and sell your invention,
subcontract out the manufacturing part, or
sell your rights in return for a percentage of
the proceeds, you need a business plan.
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Why develop a
Business Plan?
A business plan is vital for enterprises
needing investment, grant funding or
significant borrowing; more so for
innovation ventures, as the greater number
of unknowns makes it even harder to
attract backing. But dont make the mistake
of thinking that only other people need your
business plan. Its primarily a tool to reveal
possibly awkward truths about your
business to you.
- a Creative Investor

Three Types of Plans

Summary Plan
10 pages, 3 important points

Comprehensive Plan
10-40 pages, seeking capital or alliances

Operational Plan
40+ pages, for going concerns, part of an
annual process
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The Summary Plan

The Business
Legal Structure, Products or Services,
Management, Personnel, Record Keeping

Marketing
Target Market, Competition, Advertising

Financials
Summary of Needs, Use of Funds, 3 Year
Cash Flow Projections, Income Projections
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The Comprehensive Plan

1. Executive
Summary
2. Problem
3. Solution
4. Business Model
5. Secrets

6. Marketing and
Sales
7. Competition
8. Management
Team
9. Financials
10.Current Status
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Executive Summary
Define problem, solution, business model,
and why your solution is better
Write it last
Grab readers attention
No more than 2 pages!
Most important part of your plan and
usually written last
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Problem
What problem are you solving?
Describe how the state of the art is
insufficient
Get your reader to agree that the current
situation isnt optimal
If there isnt a problem, take your idea
back to the drawing board
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Solution
How do we solve the Problem?
Explain what you sell
State your value proposition

Value Proposition
Worksheet
First Sentence:
For (target customer)
who (statement of the need or opportunity),
the (product/service name) is a (product/service
category)
that (statement of benefit).

Second Sentence:
Unlike (primary competitive alternative),
our product (statement of primary differentiation).
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Business Model
Explain how you make money
Who pays you?
How do you collect?
What are your channels of distribution?
How do you integrate suppliers?

Use examples if necessary

Be complete
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Secrets
Describe your technology, process
improvement, etc.
Use charts, diagrams, schematics, as
much as possible
Understand your Intellectual Property

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Marketing and Sales

Define your primary, secondary, and other
audiences
Show some numbers
How will you find, sell, and retain
customers?
Advertising and promotion budget
Identify your leverage points
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Competition
Everyone has competitors!
Provide a complete view of the competitive
landscape
Direct and indirect competitors
Current and anticipated competitors
Competitor strengths and weaknesses
Your competitive advantages
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Management Team
Describe your key players
Management Team
Board of Directors
Board of Advisors
Major Investors

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Financial Projections

Cash Flow Projections

Income Projections
Balance Sheets
Assumptions

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Current Status
Describe your major milestones and tasks
Technology
Fundraising
Customer Development, etc.

Where are you now?

Brag about your accomplishments
Talk about the next steps
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Internet Resources
WSSI Inventor Resources Page http://uwadmnweb.uwyo.edu/SBIR/inventorresources.html

Innovative Products Technologies, Inc. http://www14.inetba.com/inventonecom/

Business Plan Development Tools (online)

http://www.uwyo.edu/sbdc
http://www.sba.gov/starting_business/index.html

Sample Plans
http://www.bplans.com/samples/sba.cfm?DCMP=OTC-sba_course
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