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The Business Plan

Janis Machala, Paladin Partners


Don Ferrel, SeaTec
Cofounders of BigScreen

About Us

Janis

Managing Partner,
Paladin Partners
Serial entrepreneur,
business advisory
services
Wang, Sun, Microsoft,
IT Start-ups
BA Psychology, MBA,
University of Iowa

Long time active player in West


Coast venture and angel scenes
NWEN, Alliance of Angels, Seraph
Done lots of deals

Don

President/CEO, SeaTec
Consulting
Serial entrepreneur,
business development,
large scale IT systems
integration
Scitor, Rockwell
International
BA Math, BS Physics,
Washington State

Strong technical acumen


Excellent execution and
team building skills
Fiscally conservative

About Our Company - BigScreen

Simplified computing and


Internet for older adults

Extends social and caregiving networks


Trusted source for valueadded services

Purpose of a Business Plan

Alignment of team(s)
Operating plan
Communication across company,
division, department, business
partners
Investment capital
Expansion capital (banks, leases)
Merger/acquisition process

How to Use a Business Plan

Executive summary

Mini business plan

Solicit interest
Screen for investor candidates
Banking/leasing document
Potential acquirers

Full business plan

Team planning process


Due diligence

What Investors Look For

How does the team think?


How detail oriented is the team?
How big is this market?
Is there sustainable competitive
advantage?
Whats the growth plan?
What does the technology roadmap
look like, short term or long term play

Financial Projections

Build 5 years
Detail near years, extrapolate out
years
Build from single unit economics
Document assumptions
Compare against top down
Validate with market comparables

10 Must Answer Questions

How large is your addressable market?


How fast is the market growing?
Whos make up your management team?
Whats your secret sauce?
What are the barriers to entry/competitive
advantage?
What do your 5 year financials look like?
Whats your path to profitability?
Why is this a company versus a product/service?
Whos your competition and how do you beat them?
Why cant Microsoft do this? (or name any big,
established company)

Creating Your Companys Strategy

Building a strategy is harder work


than building your product
Think about

What do you want your business to be


when it grows up
Looking back from 5 years in future
Perspectives of all stakeholders
Anything that could go wrong

Hope is not a strategy

Competitive Analysis

You always have competitors


Dig deep, be detailed, be honest
Compare features and benefits
Technology comparison
Whole product offering (pricing,
support, etc.)
Channels, funding, customers

Sustainable Competitive Advantage

Create barriers to entry


Continually add value for your
customers (and your investors)
Anticipate competition and make
plans for dealing with it

Better widget, price erosion, market


share, different business model..

Avoid the trap of believing that your


main competitor is your exit strategy

Business Plan Format

Pages: 10 to 30
Kinkos white bond
is good enough
Simple binding
Examples

Handout a good
example B Plan
Discuss examples
of bad ones

Typical Outline
Executive Summary
Introduction and Business Premise
Market Analysis and Customer Needs
Product Overview
Value Proposition
Business Model
Business Operations Plan
Marketing and Sales
Market Entry
Transition to Revenue Service
Competitive Assessment
Partnership Strategy
Management Team and Advisors
Financial Projections
Key Business Metrics
Capital Structure/Financing Plans
Exit Strategy
Risk Analysis
Summary

User Friendly B-Plan is Key

Investors receive hundreds of these


Most plans dont get fully read
Reasons why:

Logic is difficult to follow


The business is not obvious
Too much extraneous information or fluff

Use the same techniques to write


your plan that you would use to write
a play, a song, software..

Nuts and Bolts

12 point type
Use a clean font
Dont use bold or italics too much
Make sure your visuals are readable
No typos, proof-read thoroughly (including
the visual!)
Remember: not everyone has same printer
Check for grammar
Style consistency
If you cant write, hire someone

Due Diligence

Market assessment is initial focus


Customer market validation next
Team references and resumes critical
Secondary:

Financials and assumptions


Corporate structure and legal docs
Patent applications

Resources

Reading list

Guy Kawasaki
Geoffrey Moore
Business 2.0
HBS Case Studies

Workshops

CIE Program
NWEN
WTC
SBA

Archive

Venture blogs
Kauffman
Foundation

Consultants

Domain experts
Funding experts
Teambuilding
experts

Questions and Discussion