Business Plans: Dont be a gnome!

VIDEO

http://www.youtube.com/watch?v=TBiSI6OdqvA&feature=player_detailpage

The how matters...

GNOME VIDEO

They wont always come if you build it...

Contents
1. Purpose of a business plan

2. The thinking behind 3. What to include

4. How to tips and resources

Purpose of a business plan

Internal Develop / validate an idea Track progress External o Investors

o Debt providers
o Co-founders o Customers

One doc but may need tweaking for different audiences

The thinking behind (1/2)

Q1

Is there an unsatisfied need? Do you have a way of effectively addressing this need? o OR is there a need you can satisfy better than alternatives?

Before writing the glossy book think through the basics

Q2 Q3

What is your target market prepared to pay you to satisfy the need? What will it take to get them to switch from using an alternative? o OR is there another way to monitise? (e.g. advertising) Do economics work once the business is up and running?

The thinking behind (2/2)

Q4
Q5 Q6

How long much and time does it take to reach up and running? What are the risks? Do overall economics work on a reasonably short timeframe (2-3 years)? Do you have what it takes (people, expertise, experience, ) to get from point A to point B? Can you get what you lack elsewhere? Are you committed enough (be honest with yourself)?
If you answered YES to all of the above you are now ready to write a business plan!

Q7

Elevator pitch
By now you should have something along the lines of...

This will be refined after doing proper research but important to have basics early

For Who have Our product is a

[target customers] [compelling reason to buy] [new product category / challenger]

That provides
Unlike We have

[key benefit (which solves problem)]

[competitor / substitutes] [key point of differentiation]

30-60 seconds to generate interest

Source: Crossing the Chasm

Key components
Market positioning Product / services Market strategy Operations Team Financials -- NEED -- SOLUTION -- UNFAIR ADVANTAGE -- BUSINESS MODEL (rest of) -- ENGINE ROOM -- BOTTOM LINE

Show you have done your research (market, costing, customer needs/demads/price sensitivities)

Market positioning
Size + growth of addressable market Porters 5 market attractiveness (margins, trends) Target market defined & described how will you reach them? Competition / substitutes never say no competition! Market dynamics / likely response to entry from incumbents Broader picture economy, regulations geopolitics, culture

Solve a significant problem?

Robust market, margin, and moneymaking characteristics? ($50m+, 20%+ growth, 40%+ margins)

Product / service
Product / service Pricing What makes it different? Is it ready? What is still required to develop? Need to have defensible barriers o Technology (patents, etc)

o
o o o

Domain knowledge
Network effect Partnerships Culture / loyalty

Market strategy
Describe how plan to reach target customer ahead / better than of competition o o o WOM / direct marketing / SEO First mover New category What is your unfair advantage?

o
o o

Price leader (efficiency? volume?)

Quality leader (domain expertise? premium?) Niche (knowledge of niche)

Operations
How different is business model from competition? o o o o Direct vs. indirect In-house vs. outsource vs. crowd-source Franchise vs. owned Auction

Other components

o
o o o

Location
Offices Logistics Manufacturing

Team
Demonstrate to boost investor confidence o o o o o Expertise (sector, knowledge of customer base, technical) Experience (startup, BD) Passion Personality (ability to attract talent / lead) team experience (overcome obstacles) Make sure have core in-house (e.g. technology expertise) Be clear on what is missing

Address any gaps in skills / resources

o o

Financials
Projections

Its easy to underestimate costs / overestimate revenues / get timing wrong here get reader comfortable by showing you have done research (comparable businesses, quotes from suppliers, survey of customers)

o
o

Income statements accounting profit, EBITDA, how long takes to get to break even, show until exit (e.g. 5 years)
Cash flow king, timing matters, monthly typically for Yr1 and Yr2, show seasonality, working capital requirements, capex Be clear on how large is the gap / how plan to plug it AND repay When / how (IPO, trade, PE) How much (exit multiple, resulting IRR, cash flow x)

Funding
o Exit o o

Tips and resources

The Great British Business Show Nov 17/18 (free) Business Link www.businesslink.gov.uk Smarta www.smarta.com Business plan software www.paloalto.com Business model inspiration www.businessmodelinspiration.com Business plan templates www.bplans.com

For random questions kovaleva.anastasia@gmail.com