ayla-matalon - the business plan essentials
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Ayla MatalonMIT Enterprise Forum of Israel
Technion BizTech, 2005
The Business Planning ProcessThe Business Planning Process
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Motivation – why bother
Communications protocol Get acquainted with ‘battle field’ Plan for company growth Form and focus ideas Generate reliable business model Attract capital
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Stages in the forming of a start-up
1. Initial Idea
2. Idea Formation
3. Study - Meeting with Clients
4. Bringing people in
5. Developing a business plan
6. Raising Money
7. Saying goodbye to spouse, family, friends
Decision GOA fairly good understanding of the Idea
Most of know-how necessary 4 biz plan
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The Business Plan Who you are, What you are, What you wanna be
Executive Summary The Company / People The Need and Business Opportunity Product or Service Market and Competition Business Strategy, Marketing and Sales Operations Financials
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Seven questions asked by The Potential Investor about the idea
How clear is the Need Who is the client (/ user / decision maker) Competition, & how are things done now? Tech feasibility, Marketing feasibility Required investment Risks
Is it a good idea?
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Seven questions asked by The Potential Investor
Does the TEAM show
Proper Planning Understanding of the Target Markets
{including the marketing value chain} Focus Well planned financial strategy Openness and honesty Good Communication Skills
Can they execute?
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The Executive Summary
Clear, brief explanations on Need and business concept Company product, benefit to customer The opportunity and strategy Market and competition Financial required and how it will be used Finance prospects The Team
Is it Exiting? Convincing? Do you want to learn more?
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The Company
Origins, objectives and management History in brief, Key employees, Current status Strategy in short (historical)
Does it inspire confidence?
Can this team make it?
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The People
Is the team well balanced? Have they a history of outperforming? Do they have managerial experience? Do they have marketing experience? Does the team inspire confidence?
Can this team make it?Do we enjoy working with them?
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The Opportunity, the Need
Is TAM large, rapidly growing or both? When will the need be present? How will the product or service be priced?
Support? Customer switching costs Competitors and their resources Cash Flow analysis
The heart of the business proposal
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The Product or Service
The need the product meets -- Nice to have, Enabler, Must have
Product description and usage
Competitive advantage
Does it show distinct Benefits? Is it Unique? Operational pitfalls?
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The Market
The Business Environment Market need Size, growth rate, effective segmentation,
current and future markets, food chain: channels and purchasing characteristics
Market Drivers Expected reaction (deals, LOIs, ...)
Does the analysis suggest a strategy?Does it seem reliable?
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The Competition
Who they are– products– prices– customers– marketing approaches, culture– positioning– comparison (SWOT)
Is it open, revealing, specific?
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Business Strategy, Marketing and Sales
Defining a unique business proposition Identifying initial target customers: awareness Penetrating the market Distribution channels, the Food Chain Maintaining Focus !
Can it be executed? What if…Are the penetration levels reasonable?Do the Financials make sense?
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Organization, Operations and Manpower
R&D, Production and Distribution
How and when Facilities Subcontractors Milestones
Is it going to work?
Can they make it happen?
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Risks and Uncertainty Factors
How does management intend to control and minimize risk (Market Risks, Company Risks, people, opportunity and context)
Does it address risk openly?
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Financials – a reflection of your strategy
Realistic projections for a 5 year horizon Cash flow projections Breakeven and sensitivity analysis Highlight key dimensions (sales, earnings, cash
surplus)
Are the underlying assumptions
reasonable and clearly stated?
Do the results make sense?
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PLAN AHEA
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The Financial Forecast
Goal
Present business potential: ROI (return on investment)
Derive financial requirements
Message of reliability and thoroughness
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About the Financial Forecast
In high-tech companies the expenses is the easy part - mostly personnel
The difficult part is how to estimate the revenue stream
The number part needs to reflect Company Strategy: how the market for your product is going to work
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Common Mistakes
Too much emphasis on product and technology Weak marketing plan Failure to identify details regarding competition Unrealistic business strategy Profitability and growth not discussed in detail Weak financial model Over Optimism
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Summary
The business planning process is a continuous effort
the target of which is to– distill the business idea – support it with factual evidence through
extensive market research
– discover whether the company
can make it happen