Launching A New Venture: Successful Elements of a Business Plan

By David J. Freschman

Adjunct Professor – MBA program LIM College, NYC

Managing Principal of Innovation Capital Advisors, LLC.

MNGT 702 – Launching New Ventures

Textbook – New Venture Creation: Entrepreneurship for the 21st

Century/ 8th Edition

By: Jeffry A. Timmons and Stephen Spinelli

Elements of a Venture Backed Business Plan• Executive Summary• The Industry and the Company • Product(s) or service(s) Offered• Market Research• The Economics of the Business• Marketing and Distribution Strategy• Product & Service Development• Manufacturing and Operations Plan• Management Team• The Financial Plan• The Company Offering• Appendices

Innovation Capital Advisors, LLC. | David J. Freschman

Executive Summary

• Grab the investors attention by describing a compelling business opportunity

• Identify a need or opportunity being addressed in a large and growing market

• Present a business that will solve a problem, or take advantage of that

opportunity

• Demonstrate that you have the know-how and the team to start and grow a

company successfully.

• Example of a Executive Summary Layout

• Description of the Business Concept and the Business

• Opportunity

• Target Market

• Competitive Advantages and Value Proposition

• Projections

• Economic, Profitability, and Exit Opportunity

• Management Team

• The Deal

Innovation Capital Advisors, LLC. | David J. Freschman

The Industry and the Company• Explain the type of industry you are entering

• Identify if the industry is a mature, growing or declining

• Describe the company and the business model

Innovation Capital Advisors, LLC. | David J. Freschman

Product(s) or Service(s) Offered• Describe the company’s product(s) or servicing

offerings

• Describe the feature and benefits

Innovation Capital Advisors, LLC. | David J. Freschman

Market Research and Analysis• Identify customer profile. Determine why

the customer will purchase your product or service, how much they will buy at what price.

– Include list of existing customers, if any

• Cleary define the Market Size and Trends

• Discuss Competition, Value Proposition and why the customer will buy your product or service versus the competition

Innovation Capital Advisors, LLC. | David J. Freschman

The Economics of the Business• What is the company’s Gross and Operating

Margins

• Identify Profit Potential and Sustainability

• Identify what are your Fixed, Variable, Semi-variable Costs

• Calculate how many months to breakeven

• Calculate how many months to reach positive cash flow

Innovation Capital Advisors, LLC. | David J. Freschman

Marketing & Distribution Strategy• Define overall marketing and

distribution strategy. How will the company increase brand awareness of their product and service, and how will they company convey their benefits?– Pricing

– Sales Tactics

– Service and Warranty Policies

– Advertising and Promotion

– Distribution

– Sales ForceInnovation Capital Advisors, LLC. | David J.

Freschman

Product & Service Development• Development Timeline and Task List

• Identify potential risk and challenges

• Product Improvement and New Products

• Expenses

• Proprietary Concerns

Innovation Capital Advisors, LLC. | David J. Freschman

Manufacturing and Operations Plan• Operating Plan

• Geographical Location

• Facilities and Maintenance

• Strategy and Plans

• Regulatory and Legal Issues

Innovation Capital Advisors, LLC. | David J. Freschman

Management Team

• Discuss what relevant experience each person brings to the business and be specific.

• Outline the type of key managerial experience you want and how you plan to recruit that person.

• Key management and compensation layout:• Key Management Personnel (CEO, CTO etc.)• Management Compensation and Ownership• Other Investors• Employment and Other Agreements and Stock

Option and Bonus Plans• Board of Directors• Other Shareholders, Rights, and Restrictions• Supporting Professional Advisors and Services

Innovation Capital Advisors, LLC. | David J. Freschman

The Financial Plan

• Actual Income Statements and Balance Sheet

• Projected Income Statements

• Projected Balance Sheets

• Projected Cash Flow Analysis

• Breakeven Chart and Calculation

• Cost Control

Innovation Capital Advisors, LLC. | David J. Freschman

Proposed Company Offering• Desired Financing

• Offering

• Capitalization

• Use of Funds

• Investor’s Return

Innovation Capital Advisors, LLC. | David J. Freschman

Appendices

• Purpose– Supporting documents used to enhance your

business proposal.• Includes

– Photographs of product, equipment, facilities, etc.– Copyright/Trademark Documents– Legal Agreements– Marketing Materials– Research and or Studies– Operation Schedules– Organizational Charts– Job Descriptions– Resumes– Additional Financial Documentation

Innovation Capital Advisors, LLC. | David J. Freschman