DEVELOPING A WINNING BUSINESS PLAN

SCORE Workshop Costa Mesa, CA June 21, 2011 Attended by: Liz Rodriguez

BUSINESS PLAN BASICS

Why should we do this: y

Achievement of Goals and Objectives Outside Funding Credit from S C dit f Suppliers li Management of Operation and Finances Promotion and Marketing g Start-up and Exit Strategy Allocation of Resources

FIVE THINGS INVESTORS, BANKERS (AND US) NEED TO KNOW

The Entrepreneur and Management Team background and industry experience. A Market for the Product or Service demonstrated need for it. A Sales and Marketing Plan how are we going to reach our target market market. Sound financial Projections ROI, Cash Flow, and Breakeven. A Competitive Edge we should know our competitors. Note: Typically a business should be financed with 40% debt (loans) and 60% equity (our money).

WRITING THE BUSINESS PLAN

Description of the Business p Marketing Finances Management

It should be like a story that captures the readers interest.

THE ELEMENTS
Table of contents Executive summary Marketing Plan Operational Plan Financial Plan Supporting Docs Resumes, Tax Returns (if any), Personal Net worth, Etc.

DEVELOPMENT GUIDELINES

In most cases, a solid business plan will have no , p more than 15 pages.
Executive Summary 1 page M k ti Marketing Pl 2 pages Plan Operational Plan 2 pages Financial Plan 7 pages

EXECUTIVE SUMMARY
The most important part of our business plan is: How well p , can we pitch it, the Elevator Speech. Our Executive Summary can be used as our elevator speech. How does the business work? Who are the players? Growth pla ers? Gro th aspect? Rewards? Re ards? See attached example at the end of this p presentation ( (last p g ) page).

MARKETING PLAN
Description of total market, who will buy and why. p , y y Industry trends Target markets Competition and Risk Market Share (now and in the future)

Note: If we are not generating at least 20% to 25% return, we should close the business return business.

MARKETING PLAN CONT

Sales forecast by year for the next 3 years yy y Patents, copyrights, legal and technical considerations Overall strategy or method of sales direct mail, phone, web Advertising and Promotion Pricing Strategy High, Low, Cost based? Staffing Requirements g q Note: Every company has (other than price) a position or uniqueness. Determine what it is and market it aggressively. k t i l

MARKETING: TOP SIX ADVERTISING STRATEGIES

Word of Mouth 73% Print 52% E-Mail 52% Search Engines 45% Direct Mail 43% Banner Ads 25%

OPERATIONAL PLAN
Organizational Chart how does the business run g day to day? Partners? Business form LLC, Sub S, Corp., etc Number of full and part time employees and hiring plans. Skilled or unskilled? Attorneys advisers accountant names etc Attorneys, advisers, etc. Insurance(s) Equipment Requirements q p q Supplier Information

FINANCIAL PLAN
Balance Sheet Opening and Q p g Quarterly for y the next 3 years. Income Statement Monthly for the first 12 months and th quarterly f the next 2 years. th d then t l for th t Statement of Cash - Monthly for the first 12 months and then quarterly for the next 2 years. Sources and uses of start-up-funding working capital and fixed capital. Capital expenditure requirements for the next 3 years.

FINANCIAL PLAN CONT

Cash and Breakeven Points Variable and Fixed Cost Analysis Risk loss, disaster, contingent plans Debt requirements liquidity, solvency, profitability, ROI, cash flow. Note A sales forecast is the most important Note: financial item we can have.

EXIT STRATEGY

A brief discussion regarding the termination of the g g business:

Can our business be sold?, if so when and for how much? What type of buyer would be interested? What will be the valuation of the business in 3 and 5 y years?

For example, 62% of INC 500 CEOs have an exit plan:

Sell to a strategic buyer 73% Go Public 28% Sell to employee 22% L Leave it t partners 15% to t

COMMON MISTAKES TO AVOID

Dont put off writing a p p g plan. Lets do it now! Dont confuse cash with profits. fit Dont dilute your priorities. Dont over value the business Don t idea. Dont fudge the details in the first 12 months.