HOW TO DELIVER IN

THE UNM BUSINESS

PLAN COMPETITION

Sul KassiciehFeb 16, 2017

Why are we doing this?

Intent of Competition:

Primary: help start companies in NM

Competition is the means and NOT the end

Pathway forward

Secondary: give students the experience of

building a business.

Note: the more real the business case is, the more

learning and the higher the chances that you will

win the competition AND be successful in market

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Sponsors

small business in the US is by far the best

creator of jobs and wealth

Sponsors: want to see NM advance

Why would anyone give you $25K or $20K

or….? They want to encourage “good” things

in this state

who’s who in NM technology and

business: lots of access and support

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Rules of competition

Familiarity with the rules helps all of us

put on a “great” competition

how well we do collectively reflects on all of us

Please look at the rules (you should have

studied these by now)

bizplan.unm.edu

Questions: please do not hesitate to ask

so that we (ALL) do well

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Why do we plan a business?

We can wing it but that usually wastes time and effort for you and investors (also makes you look “bad”, “unprepared”)

Reasons for planning:

Focus your thinking: is this worth doing?

Establish realistic strategy: can I do it?

Financing and other support: can I get support?

Reaction by others: you need them

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What is a business plan?

Document that can convince the reader

(you, your investors, your employees, your

support structure) that the business is viable

(can survive and thrive)

A business should produce enough revenue

to make a satisfactory profit and therefore

attractive as an investment opportunity (you

invest your time/effort/money, others might

invest money)

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Business Plan sections: no particular order: use your creativity

Executive summary (2 page distilled plan)

In the written biz plan, this is the part that

most people will read to decide if they want to

take a look at the rest so it is key to garner

someone’s further interest

Essential Element (EE) 1: Product,

Process and/or Service: what are you

selling? (use layman’s terms to define the

“what”)

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Business Plan sections:

EE 2: Management team: you should

answer the question of “why is this team

able to succeed at what is proposed ?”

why should someone give YOU money?

if you need other talent, plan for it

EE 3: Markets

customers: prove that they will buy (talk to

customers, representative sample)

competition: how are you better?

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Business Plan SectionsEE 4: Financials: P/L; Cash flow and

Balance Sheet

1st yr.: monthly; 2nd: quarterly; 3-5 yr.: yearly

reasonable projections (

EE 5: How much money is needed: from

cash flow statement

EE 6: Exit strategy: how do investors (and

you) cash out at a certain point?

Is ROI good? (why people invest?)

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It is beyond an idea….

You are trying to implement the idea into a product, process and/or service that can solve customers’ problems (so that they are willing to pay you for that solution)

Second Rule: You need to show that you have done enough work to prove ability to execute (otherwise investors will walk, you should too)

If you do not have the necessary talent, go out and get it

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IP and competitiveness

In economics, the lesser the number of sellers (competitors) of a particular item, the better economic position they are in: less competition is better for you and your investors

One way to reduce competition is to be the only producer

Holding the IP rights (patent, trade secret, etc.) for the technology needed to deliver the product does that for you.

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Tech vs. Non-tech

Technology track requires the team to have access to the IP: a license or an option to a license

The main basis of competition in technology entrepreneurship is IP

Entrepreneurial track does not require IP but the issue of competition is still important for you and the investors: on what basis will you compete (branding, first to market, staying ahead of competition?

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Markets

All ventures produce revenue when you

can convince someone to buy what you are

selling.

Your revenue stream comes from the customers

If you do not talk to your customers, how do you

know what they want or if they will buy? (lean

startup, representative sample)

Do not use the “naïve” forecasting model of 1%

(or 2% or 3%) of market: why 1%, why not 10%

and why not 0%?

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Financials

Profit and loss statement

It is simple: Revenue – Costs = Profit

Note that the financials should be a mirror

image of the activities that you have planned

if you hire someone, you have to have the salary as

part of the costs

if you advertise, that should appear in the costs

if you have rent, etc…

so make sure everything you planned is

reflected in your costs

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Realistic numbers

Reflect reality in your costs

Comparables: what are others in your

industry paying for similar positions

other costs should reflect market rates:

example is rent, salaries in region, etc.

do not forget ALL expenses: tie to activities

you proposed in your plan…

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Revenues:

Costs are usually easy to figure out: ask

your supplier or look for comparable data.

very easy to incur: many people willing to give

you credit but you need to pay back at a certain

point

Revenues are harder and are subjected

to more scrutiny by your investors (money

has become tighter)

Market Research and/or Customer verification

(Lean Startup) are absolute necessities

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Revenue Estimation

Market studies: generic ones should be

used to sharpen your company’s estimate

you need to do your own market research:

analyze YOUR customers (you are claiming

that you do things better, does the customer

see it that way as well, will they buy and at what

price?)

You will get a lot of questions on this: do your

homework.

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Why is revenue important?

Cash flow: the more money you bring in,

the lesser amount is needed from your

investors

If money does not come in to pay for

expenses: you either have to

borrow the money: unlikely in new ventures

have an investor put it in: you need to convince

you forgo the expense but is that good for the

company (may shut down for lack of funds?)

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Finding spreadsheets online

I like the one from Coloradohttp://leeds-faculty.colorado.edu/moyes/bplan/html/spTools.html

it links the P&L statement, Cash flow and

balance sheet

but remember GIGO

There are others out there as well (SBA,

etc….

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A lot of hard work…

Business planning is hard work

You are not doing this for a shot at the

prize money: to win, you have to have:

the right team

the right technology/product, product/market

great market and financial analyses

If you can win, you probably can make

lots of money starting the business: $25K

should be the “start” not the “end goal”

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Judging Criteria (10 points each)

The importance of the problem/ opportunity/value proposition

Business revenue model is clearly articulated

Solutions proposed are better than the ones offered by the competition

Team can implement the plan/business model

Customers are well understood and can be effectively reached by the team

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Judging Criteria (continued)

Channels for reaching customers are well defined

Revenues and Costs are clearly outlined and are reasonable

Financial information is clear and is justified

Presentation was prepared and delivered professionally

Overall quality of work on the elements of the business plan or the contents of the business model generation canvas

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Good luck to all!

Questions ?????

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