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Writing a Winning Business PlanUniversity of California-Irvine

February 1, 2011

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Marshel SheperdOne “A”One “L”Two “H”sThree “E”s

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My Business Background

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Exec Summary

My Goal for Today

“A overview to get you excited…”

“Details that will get you hooked.”

Business Plan

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• Articulate Vision & Reasoning• How To Turn $ to $• Intro of Management Team• Outline Known Risks &

Challenges

Purpose of Both

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• Investment Consideration• Position Against Difficult & Critical

Issues• Attract Talent• Create Credibility• Memorable Milestone Roadmap

Goal of Overall Plan

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• Pleading a Case• Anecdotes & Trends• Timeliness--Why Now?• How World Is Changed

With You• Unlock Big Time Value

Tone of the Plan

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• You Won’t Think of It All—But Try—Work In Progress• People, Markets, Competitors,

Customers May Change• Revenue Model Might Change

if Incentives Aren’t Right• End Game Mission Should

Remain Sturdy

What You Should KnowCr

eativ

ity +

Adap

tatio

n

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An Example: Our Story

100,000,000 Known Cases Annually

1. Poor methods of diagnosis—Dissatisfaction 2. Growing Market—Importance

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Direct to Optometrist & Ophthalmologists

Direct to Consumers (No Eye Dr. Needed)

Win Over Eye Drop Solution Companies

Win Over Insurance Companies

Too Risky & Complicated

Little Incentive to Switch

Preventative Care

Partner For Better Solutions

Version 1.0

Version 3.1

Version 2.0

Version 3.0

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Where Are We Today• Timing—Market Needs to Mature a Bit Before We Make Sense

• Building Relationships & Credibility with Science World

• Simplifying Our Market Entry Pathway

• Many Challenges to a Product Business

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The Business Plan

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• Exec Summary• Company Description• Market Evidence• Product or Service• How You Make $• Customer Analysis• Marketing Plan• Financial Plan

• Management Team• Competition (Existing

& Entrants)• Operating &

Milestone Risks• Exit Strategy

Plan Components

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• This is a 1-Pager (aka Tear Sheet)• What Is The BIG DEAL?– What Are You Solving? How Bad Is It…– Why Should Investors Care? How Big Is It… – Who Needs It Solved? How Many Are There…– Why Do They Care? How Important Is It…– Who Pays You? How/Who Pays, Can They…– What Stage Is This? How Far From Payback…

• Goal Is To Get the Reader To the Plan

Executive Summary

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• What Defines Your Market?– Segmented Attributes?

• How Big Is The Market? • What Market Conditions Create The Problem

You Solve?– Is there another way to solve it that dominates

your solution?– Aspirin vs. Pain Killer

• Goal is to Give Undeniable Evidence That Market Is There & Ready

Market Overview

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• What Does It Do?• How Does It Do It?• Key Defining Attributes? From the Customer…• Are Differences WOW or Eh?• Do Customers Need to Switch…Will They?

Why?• What Position Will It Take In The Market?– Is it Defensible? Is it Scalable?

• Goal is to prove the solution is believable, warranted, and superior.

Product or Service

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Product or Service

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• What Key Assumptions Need To Be Proven?

• Small & Large, Investors Want to See Them All

• Don’t All Need to Be Large—Smaller Steps Shows Momentum

• Goal is to Show Grasp of Knowledge to Get to Market

Product Milestones

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Marketing• Demand—How Bad Do They Want It?

• Distribution—How Will You Reach Your Market?

• Purchase Consideration & Behaviors—Know Your Customers and What Makes Them Excited

• Goal Is to Layout Your Market Domination Strategy—Pricing, Quality, Geography, Mobility

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• Why Will They Give You Money?

• Do They Have Money To Afford It At Your Cost Structure?

• What Are Their Expectations of Quality?

Potential Customer Base

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• Who Does What? Qualifications?

• Who Else Do You Need?

• How Will You Get Them?

• Management Is Critical—Don’t Overlook This!

• Goal Is to Show Why You Are The Right Team, If Not Complete—Who Do You Need

Management Team

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• Who is Paying? Who is Using?

• How Often Are They Buying?

• How Valuable Is It To Them?

• Razor / Razorblade?

• Think Incentives & Natural Flow

Business Model

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• Who Are Your Competitors– Answer better not be “None”

• What Are Your & Their Advantages & Disadvantages

• What Are The Gaps? Does Closing Them Matter?

• Who Else Can Enter this Space if it Proves to Be Lucrative? How Will Slow Them?

Competition

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• Great Businesses Will Attract Copy Cats…What Will Stop/Slow Them?– Intellectual Property– Economies of Scale– Critical Relationships– Capital Requirements

• Goal Is to Show How Each of These Matter To Your Model

Barriers to Entry

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• Income Statement (3 to 5 years)• Balance Sheet (3 to 5 years)• When Funds Are Required & Uses• Key Assumptions• Financial Model—What Are the Economic

Drivers?• Goal is to Present a Cogent Plan that Aligns

with the Rest—Does It Make Sense?

Financial Plans

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• IPO

• Operate & Grow It

• Seek Corporate Buyout

• Goal is to Show Investors (including you & your team) When They Will Get their Money Back + Rate of Return– FYI…A Business “Made to Operate” is What Corporate

Acquirers Want to See

Exit Strategy

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• Investors, Customers, Partners, Employees, and Success is ULTIMATELY the Result of the People Involved– Advice: Fall In Love with You + Your Idea

• Don’t Do It Alone…You Will Not Think of Everything

• Build Trust In Each Other—It Will Be Rough & Rocky…

• Know Exactly What You Want and When You Want It—Ask For The Money

Other Things to Consider

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• How Much Money Would You Put On The Line?– Did You Put Money On the Line?– This is Not a Solid Argument for Investors

• How Committed & Passionate Are You To the Idea?– Are Your Teammates Equally Committed &

Passionate?• Remember…Goal of Plan Is To Get You To a

Meeting

Other Things to Consider

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• Don’t Need to Solve the World’s Biggest Problems from Day 1– Plan Needs to Be Believable & Achievable

• Textbooks Won’t Have the Answer. – Critical & Creative Thinking Will

• Know Your Pain Tolerance• Minimum Living Expenses to Survive

Other Things to Consider

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• Think Critically and On Your Feet• Be Creative• Have Fun• Take Criticism, But Don’t Let It Stop You– Nobody Loves Your Vision As Much As You

Do!• Good Luck

Parting Words

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Thank You

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Questions?Marshel Sheperd

marshelsheperd@gmail.com(203) 979-6047