Writing a Winning Business PlanLari E. Mobley, MBA, Ph.D.

Jeff McHugh, MBA, CMA

Portions adapted from Katan Associates, UCI, 2015

Agenda

• What is a business plan?• Guidelines and judging criteria• Sections• Tips and suggestions• Q & A

Dilbert on Business Plans

A brief explanation

https://youtu.be/PDWvcsTloJo

What is a business plan?

• A business plan is a written description of your business’s future– Statement of goals– Reasons they are attainable– Plans for reaching them– People who will make it happen

• Plans don’t sell new business ideas to investors. People do.

Guidelines for Biola Start-up

• Business plans must not be over fifteen pages, excluding the cover page and table of contents.– Cover page should include company name,

team member names, school affiliations, undergraduate, graduate, alumni status.

• Margins must be one inch on all sides.• Body text should be 12 pt. font.

Guidelines for Biola Start-up

• Document text should be single-spaced.• Submit documents only as a single file in

Adobe Acrobat format (.pdf format).• Due Date:

– Must post Written Business Plan to: BiolaStartup2016.istart.org by March 14, 2016, 11:59PM.

Judging criteria

• Quality of business plan = 30%– Executive summary &

company overview– Products or services– Market need– Market potential– Competitive advantage– Management– Financial forecasts

Judging criteria

• Faith-based component = 20%– Are Biblical values and principles represented?– Does the business serve the common good and

impact the world for Christ?• Impact of presentation = 30%

– Evidence of a market, ability to execute, and return on investment

• Judges’ assessment of idea= 20%– Would they invest their own money?

Glossary of business plan terms

Executive summary

• The executive summary is clear and effective as a stand-alone document– What problem are you solving? – How will your business solving the problem? – Who are your customers? – Who are your competitors? – How viable is your business? – How do you make money?

Products or services

• What is the product or service? • What are its attributes? • What are the advantages and potential

drawbacks?

Products or services

• Why/how is your product/service more compelling than existing ones or the competition? What is the stage of development?

• Do you have a proprietary position or intellectual property protection planned or in place?

Market need

Market need

• What specific conditions in the market have created the problem you are solving?

• How will your product/service take advantage of the opportunity?

Market need

• Who are your customers and what are their attributes?

• Clearly define your potential customers and why they will pay for your product or service

Marketing by Guy Kawasaki

• https://youtu.be/uFDnT_xgqJ0?t=5m4s

Market potential

• What are the characteristics of the market for your product or service?

• How will you reach the market? – Hint: “word of mouth” is not a strategy. It means

“we have no clue.” • How big is the market opportunity: number

of potential customers & annual sales? – How do you know this?– How believable are your numbers?

Market potential

• Can you narrow the market to a manageable segment? – Demographic, psychographics, geography,

behavior– No, “everyone” is NOT your customer

• How will you dominate the market? – e.g. through pricing, quality, geography

• Is there a market niche where you will have competitive advantage?– Can you sustain this advantage? How?

Build a bottom-up model

• NOT this:– There are 1.3 billion people– 1 percent want Internet access– We’ll get 10% of that

potential audience– Each account will yield $240 per year– 1.3 billion people x 1% addressable market x 10%

success rate x $240/customer = $312 million!• And—added bonus—look at how conservative these

principles are!

Source: The Art of the Start, by Guy Kawasaki

Build a bottom-up model

• BUT this:– Each salesperson can make

10 phone calls per day that get through to a prospect

– There are 240 working days per year

– 5% of sales calls will convert within 6 months– Each successful sale will bring in $240 worth of business– We can bring on board 5 salespeople– 10 calls/day x 240 days/year x 5% success rate x 5

salespeople = $144,000 in sales the first yearSource: The Art of the Start, by Guy Kawasaki

Competitive advantage

• Competitive Matrix: – Who are your competitors? – Their strengths & weaknesses? – Your strengths & weaknesses? – How will you close the gap? – How easily can competition close gap?

Competitive advantage

• Yes, you have competitors– The “old way of doing things” can be a competitor– Doing nothing can be a competitor– Saying you have no competition is a nonstarter

• It’s your job to show how you are superior to the competition, not that it does not exist

Competitors by Guy Kawasaki

• https://youtu.be/uFDnT_xgqJ0?t=5m42s

Competitors: what NOT to do

Source: The Art of the Start, by Guy Kawasaki

Competitors: what to do

Source: The Art of the Start, by Guy Kawasaki

Management

• Who are key team members and their respective roles?

• What are their relevant experiences and accomplishments?

• What other areas of expertise are you lacking?

• When will you need additional team members?

Financial forecasts

• Income statement• Balance sheet• Funds required & uses• Key assumptions• Financial model

Tips and suggestions

• Don’t forget key expenses– Salaries and payroll taxes

• Unless you are independently wealthy– Licenses, permits, patents, and

trademarks– Insurance

• Business, workman’s comp, vehicles, other– Websites are not free– Social media is not free

Tips and suggestions

• Explain your “go to market strategy”– How will you get your first customers?– How exactly will they hear about you and decide

to buy your product or service?– Are they both willing and able to pay?

Tips and suggestions

• Do your research– Read sample business plans– Have others read your plan– Check your numbers for accuracy and believability

• Be realistic

Final thoughts

• Our success comes from the Lord

“He did this all so you would never say to yourself ‘I have achieved this wealth with my

own strength and energy.’ Remember the Lord your God. He is the one who gives you

power to be successful…” - Deuteronomy 8: 17-18 (NLT)

Questions

• Any questions?