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303 Biotechnology Entrepreneurship. http://dx.doi.org/10.1016/B978-0-12-404730-3.00022-1 Copyright © 2014 Elsevier Inc. All rights reserved. Your Business Plan and Presentation: Articulating Your Journey to Commercialization Lowell W. Busenitz, PhD, MBA Academic Director, Price College Center for Entrepreneurship, University of Oklahoma, Norman, Oklahoma Chapter 22 PITCHING TO INVESTORS AND PARTNERS If a venture is to be successful, entrepreneurs always need to be able to sell their concept to potential stakeholders by letting them know they have a viable venture. Such stakeholders usually involve financial investors, but they can also involve suppliers, buyers, or key partnerships with other firms who will add value to the venture. Stake- holders typically want to learn about your venture and its viability before commitments are made. Potential finan- cial partners in particular are noted for probing deeply for information about the foundations and direction of the venture. Whenever potential stakeholders inquire about the nature, viability, and direction of the venture, entre- preneurs need to be ready. Having a written business plan is an excellent and frequently expected way for entrepre- neurs to signal the depth of their understanding of, and commitment to, the venture. A written business plan is the most common document used to start attracting outside stakeholders. Furthermore, a well-written business plan is a great foundation in which to show the viability of a busi- ness concept. In addition to having a written business plan to offer to stakeholders, there are a couple of key reasons that encourage building a business plan. First, starting a venture involves putting together a team. Internally, the founding entrepreneur or team will inevitably need to make some key hires. Without a clear articulation of: what the venture is about, specifications of resources already in place, the proposed direction, and targeted directions for the venture, effective hires becomes increasingly unlikely. A written business plan is a valuable tool to help lead the founders through this process. Building the “team” may also involve external stakeholders such as key suppliers or buyers. When financing is involved, such inquirers will typically want extensive information about the venture. Also, and perhaps most importantly, many financial investors will generally want to be considered part of the team giving meaningful input on the strategic direction and operations of the venture going forward. The more people that get involved with the venture, the more a business plan becomes a valuable tool for com- municating what the venture is really about and to get the key individuals involved pulling together in the same direction. The likelihood of potential investors or other stakehold- ers asking for a written business plan is what generally motivates entrepreneurs to develop such a document. How- ever, no one will gain more from writing the business plan than the entrepreneurs who put it together. It is the building of all the different components of the plan and their new insights that make the process so rich. As I discuss below, much learning and realignment are all integral parts of a quality-evolving business plan and the maturing of the concept. Feasibility Analysis Versus Business Plans Before we move further into the business planning process, we will address the purpose of a feasibility analysis com- pared with that of a business plan. A feasibility analysis is about an idea that an entrepreneur is interested in pursuing, but he or she does not yet know if it is a viable opportunity. In its simplest form, feasibility work is most relevant for the very earliest stages of concept development and is for inter- nal validation purposes about whether this venture concept has potential. Such analyses typically involves determin- ing if the technology is feasible, if there is real demand for the product or service, if prospective customers feel a pain that would make the proposed product desirable to them, and if so, what is the best way for them to gain access to

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Page 1: Biotechnology Entrepreneurship || Your Business Plan and Presentation

Your Business Plan and Presentation: Articulating Your Journey to CommercializationLowell W. Busenitz, PhD, MBAAcademic Director, Price College Center for Entrepreneurship, University of Oklahoma, Norman, Oklahoma

Chapter 22

Biotechnology Entrepreneurship. http://dx.doi.org/10.1016/B978-0-12-404730-3.00022-1Copyright © 2014 Elsevier Inc. All rights reserved.

PITCHING TO INVESTORS AND PARTNERS

If a venture is to be successful, entrepreneurs always need to be able to sell their concept to potential stakeholders by letting them know they have a viable venture. Such stakeholders usually involve financial investors, but they can also involve suppliers, buyers, or key partnerships with other firms who will add value to the venture. Stake-holders typically want to learn about your venture and its viability before commitments are made. Potential finan-cial partners in particular are noted for probing deeply for information about the foundations and direction of the venture. Whenever potential stakeholders inquire about the nature, viability, and direction of the venture, entre-preneurs need to be ready. Having a written business plan is an excellent and frequently expected way for entrepre-neurs to signal the depth of their understanding of, and commitment to, the venture. A written business plan is the most common document used to start attracting outside stakeholders. Furthermore, a well-written business plan is a great foundation in which to show the viability of a busi-ness concept.

In addition to having a written business plan to offer to stakeholders, there are a couple of key reasons that encourage building a business plan. First, starting a venture involves putting together a team. Internally, the founding entrepreneur or team will inevitably need to make some key hires. Without a clear articulation of: what the venture is about, specifications of resources already in place, the proposed direction, and targeted directions for the venture, effective hires becomes increasingly unlikely. A written business plan is a valuable tool to help lead the founders through this process. Building the “team” may also involve external stakeholders such as key suppliers or buyers. When financing is involved, such inquirers will typically want extensive information about

303

the venture. Also, and perhaps most importantly, many financial investors will generally want to be considered part of the team giving meaningful input on the strategic direction and operations of the venture going forward. The more people that get involved with the venture, the more a business plan becomes a valuable tool for com-municating what the venture is really about and to get the key individuals involved pulling together in the same direction.

The likelihood of potential investors or other stakehold-ers asking for a written business plan is what generally motivates entrepreneurs to develop such a document. How-ever, no one will gain more from writing the business plan than the entrepreneurs who put it together. It is the building of all the different components of the plan and their new insights that make the process so rich. As I discuss below, much learning and realignment are all integral parts of a quality-evolving business plan and the maturing of the concept.

Feasibility Analysis Versus Business Plans

Before we move further into the business planning process, we will address the purpose of a feasibility analysis com-pared with that of a business plan. A feasibility analysis is about an idea that an entrepreneur is interested in pursuing, but he or she does not yet know if it is a viable opportunity. In its simplest form, feasibility work is most relevant for the very earliest stages of concept development and is for inter-nal validation purposes about whether this venture concept has potential. Such analyses typically involves determin-ing if the technology is feasible, if there is real demand for the product or service, if prospective customers feel a pain that would make the proposed product desirable to them, and if so, what is the best way for them to gain access to

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the product? Financial feasibility, such as how much will customers pay is also important. How much will it cost to make? How much start-up capital will be needed? Doing further research by developing hypotheses about technol-ogy and markets and prospective customers and finances are all part of the feasibility analysis. Then doing extensive research to see if the initial hypotheses are substantiated. Some of this work may be done through access to research databases; but there are very few substitutes for hitting the pavement to interview industry experts and prospective customers. A feasibility analysis helps the founding team evaluate if this is a potential “go” or “no go” concept.

A business plan comes after the entrepreneurs are satis-fied that the venture concept is feasible. At least some of the information gleaned from the research for a feasibility analysis will become foundational for the business plan. A business plan starts with the assumption that the venture concept has significant viability and that the entrepreneur is now in the process of putting the building blocks into place in pursuit of commercialization. Since the research of a feasibility analysis is rarely conclusive, more validation is invariably needed to verify various parts of the commer-cialization process. Furthermore, while a business plan is a selling document, it should always be seen as a “living” document that continues to take shape based on learning and further input. See Table 22.1 for a summary comparison of the differences between feasibility analysis and the business plan. The following section addresses the dynamic learning process of putting together a business plan in greater depth.

THE BUSINESS PLANNING PROCESS

Business plans are a communication tool between the entre-preneur and outside investors such as venture capitalists for example. There are many good things that come from put-ting together a well-crafted business plan. It can be of great assistance in facilitating the support and collaborations of partners and outside investors. Unfortunately, many entre-preneurs find the research and writing process to be chal-lenging. The major resistance to putting together a quality business plan usually comes from the time and effort that it takes to assemble such a product. The research, revisions, reiterations, and time are generally substantial.

With the goal of having a viable business plan in hand to help communicate with prospective investors, let’s take a closer look at the value that the process can add. In pre-paring for battle, General Dwight Eisenhower once said, “I have always found that plans are useless but planning is indispensable.” Preparing to launch a new venture is a major undertaking that almost always encounters signifi-cant obstacles. In response to the risks and unknowns that new ventures face, business plans can be perceived as irrel-evant. The new venture start-up process usually involves

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ignificant adjustments, thus it is sometimes argued that a ritten business plan quickly becomes out-of-date and thus

s an irrelevant process. While there are some truths to this, uch a perspective completely misses the point. As Eisen-ower noted, the planning process itself is indispensable hen preparing for a significant and uncertain action ahead,

ven when it involves uncharted territory. So let’s explicitly bserve some of the benefits of the business plan process or an entrepreneurial team.

First, the process of writing the business plan gives he entrepreneurs another communication tool with which o reach the desired stakeholders. As entrepreneurs move ut and start selling their business concept to prospective nvestors, possible suppliers, and potential customers, they ill often need multiple communication tools. In putting

ogether a written business plan, entrepreneurs will be chal-enged to obtain a better understanding of the issues that re important to the investment community. Furthermore,

TABLE 22.1 Comparisons of Feasibility Analysis and Business Plans

Feasibility Analysis Business Plan

Central intent

To determine if a busi-ness concept has the potential to become a viable business opportunity.

To specify the commer-cialization plan and sell the business concept to prospective investors and stakeholders.

Key decisions

Is this venture concept a “go” or “no go?”

What resources are needed to take this con-cept to the next level? How much capital do we need to raise? From whom will we raise it? What will we give up in return?

For whom For the nascent entrepreneurs.If it is a “go,” then am I the right person to lead this venture?

For prospective investors and potential stakehold-ers. A form of strategic planning for the entre-preneurs.

Data to be gathered

Gathering data from prospective customers to assess market need.

Gathering data from experts and prospec-tive customers about how best to launch and implement this venture.

Commitment level

Everything is tentative. Fully committed to pressing forward with the venture.

Business models

Evaluating different ways that this business could potentially operate.

Adopting a specific busi-ness model and the spe-cific resources needed to launch the venture.

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Chapter | 22 Your Business Plan and Presentation: Articulating

as the writing process unfolds, entrepreneurs will develop special communication mediums and terminology associ-ated with unique characteristics of the industry. The process of developing special and unique language then becomes a tool for helping entrepreneurs communicate their venture to the needed parties. The writing process facilitates more effective communication.

Second, writing a plan helps entrepreneurs build a logical whole. By definition, a solid business plan brings together multiple components into one package. It is like a puzzle in which all the pieces need to fit together. A solid plan will effectively address the following:

l Identify the technology l Analyze competition l Segment the serviceable market and entry points l Address the venture’s competitive advantage l Develop a strategy for entering the market l Cover implementation and operation strategies l Specify the management team l Explain the company structure l Identify the critical risks l Build the revenue model l Offer key investment considerations

Without being challenged to integrate all these components into a larger whole, it is unlikely that entrepreneurs would effectively think through the package deal in sufficient depth. This represents a fairly comprehensive set of issues that are interlinked and build from one to another. It is very easy to lose focus in fitting all the pieces of a business plan together. With a well-developed business plan, the various pieces fit together like a puzzle integrated nicely into one cohesive package. The process of writing a business plan facilitates this process.

Third, the business plan writing process encourages the development of creative insights. The writing and assem-bling of the business plan into a whole package often leads to fresh insights into things that previously were not apparent. Most entrepreneurs pursuing a new venture think about it all day, every day. There are many good things to say about that kind of energy and passion. However, with such focus and intensity can also come gaps and tun-nel vision. Entrepreneurs need tools that will give them a different perspective on various parts of their venture. Entrepreneurs in this process often come to see and under-stand their venture in a way they previously had not. Such insights can lead to follow-on opportunities, new ways to deal with potential competitors, or a creative approach to entering the market.

Fourth, the writing process establishes a foundation for the ongoing strategic development of the venture. With-out writing down how one is actually thinking about their venture, one can easily become blown around by different

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305 Your Journey to Commercialization

onversations and ideas. Entrepreneurs sometime respond o suggestions for the venture by saying “yes” we can do hat without understanding the implications for the entire enture. However, without established foundations in lace, they are in no position for true and meaningful learn-ng about what may be wrong, and what, and how much eeds to be changed. The current paradigm and business lan that is in place for a venture is, in essence, the thought oundation of the venture. Right or wrong, from this par-digm the venture moves forward. The emerging logic epresented in a business plan will almost always need o be adjusted, sometimes substantially. Failure to do so ften means a failed venture. Having a logical plan gives ntrepreneurs the foundation from which to evaluate their urrent logic—where it is strong and where it is flawed. ithout this baseline in place, the entrepreneurial team ill be tossed about like a ship without a rudder. Assum-

ng that a written business plan is not set in concrete, it an serve as a great vehicle for strategic thinking. Stated ifferently, a business plan should always be a working or living” document!

These four points suggest that writing a business plan an be a very constructive activity on the way to build-ng a viable venture. The thought process needed to build venture is substantial. Putting together a business plan nd continuing to revise it is an amazing process that many housands of entrepreneurs have found to be beneficial.

ost entrepreneurs find putting a business plan together is challenging process, but it usually pays dividends many imes over. We now move to discuss in greater detail what ctually goes into the making of a quality business plan.

HE CONTENTS OF THE BUSINESS PLAN

mong prospective investors who regularly review busi-ess concepts and business plans, an “industry standard” of he key issues that should be covered and also to a lesser xtent, the order in which the various components should e covered has emerged. Sometimes entrepreneurs, being he creative individuals that many of them tend to be, try to hange things around to bring some innovation to the busi-ess plan. While there is some room for variation, and most usiness concepts usually call for some tweaking to cap-ure the nuances of that specific venture, business plans as whole are not the place to get overly creative. I strongly uggest you largely follow an established outline using the orms for the building of business plans.

The outline and guidelines for building a business plan re found below. The suggested outline offers enough etail to give significant guidance. Also, clear distinc-ions are made between industry, market, and competitive dvantage components—issues that are often confused and ntermingled. The industry addresses the competitors who

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are currently in the space now and who are likely to be the key competitors for the venture going forward. The market addresses the prospective customers, the size of the ser-viceable market, how can the serviceable market be seg-mented, and where is the sweet spot of all the potential customers.

As you dig into the details of building a wonderful busi-ness plan, it is helpful to keep in mind the following bigger picture that most prospective investors want to know about every business they consider:

1. What is the customer pain and is the motivation likely to be strong enough for prospective customers to buy the offered solution?

2. What sets this venture apart from existing competitors and will it be able to build and protect its competitive advantage?

3. How big is the market and is there significant growth in this space?

4. Has a quality team been assembled to lead this venture and why are they the right people to lead this concept forward?

5

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SECTION | VI The Financial Capital

. How will the business make money? The expenses and potential revenues will need to be shown to be realistic and lead to long-term profitability. Are the potential revenues and profits large enough to adequately reward the type of investors that you will be pitching too?

ith that introduction, I now suggest the following outline. t starts with the executive summary. This section, while irst in the business plan, is usually written last. The writing f the business plan starts in earnest with Section II on the enture opportunity. Remember that in writing your busi-ess plan and following the outline, it is important to tell our story. The path to this concept is unique and it has he possibility of changing the world that is relevant to the usiness concept. Starting with the name of the business, he mantra, product name, section titles, and body content, he business plan should communicate a great story about a reat business venture that is in development and is going to esolve a critical customer pain while returning a nice return or your prospective investors. Keep the central theme of our story as a common thread throughout. Always work owards building your story!

Cover Page and Table of Contents I. Executive summary (to be written last). A. The executive summary must make a great first

impression. B. Potential investors should be provided enough relevant

information in the executive summary to convince them to inquire further, identifying such central issues as: l The specific product or service offering. l The reasons a customer would buy this product or

service. l The reasons a customer would buy it from this

venture. l The reasons a customer would buy it right now. l The manner in which the company name, logo,

mantra, and tag line help to communicate the company’s strategy, goals, etc.

C. The executive summary should be brief and should clearly describe the offering to investors. Briefly specify the type of funding you seek, the amount you want, the use of the funds, and the length of time the funds are needed. Also mention how much of the company you are prepared to offer in exchange for financing and the role you would like a potential investor to have.

II. Venture Opportunity (opportunity context) A. Business description

l The company (name/form/logo) and industry category.

l The specific product/service offering. l The goals, mission (mantra), strategy, objectives.

l How your business will work (consider using a visual model).

l Explain your interest in this business concept. B. Financial cost/benefit analysis for the venture.

l What will be the source(s) for revenue? Provide some meaningful estimations of how much revenue each source will provide for the first 3 years of anticipated revenue.

l What are the main anticipated variable costs required to launch the venture? What are the major anticipated fixed costs required to launch the venture?

l Show that the financial benefits outweigh the costs. C. Customer value proposition:

l What are specific benefits that you will deliver to your principal customers? These will most likely involve financial benefits, but psychological ben-efits could also be noted.

l Develop quantitative numbers comparing and con-trasting the way your targeted customer is currently spending time/money with how your new offered product will improve production and/or financial gains for your customer.

D. The innovation/technology. l Identify your technology innovation. l Show how it compares to the currently accepted

practice. l Include helpful diagrams that inform the investor. l Emphasize the benefits the end-users will

experience.

Business Plan (Bplan) Outline

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30Chapter | 22 Your Business Plan and Presentation: Articulating Your Journey to Commercialization

l Put together a “product matrix” to show compari-sons with currently existing products (see sample worksheet in Table 22.2).

l Any key industry standards or requirements? l If applicable, put technical specifications in an

appendix.

III. Industry Examination A. Macro factors impacting the overall industry trends:

What emerging macro-trends suggest the traditional way of doing business is changing? Substantiate your arguments with changes starting to appear, or are projected to appear, in the economic, political, regulatory, demographic, technological, socio-cultural, or global arenas. The focus here is on macro-level trends (why the time may be right for your concept).

B. Industry analysis. l Description (type, size, segmentation, major players). l Demand conditions (life cycle, profitability, history,

trends). l Industry attractiveness (Porter’s 5 forces).

C. Current industry models/competitors/trends. l Develop a “competitor matrix” (see sample work-

sheet in Table 22.3). l What business models are currently used by estab-

lished firms? l How are new products typically introduced in this

space? l Provide examples of successful start-ups in this

industry. l Provide examples of unsuccessful start-ups in this

industry.

IV. Market Examination A. Macro-level analysis.

l Market segmentation of serviceable market. l Size (must be large enough to sustain a business). l Demographics (income, habits, personal character-

istics, standard of living, etc., for major segments). l Trends in the various segments. l Psychographic profile (interests, activities, opin-

ions). B. Your customers (micro-level analysis).

l Identify multiple target segments; compare and evaluate them.

l Identify your initial target customer segment. l Motivations for target customers to purchase. l Timing (why is the timing right). l Where is your projected “sweet spot” in the market? l Scalability—can success in one area lead to success

in another? l Develop a matrix table that summarizes and

distinguishes the different customer segments. Conclude with justifying your chosen entry segment

and why you think that this is your starting “sweet spot.”

l Include customer testimonials that validate your market.

Most top quality business plans build customer analysis from primary data collected by the team. This typically includes structured interviews or survey data (details of data collected are typically included in an appendix). Secondary data can also provide rich sources of customer information.

V. Competitive Advantage A. What resource(s) will be used to seek a competitive

advantage? B. Can the resources to be used be considered as “valu-

able,” “rare,” and/or hard to “imitate?” l Are there patents, trademarks, and/or copyrights

involved? l Is there intellectual property to be developed? l What other resources should be considered?

C. For a new venture, it can be very effective to articu-late one or two resource-based advantages and by what means you plan to build these competitive advantages down the road assuming that you have a successful launch.

VI. Pricing, Marketing, and Supply Chain Based on your industry and market analyses and your competitive advantage, explicitly develop and state your overall marketing strategy. (Your pricing, distribution, pro-motion, sales and service operations should all flow from your overall marketing strategy.)

The fundamental purpose of this section is to design a plan for how you are going to sell your first customers (remember to approach this with a bottom-up approach). Rarely is it appropriate for a new venture to initially focus on appealing to the mass market.

A. Pricing operations (e.g., quantity discounts? Premium price?). Pricing strategies: l Keystone pricing—many businesses double their

costs. l Cost-plus pricing—mark-up based on the cost of

the unit sold. l Competitive pricing—based on what competitors

are selling for. l Market pricing—charging the highest price that

customers will bear. Pricing can be based on more than one of the above as appropriate.

B. Promotion and advertising operations. C. Distribution operations (wholesaler channels, use of

Internet, retail sales, combination, etc.). D. Sales approach. Who will develop leads, work

with prospects, and close the sale? How will sales people be compensated? Describe the sales cycle. Demonstrate interest by potential buyers.

Continued

Business Plan (Bplan) Outline—Cont’d

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Business Plan (Bplan) Outline—Cont’d

E. Service operations (how will customer service be offered?).

VII. Implementation and Operating Strategies Explaining how and when you will execute your Bplan

strategy. A. Identify what has already been accomplished. Focus

particularly on specifying the specific steps that need to be accomplished between now and the point of the first sale.

B. Provide a timeline with milestones to show projected timing and the sequence of key events. While one to three significant accomplishments may be included, the focus should be on the six to ten most significant future milestones, usually spanning the next 2 to 3 years (major milestones in years 4 to 5 may also be included).

C. Critical operational issues to potentially address might include: l Facility requirements—leased, purchased, or both. l Labor requirements. l Supply chain track and alternatives. l Capital requirements—equipment list, financing,

etc. l Seasonality—production planning, inventory

turnover and control, lead-times, storage, etc.Overall, this section should accomplish the following:

l Specify key future steps to be accomplished in establishing proof-of-concept and launching this venture.

l Do you anticipate rolling out additional products or services in the next 3 to 5 years?

l Signal funding needs for the early phases of the venture.

VIII. Company Structure and Management A. Company structure.

l Legal form of the organization (LLC, LLP, C-Corp. etc.).

l Ownership structure of the business. B. Management Team

l Training, work experience, and the personal capabilities.

l Supporters of the team. l Profile key future hires needed in the future.

C. The extended team: l Advisory board l Board of directors?

IX. Critical Risks A. Identify three to six of the most critical risk fac-

tors. Where might the venture hit obstacles going forward?

B. Possible internal critical risks—market adoption and acceptance, cost/time over runs, key personnel issues, etc.

C. Possible external critical risks—environmental shifts, market shifts, competitors’ actions, etc.

D. For each risk factor, how will you mitigate these risks in the event that they emerge?

X. The Revenue Model and Key Investment Considerations A. Specify your financial assumptions (most likely make

these explicit in an Appendix). B. An “average unit economic analysis” should show

revenue to be received from the first year of sales on a per unit basis, the costs associated with start-up, and ongoing costs in year one.

C. Summary financials in one table for years 1 to 5 to include units sold, COGS, revenue, operating income. l Include a “Valley of Death” chart (capital

required, B/E, etc.). D. Financial analysis schedules (cash flow statement;

income statement, balance sheet). The detailed sched-ules should be monthly for at least 1 year, quarterly for first 2 years, and annually through 5 years. Put in an Appendix.

E. Required funding (type of funding and the deal struc-ture). l “Use of funds” statement identifying main expen-

ditures. l Timing of funds being sought and key milestones. l Terms to be offered to investors (equity percent).

F. Future growth opportunities (scalability). l Leveraging developed capabilities for further

expansion. l Follow-on customer market opportunities.

G. Key reasons to invest (develop two to four reasons to invest). l Unique product, service, use of new (existing)

technology. l Any usually qualified individuals, perhaps with

linkages? l Do you have a particularly strong competitive

advantage? l Realistic assessment of ROI potential l What kind of exit is likely within 5 years?

AppendixThe appendix is the last section of the business plan. It is used to communicate supplemental and supporting information. l Detailed financial statements or worksheets. l Detailed product or technical description and patent grants. l Published articles and/or technical reports. l Primary research detailing competitor or customer feed-

back. l Business agreements. l Letters of intent connected to the business. l Sample of marketing or promotional materials. l Accolades/awards/commendations/testimonials. l Purchase orders for your product/service.

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309Chapter | 22 Your Business Plan and Presentation: Articulating Your Journey to Commercialization

Miscellaneous Information on Writing your BPlan l Business plans should be long enough to effectively tell

your story. This will most likely be between 20 and 30 pages plus appendices. Longer Bplans tend to have too many details that potential investors are unlikely to want to read about here (although they are likely to want to ask you about such details). Also, the longer a business plan, the easier it is to repeat information. When repetition is appropriate, at least change the verbiage.

Tables and Graphics: l Never pass up an opportunity to insert some great visu-

als such as models and tables. They are a welcome sight to most readers and can easily be worth more than a thousand words!

l Overall, pie charts have their place; tables are almost always beneficial; on average, bar charts are the least

helpful.

Grammar and Miscellaneous Details l Most investors very quickly notice grammar and spelling

errors. This presents an image of incompetence and slop-piness. Consider asking other skilled individuals unfamiliar with a Bplan to read it.

l Use active voice in your writing. l Develop structure and hierarchy to your plan. Use

first, second, and possibly third order headings with frequency.

l Intersperse into your written presentation a series of bullet statements, tables, and models wherever possible. Try to have some variation from the typical narrative on every page. Double space between paragraphs.

l Use endnotes to reference your source information. l Font type should be something common like Times Roman

style and probably 12 point. l Margins are to be at least 1 inch.

Business Plan (Bplan) Outline—Cont’d

TABLE 22.3 Competitor Matrix for New TeleMedicine Dermatology Service

TeleMedicineDermatology Conventional Dermatologist DermLink MD Spot Exam

Years in industry Start-up Decades 5 years 3 years

Service medium Mobile Face-to-face Internet Mobile

Actual consultation Yes Yes Yes No

Consultation timeframe 24 hours Average 6 weeks 48 hours 24 hours

Consultation type Acne only Varies Follow-up Mole categorization

Price $59 $78 to $139 $99 $4.99

TABLE 22.2 Product Matrix for a New Physician Office Rapid Diagnostic Test

New Diagnostic Rapid Strep Test Conventional Laboratory

Source of diagnosis Saliva Throat swab Blood work

Wait time 10 to 15 minutes 10 to 15 minutes 2 to 3 days

Cost to produce $18 $2 None

Price sold to doctors $45 $3 Outsourced

Insurance reimbursement to doctors $85 $17 Labs reimbursed

The suggested outline above includes the multiple sections that go into making up a plan and it has been tried and tested many times. However, there are several things, such as the nature of the business, that can alter the outline. For example, if a venture is working on a new drug application with long FDA approvals to obtain,

developing an extensive marketing program would not be appropriate. Consequently, flexibility is important but the completeness of the outline presented is to help the writer understand all the components that prospective stakeholders are often used to seeing and may inquire about.

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PRESENTING THE WRITTEN BUSINESS PLAN

Having worked through the building of the content of your business plan, we need to explicitly address the presenta-tion aspects of the plan—first the written presentation fol-lowed by a section on oral presentations. With the context of today’s entrepreneur and investor, expectations can be quite varied. If one was pursuing a new start-up 20 years ago and needed funding, there were venture capitalists on the equity side and banks on the loan side. These are two very dis-tinct types of financing, and the two rarely, if ever, com-pete for the same investments. We knew very little about business angels back then other than that they existed in the woodwork of communities. Today we still have venture capitalists and business angels, but each group seems to be becoming more diverse. The venture capital market seems to be emerging with a limited number of very strong players and many smaller players focused on various niches. In the business angel market, there are those who are still largely hidden in the woodwork of communities. However, there are also numerous groups of angel networks, and for exam-ple, may have monthly meetings to hear pitches and to pool their investments. Much more recently, we have crowdfund-ing emerging as a funding source for smaller amounts of capital for start-up ventures.

Along with the diversity of the today’s investment com-munity comes significant variation in the way that inves-tors get their information delivered. The traditional way is the written business plan which is the ticket that gets you through the door to discuss your concept with a venture capitalist. The written business plan was the first screen, and entrepreneurs could rarely get to first base with a ven-ture capitalist unless they cleared the hurdle with a quality concept and written plan that generated further intrigue and interest. With today’s investment community, such prefer-ences still exist but the expectations are much more diverse. Some prospective investors now want to read an executive summary or slide deck first; others want to hear a shorter oral pitch and then seek to engage a written plan if they are interested in moving their interest to a deeper level. In short, investor expectations vary widely. Entrepreneurs must be ready to jump in and provide prospective investors what-ever they request or need. We will now address some of the modes and types of presentations, first written and then oral.

Types of Written Business Plans

Unless specified otherwise, when someone refers to or asks for a written business plan, they are usually referring to the standard business plan that typically consist of 20 to 30 pages, making up the main document plus appendi-ces. Such written plans generally are able to offer enough depth that the reader can get familiar with the venture

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oncept and how it is approaching the commercialization rocess. If the main part of the business plan exceeds 30 ages, most readers will become bogged down and lose nterest. For internal planning purposes, some entrepre-eurs will continue to expand the business plan and use t as an internal working document. Such documents are eferred to here as the internal business plan and can reach 0 to 100 pages in length.

Shorter business plans are also used with some frequency n the marketplace. We address two here. The dehydrated busi-ess plan usually runs from 5 to 10 pages and, as the name uggests, it is a scaled-down version of the standard plan. ssentially, such a document covers the key points of the usiness plan by bringing particular attention to those issues hat represent the heart of the business concept. Even with the ehydrated business plan, remember that you are telling a story f the origins of the business concept; why the founder(s) is the ight individual to take this concept forward and the projected ath of the venture’s development. Such features are attractive n luring prospective stakeholders to the venture.

The final written form addressed here is the executive ummary. It is the business plan in miniature and is usually to 2 pages in length; sometimes as a stand-alone docu-ent it can run to 3 pages. The executive summary sets

he tone by seeking to capture the pertinent points of the hole plan in a brief synopsis. Stated differently, the execu-

ive summary should be an honest and captivating overview hat sells the highlights of your vision and objectives for the enture capitalist to garner further interest. The goal is to ntice the reader to come seeking additional information. emember that with both of these shorter versions the point

s to use these as a means to invite the reader to something ore, such as the standard business plan or engaging the

ntrepreneur directly.

eadability and Physical Layout

ost entrepreneurs want prospective investors to read he standard business plan if they have one. However, if eadability problems with the business plan exist, pro-pective investors are likely to abandon the read and move way from further inquiry. Far too often a failure to read s because the business plan is put together in a way that akes it a challenging read. I strongly suggest that the

usiness plan be put together in a way that can accom-odate a 10-, 30-, or 60-minute plus read. Specifically, I

uggest the following:

Use the company name, logo, and mantra to help tell your venture story. These are similar tools that help a reader more quickly comprehend your business concept. Can someone get a good idea of what your venture is about by just looking at the name, logo, and mantra?

Make the section titles talk. If everything was deleted except for the name, logo, mantra, and section titles, how

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much could they tell you about the venture? Would they by themselves invite further inquiry?

l Structure the sections using multi-level headings. Take main headings like industry examination, market exami-nation, competitive advantage, etc., and beneath them use subheadings. This helps the reader greatly by communi-cating the structure and overall direction of the business plan and what is being addressed.

l Leave a reasonable amount of “white” space on each page. The norm is single spaced text with one blank line between paragraphs.

l Each page should look different. Try not to have pages with just straight text in traditional paragraphs. A possible means of breaking up a page includes bullet statement subsections, tables and charts, and meaningful pictures that help tell your story. Meaningful charts and tables can be worth thousands of words; they can also help condense the length of the plan. Most readers would rather read a great summary table than 2 to 3 pages of typed detail. Your reader will appreciate you for it.

l Beware of repetition! With a document that encompasses as much material as a business plan does with multiple cross-linkages, it is easy to repeat oneself. Where it is appropriate to discuss something that has been discussed earlier, say it differently. Also, get someone with fresh eyes to read your business plan and help with things like this.

l Eliminate all grammatical errors. Like it or not, with just a few grammatical errors, most readers start making infer-ences about the capabilities of the person writing the plan. It is always a good practice to get someone with good writ-ing and grammar skills to make the necessary corrections.

Accommodating Different “Reads”

As mentioned earlier, potential stakeholders have multiple preferences for how they like to become familiar with a new business concept (executive summary, dehydrated or stan-dard business plans, slide decks, oral presentations, etc.). Now let’s assume we have a group of potential stakeholders, all of whom have chosen the standard business plan to first become familiar with the business concept. There will be a very significant variance in the time and approach they take to reading it. As the author of your business plan, you need to be aware of these different reads. Some will read the executive summary and then leaf through the rest of the plan in a matter of a few minutes. At the other extreme will be those who give it a very solid read taking 60 to 90 minutes. In between there are those who will read little more than the section headings, bulleted statements and tables, and then perhaps supplement it with reading the sections they consider to be their most important section(s). To make things harder, most readers have their unique preferences about what they consider to be the most important sections! As a writer of your business

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plan, it serves you well to keep the reading style of these vari-ous readers in mind and seek to write the plan in a way that accommodates multiple types of reads.

ORALLY COMMUNICATING YOUR BUSINESS PLAN

While the focus of this chapter is primarily on the written business plan, they usually go hand-in-hand with the oral presentation. While there are numerous materials dedicated to making effective oral presentations that are certainly worthy of further study, I will address a few central per-spectives specific to business plans to keep in mind for the oral presentation.

Oral Presentation Length and Content

Just as prospective stakeholders have varying prefer-ences on the length of the written business plan, they also have a specific length of time for the oral presentation. Some situations will call for a 1-minute presentation; another will call for a 5-minute presentation; yet another may allow 15 or even as long as 20 minutes. Again, noth-ing is set in concrete and rarely does the entrepreneur get to choose. So you have to be ready to adapt. This brings up the central point of any oral presentation: The goal is to give your audience a meaningful snapshot of your venture and how it addresses an important customer pain, key advantages you have moving forward, and what is in it for prospective investors. Entrepreneurs should not try to communicate everything they know about their concept, even if it is a longer presentation (like 20 minutes). Instead, with energy and passion, deliver the most important points that accurately reflect the venture. Think about it in terms of saying enough to bait some interesting questions that will lead to deeper interactions. More in-depth communications commonly come during the question and answer time and particularly within one-on-one conversations.

Preparing slides for a presentation is also very impor-tant. First, here are the four most common complaints that I hear about for business plan presentations.

1. The business concept is NOT understood. 2. Too technology-focused. 3. Too much industry and technology jargon. 4. No clear story; the flow is lost.

With these failures far too common in the presenta-tion of business concepts, let me make the following suggestions:

1. Get the story right. 2. Bring solid energy and confidence to the presentation. 3. Always remember what is in it for your audience.

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4. Plan for approximately one slide about every 45 seconds.

5. Use simple pictures and models where possible. Use variation from slide to slide.

6. No more than 15 to 20 words per slide. 7. Font size, no less than 28 point. 8. Use contrast—usually dark text on a light

background. 9. Be well-dressed and neat.

Elevator Pitch

The elevator pitch is the most important part of the oral pre-sentation. First, never assume that you have your audience’s attention. If you miss them with your elevator pitch, in all likelihood, they are gone for the entire presentation. Second, develop a pitch that gets to the heart of the customer pain and the product that you deliver. Here are six different mecha-nisms around which elevator pitches can be developed:

1. Question—directed straight at the audience to get them involved.

2. A factoid—a striking or little known fact.

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3. A physical object or demonstration. 4. An anecdote—a quick human interest story. 5. A quotation—an endorsement from a notable figure. 6. An analogy—a striking comparison.

CONCLUSION

A business plan is a wonderful tool that facilitates the communication process regarding the projected direction of the new venture and what it plans to accomplish. Busi-ness plans are written with the intent of helping to inform prospective investors and other stakeholders of the oppor-tunities that lie ahead for the proposed venture and how it plans to achieve attractive outcomes. Business plans also serve as a valuable tool for helping the entrepreneurs to carve out a strategic plan and to better think through how all the different pieces of this business puzzle fit together in the venture going forward. The better the strategy of a venture is understood by the entrepreneurs in the context of competition and emerging technologies, the more pre-pared they will be in leading the venture onward towards a successful outcome.