The Business Plan

HST.921 Tutorial

March 5, 2009

Developed by The CONTeXO Group for HST.921

HST.921 / HST.922 Information Technology in the Health Care System of the Future, Spring 2009Harvard-MIT Division of Health Sciences and TechnologyCourse Directors: Dr. Steven Locke, Dr. Bryan Bergeron, Dr. Daniel Sands, and Ms. Mirena Bagur

Agenda

• What is a Business Plan?

• Elements of a Business Plan

• Investor Presentation

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WHAT IS A BUSINESS PLAN?

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The Foundation Of Your New Venture

MarketingPlan

ProductPlan

FinancialPlan

MfgPlan

OtherPlans

30-60 seconds

1-2 pages

15-30 minutes

20-40 pages

Elevator Pitch

Executive Summary

Presentation

Business Plan

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Why Does One Need A Business Plan?

• To serve as a disciplined focal thinking point for building the business

• To raise financing

• To attract talent and management team

• To pursue strategic partners

• After (each) financing, it becomes the operational plan, constantly updated

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ELEMENTS OF A BUSINESS PLAN

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Business Plan Outline

• Executive Summary • Company description• Management Team• Products • Market • Competition • Marketing Program• Business Model• Manufacturing • Service

• Facilities• Staffing• Board/Advisory Board• Ownership• Milestones• Capital required/use of

proceeds • Financial data/forecasts • Risks/Risk Management• Appendices

(Not all Business Plans will contain all elements…)

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Executive Summary

Short summary of the business plan, including:

• The company

• Management team

• Target market

• Principal products or services

• Marketing plan

• Financing requirements

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Company Description

• History and status

• Background and industry

• Company's objectives

• Company's strategies

• What makes the company different from others

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Management Team

• Founders and key employees

• Entrepreneurial Experience

• Industry Experience

• Functional/Operational Experience

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Products

• Product description and comparisons • Innovative features/IP (patent coverage) • Applications • Technology • Product development and R&D effort • Product introduction schedule and major

milestones • Future products (product evolution)

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Market

• Market summary and industry overview

• Market analysis and forecasts

• Industry trends

• Initial product(s) /Total Available Market

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Competition

• Similar Products

• Product Comparisons

• Company Comparisons

• Market Share

• Outlook

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Marketing Program

• Objectives

• Marketing strategy

• Communications and PR/Analysts

• Strategic Alliances

• Sales and distribution channels

• Customers

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Business Model

• Your company’s plan to make money– How can you transform your technology or scientific idea

into economic value?– Who will pay? How much? How often?

• Some possible business models– Licenses (perpetual or term) – Subscriptions (annual, monthly) - SaaS– Pay-per-use - SaaS– “Razor/Razorblade”– Auctions– Software + services bundles

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Manufacturing

• Process

• Costs

• Life Cycle

• Manufacturing Engineering

• Supply Chain

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Service

• Customer Service/Call Center

• Field Service

• Service Policy/Contracts/SLAs

• Service Lifecycle

• Field Engineering

• Spare Parts & Distribution

• Organization

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Facilities

• Office Space

• Manufacturing Space

• Remote Offices

• Telecomms/Networking

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Staffing

• Founder and key employees

• Organizational structure

• Headcount growth

• By job function/department

• Recruiting sources

• Geographic labor pool (local v. relo)

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Board/Advisory Board

• Board members (typical)– Smaller is better– CEO/Founder(s)– 2 Investors– 2 industry experienced veterans (optional)

• Advisory Board– Credibility, customer access– Industry experienced veterans– Luminaries

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Ownership

• Founders/employees

• Outside investors

• Incentive plan (stock options/stock purchase)

• Cash investments to date

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Milestones

• Major events that increase valuation; e.g.– Working Beta/Beta customers

– Complete commercial product

– First n paying customers

– First major strategic partner/reseller

– Follow-on product

– P&L/cash flow breakeven

– Etc.

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Capital Required/Use of Proceeds

• By Milestone

• By “Uses” for each milestone

• “Rule of thumb” is 50% more than plan

• Make sure Cash Flow works

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Financial Data/Forecasts

• Give Assumptions Used

• By month for first 6 months• By quarter for following 6 quarters• By year for another 3 years (total 5 years)

• Revenue• Expenses• Cash Flow

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Risks/Risk Management

• Product Risks

• Market Risks

• Team Risks

• Other Critical Success Factors

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Appendices

• Detailed management profiles

• References

• Product descriptions, sketches, photos

• Recent literature on product, market, etc.

• Analyst reports

• …

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INVESTOR PRESENTATION

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Overview

• Objective: Get another meeting/initiate Due Diligence

• A summary of key points, not the whole Business Plan

• Not selling product - selling stock• Typical initial meeting is one hour• Begin by asking about the investor firm• Presentation - no more than 20-30 minutes• Leave ample time for discussion

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Presentation Content

• What an investor wants to know– Who you are– What you have accomplished– What you plan to do

• Focus on the “Big Four”– Management Team– Market– Product (keep light, demo OPTIONAL)– Finance

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THANK YOU

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HST.921 / HST.922 Information Technology in the Health Care System of the FutureSpring 2009

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