Business plan outlineCover page and table of contentsCompany nameProduct nameConfidentiality statementDisclaimerDo not include a non-disclosure agreement (NDA) as most investors will not sign an NDA at this??.stage.Executive summarySummarize all key points in your business plan. This may be all the investor will ever read. Itshould be 1-3 pages long. Your executive summary should include:Value proposition and innovationMarket identification and analysisMarketing and sales strategySustainable competitive advantageCompany products and servicesTeamOperational planExpansion planFinancialsValue proposition and innovationValue proposition ? What problem are you solving for customers? Quantify benefit if possible??.Innovation ? What is new about your product?Market identification and analysisEstablish that there is a fast growing market for your product. Show that you understandyour competition. Include in this section:Market and industryDefine the market or industry.How large is it and how fast is it growing? ? Total market size in dollar volume / Marketgrowth rate.What trends are important in the industry or marketplace?How is market and industry segmented (e.g. product/ buyer/ channel/ geographic)???.Targeting segmentDefine and describe the target segment.Calculate total market size / total addressable market/ target segment/ market shareCompetitionDirect competitorsIndirect competitorsCustomersWho are the traditional customers in this market?What motivates buying decisions?In what ways are customers dissatisfied with current offerings in the marketplace?What customer needs are currently unmet by the market?Douglas Abrams ? Business plan outline Page 2Copyright ? 2006-2008 Douglas Abrams www.expara.comMarketing and sales strategyExplain how you are going to capture your market.Marketing strategy??.Differentiation ? Product differentiation/ Cost leadership (Including comparison matrix)Positioning ? including positioning map or strategy canvasTagline ? clear, strong, authenticMarketing execution 4PsProduct (Elements of the marketing strategy directly related to the product)Price (Take into account channelPlace (Channels)Promotion (Focusing on sales strategy)Initial sales strategy ? How to make the first sale?Sustainable competitive advantageExplain how you will compete when others enter your market, especially larger, betterfundedestablished companies. Try to include as much SCA as possible.Proprietary intellectual property and IP strategyCompetitive strategies ? entry barrier/ network effects and externalities/ switching cost??.Company products and servicesProducts/ services key featuresHow the product works?Product illustrationExplain clearly but do not go into too much technical detail.TeamExplain why the members of the management team are the best people to execute yourbusiness plan. Emphasize their relevant strengths and experience. Include an experiencedBoard of Advisors to enhance credibilityA short paragraph on each team member, full name, picture, position, relevant strengthsand experienceBoard of advisors, with names and biographical dataStrategic Alliances??.Operational planHow to execute on the business plan? (Detailed descriptions of year one activities)Distribution, service provision, support, production, operating methods, procedureA timeline of operational milestonesExpansion planProduct expansion plan with a timelineGeographical expansion with a timeline and strategyDouglas Abrams ? Business plan outline Page 3Copyright ? 2006-2008 Douglas Abrams www.expara.comFinancialsBusiness modelHow will the business make money? Include a diagram showing the flow of money and theexchange of goods and services among the various stakeholders.Sources of revenue/cost driversInvestment requiredCritical success factorsFinancial projections5 years of projected balance sheet, income statement and cash flow statements in charts ortablesTo attract VC investment you should be generating a minimum of $50MM in revenue within 5 years.??.ValuationHow much is the business worth today?Valuation methods can include: Discounted Cash Flow (DCF), comparables, or VC methodFor DCF valuations, use an 80% discount rate.Make sure that you can explain your assumptions and how you arrived at the valuation.For seed stage companies, should generally be in the range of $2-4 MM.Funding required and equity offeredHow much money do you need to raise?How much equity will the investor receive?You should generally be raising around $0.6MM to $1.5MM at this stage.If you are raising less than $1MM, you will likely be seeking investment from Angel investors ratherthan from VCs. Seed stage equity offered should usually be in the range of 15-30%Uses of proceedsHow are you going to use the money you are raisingRemember that you will need to use it to fuel growth in the companyExit Strategy and ROIHow will your investors make money and how much will they make?Calculate the investor?s projected return on investment (ROI)IPOs (sell to the public)Trade sale (sell to another company)Choose the most likely strategy for the companyInvestor ROI should be at least 10-30 times, preferably 50-100 times over 5 years.??.Remember that investor IRR is an annual returnPresent the ROI as a multiple of the original investmentAppendixes ? Include supporting material in the appendices. Examples:Detailed team backgrounds and resumesPatent informationDetailed market research and publicityDetailed financial entriesCustomer testimonials and endorsementsDilution scheduleBusiness plan writing, structure and designInclude a title page, table of contents and page numbers on each pageUse good grammar, sentence structure and avoid spelling or punctuation errorsUse a clean, simple and legible document designThe business plan should be a maximum of 25 pages long, excluding appendices.Douglas Abrams ? Business plan outline Page 4Copyright ? 2006-2008 Douglas Abrams www.expara.comBusiness plan questionsInnovation and value proposition1. What is your product and what is innovative about it?2. What is the painful problem you are solving for customers?3. What are the shortfalls of the current solutions?4. How do you solve this problem and can you quantify your benefit?5. How does it enable you to accomplish this?Market identification and analysis1. Who is your customer?2. How big is your market and how fast is it growing?a. Top-down approachb. Bottom-up approach3. What are trends in your market are favourable for you?a. Technological, social, demographic, regulatory4. Who are your direct and indirect competitors?5. How is your market segmented?Marketing strategy1. How is your product differentiated from your competitors? product? Use a comparison matrix toillustrate.2. What is your position in the market? Use a positioning map or Blue Ocean Strategy canvas toillustrate3. What are your price, place, product, promotion and initial sales plans4. What is your tagline?Sustainable competitive advantage??.1. How will you compete with small followers?2. How will you compete with large companies who decide to move into your space?3. What is your IP strategy?4. What are your competitive strategies to create barriers to entry?Business model and financial plan1. Business modela. Revenue sourcesb. Cost driversc. Investment requiredd. Critical success factors2. Financial projections3. Valuation4. Funding required and equity offered5. Use of Proceeds6. Exit Strategy and ROI??.
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