Ayla Matalon MIT Enterprise Forum of Israel Technion BizTech, 2005

1. Ayla MatalonMIT Enterprise Forum of IsraelTechnion BizTech, 2005 The Business Planning Process

2. Motivation – why bother • Communications protocol • Get acquainted with ‘battle field’ • Plan for company growth • Form and focus ideas • Generate reliable business model • Attract capital

3. Stages in the forming of a start-up • Initial Idea • Idea Formation • Study - Meeting with Clients • Bringing people in • Developing a business plan • Raising Money • Saying goodbye to spouse, family, friends Decision GOA fairly good understanding of the Idea Most of know-how necessary 4 biz plan

4. The Business PlanWho you are, What you are, What you wanna be • Executive Summary • The Company / People • The Need and Business Opportunity • Product or Service • Market and Competition • Business Strategy, Marketing and Sales • Operations • Financials

5. Seven questions asked byThe Potential Investor about the idea • How clear is the Need • Who is the client (/ user / decision maker) • Competition, & how are things done now? • Tech feasibility, Marketing feasibility • Required investment • Risks Is it a good idea?

6. Seven questions asked byThe Potential Investor Does the TEAM show • Proper Planning • Understanding of the Target Markets {including the marketing value chain} • Focus • Well planned financial strategy • Openness and honesty • Good Communication Skills Can they execute?

7. The Executive Summary Clear, brief explanations on • Need and business concept • Company product, benefit to customer • The opportunity and strategy • Market and competition • Financial required and how it will be used • Finance prospects • The Team Is it Exiting? Convincing? Do you want to learn more?

8. The Company • Origins, objectives and management • History in brief, Key employees, Current status • Strategy in short (historical) Does it inspire confidence? Can this team make it?

9. The People • Is the team well balanced? • Have they a history of outperforming? • Do they have managerial experience? • Do they have marketing experience? • Does the team inspire confidence? Can this team make it? Do we enjoy working with them?

10. The Opportunity, the Need • Is TAM large, rapidly growing or both? • When will the need be present? • How will the product or service be priced? Support? • Customer switching costs • Competitors and their resources • Cash Flow analysis The heart of the business proposal

11. The Product or Service • The need the product meets -- Nice to have, Enabler, Must have • Product description and usage • Competitive advantage Does it show distinct Benefits? Is it Unique? Operational pitfalls?

13. The Market • The Business Environment • Market need • Size, growth rate, effective segmentation, current and future markets, food chain: channels and purchasing characteristics • Market Drivers • Expected reaction (deals, LOIs, ...) Does the analysis suggest a strategy? Does it seem reliable?

14. The Competition • Who they are • products • prices • customers • marketing approaches, culture • positioning • comparison (SWOT) Is it open, revealing, specific?

15. Business Strategy, Marketing and Sales • Defining a unique business proposition • Identifying initial target customers: awareness • Penetrating the market • Distribution channels, the Food Chain • Maintaining Focus ! Can it be executed? What if… Are the penetration levels reasonable? Do the Financials make sense?

16. Organization, Operations and Manpower R&D, Production and Distribution • How and when • Facilities • Subcontractors • Milestones Is it going to work? Can they make it happen?

17. Risks and Uncertainty Factors • How does management intend to control and minimize risk (Market Risks, Company Risks, people, opportunity and context) Does it address risk openly?

18. Financials – a reflection of your strategy Realistic projections for a 5 year horizon • Cash flow projections • Breakeven and sensitivity analysis • Highlight key dimensions (sales, earnings, cash surplus) Are the underlying assumptions reasonable and clearly stated? Do the results make sense?

19. PLAN AHEA

20. The Financial Forecast Goal • Present business potential: ROI (return on investment) • Derive financial requirements • Message of reliability and thoroughness

21. About the Financial Forecast • In high-tech companies the expenses is the easy part - mostly personnel • The difficult part is how to estimate the revenue stream The number part needs to reflect Company Strategy: how the market for your product is going to work

22. Common Mistakes • Too much emphasis on product and technology • Weak marketing plan • Failure to identify details regarding competition • Unrealistic business strategy • Profitability and growth not discussed in detail • Weak financial model • Over Optimism

23. Summary • The business planning process is a continuous effort the target of which is to • distill the business idea • support it with factual evidence through extensive market research • discover whether the company can make it happen