Putting It All Together

1. Putting It All Together Presented by the UH Pacific Business Center Program (PBCP) David M. Gillespie PBCP is a partner with the Shidler in providing economic technical assistance throughout the Pacific Region. The PBCP also operates the Honolulu Minority Business Enterprise Center. We have extensive experience and expertise in business plan development.

2. Business Plan Format Document/Submission Requirements • Prefer PDF format • Less than 1mb single file • Single Spaced (min.), 12 Point Font (min.), 1” Margins all around (min.) & 8.5” X 11” paper size • Emailed as attachment to: pace@hawaii.edu by 5pm on 4/4/08, AND • Five hardcopies to PACE office • If Mailed - postmarked by 4/4/08 • If Hand Delivered – At PACE by 5pm on 4/4/08

3. Business Plan Format Document Specification Requirements • Cover Sheet– 1 page • Executive Summary– Maximum 2 pages • Business Plan– Maximum 10 pages • Attachments or Appendices– Maximum 10 pages, open format

4. Business Plan Format Judging Criteria • Overall Appeal -10% • Attractiveness of Market Opportunity-15% • Value Created by the Product/Service-15% • Competitive Advantage of Venture-15% • Operational & Technological Viability-15% • Management Team Capability-15% • Capital Requirements & Financial Forecast -15%

5. Business Plan Outline Suggested Organization 1. Cover Sheet 2. Exec. Summary - Overall Appeal (10%) 3. Overview of the Firm 4.Market Analysis – Market Opportunity (15%) 5. Products/Services Offered – Value Created (15%) • Marketing Plan/Strategy – Competitive Advantage (15%) 7. Operations Plan – Operational & Technical Viability (15%) 8. Management Team – Team Capability (15%) 9. Financial Plan –Capital Requirements & Projections (15%) 10. Appendices & Attachments

6. 1. Cover Sheet Data Requirements: • Team Name • Business Name • Names of All Team Members Other: • Logo Development • Balanced Sheet with Lots of White • Use of Color

7. 2. Executive Summary Judging Criteria 1 - Overall Appeal of the Plan (10%): Compelling “vision”; enthusiasm; greater than the sum of its parts. The business plan judge will probably obtain most of his/her ‘appeal’ in reading your Executive Summary. Write the Final Executive Summary Last • Things will change as you write the plan • The Executive Summary you already turned in can be adjusted/changed.

8. 2. Executive Summary ‘Elevator Pitch’ – The reader must ‘get it’ in the Executive Summary. • Who – Manoa Tansgenics, Inc., a start up life science company • What – Provide genetically modified mice, a novel gene insertional methodology and gene therapy research development. • How – Use a proprietary gene insertion technology invented by the two business founders • Why– Transgenic mice market at $180 million; once technology validated potential for gene therapy market projected at $5.7 billion in 2011 • How Much & Return – Need $2.5 million for research; offer 15% equity in the firm. Once reach 20% market penetration, firm sold/merged/IPO.

9. 2. Executive Summary Other Key Items to Address: • Mission and Objectives • Product, Process, or New Business Model • The ‘Pain’ the Above will relieve • Target Market – Customers, Value Added, Competitors, Competitive Advantage • Business Model – Who pays, how much, and how often. Model margins The Executive Summary MUST stand on its own; don’t copy sections word for word from the business plan narrative—a common mistake.

10. 2. Executive Summary Include/Expand By the Level of Importance to Your Business Plan • Technology & Intellectual Property • Management Team • Milestones/Goals • Revenue/Cash Projection • Funding Needs & Use of Proceeds • Investor Potential Return & How and When Returned

11. 3. Overview of the Firm Major Sections to Consider – A way of introducing the firm • Value, Vision & Mission • History • Distinctive Competence • Technology • Competitive Advantage • Strategy and Objectives of Firm • Major Milestones Achieved to Date

12. 4. Market Analysis Judging Criteria 2 - Attractiveness of Market Opportunity (15%) • Market size and growth potential • Your firm’s potential in this market • Expected margins and net profit long-term potential

13. 4. Market Analysis • Market Profile- Show you know the market you are entering • Demographic/Geographic/Psychographic or Business Profile • Maturity of Industry – Which Phase: Start-Up, Growth, Maturity, Decline • Size of Market – Units and Dollars • Growth Potential – Tie it to research and in units and dollars over time • Market ‘Pain’ • Needs – What is the ‘pain’ of this market • Set it up so that your product relieves ‘pain’

14. 4. Market Analysis • Market/Industry ‘Business Model’ • What is the current set-up (business model) for businesses in this market. • What is the margin and net profit profile of this market/industry –financial research • Is there a niche unsatisfied, or a better business model— set it up so your product/service, and, or business model is the answer.

15. 4. Market Analysis • Competition– Who else provides the service or product and what else do they provide their customers • Competitive Position of Leaders • Market Share Distribution - % of the market pie by leader, market share growth • Barriers to Entry – How difficult is it to enter the market you’re interested in.

16. 5. Product/Service Judging Criteria 3 - Value Created by the Product/Service (15%) • How will you relieve the ‘pain’- what is the unique value of product/service • Importance of Product/Service to Customer • Product/Service Description or Prototype • Features and Benefits of Product/Service • Market Reaction to Product/Service

17. 5. Product/Service • Product/Service Description– Clear, concise and complete. Detail in Appendix • Product Benefits & Features– The things that will relieve the ‘pain’ you identified in Market Analysis. • Product/Service Customer Reaction– Sampling, interviews, testimonials • Product SWOT– If appropriate

18. 5. Product/Service • Cleary Describe Product Need • Need may not be fully recognized by the market at this time • Describe how you see the ‘need’ developing • Product Development Plan • Current level of product development • Phasing plan of product development

19. 6. Marketing Plan Judging Criteria 4 - Competitive Advantage of the Venture (15%) • How Will the Product Gain Market Share Against Competitors • Market Share and Growth Profile Potential • How Long to Get Product/Service to Market • What Business Model/Distribution Method Will Position the Firm Best

20. 6. Marketing Plan • Business Model Proposed • Be as specific as possible. Clear, concise explanation (B2B, B2C, etc.) • Product Market Development Plan • Phases of development: drawing, prototype, pilot manufacturing • Overcoming Competition – How? • Pricing, Business Model, Quality, Market Tactics

21. 6. Marketing Plan • Focused Target Market(s) Profile • Size and Trends of Markets • Demographic, Geographic, Psychographic or Business Profile • Buying Sensitivity • Vulnerability to Economic Factors • Purchasing Patterns

22. 6. Marketing Plan • Pricing Strategy– Image Awareness, Cost Recovery • How will you fit within the market? - Above Market, Match Competition, Below Market ? • Promotional Strategy • Media – Web-based, Print, TV: what does the competition do? • Message – What will be your key message; Is it focused on your core business? • Promotional Budget – Sales growth requires a matching promotional budget.

23. 6. Marketing Plan Sales Strategy– How will sales be developed and processed • Sales Generation in the Business Model • Sales Force Management • Order Processing • Compensation Plan

24. 6. Marketing Plan • Sales Projections • First Year – by quarter; then yearly • By Product/Service Line • By Units and Dollars • Other Marketing Activities • Service and Support Capability • Strategic Alliances

25. 7. Operations Plan Judging Criteria 5 - Operational & Technological Viability (15%) • Product/Service Production • Product/Service Distribution • Production obstacles and how you will overcome them • Any essential technology property and how will it be protected • Develop a plan timeframe

26. 7. Operations Plan Production Plan– Where produced or developed – materials required & sources, outsourcing • Technical requirements of producing the product/service and how met. • Patent protection or other means of protection Distribution Strategy– How will you get your product/service to the customer • Retail, Wholesale, Distributor, Internet, Licensing, Franchising – tie into the business model

27. 7. Operations Plan Manufacturing Requirements – by order of importance to the plan • Facilities – plan for growth • Equipment • Outsourcing • Third-Party Agreements • Contracts • Licensing

28. 7. Operations Plan Milestones– Make/Break Activities • Schedule of key activities to be accomplished – GANTT Chart • Specific/Crucial Objectives: • Timeframe • Responsibility of who? • Results expected

29. 8. Management Team Judging Criteria 6 -Management Team Capability (15%) • Venture management/expertise needs • Education, experience, skills of team • Acknowledge skill gaps and show how you will overcome them – hire, contract, etc. • Role of each team member in the development of the venture – dual roles

30. 8. Management Team • Names • Roles and Positions • Experience and Education • Other Related Experience • ‘Gap’ Experts – Technical skills • Strategic Alliances

31. 8. Management Team Show that Your Organization is Set to Meet the Growth You Planned For • Principal Players– Do you have the right people in the right places? Will the firm’s expertise requirements change as the firm grows? • Consultants and Specialist– Are industry changes severe enough to bring on experts? • Organizational Structure– What is your organizational structure and will it be appropriate for your firm’s growth?

32. 9. Financial Plan Judging Criteria 7 - Capital Requirements & Financial Forecast (15%) • Capital • Needs – Capital asset purchases, start-up expenses, working capital • Sources – Venture Capitalist, lenders, FFF? • Phasing – Start-up, 1st, 2nd, other rounds • Entity Ownership structure • Investment Exit Strategy • Project Evaluators – ROI, NPV, IRR • Cash Flow - when turn positive

33. 9. Financial Plan • Financial Forecast • P & L Summary • Cash Flow Summary • Cash Flow Breakeven– When does firm turn to positive cash flow • Investor Return– ROI, Dividends, Capital Returns, NPV, IRR

34. 9. Financial Plan Stages of VC Funding: • Seed – Develop proto-type • Early Stage – Launch product • Growth Stage – Expand marketing • Mezzanine – Add resources, acquire other firms Develop a structure/mix of funding

35. 9. Financial Plan • Income Projections– Revenues, COGS and major expense categories. $ and %. • Cash Flow Forecasts–Too little cash (common problem) for working capital. • Cash Flow Break-Even Analysis – Do you need to generate more or less sales to cover operating costs than what you originally planned for?

36. 9. Financial Plan Income Statement Format • Major Revenue Categories– Ascending Order • By product/service type • Show Key % - Gross & Operating Margins • Major Expense Categories– Ascending Order • COGS, Personnel, Rent • Level of Detail • By Quarter for the first 12 months • By Year after first 12 months • Three years minimum, five years maximum

37. 9. Financial Plan Cash Flow – Direct Method • Operating Activities Revenues, Direct Materials and Labor, General & Admin. Expenses • Investing Activities– Asset Purchases • Financing Activities– Dividends, Return on Investment

38. 9. Financial Plan Be sure you have a financial macro & micro understanding of your venture and that micro and macro are in sync. • Macro View– The financial big picture: Review, understand and analyze the financial statements you generate. • Micro View– The financial details: Pricing strategy, margins, mark-up of the product or service you are offering.

39. 9. Financial Plan

40. 10. Appendices/Attachments Examples of what you can put in the Appendix Detailed Financial Documents • Start-up Cost Schedule • Funding Sources Detail • Detailed Income Projections • Balance Sheet Projections • Detailed Cash Flow Projections • Cash Break-Even Analysis

41. 10. Appendices/Attachments Assumptions Critical to Your Plan • Interest Rates: Long & short-term • Sales on Credit • Inventory Turnover • Personnel Overhead • Licensing Agreement • Other

42. 10. Appendices/Attachments Product/Service • Detailed Description, Drawings, Production Processes Management Team • Resumes • Consultants/Experts Qualifications Other • Market Research Data • Relevant News Articles

43. General Comments 6 C’s Of A Winning Business Plan • Complete– No missing sections, cover all the judging points. • Clear– Concept of your product/service, its market, and business model are explained completely during the first read of the plan. • Credible– The plan makes ‘sense’. No crazy revenue projections, outrageous market share claims, belief in a lack of any competition, etc.

44. General Comments 6 C’s Of A Winning Business Plan • Compelling– Draws the reader into the business concept they way a good novel draws in a reader. The reader buys into your idea because your plan is convincing and your narrative is persuasive. • Customer Focused– Show you understand your customer and how you will relieve their pain. • Concern for Investor/Lender – Show how, and when, debt/equity is returned and ROI is developed.

45. General Comments ‘Form’ of the Plan • Use of Charts and Graphs • Simple, Clean, Easy to Read • Font TypeandSizeChanges • Limited Changes - subtle • Color • Make sure it prints ‘ok’ in black and white • Shading and texture for graphs/charts • Number the pages

46. General Comments Plan Development • Many contributors—one writing voice • Proofread by non-team member • Support assumptions when ever possible Business Plan Team Skill Needs • Marketing – Research, Market Size, Sales Est. • Financial – Projections & Statement Development Plan Wording • Positive word choices; not “might”, “maybe”, “probably”; but don’t overstate or exaggerate.

47. General Comments Business Plan Judges Are Hawaii Business Professionals • Bankers, Business Owners, Gov’t and Non-Gov’t Organization Employees • Business Service Providers – Accountants, Lawyers, Consultants • Investors, Venture Capitalist • Entrepreneurs

48. Business Resources Software & Website Assistance: • Business Plan Pro – palo-alto.com • Business Plan Builder – jianusa.com • Business Plan Writer Deluxe • Bplans.com • Businessplans.org – sample plans • Microsoft Business Planner – Office Pro

49. Pacific Business Center Good Luck to All!!