Communicating Your Business Plan

1. Communicating Your Business Plan Paul Kirsch Samuel Zell & Robert H. Lurie Institute For Entrepreneurial Studies February 3, 2006

2. Executive Summary Core Idea Elevator Pitch Business Plan Power Point Parts of a Coordinated Message The Message of your Business Idea

3. Parts of a Coordinated Message • Core Idea • 5 Breaths • Executive Summary • 2 – 5 pages generally accepted • 3 pages for MBC • PowerPoint • 8 – 15 minutes • Elevator Pitch • 2 – 3 minutes • Full Business Plan • 15 pages + Financials S.S.D.D (Same Stuff, Different Delivery)

4. 10:30 9/30 Information session on MBC format and process 10/14 10:00 Content and presentation of an effective executive summary 10:00 11/11 Constructing an effective pitch 12/16 12:45 Communicating market pain, size; financial assumptions 1/20 Business plan preparation 10:00 12:00 2/3 How to present your business plan 10:00 2/10 Open workshop on presenting your business 2/17 $30,000+ in awards incl. Pryor-Hale Award for Best Business MBC Training Sessions

5. Agenda • Part A: The Presentation • Part B: The Content • See also SlideExamples.ppt

6. Part A: The Presentation • Before You Present • Building the Presentation • The Delivery • Using Slides and Visual Aids • Handling Q & A

7. Before You Present • Purpose • Convince investors, backers, business partners, customers of the value in your business proposition • Demonstrate ability of management team • Audience - generally • Business professionals familiar with space, technology, management team, etc.

8. Before You Present • Occasion • Contest, informal or impromptu, formal • Structure • Know time expectations • Elevator pitch: 30 seconds to 3 minutes • Initial pitch: 10 – 15 minutes • Formal presentation: 15 minute to open ended • Q & A arrangements • Dedicated time • Expected interruptions

9. Before You Present • A few comments about BPC audiences • They want you to succeed • Business professionals who may or may not know about your industry or technology • Can you discover status, experience, education, age, gender, race, relationships, etc.? • Already believe you before the presentation; it is up to you to LOSE support

10. Before You Present • Style • Level of formality • Level of interaction • Format • Multiple speakers • Visuals • Directed discussion

11. Building the Presentation • Three “universally” defined segments • Introduction • 10% of total speaking time • 2 slides: title and agenda • Body • 85% of speaking time • Conclusion • 5% of total speaking time • 1 slide: conclusion

12. Building the Introduction • Multiple purposes • Get attention • Establish credibility • Manage first impressions • Greet audience, primarily judges • Introduce team • Set agenda with main points • Develop sense of rapport and goodwill • Give purpose and/or goal

13. Building the Body • Contains your main points • Product and/or service concept • Uniqueness, secret sauce • Business model • What do you do? / How do you make money? • Market • Competition & Industry • Management Team • Financials • Sequence is NOT pre-determined

14. Building the Body • Techniques for presenting data • Repetition • Varied and interesting visuals • Varied and illustrative data • Facts • Research • Quotes • Stats • Transitions • Not always needed but FLOW always a consideration

15. Building the Conclusion • Last and lasting message to audience • Restate goal • Review main points • Ask for action or leave with challenge • Maintain credibility • Maintain sense of goodwill • Provide closure, ask for questions

16. The Delivery • Utilize multiple channels • Multimedia • Examples of product or technology • Variation is critical • In slides • In vocal quality • In pace • In data • Use organizational cues….carefully

17. Delivery: Before You Say a Word • Owning the room • Demonstrate an effective TEAM • Use your physical presence • Introductions • Manage your reputation • Impressions begin forming before you speak

18. Delivery: Who Does the Talking • Multiple speakers whenever possible • Strongest speakers first and last • CEO must speak • Speakers speak while team members run equipment • Speaker never clicks a mouse • Speakers’ main focus is the audience NOT the presentation • Transitions

19. Delivery • Get audience attention • Develop & build relationship • Demonstrate ability to think on your feet • Involve and engage audience • Eye contact is critical • Humor can be useful tool • Energy and passion sell • Credibility is critical

20. Delivery • Practice and get feedback • Eliminate “um” and “ah” • “So” is not a transition • “we hope” and “hopefully” • Adhere to time limits – No Excuses! • Do not get bogged in detail • Do not use up-speak • Pause to separate and emphasize words and ideas

21. Tips for Persuasion • Repeat, repeat, repeat • Chose appropriate appeals • Logos – logical • Ethos – idealistic • Pathos – emotional • Supply data, all types • Check your math…..PLEASE! • Explicitly establish credibility, when possible • Fulfill audience needs

22. Using Slides and Visual Aids • Use medium to dark background with light print or • Black text on white or lightest gray background • Use slide template • Develop brand recognition • Use builds economically on busy slides • Use boring transitions • Use slide numbers

23. Using Slides and Visual Aids • Use presentation, sans serif font • Helvetica • Arial • Tahoma • Use large font size • 36-44 titles • 24-32 main headers • 22-28 secondary headers, no smaller than 18

24. Using Slides and Visual Aids • Handouts • What and when to give • Consider “leave-behinds” • Talk to audience - not screen • If you must, carry note cards - not paper • Fewer distractions are better • Graphical representations almost always better • Less is more • One main idea with ≤ 7 chunks per slide

25. Handling Q & A • Know your approach before presenting • Ask boldly for questions • Entire team fields questions • Ideally, one team member answers each question • Limit parroting • Repeat question for you and audience • Amplification rules • Check body language "oh really?“"is he STILL talking?“betterresult

26. Handling Q & A • Maintain control • Maintain credibility • Ask for clarity • Parse complex or multi-part questions • Answer honestly • Answer briefly • Thank the audience

27. “I don’t know” • Say “I don’t know” without delivering a negative or uninformed message • It’s okay to not know • SAYING “I don’t know” is a credibility killer • Try: “That’s a very important issue for us, and we’re trying to get our arms around that.” • Use this as an opportunity to demonstrate knowledge of complex and interrelated issues and relationships

28. Finally….. • Have fun • Be passionate • Be honest • Over-deliver when possible • Show energy and enthusiasm • GOOD LUCK!

29. Part B: The Content • Product and/or service concept • Uniqueness, secret sauce • Business Model • What do you do? / How do you make money? • Market • Competition & Industry • Management Team • Financials • Other topics

30. Product and/or Service Concept • Demonstrate market need clearly, cleverly, in common terms • State how your solution addresses the need, again in plain language • Discuss the status of development; e.g.: • Prototype in development • First location opening in Q3 • Manufacturing contract finalized

31. Uniqueness, Secret Sauce • What is your competitive advantage? • Technology – protectable and protected • Implementation – “land grab” • Execution - performance (ex. Starbuck’s) • Strategy – examples include • 1st mover or 2nd mover advantage • Niche market • Differentiate • Articulate what makes your solution different AND better than others

32. Market • Total Addressable Market • All microprocessors – or – • Target Market • Electronic device manufacturers – or – • Market Segment • Cell phone manufacturer – or – • Ideal or First Customer • Nokia or Motorola Note on terminology

33. Market Segment • Set of potential, actual customers for • Your set of products & services who • Have a common set of needs, wants and • Refer to one another when making buying decisions

34. In Discussion of Market • You must size the market • You must size the segments • By credible means • Three measures • Total dollars spent • Number of customers • Number of units sold

35. In Discussion of Market • Do not offer the 1% solution • Why aim so low? • How many customers is this? • Understand advantages of large markets and segments

36. About the Target Customer • Is there an identifiable buyer? • Accessible to your channel • Able to pay • What is the market pain? Reason to buy? • Can customer wait a year? (she will) • Does full product address full market pain? • Are auxiliary features, products, services needed?

37. A Note on Vocabulary Market ≠ Competition ≠ Industry ≠ Space Market + Competition + Value Chain Players = Industry Industry + Technology + Externals = Space GovernmentRegulatorsTrade GroupsFinancial partnersConsultants

38. Competition • Does competition exist? • No identifiable competition = No identifiable market • Degree of competition can vary depending on • Improvement |--------------------|  Innovation • Evolution  |--------------------|  Revolution • What are your potential customers doing today? • NEVER say “no competition”

39. Competition • Who do you directly compete with? • Who do you indirectly compete with? • Whose products are you substituting? • What will their response be? • How able are they to respond?

40. Industry • What are the relationships in the industry? • Value chains • Financial • Governmental and regulatory • How does this help/hurt your operations? • How does affect exit?

41. Management Team • Skill • Ability • Experience • Previous experience as a team • Drive • Smarts

42. Financials • Need to demonstrate that your business model works • Discuss relevant, most interesting items, e.g.: First sale | break even pt | profitability | exit & return • Projections • Assumptions • Graphs • Unit costs • Scaleability

43. Financials • Based on 4 sets of information • Income statement • Balance sheet • Cash flow statement – derived from IS and BS • Sources/uses of funds – snapshot in time • All work together and reflect SAME assumptions • The Good, The Bad and The Likely

44. Other Topics to Consider • Accomplishments • Countermeasures to Risks • Intellectual property • Porter’s 5 forces and/or PEST analysis

45. Accomplishments • Demonstrates activity • Not an “academic” exercise • Progress is important • Shows ability to plan and execute • Can be integrated into milestones and demonstrates critical path • Builds credibility

46. Risk and Countermeasures • Identify “right” issues • Are mitigation approaches realistic Some common categories to consider Technology Regulatory Product Financial Market Execution Management

47. Intellectual Property • Protectable, defendable? • Status: filed, provisional, granted • Type: use, design • Advantage is not in HAVING intellectual property • Advantage is EXECUTING on intellectual property

48. Porter’s 5 Forces and PEST • Threat of new entrants • Threat of substitutes • Strength of YOUR suppliers • Strength of YOUR customers • Competitive environment and rivalry See Appendix 3 of the “New Business Road Test” • Political– can include regulatory • Economic • Social – can include environmental • Technological • Good back-up slides • Very visual • Demonstrates solid research

49. Communicating Your Business Plan Paul Kirsch Samuel Zell & Robert H. Lurie Institute For Entrepreneurial Studies February 3, 2006