New Venture Challenge Phase II Kickoff: Presentations and Business Plans

1. New Venture Challenge Phase II Kickoff:Presentations and Business Plans Steven Kaplan and Ellen Rudnick Graduate School of Business University of Chicago

2. Agenda • Preparation for classroom presentations. • Guidelines for developing business plans.

3. Preparation for classroom presentations. • Each team will present twice. • First time in March / April. • Second time in End of April / May when business plans are more complete. • We will contact each team in our respective sections to set presentation dates. • Teams will have 45 to 50 minute time slots. • Should aim for 25 minutes to present. Do not go over. • Leave 20 to 25 minutes for discussion. • Be concise. • Goal is to make plans better. • Welcome criticism, don’t fight it. Have thick skin. • Presentations and critiques are very helpful.

4. Strategy for presentations • Between now and presentation: • Talk to customers / potential customers. • Will they buy product / service? Why? • What do you have to do to get them? • What will they pay? • Get beta customers? • Identify and approach resources that can help. • Advisors? • Employees / management? • Alliances / partners? • Suppliers? • Other strategic relationships?

5. Strategy for presentations - 2 • At presentation: • Do not waste much time at 5000 feet. • “This is a big market.” • Get into details quickly. • The more details / granularity, the better. • Make sure that you: • Describe typical customer. • Describe what typical customer does today. • Describe how typical customer benefits from your product / service. • Describe why customer will buy from you. • If you do not do this, we will ask you to do it. • Earlier you do this the better.

6. Strategy for presentations - 3 • Once audience understands business and value proposition, then (not necessarily in this order): • Describe market size. • Segment as well as you can. • Describe how much of that market you will get to and how you will get to it. • Describe and analyze competitors. • Describe your competitive advantage / what is special. • Describe management team.

7. Strategy for presentations - 4 • How can we help? Ask for help / suggestions: • Describe what you are unsure of that you need to investigate. • Describe the resources you would like to obtain: • Advisors? • Employees / management? • Alliances / partners? • Suppliers? • Other strategic relationships? • First presentation should be designed with goal to elicit feedback and get information. • Idea is to be as open as possible, not defensive. • May be painful anyway.

8. Developing a Business Plan

9. Functions of the Business Plan • Planning tool • Evaluate strategies, define needs, set objectives. • Sales Document for Raising Capital • Introduction to the business. • Tool for basing investment decision. • Measure and Monitor Performance • How much progress is made against original objectives. • Identify emerging problems.

10. Business Plan is a Process • Plan will be edited, reworked, revised over time. • Almost impossible to predict the road map for success this early. • Ability to adapt to new and unforeseen developments key to success. • Even the most successful business plans adjust. • Microsoft. • Amazon.

11. Elements of the Business Plan • Executive Summary • Company Description • Management • Product • Marketing and Sales • Operations • Financial Statements and Projections • Appendices

12. Executive Summary • Most important part of plan; investors will not read further if story not compelling • 2-4 pages. • Should be done after preparing the rest of the plan and it should distill each section of the plan.

13. Executive Summary - 2 • Should include: • The company’s background. • The product / service and its technology (any proprietary advantages) • Description of value proposition. • How do customers benefit? Before and after. • Why will they buy from you? • How will you get them? • Market potential for the product. • Management team and its track records • Key advisors and/or strategic relationships • Key financial data: five year forecasts • Amount of capital required • Key milestones

14. Company Description • Purpose: Communicate origins of company and its goals • Brief and Direct. • Explain organizational, research, development and other activities that have occurred to date. • Summarize both short and long term objectives of the company.

15. Management • Management capability single most important factor to investors. • Should describe relevant experience and accomplishments of team members. • Include resumes in appendix. • Do not overstate abilities of team. • Recognize gaps and how you intend to fill them.

16. Product or Service • What need is the product / service filling? • What is value proposition? • Make sure that you: • Describe typical customer. • Describe what typical customer does today. • Describe how typical customer benefits from your product / service. • Describe why customer will buy from you. • Product attributes: competitive or proprietary advantages. • If in development stage what needs to be done to complete development? How long will it take? • If technology intensive discuss nature of technology, ownership issues, prior applications, competing technologies.

17. Marketing and Sales • Market understanding critical to establishing credibility with investors • General market issues: size, projected growth, driving forces, segments, characteristics • Who are the customers and what motivates them? • Where do the customers fit in the distribution chain? • What are the distribution and sales channels to reach these customers?

18. Competition • Identify competing products and technologies • Assess competitive strengths and weaknesses • Consider using a comparative table to rank competitors on features/characteristics • What might be defensive reaction of competitors to this product?

19. Revenue model • Estimate market penetration over time • Product pricing strategy • Sales and Distribution strategy

20. Operations Issues • In-house or contracted resources • Cost related issues

21. Financial Statements and Projections • Income statements, Balance Sheets and Cash Flow Statements for five years • Monthly for year 1 and quarterly thereafter • Should be bottom-up with top-down reality check. • Key assumptions in the projections • Sensitivity Analysis: Impact on projections from changes in the assumptions • Realistic, logical and attainable!!!

22. Items for Appendices • Detail of Financial Forecasts • Management resumes/bios • Patent Information • Pictures or drawings of product • Relevant articles in press or trade journals • Market research information • Summary of key contracts or business relationships

23. Our availability: • Generally available. Call or e-mail first to make appointment. • Steve • Call: 702-4513. • Fax: 702-0458. • E-mail: steven.kaplan@gsb.uchicago.edu • Ellen • Call: 834-3781. • Fax: 702-0458. • E-mail: ellen.rudnick@gsb.uchicago.edu

24. “Make no small plans!” • Aim as high as you can imagine. • If you think you have a real, valuable plan, go after the best: • Go after the best employees. • Go after the best advisors. • Go after the best strategic relationships. • Do not think that MBA students cannot go after them. • Speed, Speed, Speed!

25. Team Introductions and Elevator Pitches Professor Rudnick (34104-81, Mon.) • Brides Noir • CorrelSoft, Inc. • Custodial Engineers • DS2 • GMB Plastics LLC • Kid’sFirst • Loren Brown Hair Studios • Marketing Decision Partners • Milega • Occuity • Omnichip • Proxy•Mate • PureChem • Raicore Networks • Symphony Design Professor Kaplan (34104-01, Wed./Fri.) • Advanced Chromatography Systems • The Auto Shop, Inc. • Changing World Foods • CUBIS Group Inc. • DriveBase • Edu Fin • Feations • Harvey Washbanger’s & Co. • InfoUnity • Maroon Biotech • P.A.R.I.S. • PowerDict, Inc. • Supertilities • Toul AB • WITco