The Business Planning Process
Ayla Matalon
MIT Enterprise Forum of Israel
Technion BizTech, 2005
Motivation – why bother
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Communications protocol
Get acquainted with ‘battle field’
Plan for company growth
Form and focus ideas
Generate reliable business model
Attract capital
Stages in the forming of a start-up
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Initial Idea
Idea Formation
Study - Meeting with Clients
Bringing people in
Decision GO
A fairly good understanding of the Idea
Most of know-how necessary 4 biz plan
Developing a business plan
Raising Money
Saying goodbye to spouse, family, friends
The Business Plan
Who you are, What you are, What you wanna be
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Executive Summary
The Company / People
The Need and Business Opportunity
Product or Service
Market and Competition
Business Strategy, Marketing and Sales
Operations
Financials
Seven questions asked by
The Potential Investor about the idea
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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?
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Seven questions asked by
The Potential Investor
Does the TEAM show
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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?
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
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Is it Exiting? Convincing?
Do you want to learn more?
The Company
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Origins, objectives and management
History in brief, Key employees, Current status
Strategy in short (historical)
Does it inspire confidence?
Can this team make it?
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The People
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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?
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The Opportunity, the Need
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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
The Product or Service
The need the product meets
-- Nice to have, Enabler, Must have
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Product description and usage
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Competitive advantage
Does it show distinct Benefits?
Is it Unique? Operational pitfalls?
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The Market
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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?
The Competition
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Who they are
– products
– prices
– customers
– marketing approaches, culture
– positioning
– comparison (SWOT)
Is it open, revealing, specific?
Business Strategy, Marketing and Sales
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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?
Organization, Operations and Manpower
R&D, Production and Distribution
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How and when
Facilities
Subcontractors
Milestones
Is it going to work?
Can they make it happen?
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Risks and Uncertainty Factors
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How does management intend to
control and minimize risk (Market
Risks, Company Risks, people,
opportunity and context)
Does it address risk openly?
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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)
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Are the underlying assumptions
reasonable and clearly stated?
Do the results make sense?
PLAN AHEA
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The Financial Forecast
Goal
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Present business potential: ROI (return on
investment)
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Derive financial requirements
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Message of reliability and thoroughness
About the Financial Forecast
In high-tech companies the expenses is the
easy part - mostly personnel
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The difficult part is how to estimate the
revenue stream
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The number part needs to reflect
Company Strategy: how the market for
your product is going to work
Common Mistakes
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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
Summary
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The business planning process is a
continuous effort
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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