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Business Plan Whats the Big Deal? Ted Trujillo Director Sandoval County Small Business Development Center

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SBDC offers FREE business counseling to NM small business owners and start-ups. We also conduct business training programs. Assist both for profit and non-profit organizations. IBA International Business Accelerator Assists NM small businesses with expanding to international markets. Conduct trade missions. PTAP Procurement Technical Assistance Program Assist NM small businesses with securing governmental contracts. ($84M in 2 years) New Mexico Small Business Development Center

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New Mexico SBDC Offices

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Sandoval County SBDC Bernalillo Office Rio Rancho Office Ted Trujillo Director, Certified Business Advisor Melanie Martinez Administrative Assistant 282 Camino del Pueblo Bernalillo, NM 87004 (505)867-5066 Aaron Lundquist - Certified Business Advisor 4001 Southern Blvd. Rio Rancho, NM 87124 (505)892-1533 www.nmsbdc.org

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Business Plan Overview Why write a Business Plan? What do Investors Really Want to Know? What is the Tone and Content of Business Plan? Will you make the cut?

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Why Do I Need A Business Plan? Reduces Risk by forcing evaluation of: - Market demand for product or service - Strategies (business structure, marketing, distribution) - Competition - Financing Critical to obtain funding. Means to managing change. Foundation of your conversations with investors: elevator speech, executive summary, PowerPoint. Unite management team with common vision. Attract key employees, strategic partners, board of directors or advisors. Creates a blueprint for your business. Serves as a cache for critical information such as competition, marketing, etc. Understand your business better than anyone else. Identify Opportunities.

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When Is a Business Plan not Necessary?

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When you can afford to fail.

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What Are the Benefits of Writing a Plan? Forces you to think through details If you fail to plan, plan to fail Establishes creditability Finds answers to problems before you spend money.

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How Long Does it Take to Write One? It depends! You can write a good plan in 8 10 pages. More complex businesses will require 20 30 pages 200 300 hours, 3 6 months for more complex plans. THE LONGER THE STORY, THE WEAKER THE CASE!

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Who Should Write the Business Plan? You should! Own your plan Seek critique from other professionals SBDC (Small Business Development Center) SCORE (Service Core of Retired Executives) WESST Corp. (Womens Economic Self-Sufficiency Team) TVC (Technology Venture Corporation)

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Provides a Reality Check After writing the plan, you will discover: 1.Objective is not worth effort. 2.Business is not feasible. 3.You are sitting on a gold mine!

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What do Investors Really Want to Know?

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Answers to These Questions Can you create something of value for customers? Can you capture economic value in the face of competition? What is your business model for making money?

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Good Plans Persuade Professional summary Business knowledge Energy and optimism Compelling tone Describes: People, opportunity, context, risks, rewards Clearly shows investors how you will create value in the marketplace to make them money.

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What is the Format? Executive Summary Company Description Target Market Description Competitive Analysis Marketing and Sales Plan Operations Plan Management Team/Key Personnel Financial Statements start-up sheet, 3-year pro forma income statement and balance sheet. Banks will also require a personal financial statement.

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Executive Summary Most important part of business plan 1 2 pages, 3 at the most. Stands independently. Contains all Major Components of Plan. Entices investor to delve further. This is written last!

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Description of Business Opportunity Captures vision. Touches on product origin. Why concept is worthwhile. Milestones achieved. Market niche/competitive advantage. Financing of the company. Conveys sense of urgency.

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The Product or Service Pain product or service addresses in the marketplace. Stage of development and time to market. Benefits/advantages over the competition. Avoid appearance of being in love with your technology. Source of technology and rights.

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Intellectual Property (IP) Strategy Poses legal barrier to others. Entrepreneur must understand: Where IP came from Who owns it How the company acquires rights in it. If proprietary, steps taken to protect IP. Establishes legal rights

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Examples of Things That can be Protected. New product or service and its name. New software. New technical or business method or process. New promotional or merchandising approach. New packaging. New design. Identity of a critical supplier. Refinancing plan.

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Types of Intellectual Property Confidential disclosure agreements. Employment contracts. Consultant contracts. Supply contracts with customers. Registration on domain names. Trademarks/copyrights Licenses Patents

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Who is Your Customer? Everyone may not be your customer. Try to pinpoint by demographics: Male or female Age Income level Place or business/residence Education Buying habits Try to identify decision makers. The better you can isolate who your customer is, the better you can figure out how to best market to them and let them know about you and your products or services.

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Identify and Acknowledge the Competition Everyone has competition. Study competition to see areas that you can use to your advantage. See what you competition does well and try to figure out how to copy or improve upon. Do a SWOT analysis. Strengths, Weaknesses, Opportunities, Threats.

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Competitive Landscape Comparison Company What we can do and they cant. What we cant do and they can. Company X Company Y Company Z

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Consider the 4 6 Ps of Marketing: Product Place Price Promotion Position Politics Harvard Business School School of Hard Knocks

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Describe Business Strategy Milestones you will take to achieve economic targets: Letters of intent from strategic partners by Sept. 2011 Key hires complete by Oct. 2011 Field testing complete by June 2011 Sales distribution channel complete by August 2011 Full operational by Nov. 2011 25 signed contracts by Dec. 2011

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Economics of the Business Revenue Profit Breakeven Months to Positive Cash Flow

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Financial Plan Income statement Balance Sheet Cash Flow Breakeven Points (Profits and Cash) Ask (Investment sought) Use of Funds Include assumption: Be specific on how business will generate revenue.

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Income Statement - 12 Months Period Starting:Month 1Month 2Month 3Month 4Month 5Month 6Month 7Month 8Month 9Month 10Month 11Month 12Totals Sales 0 Other 0 Total Sales 0000000000000 Less Cost of Goods Sold Materials 0 Labor 0 Overhead 0 Other 0 Total Cost of Goods Sold 0000000000000 Gross Profit0000000000000 Operating Expenses Salaries and wages 0 Employee benefits 0 Payroll taxes 0 Rent 0 Utilities 0 Repairs and maintenance 0 Insurance 0 Travel 0 Telephone 0 Postage 0 Office supplies 0 Advertising 0 Marketing/promotion 0 Professional fees 0 Training and development 0 Bank charges 0 Depreciation 0 Miscellaneous 0 Other 0 Total Operating Expenses 0000000000000 Operating Income 0000000000000 Interest income (expense) 0 Other income (expense) 0 Total Nonoperating Income (Expense) 0000000000000 Income (Loss) Before Taxes 0000000000000 Income Taxes 0 Net Income (Loss) 0000000000000 Cumulative Net Income (Loss) 0000000000000 INCOME STATEMENT (Profit & Loss)

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Balance Sheet

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Cash Flow Statement

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Break-Even Chart $

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Why Plans Fail to Make Cut Insufficient or poorly understood market Non-credible technology Not protected Not proven Team not credible Action plan not credible Horribly written plan Too long, typos, poor grammar Technological treatise Entrepreneurs demand for a non-disclosure agreement because plan contains confidential information.

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Final Thoughts Tell a consistent story between plan and financial statements. Everyone has competition. Not everyone is a customer. Get professional help in reviewing your plan. Check for grammar and spelling errors. Check your FICO report before seeking funding. Study your customer and your competition and adjust your plans as market conditions dictate.