1

Business Plan
Essentials for
Social Entrepreneurs

2
Agenda

• Preparation
• Gathering information
• What to cover and how
to organize
• Success factors
• Something extra

3
Preparing

4
Why Undertake Writing a Business Plan

• Provides a road map • Challenges and refines

for where you are going strategies
• Provides a framework • Clarifies company focus and
for making decisions aligns resources
• Develops and tests • Sales tool for investors and
assumptions and partners
alternatives before • Gets buy in from the team
committing resources • Tool for getting feedback
• Helps determine the number • Builds in mechanism
and amount for staying on track and
of resources (both money evaluate success
and people) needed

5
Poll

From whom will you raise money?

• Angels (wealthy individual who invest in businesses)
• Bank
• Friends and Family
• Self
• Supplier / Vendor
• Venture Capital
• Other

6
How In Depth Does It Need to Be: That Depends

The longer the plan:

• The more sophisticated the lender
• The more money you’re raising
• The bigger the company at the start
• The faster the growth trajectory
• The more spread out the staff
• The more frequently the staff turns over
• The more outsiders and the more important their role
(funders, vendors, partners, strategic alliances)

7
Time Span

3 years
sometimes 5
depending on need

8
Who Will Be Involved and How

Name/Title Responsibility Task Timing Comments

Jane Doe, President •Oversight •Overall task master
•Legal issues
•Management /staff plan
•Strategic Partnerships
Jim Johnson, VP •Information gathering •Marketplace analysis
Product Development •Product description
•Operations
Maria Garcia, •Marketing •Market definition
VP Marketing •Note taking
•Positioning
•Marketing tactics
John Smith, •Financials •Budget, startup funds
Accountant separated
•P&L
•Balance Sheet
•Cash Flow
•Breakeven Analysis
•Assumption write up

9
Questions

10
Gathering
Information

11
Why Research the Feasibility of Your Business

• Determine your idea’s potential

• Define customer
• Size up the competition
• Test product and positioning

12
Where to Look for Information
• Internet search engines
by competitors’ names
or key words
• Trade associations and
publications
• Business and general press
as well as press releases
• Government agencies
• Corporate annual reports
13
• Investment firm research
• Private research firms such as
IDC, Forrester, Jupiter
• Online computer databases,
Nexis, Factiva
• Shop the competition
• Conduct your own research
What to Look for

• Market size
• Market needs and characteristics
• Market segments and underserved niches
• Market trends
− Industry − Regulatory
− Technology − Political
− Sociological − Economic
• Competition
• Data to help make budget assumptions/
financial projections

14
Compare Yourself to the Competition

• Been around • Information

a long time • Availability
• Quality • Credit card
• Exclusivity • Credit line
• Pricing • Warranty
• Extent • Accessories
of features • Positioning
• Service • Amount and
• Reliability location of
• Delivery advertising
• Location

15
Questions

16
Structure of the
Business Plan

17
Business Plan Sections

• Executive summary (written • Marketing strategy

last) • Operations
• Company summary / • Organizational plan
Description of business • Social impact assessment
• Contributions and • Financial information
milestones*
• Risk factors (competition
• Market opportunity ask for this section)
• Competition*

18
Company/Business Description Section

• Description of product/service • Mission and vision

emphasizing uniqueness • Business Model: describes
• Location what you are selling, how
• Legal Issues you will make money and
– Legal form why you will be successful
– Ownership • Development stage
– IP • Financial status
– Loans, leases, obligations • Contributions & milestones
– Contracts, Agreements

19
Vision/Mission

Together they provide direction and focus

on where your heading long term and
where you need to be today. If you get
into a bind, check your vision and mission
for direction.

20
Vision

• The dream
• This is about what could be
• It’s squishy, subjective
• It’s your rallying cry
• Use powerful, simple yet memorable
phrases that capture the essence of
your vision

21
Examples of Great Vision Statements

• John Kennedy: land a man on the moon and safely return him
to earth by the end of this decade
• Coca Cola: benefits and refreshes everyone it touches
• Avon: to be the company that best understands and satisfies the
product, service and self-fulfillment needs of women – globally.
• Microsoft: a personal computer in every desk top running Microsoft
software
• Dell: listens to customers and delivers innovative technology
and services they trust and value
• Amazon: to be earth's most customer centric company; to build
a place where people can come to find and discover anything
they might want to buy online
• Google: we provide access to the worlds’ information in one click

22
Mission

Answers
23
Example of Great Mission Statements

• American Red Cross: to improve the quality of human life; to enhance

self-reliance and concern for others; and to help people avoid, prepare
for, and cope with emergencies
• Avis: We will ensure a stress-free car rental experience by providing
superior services that cater to our customers’ individual
needs…always conveying the ‘We Try Harder®’ spirit with knowledge,
caring and a passion for excellence
• Long John Silver: to be America’s best quick service restaurant chain.
We will provide each guest great tasting, healthful, reasonably priced
fish, seafood, and chicken in a fast, friendly manner on every visit.
• Blockbuster: mission to become the complete source for movies
and games – rental and retail
• Patagonia: Build the best product, cause no unnecessary harm, use
business to inspire and implement solutions to the environmental
crisis

24
Developing Your Mission and Vision

• Create an overall picture • What’s the legacy you want to

of your company. create?
• Describe the purpose • What are the strengths
of the company. and opportunities revealed in
• Who are your company’s the SWOT analysis
customers and how do to be conveyed?
you segment the market? • What are the subjective words
• What differentiates your and terms that describe your
company from its company?
competitors?

25
Marketplace Analysis

Demonstrates both need and demand and shows

your understanding of the market’s demographics
and factors that will influence customers to buy
• External environment
− Industry − Regulatory
− Technology − Political
− Sociological − Economic

• Market description: size,

growth and demand
• Customers: segments,
purchasing
power and buying

26
Marketplace Analysis

Competition:
• Who else offers your product/service? Where?
• Who buys from your competitors?
What are their plans for growth?
• How important are your target customers to the competition?
What share of market do you have vs.
the competition per customer segment?
• Compare strengths and weaknesses to you:
− Product performance
− production/service delivery
− Experienced personnel
− Location
− Brand awareness
− Etc.
27
Marketing Strategy

• Define Market
− Demographic − Psychographic
− Geography − Purchasing habits
− Life / business style − Buying sensitives
• Product description
• Marketing objective
• Positioning: What’s your value proposition?
• Pricing
• Distribution channels
• Communications tactics: direct mail,
advertising, promotion, trade shows,
word-of-mouth, etc.
• Public relations
• Strategic alliances that help
penetrate the market faster

28
Operations

What are the key factors involved in creating your

product/service? How does the business work (production
process, supply chain, facility, equipment, management
information systems)? Differs by type of business:
 Manufacturing:  Retail:  Service:
How do you turn What are your hours Describe type
raw materials of operation, of people and
into finished systems, customer processes involved in
products? service practices and delivering the service.
Capacity store layout? How will you control
challenges? for quality? How
Quality control? will you handle
capacity issues?

29
Organization Plan

The strength of the management team is absolutely critical

to the success and to the ability to raise investment capital
and form strategic partnerships.
• Highlight management’s
experience, industry knowledge
and functional skills
• Include an organizational
structure
• Board of directors
• Advisory board
• Key consultants

30
Values and Social Responsibility

Social Responsibility Values

– Employees – Beliefs that have an emotional
– Suppliers investment
– Customers
– Community
– Environment

31
Tool: Value Impact Chain

Inputs  Activities  Outputs  Outcomes  Goal

Alignment
What is put Venture’s Results that Changes How well
into the primary can be (increases or outcomes
venture activities to measured by decreases) to align with
produce the venture – the social intended
financial and Social system goals; activity
social value Indicators and goal
adjustment

Source: Social Impact Assessment and Building Your SROI, Cathy Clark Faculty Advisor, GSVC Director, Research
Initiative on Social Entrepreneurship Columbia Business School

32
Tool: Value Impact Chain

Inputs  Activities  Outputs  Outcomes  Goal

Alignment
What is put Venture’s Results that Changes to Activity and
into the primary can be the social goal
venture activities measured system adjustment

−
What would
have
happened
anyway

= Impact

Source: Social Impact Assessment and Building Your SROI, Cathy Clark Faculty Advisor, GSVC Director, Research
Initiative on Social Entrepreneurship Columbia Business School

33
Exit Strategy

• Go public
• Acquisition/merger
• Sale
• Buy-out
• Franchise
• Hand down
• Close

34
Financials

• Income statement
• Cash flow statement
• Balance sheet
• Other
− Source and use of funding
− Startup costs
− Breakeven analysis
− Assumptions

35
Financials

• Develop realistic assumptions

– Forecast revenues based on industry standards
for price, sales volume and growth rate
– Cost of goods: source vendors and suppliers
for their fees
– Operations: project staffing needs with salaries and start
dates, fixed costs and marketing dollars
• Project realistic numbers
• Provide monthly data for 1st year, annual
for 2nd and 3rd year
• Consider 2 or 3 scenarios: best, worst, likely
• Include what’s important summarize the rest

36
Risk & Contingency

• Identify risk factors and

a plan for mitigating them.
– Market
– Competition
– Technology
– Production
– Execution
– Capitalization
– Economic

37
Appendix

• Letters of intent/key contracts

• Endorsements
• Photos
• Location list
• Market research results
• Managers resumes
• Technical/operational information
• Marketing material

38
Executive Summary

• Solve a problem
• Turn the problem into an opportunity
• Define the market and its potential
• Analyze the competition and
state your advantage
• Describe the company’s products
• Strategize on the best way
to market your product
• Portray solid management expertise
• Summarize financials and spell out
how much you need and for what

39
Questions

40
Success Factors

41
Questions to Ask Yourself

• Does your idea solve a significant

problem, meets a significant
unmet need
• Offers a profit potential (reward)
that it outweighs the risk
• Good fit for your expertise
• Opportunity for profits will exist
for a reasonable length of time –
forget fads
• People will want to finance idea

42
Questions Others Will Ask

Is the idea solid?

Is the industry healthy?
Is the market large enough?
Do they understand the market?
Are the financial projections
realistic and positive?

Is management experienced and capable?

Does the team have Are they passionate and motivated?

values and integrity?
Are they strategic and flexible?
Do they have good control
of their finances?
How will I get my money back?

43
Dotting the “i” and Crossing the “t”

• Clear and compelling

• Accurate data
• Credible sources
• Jargon-free
• Clear typeface 11 or 12
point type
• Include graphics
and charts
• Use color for emphasis
• Correct typos
and grammatical
mistakes

44
Questions

45
Something Extra

46
Nondisclosure Agreement (NDA)

• Increases chance of information

remaining confidential
• Prohibits recipient from disclosing
information in your Business Plan
• Nothing guarantees confidentiality
• Venture capitalists and
professional investors
will NOT sign NDAs

47
5 Ways to Name

• Take the names of people, animals, places or symbols:

Johnson & Johnson, Procter & Gamble, Scientific Atlanta, Ford, Heinz,
Alamo, Eli Lilly, Disneyland, Stengel Solutions
• Literally describe the business, product or service:
American Airlines, General Motors, Metropolitan Life, General Electric,
Universal Studios
• Use contractions, acronyms and initials:
IBM, FedEx, Nabisco, ESPN
• Make up a nonsense name, or pick an unrelated or coined name,
or use a foreign phrase that sounds good:
Google, Yahoo, Zocor, Exxon, Dos Equis, TiVo, Xerox
• *Come up with a benefit-related name:
Spic and Span (household cleaner), Edge (shaving lather),
Head & Shoulders (shampoo), Nice ’n Easy (hair coloring),
I Can’t Believe It’s Not Butter! (margarine)

48
Identify Your Reasons For Starting a Business

• This is personal journey

• There are no right
or wrong answers

49
Determine the Additional Support You’ll Need

• Take classes
• Join industry groups
• Join networking groups
• Network
• Join peer-to-peer
mastermind or CEO
Roundtables
• Read books and magazines
on entrepreneurs and
entrepreneurial techniques
• Find a mentor or advisor
• Use a coach

50
Set Your Own Direction

51
Getting Ready to Grow: The Tools You’ll Need

• Email me at
info@ventureneer.com for
this ebook.
• Include Getting Ready to
Grow in the subject line
• Find out more about
Ventureneer’s 8 week class:
Business Plan Essentials

52
Suggested Reading

• Harvard Business Essentials Entrepreneur’s Toolkit: Tools and Techniques to Launch and Grow Your New Business
• Values-driven Business: How to Change the World, Make Money and Have Fun by Ben Cohen and Mal Warwick
• stengelsolutons.com
– Ten Tips for Developing a Meaningful Market Analysis
– Ten Tips to Getting Valuable Feedback Online
• Stengel Solutions Handouts (to be emailed)
– Hungry for Feedback That Will Really Grow Your Company? Create the Perfect Survey
– Redefine (Define) the Company Vision/Mission
– Sample business plan
• WSJ.com
– Why Business Plans Don’t Deliver: The five most common flaws—and how to fix them
http://online.wsj.com/article/SB10001424052970204830304574133501980701202.html
• Entrepreneur.com
– How to Research Your Business Idea
http://www.entrepreneur.com/startingabusiness/businessideas/evaluatingyouridea/article70518.html
– How to Name Your Business
http://www.entrepreneur.com/startingabusiness/startupbasics/namingyourbusiness/article21774.html
– Full Dream Ahead
http://www.entrepreneur.com/magazine/entrepreneursstartupsmagazine/2004/february/68924.html
• MyOwnBusiness.com
http://www.myownbusiness.org/s2/index.html
• Business Week
http://allbusiness.businessweek.com/business-planning-structures/business-plans/437-1.html

53
Questions

54