Business Plan A Business Plan is a well thought out document describing why, how, and when the firm will accomplish economic viability which basically comes from sustained positive cash flows.

Target Audience for the Business Plan

  1. VCs / Angel investors
  2. Potential senior employees
  3. Bankers
  4. Attorneys and accountants
  5. Leasing companies

Stages in the Growth of a Company

  1. Idea / Concept
  2. Prototype / Proof of the concept
  3. Incubation / Product development
  4. Organization building
  5. Scale up (alliances, partnerships)
  6. IPO: Initial Public Offer

Sources of Funds

  1. Idea /Concept: Personal savings
  2. Prototype: Loan from friends and relatives
  3. Incubation: Angel / Early stage fund
  4. Organization building: VC, first round
  5. Scale up: Second round / growth/ scale up funds/ PE
  6. IPO: Investment bankers, underwriters

What is the VC Looking For in a BP ?

  1. Basic value proposition
  2. Market size, segmentation, target customers, competitors
  3. Entry barriers, IP protection, Unique Selling Points
  4. Technology expertise and domain knowledge
  5. Alliance and strategic partnerships
  6. Promoters, Board of Directors, Top management (VPs)
  7. Team (Project management, execution capabilities)
  8. Scalability and growth potential
  9. Marketing and selling plan: channels, distributors, customer acquisition costs
  10. Milestones and deliverables (prototype, proof-of-concept, beta customers)
  11. Requirement and application of funds: Setting offices, where, how many?
  12. Equity/Capital structure, Financing policies (debt/equity ratio)
  13. Revenue model: Sources of revenue (service/product mix)
  14. Profitability, break even point, growth estimates (revenue, team size)
  15. Risks and contingencies: De-risking/risk management/risk containment plan
  16. Projected (pro-forma) financial statements
  17. Exit strategy (IPO, equity buyer, strategic buyer, Merger & Acquisition)
  18. Valuation and offer (equity price, number of shares)

Business Plan Sections Checklist

  1. Executive summary
  2. Introduction / Company overview
  3. Concept / Proposition / Product description
  4. Market opportunity
  5. Competition survey
  6. Development plan and milestones
  7. Marketing plan
  8. Team
  9. Financials
  10. Offer
  11. Appendix