Contrarian views on

business planning
 Chapter 16

Developing a sustainable
business plan
 Objectives
1. To define a sustainable business plan and demonstrate its value
2. To describe the benefits of a business plan
3. To set forth the viewpoints of those who read a business plan
4. To understand the mind-set of your five-minute reader
5. To see a complete outline of an effective business plan
6. To present some helpful hints for writing an effective business plan
7. To highlight points to remember in the presentation of a business plan
8. To underline some of the contrarian viewpoints on the importance of a
business plan
 A business plan is a work of art
• You can’t raise money without a business
plan… a business plan is a work of art in its
own right. It’s the document that personifies
and expresses your company. Each plan,
like every snowflake, must be different.
Each is a separate piece of art. Each must
BP for Involution Studios
be reflective of the individuality of the “Magical Software for
Personalized Medicine”
entrepreneur.
– Joseph R. Mancuso, How to Write a Winning Business
Plan
 But first

? Why can’t you just start a business

on the back of a napkin?
Who reads a business plan
anyway?
What would a ‘sustainable’
business plan include?
 Review slides
Why do we say from Chapter 3
'sustainable' BP?
• Traditional definition
– surviving or maintaining a business’ viability
against its competitors.
• New definition
– real commitment to the environment and climate
change mitigation/adaptation as well as a
revamping of the entire business model to its core.
– providing products and services without
jeopardizing the environment
The need for a sustainable business plan
• Remember this slide from Chapter 1?
– Famous roller coaster entrepreneur Carl Miler’s brilliant
innovation swept away by global warming.
• Usually it’s about finance, marketing and personnel . . .
• But today more and more investors are demanding
that BPs focus on People, Profits, and Planet.
• You must write for both definitions of sustainability.
• BPs have to take into account . . .
– Volatile weather, economic instability, interruptions to
transport, energy and water, availability of raw materials,
food supply glitches, and regulatory changes

8
 The need for a sustainable business plan

• What do you expect

people to do with your
product when they have
finished using it?
• Take electronic waste
as an example
• The entire life cycle of
the product must be
considered
 Ecology of entrepreneurial
business planning
• A business is not separate from the
biosphere.
• Industrial ecology sees business
as a series of interlocking
ecosystems
• The biosphere surrounds the
socioeconomic and regulatory
systems in which the firm operates.
• The goal is to pick the least
burdensome environmental and
social outputs when designing
products and services.
 Contrarian views on business planning
• ‘Business plans are the
equivalent of “intellectual
push-ups”. Nice exercise,
but not necessarily
relevant to anything in the
real world’.
 Lean canvas
business planning
• Instead of writing a long and in-depth
business plan, Lean Canvas Planners
advocate a simpler approach,
essentially on a single sheet of paper.
• Osterwalder’s Business Model
Canvas puts all the complicated
strategies of your business in one
simple diagram.
• Each box details your company’s
strategy.
 Lean canvas
business planning
• Lean canvas may be useful for high-
growth, technology gazelles
• But some entrepreneurs must first
thoroughly research the customer.
• Lean Canvas doesn’t help
entrepreneurs determine if their
company is truly financially viable
without rigorous financial planning.
• You are going to get nowhere with
banks and private investors without
a plan.
A short ‘pitch deck’ may be enough
• What is the opportunity? • How do you connect to customers?
• What gives you special advantages in • What is the secret of your expected sales
solving the problem? success?
• What makes you think that your people are • What have you learned from the
especially qualified to grow this business? competition?
• What is the business model? • What are the risk factors?
• What makes it scalable? • How will you make money?
• How do you know you’ll have customers? • How will you use the funds you raise?
Original pitch deck for Josef Schumpeter Entrepreneurship University
 Business model Accelerator Start-up weekends Demo days and Prize
competitions competitions and hackathons pitch events challenges

Foster student Evaluating the best Showcasing

Entrepreneurs entrepreneurs Solving big
Reasons for success and ideas to enter encouraging and viable problems or
competition ultimately
demonstrate
to ‘acceleration’ for
eventual collaboration among ventures to VCs addressing specific
credibility.. investment. themselves. and angel markets.
investors.

Faculty, local Seed-stage angel Professional full

mentors, investors, Local entrepreneurs, Seed angel
investors, VCs, time or volunteer
Judging entrepreneurs, successful local business successful committee.
some investors entrepreneurs leaders entrepreneurs. Sometimes judged
by ‘the crowd’.
Business plans Submit basic Collaborate with Successive rapid Varies. Often
submitted and application. Live peers over long pitches in front successive
Structure reviewed. Live pitch/demo at an weekend. Demo and of judges and judging/pitch
evaluation of event. pitch in front of audience. competitions.
finalists. judges.

Entrance Business plan. Application, team, Hands-on Pitch, basic Innovative

criteria pitch/demo. development skills. product demo. prototype/product.

Seed-capital, Team formation. VC/angel Cash prize.

Ideal Cash prize, participation in a Prototype. Idea investment. Customer validation
outcomes recognition. program. Startup validation. Cash Visibility and /adoption. Visibility.
development. prize/services. traction.
In business planning, never
forget your ‘north star goal’
• Achieved in a reasonable timeframe
• Can be acted on by your team
• Connects to the core of the business
• Drives excitement and passion
• Serves a higher purpose than business
profitability
• Solves a great human challenge and
• Leverages your organisation’s strengths.
 Benefits of the business plan
• Stakeholders get a lot out of a business plan.
• Provides the financial details
• Helps identify risks
• Provides a useful guide for
assessing the entrepreneur’s
planning and managerial ability.
• May help you avoid a project
doomed to failure!
Benefits for the entrepreneur
• Forced to view the venture objectively.
• Scrutinises your assumptions
• Lets you develop operating strategies
• Quantifies your objectives, providing
measurable benchmarks
• Gives you communication tool for outside
financial sources
 Benefits for the funder
• Gives them the details of the market potential
• Show the venture’s ability to service debt or
provide an adequate return on equity.
• Identifies critical risks, crucial events and
contingency plans
• Gives them a thorough business and
financial evaluation.
• Give them a guide to assess you planning
and managerial ability.
 Who reads the plan?
• Obviously venture capitalists, • ‘Five-minute reading’
bankers, angel investors, 1. Characteristics of the industry.
potential large customers, 2. Financial structure
lawyers, consultants and 3. Balance sheet
suppliers 4. Quality of entrepreneurs
• You need to understand three 5. Establish the unique feature
main viewpoints when 6. Read over the entire plan
preparing the plan lightly
 How to structure a
business plan

? • Eight to 12 sections (depending

on the idea, the industry and
the technical details)
• Length of a plan is 25 pages
• See complete outline in book
Table 16.2.

Yahoo’s original BP
 How to structure a
business plan

?
See complete BP outline in book Table 16.2.
Yahoo’s original BP
 Executive • Write this after the rest of the business plan
Business
summary plan segments
• A clever snapshot of the complete plan
How to structure a
business plan Business • Business name and industry background
description • Thoroughly describe the venture

Sustainability • Define sustainability relevant to the business

• Includes marketing vision, market trends,

Marketing competitor analysis, remarkable difference

• Prototypes, lab tests, blueprints, sketches,

R&D developmental budget.

• Location, labour availability, wage rate, suppliers,

Operations customers, taxes and zoning, plant and equipment
 • Key personnel, advisers, consultants, board
Management
Business plan segments
• Structure of payment and ownership
How to structure a
• Demonstrate the viability of the undertaking
Financial
business plan
• Pro forma reporting

• Unfavourable trends, difficulties

Critical risks • Cover the what-ifs

• Orderly transition
Harvest strategy • Management succession and exit strategies

Milestone • Provide a timetable for the various activities

schedule • Timeframes

Appendix • Additional documentation

bibliography
Use the
business plan
assessment
tool in the
book.
 Updating the business plan
• Update in the event:
– of financial changes
– of additional financing
– of changes in the market
– of launch of a new product or service
– of new management team
– to reflect the new reality.
 A practical example

See Appendix 1 for

an example business
plan – ‘Cocoa Samoa
Ltd’
 The pitch

?
• Now it is written, how can you
(verbally) present your plan to an
audience?
 The pitch

• Presenting the plan to stakeholders –

especially funding providers
– Either individually or in groups
• Also known as ‘the elevator pitch’
• Be organised, well-prepared, interesting
and flexible
 The pitch

• Know the outline thoroughly

• Use keywords that help recall examples,
visual aids or other details
• Rehearse the presentation
• Be familiar with any equipment
• The day before, practice it in full
 The pitch

• Focus on the consumer pain

• Demonstrate a reachable market
• Explain the business model
• Tout the management team
• Explain your metrics
• Motivate the audience
• Answer: ‘Why you?’ and ‘why now?’
 The pitch

• Focus on the consumer pain

• Demonstrate a reachable market
• Explain the business model
• Tout the management team
• Explain your metrics
• Motivate the audience
• Answer: ‘Why you?’ and ‘why now?’
What to do if they turn
your down
 Key concepts

?
(close your books)
1. What is a business plan and
what does it describe?
2. What are the main segments in
a business plan?
 Key concepts
A business plan is a written document that
describes:
– current status
– expected needs
– projected results of the new business.