Business Plan through investors' eyes

How many times have you had a great idea, you presented it to your management, just to hear: "what you have is a great solution, looking for a problem"? What is the right approach to new business?

Is it good to have competition? Is the competition only coming from direct competitors? (hint--no…) How can you identify your competitors, current and in the future? Why is it important to disclose this in a business plan?

Identifying the competitors in your market is relatively easy, but how do you identify companies who are not currently competitors, but may enter your market and surprise you?

In this lecture I’ll talk about one of my most favorite source of competitive advantage: the secret sauce, or rocket science. Just like Coca Cola maintained its competitive advantage over 130 years.

This will be far from legal advice. However, in this lecture we will talk about the different kinds of patents, how to apply, what is the process, and the value they provide as a competitive advantage.

Often I heard "it takes more than two people in a garage for a year to do this" as a proposed competitive advantage. Does it? And what if the other company is Google? When does man-years serve as a competitive advantage, and when not?

Will you be able to establish a sustainable competitive advantage by being first to market? When will it work, and when will it not?

Can you have exclusive access to resources or customers? What is the competitive value of such access? What did AOL really buy in their $407m acquisition in 1997?

This is a question I often ask when I teach in a classroom. And for the most part--I get the wrong answer. The real answer will surprise you, and I will back it up with real life stories.

You may have a strategy to keep you price by adding features, functionality, or performance. However, typically your prices will decline over time, and so will your costs. This lecture will show you how to calculate and estimate those price and cost reductions.

You are not the average customer. You are biased towards your idea, but your customer will make a more rational purchase decision based on their return on investment.

What is the size of your target market? How do you find this information? Can you find it free of charge? (hint--yes…) Is the market large enough to interest your investors?

Just looking at some of the other "business plan" classes, I find the question: "is the market big enough?" Well, my experience proves that you also need to ask if the market is small enough. That's right.

Is it the PowerPoint presentation? The Word document? The Excel Spreadsheet? Their Google or Apple counterparts? The most important part is actually the assumptions that you make. The rest will fall out of them.

The previous lecture discussed the importance of the assumptions. This lecture will give you a list of the assumptions you need to make, along with real life examples from business plans I created.

Your business plan is as strong as your base assumptions. But those can change over time. How sensitive are your financial results and expected return on investment to changes in your basic assumptions?

This lecture is not a mini-course in financial statements or reporting. However, it will show you how to simply turn your assumptions into financial projections, which will be the basis to determine the viability of your business.

Finally, in this lecture we will determine if your business is viable and worth pursuing by you or your company. We will obviously need to invest in the business, but will we get a better return on that investment than we could get by depositing it in the bank?

If we had the money to start the business, we would probably not look for investors. However, we don’t, so we do. Investors are much more rational than we are, and will invest for the financial return. Can we promise the investor a solid return on the investment, while considering the risk?

In the 1990s, the word IPO (Initial Public Offering) was common to describe how will your investors (and you) convert their ownership into a magnificent return on investment. You hardly hear the word IPO anymore. However, your investors still consider the "exit strategy," or how to liquidate their investment. How do you create a good exit strategy for them?

All the lectures leading to now taught you how to create the content. Now it is time to format it and turn it into documents. What needs to go in a business plan? What are the different elements? What is the appropriate size? Format?

Right before going into one of my first business meeting in the US, almost two decades ago, my CEO said "never go into a meeting if you don't know what the outcome will be..." It didn't make sense at the time, and this lecture will explain why it makes perfect sense. You are presenting to people, and you need to know what they care about. You need to "do your homework" before the meeting.

You need to have a "hard stop" after you shared your assumptions with the investors, to see if they would challenge it. This lecture will discuss that pause in your presentation, and how to make sure you focus on what the investors want to hear, rather than what you have to say.

Often entrepreneurs lose track of time when presenting. The investors might have questions. Some things need to be explained in details, and before you know it--you are out of time, and you didn't cover everything. This lecture will provide tips on how to stay on message, stay on topic, and more important--stay on time.

"A picture is worth a thousand words." One second of video is worth 60 pictures... A demonstration of your product, service, process, or business model is priceless. After this lecture you will learn how to put together a "quick and dirty" demo for your audience.

You have a great idea, and you followed the guidelines in this course, and the investors like it. Now they will spend time validating what you told them. This process is called the Due-Diligence process. How long it will take depends on how prepared you are. This lecture will prepare you for a quick due-diligence process.

In a way of a summary, I will now share with you a few stories in which I (and others) have made mistakes, so you can learn from them and avoid them.

In the introduction lecture I told you what I will tell you, then through 30 lectures I told you, and now I'll tell you what I told you, so you will remember and get value out of this course! Use this lecture in the future when you need a quick reminder of all the advice you received in this course.