The Entrepreneurs Guide to Business Planning

The Entrepreneurs Guide to Business Planning

Your plan must be for an idea that is linked to Life Sciences with a Biological component. The
idea could be based on your undergraduate research project, a scientific paper you have
read, a scientific product you have used, a published patent or your own idea. Examples
include: new scientific equipment; providing a service for scientific companies; products that
are used in food, cosmetics, pharmaceutical, biotechnology industries; environmental
products etc. Provided there is a Biological component this should be acceptable, if you are
unsure about your idea ask before writing the plan.
The criteria for the assessment of the elevator pitch will be the marks given by the panel an effective presentation, coverage of key attributes of business proposal including economic and commercial considerations plus inclusion of statements of key details that an investor would need to follow up on the presentation. Criteria for the assessment of the business plan will include the standard of presentation and analysis of the business, the feasibility of the project, the projected capital and financial structures and the evidence of economic and commercial understanding within the plan, especially presentation of it to potential investors. The criteria for assessment of the skills for preparation of a CV will be with reference to an “ideal” CV issued to the students, with particular attention paid to neatness, intelligence of presentation and content.
1. understand all the economic and commercial considerations which determine successful development of scientific research discoveries;
2. befamiliarwiththewiderangeofapproachesusedtostart,runandcontribute to a Bioscience linked Business;
3. develop a critical understanding of the different methods and resources used to plan a commercial venture in the Bioscience Industry;
4. be able to use patenting and other methods to protect intellectual property rights;
5. generate and present business plans that include an appropriate CV with respect to biotechnological products.

Writing a Business Plan

This document contains some suggestions on what your Business Plan should contain, although these should not

be viewed as rules or requirements but only as guidelines.

Phase 1: Firstly you will develop an idea. The aim will be to write a short summary of your idea for a business.

This can be based on the template (IdeaTemplate.doc), which is available on Blackboard. This document will form

the background to build your plan around. In effect it can form a draft of your Executive Summary.

Your idea should be based around a single publication as the technology you are building your imaginary

Business around. This publication can be a piece of scientific research (use Science Direct or PubMed Central to

access full papers) or a patent publication (use the European Patent Database for a downloadable pdf of a

patent).

As part of the course you will be required to make a short 2 minute elevator-pitch presentation to staff and

students in week 5 and this Phase 1 idea is a useful preparation for this section.

Phase 2: The IdeaTemplate has a well-defined structure and can be built on in your Business Plan. However, the

plan will be a longer document with fewer restrictions on the structure than in the Phase 1 and will be in the form

of a business plan. The business plan must cover a number of topics, but can be expected to include:

• Executive Summary

• Background

• Product and Sevices Description

• Market analysis

• Financial Projections

• Risk analysis

Again, there are notes on writing a business plan later in this handbook. Sample business plans can be found on

the internet. Please note that your plan will be submitted through Turnitin and you must be very careful not to cut

and paste from these sites. You are required to give a presentation on your plan in Week 12 and it will be very

clear to the examiners how well you understand your plan.

Phase 3: A real Business? This section gives advice on how to take such a venture from a plan to a reality……

The Entrepreneurs Guide to Business Planning
PHASE 1 – THE IDEA SUMMARY

The first stage of evaluating an idea is a short summary of the idea. This is sometimes known as the Preliminary

Venture Analysis (PVA).

A PVA is a framework for a quick analysis of a business opportunity. It provides a concise overview of key factors

relating to the likely viability and success of the business idea, and provides a framework for deciding whether

more detailed work and investment of time and energy is warranted. It can play an important role in helping to

communicate the nature of the opportunity to other interested parties.

What Should the Summary Look Like?

There is no ‘one right way’ to construct a PVA. However, the following framework is strongly suggested. The

document should start with a short executive summary and a brief discussion of the proposed venture under the

following headings. The complete document should be short – no more than two to three sides of A4 at most! So,

it is important to remember that the following topics and questions are indications of what you should think about

and not all of the points will need to be covered in the summary – only the most important points are relevant.

Opportunity conditions

Examine the context in which the opportunity occurs. For example, why does the opportunity exist, what is the

time frame in which it occurs, can the opportunity be captured?

• Feasibility – technical and marketing

• Competitive advantages – core competency – “why us”?

• Pay-off – over the next 5-7 years

• Time window for this opportunity

• Can the opportunity be harvested? Do you have an exit strategy?

• Product/service strategy is sound

• Entry strategy is sound

• Linkage between technology and the market

• Why is this opportunity for you? Can a team be built to do this?

Describe your business

What have you got that is of value? Describe what it is, what its development status is, what the first product and

future products are, what does it do, and not do? Also include here your intellectual property position, e.g. can it

be protected?

• Description of the business.

• Development status – current status, time to first sale; tasks and resources needed.

• Protectability (intellectual property position – copyright/patent?).

• First products/services, follow-on products/services.

• Customers – first customers and why they will buy from you. Later customers.

• Strengths/weaknesses of product/service.
Examine the market

What does the market for your product or service look like? What is the size of the market and what trends are

relevant? How is the market segmented, who are your customers, how will you reach them, how will you enter the

market?

• Size and trends – 3 or 4 years history and 5 years future.

• Customers – prior direct contact, in-person survey, the buying decision.

• Entry marketing plan – products, customers, marketing and sales effort, number of units, sales, growth

rate (5 year projection).

Examine the competition

• What is nature of the competitive environment? Who is doing it now, who are they, where are they, how

are they doing it, and what are their strengths and weaknesses?

• Names of competitors, location, size, products sold, strengths, weaknesses, age, sales tactics, pricing,

financials.

Examine the economics

• Describe your business model. How much will your product or service cost, how long to profitability,

where is the money coming from, and are the risks and rewards acceptable?

• Estimate of selling price, costs, margins, Break Even, months to Break Even, months to positive cash

flow, Return on equity, estimate of capital needed for start-up and for 2nd year and 3rd year sales, source

of funds.

Examine the potential team required

• Do you have ability to make it happen? What are your strengths, skills and experience? What evidence

do you have of past achievements, what skills are lacking and how will gaps in your team be filled?

• Commitment of founders.

• Relevant experience.

• Team voids – how will they be filled? When?

• Positions, responsibilities, ownership of founders and team members.

Risks and Problems

• Demonstrate that you have considered the challenges you will face. How will you protect the downside,

what is your exit strategy, and how will you minimise the chances of failure?

• Risks and problems – impact on venture, how to minimize.

• Overall risk of venture. Changes in venture concept

• Identify changes in concept of venture resulting from above analysis.

• Decision -GO or NO GO.
Next steps

What do you need to make your venture happen? What are the next steps, where do we go from here, what do

you want?

Usually the amount needed to develop the market is underestimated – you need to include channel development

and customer education.

Usually marketing people are brought on too late in a company’s development.

Finally, ask yourself: “why hasn’t someone done this before?”

The Entrepreneurs Guide to Business Planning
PHASE 2 – THE BUSINESS PLAN

The business plan can mean different things to different people and can be modified to suit a particular purpose.

Broadly speaking the business plan should explain the nature of the company’s business, what it wants to achieve

and how it is going to do it. The company’s management should prepare the plan and should set challenging but

achievable goals.

In essence, much of what will be included in a business plan is an extension of the information already considered

in the idea summary (see previous section) and is a natural extension of it.

Frequently the Business Plan is used to raise investment in the business. The business plan must therefore

convince the investor that the company and the management team have the ability to achieve the goals of the

company within the specified time of the plan. The length of the business plan depends on the particular

circumstances but, as a general rule, it should be no longer than six to ten pages. It is important to use plain

English – especially if you are explaining technical details.

The following covers the important areas of a business plan and can be applied to almost any business. The

format and structure of a business plan though can vary widely depending on the business in question and the

perspective of the people putting the plan together.

Important Areas to Cover

Executive Summary

This is the most important section and is often best written last. It summarises your business plan and is placed at

the front of the document. It is vital to give this summary significant thought and time, as it may well determine the

amount of consideration an investor will give to your detailed proposal.

It should be clearly written and powerfully persuasive, yet balance “sales talk” with realism in order to be

convincing. It should be limited to no more than two pages and include the key elements of the business plan.

Background on the company

Provide a summary of the fundamental nature of the company and its activities, a brief history of the company and

an outline of the company’s objectives.

The product or service

Explain the company’s product or service in plain English. This is especially important if the product or service is

technically orientated. A non-specialist must be able to understand the plan.

• Emphasise the product, or service’s competitive edge or unique selling point.

• Describe the stage of development of the product’s or service. Is there an opportunity to develop a

second-generation product in due course? Is the product or service vulnerable to technological

redundancy?

• If relevant, explain what legal protection you have on the product, such as patents obtained, pending or

required. Assess the impact of legal protection on the marketability of the product.

Market analysis

You need to convince the investor that there is a real commercial opportunity for the business and its products

and services. Offer the reader a combination of clear description and analysis, including a realistic “SWOT”

(strengths, weaknesses, opportunities and threats) analysis.

• Define your market and explain in what industry sector your company operates. What is the size of the

whole market? What are the prospects for this market? How developed is the market as a whole, ie.

developing, growing, mature, declining?

• How does your company fit within this market? Who are your competitors? For what proportion of the

market do they account? What is their strategic positioning? What are their strengths and weaknesses?

What are the barriers to new entrants?

• Describe the distribution channels. Who are your customers? Comment on the price sensitivity of the

market.

• Explain the historic problems faced by the business and its products or services in the market. Have

these problems been overcome, and if so, how? Address the current issues, concerns and risks affecting

your business and the industry in which it operates.

• What are your projections for the company and the market? Assess future potential problems and how

they will be tackled, minimised or avoided.

Marketing

Having defined the relevant market and its opportunities, it is necessary to address how the prospective business

will exploit these opportunities.

• Outline your sales and distribution strategy. What is your planned sales force? What are your strategies

for different markets? What distribution channels are you planning to use and how do these compare with

your competitors’? Identify overseas market access issues and how these will be resolved.

• What is your pricing strategy? How does this compare with your competitors’?

• What are your advertising, public relations and promotion plans?

Business operations

Explain how your business operates:

• Explain how you make the products or provide the service, first in brief and then in more detail.

• What are the sources of raw materials?

• Who are your suppliers?

• What are the labour requirements? What is the company’s approach to industrial relations?

• Outline your company’s approach to research and development.

The management team

Demonstrate that the company has the quality of management to be able to turn the business plan into reality.

The senior management team ideally should be experienced in complementary areas, such as management

strategy, finance and marketing, and their roles should be specified. The special abilities each member brings to

the venture should be explained. A concise curriculum vitae should be included for each team member,

highlighting the individual’s previous track record.

• Identify the current and potential skills gaps and explain how you aim to fill them. Investors will sometimes

assist in locating experienced managers where an important post is unfilled, provided they are convinced

about the other aspects of your plan.

• Explain your controls, performance measures and remuneration for management, employees and others.

• List your auditors and other advisers.

• Include organisation chart.

Financial projections

Describe the company’s business model and how funds will be used.

• Explain the research undertaken to support these assumptions.

• What are the costs associated with the business? Remember to split sales costs (e.g. communications to

potential and current customers) and marketing costs (e.g. research into potential sales areas).

• What are the sale prices or fee charging structures?

Keep the plan feasible. Avoid being overly optimistic. Highlight challenges and show how they will be met.

Risks, Investment and Exit opportunities

State how much finance is required by your business and from what sources (i.e. management, venture capital,

banks and others) and explain the purpose for which it will be applied. Outline the capital structure and ownership

before and after financing.

• Consider how any investors will exit the investment and make a return. Possible exit strategies for the

investors may include floating the company on a stock exchange or selling the company to a trade buyer.

• Show that you have considered the risks and challenges you will face. How will you protect the downside

and how will you minimise the chances of failure.

PHASE 3 – A REAL BUSINESS

PRESENTING YOUR IDEA

So, you have your product or service, you have your business plan, you’ve looked at the market and you’ve

compiled your list of possible funding sources – what now?

It is time to sell your idea to those with the money – in other words, it’s time to pitch.

Pitching in Writing

Successful pitching is a combination of many things, but primarily -luck, timing and skill. To begin with, your initial

pitch letter needs to:

• get to the right person;

• get to the point;

• get their attention;

• get their confidence that you are a pro; and

• not get too long-winded. Remember – the person you’re aiming to entice into business with you is likely to

get information overload every day. Keep it short, concise and simple.

Here are some suggestions that may help in the initial stages of pitching your idea.

Do your homework. Know about the investor you’re approaching. Find out everything you can about them, their

company, their operations and their mission. Show you fit in with their long-term vision.

Phone first. Call the company before you even put fingers to keyboard. Get a name – the right contact person to

send your information to. If you don’t do this, you may as well not send the pitch in at all.

Network, network, network. Yes, you’ve heard it a thousand times, and that’s because it’s true networking is a

great way to unearth contacts, and contacts often mean that pitching is that little bit easier. It is much more

difficult to get a positive response from cold calling. If someone is prepared to introduce you to a potential

investor, you already have your foot in that proverbial door, before you even open your mouth.

Write a punchy pitch letter. A good pitch letter consists of a lead, a body and a close. Take the time to write a

catchy lead that grabs their attention, then compose some brief and interesting text about your idea and lastly,

wrap it up as fast as politely possible. Your pitch letter is crucial to getting interest in your idea. Sometimes it is the

only thing a potential investor has time to read, so if you lose them in the letter, you’ve lost them – period.

Pitching in Person
But what if you get that “one in a million” chance to verbally pitch your idea, face to face to your intended target?

Be it in an elevator, a party or a boardroom – here are some basic guidelines on how to survive the verbal pitch.

Know this: verbal pitching is an art form comprised of about 50% solid homework and 50% improvisational skill. If

you are not too good at public speaking, go and do a course, or start practicing in front of a mirror or your family

or friends. Confidence is the key and you’ll need lots of it to successfully verbally pitch your idea.

Don’t forget: you have about 60 seconds to win your target investor over. First impressions do count, so make

sure yours is a good one. You’re not only selling your business idea – you’re selling yourself.

Research, research, research. Be professional and be clear. Know what you’re talking about inside-out. If you’re

not sure what you’re pitching, neither will the investor, and you’ll lose your chance of securing interest.

The in-the-room improvisation requires a lot of instinct. Learn how to “read” the people listening to your pitch. If

they start to glaze over – hit them with the best angle on your idea: clearly, succinctly and forcefully. This kind of pitching isn’t called the “hard sell” for nothing!
Be passionate about your business. If you are excited about it’s potential and have backed up that excitement

with cold, hard business research, the odds are that your target will “catch” your enthusiasm. If they themselves

can’t help you with your business, then they are likely to then suggest others you should talk to.

This is what you have to remember in pitching. Keep your pitch short (2-3 min), even shorter if the idea’s pretty

simple (1-2 min). You give someone a 15-20 minute pitch, they probably stop listening half way through.

The Ten Commandments for Verbal Pitching

1. Know your business idea backwards and be professional, yet passionate.

2. Give the buyer an emotional/personal investment in the idea. If they’re talking, let them.

3. Get them involved.

4. Your goal is to reach a point of intimacy. Be responsive, listen to them and hear what they want.

5. Don’t rely on notes – they distance you. Have them, but don’t rely on them. Include everybody present in

your pitch (assistants too).

6. Make comparisons to successful businesses.

7. Don’t pitch what you don’t believe in. Know their business and their background well.

8. Refer to it in the pitch.

9. Don’t promise what you don’t intend to deliver.

10. When it’s sold, shut up. Remember: You usually get just one shot at a pitch, so you better be great!

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