Below
is an excerpt from Chapter Five of Tim Burns' new book, entrepreneurship.com.
Burns is an MBA, CPA, and attorney, which means he can cover all the
angles of a business plan without getting hung-up in any one area. His
focus is on "reality-based planning," which doesn't mean your
company has to be profitable, but it has to show a clear path to profit.
Burns' most important
contribution to the literature of business plans is the
"e-plan," a concept he borrowed from venture capital guru David
Cowan (Bessemer), and which he develops in his book. Burns argues that a
modern business plan should be presented as a series of 12 PowerPoint
slides plus an Executive Summary. This approach is both unique and
valuable.
An e-plan pleases potential
investors by immediately getting to the point. It's easy to update, and it
helps entrepreneurs remember that a business plan is wedded to a verbal
pitch or presentation. For online economy entrepreneurs who are serious
(and in serious need of funding), this book is highly recommended. More
information about the author and the book follows the excerpt. Good luck
in your hunt for serious money!
THE E-PLAN
The Internet Entrepreneur's Treasure Map
Planning in a Real-Time Economy
Business commentators are divided
on the ability to effectively plan in the new economy. Some opine that the
pace of change is so rapid that it is impossible to plan for the future.
Successful companies during this competitive era are preparing clear,
flexible business plans that develop their vision of their intended
destination. Planning is necessary to develop your vision, but it needs to
be flexible. As a result, I am advocating a variation of the traditional
business plan that I call the "e-plan."
The e-plan helps you capture your
vision while providing a flexible platform for responding to the
inevitable changes and shifts in the economy. The new economy is no place
for the 100-page business plan that flushes out every conceivable detail.
This exercise is not about earning a gold star on your business plan from
a difficult teacher or some picky banker. Rather, it is about capturing
your vision in a flexible format that facilitates the execution of your
business model -- that is the essence of the e-plan.
Enter The E-Plan
Extensive business plan were
often aimed at traditional lenders who wanted to be sure that no stone was
left unturned. Chances are that in today's economy, many of the old stones
will disappear and be replaced by new ones by the time a conventional
business plan is finished.
I was never a fan of the business
plan treatise. Supplementary information, such as product circulars and
marketing materials, can be included in an appendix, but the narrative
part of the plan should be a maximum of 20 pages. The object is not to
unearth every conceivable detail but to think through your business model.
Few plans are read in their entirety by potential investors, and the new
economy requires an even more concise way of formulating a business model.
This new format -- the e-plan --
is designed to help all the users of the business plan, which includes the
entrepreneur as well as potential investors and employees. It is
streamlined both for speed of digestion and ease of use.
The e-plan consists of an
executive summary and approximately a dozen PowerPoint slides. Each slide
addresses an important component of your business model. I consider the
e-plan to be more of a compass than a map. It is designed to guide you in
the right direction but is flexible enough to accommodate shifts and
changes in the marketplace. As these changes occur, the e-plan can be used
to produce a corresponding shift in strategy.
Some of the advantages of the
e-plan format are its overview, flexibility, and presentation.
Overview. The executive
summary and the slide format provide a quick overview of all important
components of your business model and provide a comprehensive
understanding of the model. The e-plan serves as a ready reference for the
big picture.
Flexibility. The slide
format provides you with the ability to change directions quickly. As
changes occur in the marketplace, your big picture can be changed
accordingly.
Presentation. The slide
format also facilitates the presentation of your business to potential
investors and employees. Chances are that more people will be hearing
your presentation as opposed to reading your plan.
Elements of The E-Plan
Executive Summary
In the following text, I provide
a one-paragraph summary of each of the slides in the e-plan. Just because
a plan is concise, however, doesn't mean developing it is easy. I devote
an entire chapter of my book, entrepreneurship.com to each of these
slides: what information investors are looking for, how to gather and
condense this information, and insights gleaned from the successes and
failures of other start-ups. This article is intended as an introduction
to the e-plan; my book will guide you through process of preparing one.
This one- or two-page document is
the single most important part of your plan. In a nutshell, it summarizes
your particular market opportunity and the solution to a problem that your
business offers. Busy investors often don't have the time to read the
complete business plan, particularly when they are qualifying potential
businesses. They usually rely on the executive summary to provide a
snapshot of your business model. One way to look at the summary is to
think of it as the story of your business. What need does your business
fulfill? How can you best summarize your business in 60 seconds or less?
What is your vision?
Slide 1: Name of Company
Suffice it to say that the name
of any Internet business is extremely important. As you might have already
found out, selecting a domain name these days is no simple matter. Choice
domain names are being bought and sold for heavy premiums. With the domain
name so important, it is obviously something to which you need to give
considerable thought. Start immediately searching for one if you don't
have a name already.
Slide 2: Mission Statement
The mission statement is an
abbreviated form of the executive summary. In one or two sentences, what
does your company stand for?
Slide 3: Management Team
The management team is of
particular concern to investors. Note that I use the word team.
Writer John Dunne proclaimed that "no man is an island." In
addition, no entrepreneur is an island, either. The entrepreneurs that can
attract the right people are the ones that ultimately succeed. The
management team is the backbone of the company. A founder that cannot
attract a quality management team will have trouble attracting good
employees as well as customers.
Slide 4: Market
This slide will analyze the size
of the potential market as well as its growth rate. One of the primary
advantages of the Internet is that the target markets are so huge.
Slide 5: Industry
Industry concerns a discussion of
the structure of the particular industry that you are targeting. Who are
the buyers and the sellers? Who are the suppliers? What is the market
chain of the industry? How would you diagram it? Is the industry in a
growth mode?
Slide 6: Pain -- The Market
Opportunity
This slide considers the pain or
the opportunity in the market. Where is that part of the market broken or
inefficient? How does it create an opportunity for you? Where is a problem
that your business will solve? The best business opportunities are based
on the most compelling needs of the marketplace. This often applies to a
highly fragmented industry or an industry with an inefficient market
chain.
Slide 7: Solution
What is your solution to the
problem or pain in the marketplace? What is your answer to the
disintermediation or the need in the marketplace? How does your product or
service benefit the marketplace? Why is your solution unique from others?
Do you have a competitive advantage that can be sustained? Is your
solution scalable, allowing it to be implemented on a large scale?
Slide 8: Marketing Plan
This slide represents an overview
of your marketing plan. How are you going to attract customers? Are there
viral marketing possibilities you can exploit? Viral marketing is a
strategy in which customers do much of the marketing for you. What unique
marketing advantages do you have? What important alliances can you
develop?
Slide 9: Financial Projections
This portion of the plan involves
the projection of revenues and expenses from the business. Although many
investors discount projections, they can play an important role in
examining the financial portion of the business model. The most useful
projections are developed around a meaningful unit of measure, or metric.
For example, revenues and expenses could be analyzed and expressed on a
per customer basis. What is your acquisition cost per customer? What is
his or her worth in terms of lifetime revenue? How many customers do you
need to break even? Your projections should detail your use of start-up
funds, which include capital expenses and working capital needs until the
business reaches breakeven.
Slide 10: Valuation Analysis
This final slide can be thought
of as a segue between where your presentation ends and negotiation begins.
Build the case for the valuation of your company based on your business
model. Choose the most relevant metrics to compare your business with one
traded publicly. This slide is very useful in talking with potential
investors and employees.
Uses of The E-Plan
The main audience for your e-plan
is you. First and foremost, the e-plan is a way of quickly capturing your
vision and putting it in a format for execution. The plan has to make
sense to you and guide you in propelling your vision into reality.
The next audience for your
business plan is potential investors. Investors today simply don't have
the time to wade through long plans. A short, direct format serves the
purpose better. Moses Joseph of Anila Corporation relayed that knowledge
of the market is much more important than a written business plan. He
mentioned that he can tell whether a person really knows the market within
five minutes of talking to him or her. In Joseph's opinion, the value is
not so much the written plan but rather the discipline of the planning
process itself. This process forces you to fully examine the particular
market opportunity and confront certain critical issues associated with
your venture. It is very important for entrepreneurs to completely and
fully understand their markets.
The next audience for your
business plan is your potential employees, suppliers, and affiliates. For
this use, a good business plan can show them that your business is for
real and that you have given it considerable thought.
Tim Burns, MBA, CPA, JD,
received his BA in economics (Phi Beta Kappa) from Tulane University in
1979. He received his MBA in finance and accounting in 1980 and his JD
(cum laude) in 1983, both from Tulane University. He has practiced law in
the areas of individual and corporate taxation, small business and estate
planning for 15 years. He is a member of the Louisiana State Bar
Association, the Society of Louisiana CPA's, the AICPA and the National
Academy of Elder Law Attorneys.
Tim currently hosts a weekly
television program on legal and business issues for a local Cable Access
Channel, authors a regular column on entrepreneurship and speaks
frequently on the subjects of taxation, strategic business planning, and
estate planning. His writing credits include serving as a contributing
author to the Attorneys and Accountants Continuing Education Program and
the book "Break the Curve - The Entrepreneur's Blueprint for Small
Business Success," published by Thomson International Business Press
in the fall of 1998.
You can contact Tim Burns
directly by sending tim@timburns.com.
You'll find more articles and resources for the entrepreneur at his web
site, www.timburns.com.
ENTREPRENEURSHIP.COM
Published by Dearborn Trade
(ISBN 1-57410-136-6, 300 pages, indexed, paperback, $19.95)
"Entrepreneurship.com
offers a very accessible and extremely practical MBA degree for Internet
entrepreneurs... [T]he principles outlined in this book provide an
enduring foundation for starting a business." -- Bill Reichert, President, Garage.com
"What an excellent
step-by-step guide to entrepreneuring in the digital world! This book is
cutting edge, comprehensive, packed with practical information and
insights, and very readable." -- Stephen R. Covey, author of The 7 Habits of Highly Effective
People
"I'm often asked what I look
for in a business plan... The answer lies in the pages of Tim Burns'
book." -- David Cowan, Managing Partner, Bessemer Venture Partners
This book is the desk reference
for the serious Internet entrepreneur. Packed with expert advice and
industry insights, entrepreneurship.com provides a road map for
seizing the unparalleled business opportunities of the Information Age.
As more people get online each
day, forecasters predict that the size of the Internet economy will more
than double by 2003. With plenty of fertile ground still to exploit, there
are sure to be more e-business success stories. But a viable dot.com
venture must be more than just another great idea; it must be a solid
business, guided by a compelling plan. entrepreneurship.com walks
you through the strategies for building a winning e-Plan, the streamlined
business plan for the dot.com. Business adviser and attorney Tim Burns
clearly explains what venture capitalists look for in a startup, discusses
strategies for establishing brand identity, and untangles the legal issues
involved in running an Internet venture.
entrepreneurship.com is
available through this site or at all major booksellers, online and off.
The information compiled on this site is
Copyright 1999-2008 by Attard Communications, Inc. and by the individual authors.
Business Know-How is a woman-owned business and a registered trademark of Attard Communications, Inc.
Phone: 631-467-8883.
Below
is an excerpt from Chapter Five of Tim Burns' new book, 
ENTREPRENEURSHIP.COM
