of BusinessDescription of IndustryTechnology PlanMarketing PlanFinancial PlanProduction (Outsourcing) PlanOrganizational PlanOperational PlanSummary
Section 3: Support (Backup) MaterialExhibit A: Résumés of PrincipalsExhibit B: Market StatisticsExhibit C: Market Research DataExhibit D: Competitive BrochuresExhibit E: Competitive Price ListsExhibit F: Leases and ContractsExhibit G: Supplier Price Lists
Each of these sections, as detailed in Table 2.1, will be discussed in turn.
Table 2.1
Section 1: Introduction
Section 1 contains the title (cover) page, table of contents, and executive summary. The title (cover) page is an important part of every business plan, as it has the following:
1 The company name, address, telephone, fax, e-mail address, and website.
2 Name and position of each member of the management team and the contact person.
3 The purpose of the plan, the amount of money needed, and funding increments
4 At the bottom of the title page: “This is confidential business plan number ____.” A low number should be put in for each business plan given out and when, and who received this numbered plan should be tracked for a 30-day/60-day/90-day period.
The first page after the title (cover) page is the table of contents. This follows the usual format and lists at least the major subsections in each section and the corresponding page number as well as each figure, table, and exhibit. Preferably each major subsection and smaller subsections should be labeled as 1.0, 1.1, 1.2, 2.0, 2.1, 2.3, and so on. The executive summary precedes the numbering and therefore either has no number or smaller letters or Roman numerals. The tables and figures should have a separate list, as should the exhibits (appendices).
The last item in Section 1, following the table of contents, is the all-important two-page executive summary. This is by far the most important document in the business plan, as it is often used as the screening section by investors who often decide not to read the entire plan. Many readers, including potential providers of capital, never read beyond the executive summary. One head of a very successful venture fund, who is now managing his eighth fund of over $850 million, indicated that he receives about 1,500 business plans a year, discards 1,400 based on the cover page or executive summary, and, of the remaining 100, will discard 80 after the first 1- to 2-hour examination. Of the remaining 20, about 4 to 6 will receive investment from his fund. So the executive summary needs to be very well written to invite further reading of the business plan.
The executive summary should have the name of the company and address at the top of the first page that appeared on the title (cover) page. It should begin with defining the nature and size of the problem existing. In the case of TerraPower, the problem is a large, critical one—the need for low-cost, clean electrical energy. The larger and more critical the problem, the more interest there will be on the part of investors and others.
This needs to be followed by your proposed solution to the problem. Again, for TerraPower, this is providing low-cost, clean electricity through a new traveling wave reactor (TWR) technology that runs on depleted uranium. In this section, all competitive ways to solve the problem should be discussed showing the uniqueness or the unique selling propositions of your solution. These would include nuclear, solar, cool, and geothermal energy for TerraPower.
Following the solution is the size of the market, trends for at least 3 to 5 years, and future growth rate. The market needs to be large enough and accessible to deliver the sales needed for the profits and returns expected by investors. The need for and increasing use of electricity makes for a very exciting perspective for TerraPower.
The entrepreneur and team who will deliver these sales and profits then need to be described. The education, accomplishments, and industry experience of each known member of the top management team need to be described. The individuals involved in TerraPower are very noteworthy and include CEO John Gilleland, founder of Archimedes Technology Group, and founding members Bill Gates (Microsoft), Nathan Myhrvold (Microsoft's former CTO), and Lowell Wood (a renowned astrophysicist).
The resulting sales and profits should be summarized over a 5-year period in the following format:
These numbers are taken directly from the pro forma income statement summary in the financial plan in Section 2. Note the exact calendar year is not used but rather year 1, 2, 3, 4, and 5, with 1 indicating the first year of company operations after the investment is received so that dates do not have to be changed based on the receipt of the investment.
The two-page executive summary closes with a statement of the resources needed, the increments of capital accepted, and contact information. An example two-page executive summary is indicated in Figure 2.1.
Figure 2.1 Example Executive Summary
Section 2: Body of the Business Plan
Following the executive summary, which is the end of Section 1 of the business plan, Section 2 starts on a new page with its first part—1.0—Description of Business. In this section, the nature of the venture is described to provide an understanding of how the venture will operate and deliver the products/services to solve the problem identified. Information on the products/services should be in enough detail to be easily understood; this will be expanded on in two places in Section 3. If it is a technological product/service that employs a unique/new technology, it will be described with a summary copy of the patent as well as in the product section of the marketing plan (Section 4). Every product/service will be further discussed here regardless of its degree of technology. The mission statement of the company should be described as well as the business model—the entire picture of how the company does business—and if this business model significantly differs from the model of the way business is presently being done in the industry.
Section 2.0—Description of Industry—follows; this section discusses the characteristics and size of the industry, industry trends for the past 3 to 5 years, future outlook and growth rate, and a thorough analysis of competition presently filling the same need as the new idea. This is a large section with significant use of data from secondary sources. Sometimes there are so much data that only part appears in the body of the plan, with the rest appearing in an appendix at the end of Section 3. Graphs, charts, histograms, and other graphics should be used to thoroughly explain the industry, its growth projection, and the competitors. A graph showing the market growing is important based on the trends of this market to date. The market, the market segment, and target market for the first year will be further discussed in the first section of the marketing plan.
Following the description of the industry is Section 3.0—Technology Plan. Some business plans where there is not a technological advancement in the product/service being offered might not have a technology plan. For example, one author founded a rainbow decal and sticker company with no significantly new technology, so there was no technology plan in the business plan of the company. Whenever the product/service has a patent or patent pending or application, there will always be a technology plan as the patent adds value to the venture. A general rule is if you are having a hard time deciding whether to have a technology
