for the new venture and for raising financial resources. It is important that it be well written and edited. The best way for an entrepreneur to proceed is to develop and write everything in draft format and then go back and rewrite. Keep in mind during this process the audience for your plan and arrange the material in a way, such as the one suggested in this chapter, that makes items flow smoothly from start to finish. Clear and concise writing is needed, and all numbers need to be consistent. If possible, have a friend or colleague critique the final business plan. If needed, you can always pay a professional writer at the end to make sure the plan flows smoothly.
A question frequently asked is how long (how many pages) a business plan should be. While that depends on the nature of the product or service, whether the business contains a technology plan and/or a production (outsourcing) plan, and the extent of Section 3 (exhibits and appendices), most business plans are around 30 to 50 pages. Remember, you have 12 pages of financial statements and several pages of résumés. Most important, you want all the necessary material covered in a clear, concise manner.
Summary
Every new venture needs a business plan to set the direction for the firm and obtain financial resources. The essential elements of a business plan are contained in three sections, with the main elements being in Section 2. The most important document in the plan is the executive summary, as most potential investors do not read beyond it.
Each business plan needs to be well written and organized and address as many anticipated questions as possible. It needs to flow smoothly and consistently without errors so that the reader has a clear understanding about the details and future success of the new venture. Time will tell whether TerraPower meets its plan of having a prototype ready for demonstration in 2022.
Descriptions of Images and Figures
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Example executive summary with formatting explained in parentheses.
TIDAL POINT (title)
Phoenix, Arizona
www.tidalpoint.com
Contact: _______
Stage: Pre-launch
Industry Software Product NAICS Code: 511210
Software Consulting NAICS Code: 541512
Mission Statement (bold header)
To empower our customers by providing them with better control of their IT systems through efficient, rational, and cost-effective delivery of IT products and services. And do so by becoming our clients' most trusted advisor and partner by sharing knowledge and best practices.
Problem Being Solved (bold header)
Nature of Problem: When it comes to replacement of their legacy IT systems, insurance companies struggle with cost and effort overruns, which makes the cost of transformation and cost of ownership significantly higher.
Market Segment: There are approximately 300 mid-sized to large insurance companies that need to replace their legacy IT systems. The segment growth rate is estimated to be 7% CAGR, and the total IT budget by year 2015 for COTS product and services is estimated to be USD $17.5 billion.
Importance: There is an unmet need for insurance software product providers who can combine the follow-up services required for product integration and implementation into insurance companies' operational landscape. We will offer a suite of services to the companies along with consultants and experts who can enable a smooth transition for insurance companies.
The Solution (bold header)
We will provide a customized off-the-shelf product along with the services required to integrate this product into an insurance company's operational landscape. The product will be Tidal Point Policy Administration system; this system can cover all major business lines and provide an end-to-end processing capability which includes distribution, new business development, underwriting, claims, and reinsurance. The services provided will include data migration, implementation, business analysis, process consulting, and IT strategy consulting.
USP
Provide an integrated suite of services to the clients without having them organize different activities related to legacy system transformation.
Overall cost and time will be reduced for the clients due to:Reduced time and efforts in issuing multiple RFPs and RFIs.Speed to start will improve as one vendor will provide all the services.
More effective approach as all the services would be provided by a single vendor, which will give clients better control and ease of managing the transformation.
Lower cost of ownership for the customers.
Competition
IBM, CSC, Guidewire, Accenture (Duck Creek), MajescoMastek, Camilion, Exigen, lnsurity, AQS, CGI, Cover-All
Market
400 Property & Casualty (P&C), Specialty and Life Insurance companies in the U.S. market.
Market Segment
Software (NAICS 511210): Insurance COTS product market estimated to be $17.5 billion by year 2015. Insurance software services, including consulting market, are estimated at $40.9 billion by 2015.
Software consulting (NAICS 541512): Insurance software consulting services are estimated to be $41.0 billion by year 2015.
Approximately 300 insurance companies (direct carriers) need to replace their legacy IT systems for at least one class of business.
Marketing Plan
Advertisements through industry publications such as Insurance & Technology.
Participating in industry conferences and sponsorship of these events.
Personal contacts and outside sales.
Price
COTS product: $1,250,000
Business analysis: $650,000
Implementation: $700,000
Process consulting: $200,000
Data migration: $200,000
IT strategy: $150,000
Financial Summary
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The relationships are as follows:
Chart 1: No channel members. Firm cost equals $1.00. Markup on cost equals 20 percent, which leads to Consumer selling price of $1.20.
Chart 2: One channel member. Firm cost equals $1.00. Markup on cost equals 20 percent and leads to Channel
