Business Model

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Business plan preparation
Training program for Entrepreneurs
Enno de Boer (GE/MU) Oliver T. Lohfert (GE/MU) Johannes Pruchnow (GE/MU) PD Paper

McKinsey&Company – Copyright 2002

0

020607MVA1_ZXK_265_V5

AGENDA

• Short introduction to the use of
business plans

0:15 hours

• Preparation guidelines for
business plans

3:30 hours

• Wrap-up

0:15 hours

McKinsey&Company – Copyright 2002

1

020607MVA1_ZXK_265_V5

AGENDA

• Short introduction to the use
of business plans

0:15 hours

• Preparation guidelines for
business plans

3:30 hours

• Wrap-up

0:15 hours

McKinsey&Company – Copyright 2002

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020607MVA1_ZXK_265_V5

TYPES OF NEW BUSINESSES

EXAMPLES

New high-growth ventures

New New product New industry • Palm • Direct satellite TV • Smart • Netscape • Sony Playstation • Mobile telephony • Rollerblades Product/ service Existing industries and businesses New business system • Dell • Fotolabo • Charles Schwab • FedEx New Business system Source: Planen, gründen, wachsen (McKinsey) 3

Existing Existing

McKinsey&Company – Copyright 2002

020607MVA1_ZXK_265_V5

USE OF BUSINESS PLANS

Standard use

• Start-up companies:
– Application for venture capital – Search for management team members – Communication with partners, suppliers, …

Complications for New Venture projects

• High insecurity concerning
technology, timing, and cash need

• Difficult data situation due
to newness of innovative products

• Established, developed
businesses for investment decisions – In-house budget allocations – External financing

• Necessity of external
know-how transfer

Start-up business plans to be tailored to new venture needs

• Lack of skills/motivation/
time

Source: McKinsey

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GENERIC REQUIREMENTS
Explanation Constantly adapting Impressing by clarity Convincing by facts Business planning is an iterative and adaptive process that requires constant update and adjustment work Not the quantity of analyses, but the clarity and preciseness of the pack are important No hype, but factual statements. Enthusiasm will be generated by the investor realizing the opportunity on his own Those who allocate investment resources rarely are technical experts for the technology used in the proposal The storyline and all the facts presented must fit together and generate a well rounded impression A clear, precise structure is a courtesy to those investing their time in reading the proposal

Understandable even for non-experts Consistent and concise Optically compelling

Source: McKinsey

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DEVELOPMENT STEPS FOR BUSINESS PLANS
Milestones Level of maturity of business idea Completion of financing

• External
Step 3: VC-tailored business plan evaluation (due diligence) • Deal structuring

• Management team • Implementation plan • Financing
Step 2: Rough business plan

Step 1: Idea description

• Marketing and sales • Business system • Opportunities and risks

New decision on further proceeding when next milestone is reached

• Product/service • Market and competition
Source: McKinsey
McKinsey&Company – Copyright 2002

Time
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020607MVA1_ZXK_265_V5

AGENDA

• Short introduction to the use of
business plans

0:15 hours

• Preparation guidelines for
business plans

3:30 hours

• Wrap-up

0:15 hours

McKinsey&Company – Copyright 2002

7

020607MVA1_ZXK_265_V5

CHAPTERS OF COMPLETE BUSINESS PLAN

Executive summary

Product/ service

Management team

Market and competition

Marketing and sales

Business system

Implementation plan

Financing

Opportunities and risks

Source: McKinsey

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CONTENT OF EXECUTIVE SUMMARY

• Gives a brief overview of the
concept's most...
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