Writing the Business Abstract

The business abstract should include:

•  Results of assessing the feasibility of the idea with the First Screen

•  A response to the following questions:

New Product Idea

What is your technology, invention or idea?   

What is the product/service and what need is it filling?  At what stage of development is your product (initial design, rough prototype, working prototype, commercially ready)/service?  Who has been involved in developing the product/service to-date, and what has their involvement been?  What is the status of any intellectual property?  For your project plan, please indicate what milestones you plan to reach in 1, 3 and 6 months and the resources (money, expertise, personnel) you require to reach these milestones.

Who would purchase and use your technology, invention or idea: 

To whom you are selling the product/service?  How large of a market do they represent?  Who are your competitors?  What makes your product/service better than your competition?  What is your competitive advantage?  What is your revenue model/how do you expect to make money?  

What experience, skills and motivation do you have to implement this idea?   

What relevant experience do you have?  What skills do you have?  What skills you need to develop?  What skills you need to 'hire'?  Describe your motivation and passion to implement this idea.  Who do you know personally that is entrepreneurial and why are they entrepreneurial?  What makes you think you will be successful?  What are your goals with the business/where do you see the business in 3 years?

The Process for Starting a Business

Business Plan Outline

Executive Summary

I. The Company
     A. Background
     B. Current Status
     C. Future Plans

II. The Industry
     A. Chief Characteristics    
     B. The Participants
     C. Trends

III. Product/Service
     A. Description of Product/Service
     B. Proprietary Features
     C. Future Development Plans
     D. Product Liabilities

IV. Technology: Research and Development
     A. Concept Development
     B. Research, Testing, and Evaluation
     C. Milestones
     D. Current Status

V. Market Analysis
     A. Target Market and Characteristics
     B. Current Market
     C. Market Trends, and Growth Potential

VI. Competitive Analysis
     A. Competitors Profile
     B. Product/Service Comparisons
     C. Market Niche and Share
     D. Comparison of Strengths and Weaknesses

VII. Marketing Strategy
     A. Market Penetration Goals
     B. Pricing and Packaging
     C. Sales and Distribution
     D. Service and Warranty Policies
     E. Advertising, Public Relations, and Promotions

VIII. Resources Required
     A. Operations
     B. Facilities and Equipment
     C. Organizational Plan
     D. Human Resources

IX. Management and Ownership
     A. Management
     B. Board of Directors
     C. Ownership
     D. Professional Support

X. Critical Risks and Problems

XI. Financial Data and Projections
     A. Funding Needs
     B. Terms of Investment
     C. Financial Projections
     D. Assumptions

XII. Supporting Documentation

The Business Plan

A business plan can serve many purposes. It is frequently used as the document to raise funding for new businesses. As such the plan is a selling document. A business plan is also a useful roadmap that can help you to get where you want to go. When you use the team approach to the planning process, the plan can be an excellent management tool that aids you in motivating employees, obtaining better information for decision-making, and improves communication within your company. In many cases, the business plan becomes a reality check for business owners. Thus, the business plan and the process of producing it can help you to establish direction, set goals, and begin the process of accomplishing those goals.

Who Writes the Plan?

An effective business plan should not be done by a consultant or one of your employees. YOU should direct the process and be as involved as possible. It comes from your goals, vision, philosophies, experiences, thoughts, and finally, your research into the business opportunity you are pursuing. This planning guide outlines the fundamentals of creating your own workable business plan.

Why Plan?

People frequently start businesses to gain more control over their professional destinies. Unfortunately, the reverse frequently occurs. Business owners often find that they spend most of their time "putting out fires" and spending very little time on direction setting and planning. As a result, business owners often report that they are frustrated by their lack of control over their businesses. The business plan is a means of gaining additional control over where your business is headed. As described above, the mere process of planning can help you establish direction and movement in that direction.

What is a Good Plan?

A good business plan is a dynamic document. You don't just "set it and forget it." It should be referred to frequently in decision-making, evaluating, and future planning. Your business plan should change as the environment in which you work changes. It may contain some gospel, but the plan itself is not sacred. The world changes and so must you. You must be prepared to significantly change or even scrap ideas from your plan occasionally. Using milestones developed in the planning process will help you to determine if and when this may be necessary. Writing and maintaining an effective, dynamic, and flexible plan will be one of the most difficult tasks you will encounter in developing, growing and maintaining your business.

Top Ten Mistakes in Business Plans

1. Too Darn Long
        • Elevator pitch: one minute
        • Executive Summary: 2-3 pages

2. Poor Positioning
        • No validation
        • Your solutions and/or technology are looking for a problem to
          solve
        • Invisible solution

3. Lack of Focus
        • If you have multiple opportunities, break them into phases
          instead of implementing them all at once

4. Not Enough Real World Market Analysis
        • Use bottom up numbers, not top down
        • Prepare a logical growth rate
        • Prove you have a reachable market – go after a significant piece
          of a market
        • Do not prove the obvious

5. No Business “Cockpit Gauges”
        • What are the top three drivers or metrics of your business?

6. Unclear Business Model
        • How will you make money?
        • What is your path to profitability?
        • Oblivious to the budget cycle and sell cycle
        • Oblivious to adoption and implementation time table
        • Too dependent on others
        • Scalability – how will you get that big?

7. Poor or Incomplete Competitive Analysis
        • You always have competition
        • Not disclosing all the competition
        • Do you homework

8. Weak Team Information
        • It is a team effort
        • Admit you have holes
        • Out implement

9. Poorly Defined Leverage Points
        • You cannot do it alone
        • Who has vested interest in your success
        • What are your leverage points?

10. Goofy Fundamentals that Distract
        • Do the basics right the first time
        • Get “adult supervision”
        • Use specialists
        • Look like a “standard” venture capital deal

Adapted from Bill Joos, Garage Technology Ventures

Screen your business ideas

Part 1: Strength of Business Idea
For each item, circle the most appropriate answer and make note of the (-1), (0), or (+1) score.
Low Potential (-1)
Moderate Potential (0)
High Potential (+1)

1.
Extent to which the idea:
• Takes advantage of an environmental trend
• Solves a problem
• Addresses an unfilled gap in the marketplace
Weak
Moderate
Strong
2.
Timeliness of entry to market
Not timely
Moderately timely
Very timely
3.
Extent to which the idea “adds value” for its buyer or end user
Low
Medium
High
4.
Extent to which the customer is satisfied by competing products that are already available
Very satisfied
Moderately satisfied
Not very satisfied or ambivalent
5.
Degree to which the idea requires customers to change their basic practices or behaviors
Low
Moderate
High

Part 2: Industry-Related Issues
Low Potential (-1)
Moderate Potential (0)
High Potential (+1)

1.
Number of competitors
Many
Few
None
2.
Stage of industry life cycle
Maturity phase or decline phase
Growth phase
Emergence phase
3.
Growth rate of industry
Little or no growth
Moderate growth
Strong growth
4.
Importance of industry’s products and/or services to customers
“Ambivalent”
“Would like to have”
“Must have”
5.
Industry operating margins
Low
Moderate
High
Part 3: Target Market and Customer-Related Issues
Low Potential (-1)
Moderate Potential (0)
High Potential (+1)

1.
Identification of target market for the proposed new venture
Difficult to identify
May be able to identify
Identified
2.
Ability to create “barriers to entry” for potential competitors
Unable to create
May or may not be able to create
Can create
3.
Purchasing power of customers
Low
Moderate
High
4.
Ease of making customers aware of the new product or service
Low
Moderate
High
5.
Growth potential of target market
Low
Moderate
High

Part 4: Founder- (or Founders-) Related Issues
Low Potential (-1)
Moderate Potential (0)
High Potential (+1)

1.
Founder or founders experience in the industry
No experience
Moderate experience
Experienced
2.
Founder or founders skills as they relate to the proposed new venture’s product or service
No skills
Moderate skills
Skilled
3.
Extent of the founder or founders professional and social networks in the relevant industry
None
Moderate
Extensive
4.
Extent to which the proposed new venture meets the founder or founders personal goals and aspirations
Weak
Moderate
Strong
5.
Likelihood that a team can be put together to launch and grow the new venture
Unlikely
Moderately likely
Very likely
Part 5: Financial Issues
Low Potential (-1)
Moderate Potential (0)
High Potential (+1)

1.
Initial capital investment
High
Moderate
Low
2.
Number of revenue drivers (ways in which the company makes money)
One
Two to three
More than three
3.
Time to break even
More than two years
One to two years
Less than one year
4.
Financial performance of similar businesses
Weak
Modest
Strong
5.
Ability to fund initial product (or service) development and/or initial startup expenses from personal funds or via bootstrapping
Low
Moderate
High

Overall Potential
Each part has five items. Scores will range from -5 to +5 for each part. The score is a guide—there is no established rule-of-thumb for the numerical score that equates to high potential, moderate potential, or low potential for each part. The ranking is a judgment call.
Score
(-5 to +1)
Overall Potential of the Business Idea Based on Each Part
Suggestions for Improving the Potential

Part 1:
Strength of Business Idea
High potential
Moderate potential
Low potential
Part 2:
Industry-Related Issues
High potential
Moderate potential
Low potential
Part 3:
Target Market and Customer-Related Issues
High potential
Moderate potential
Low potential
Part 4:
Founder- (or Founders-) Related Issues
High potential
Moderate potential
Low potential
Part 5:
Financial Issues
High potential
Moderate potential
Low potential
Overall Assessment
High potential
Moderate potential
Low potential

Summary—briefly summarize your justification for your overall assessment:



Feasibility Analysis Adapted from “Preparing Effective Business Plans” by Bruce R. Barringer