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• A Definition of Entrepreneurship
• Sample Business Plan Outline
• The VC Pitch
A Definition of Entrepreneurship
The word entrepreneur originates from the French word, entreprendre, which
means "to undertake." In a business context, it means to start a business. The
Merriam-Webster Dictionary presents the definition of an entrepreneur as one
who organizes, manages, and assumes the risks of a business or enterprise.
• new products
• new production methods
• new markets
• new forms of organization
Wealth is created when such innovation results in new demand. From this
viewpoint, one can define the function of the entrepreneur as one of combining
various input factors in an innovative manner to generate value to the customer
with the hope that this value will exceed the cost of the input factors, thus
generating superior returns that result in the creation of wealth.
Many people use the terms "entrepreneur" and "small business owner"
synonymously. While they may have much in common, there are significant
differences between the entrepreneurial venture and the small business.
Entrepreneurial ventures differ from small businesses in these ways:
Title Page
Table of Contents
Executive Summary
1. Business Concept
2. Company
3. Market Potential
4. Management Team
5. Distinct Competencies
6. Required Funding and its Use
7. Exit Strategy
Main Sections
I. Company Description
• Mission Statement
• Summary of Activity to Date
• Current Stage of Development
• Competencies
• Product or Service
o Description
o Benefits to customer
o Differences from current offerings
• Objectives
• Keys to Success
• Location and Facilities
• Entry Barriers
• Supply and Distribution
• Technological Factors
• Seasonality
• Economic Influences
• Regulatory Issues
III. Market Analysis
IV. Competition
• Products Offered
• Pricing
• Distribution
• Promotion
o Advertising and Publicity
o Trade Shows
o Partnerships
o Discounts and Incentives
• Sales Force
• Sales Forecasts
VI. Operations
• Product Development
o Development Team
o Development Costs
o Development Risks
• Manufacturing (if applicable)
o Production Processes
o Production Equipment
o Quality Assurance
o Administration
• Key Suppliers
• Product / Service Delivery
• Customer Service and Support
• Human Resource Plan
• Facilities
• Management Team
• Open Positions
• Board of Directors
• Key Personnel
• Organizational Chart
Time may be specified on a relative scale rather than specific calendar dates.
Milestones may include some or all of the following:
• Financing Commitments
• Product Development Milestones
o Prototype
o Testing
o Launch
• Signing of Significant Contracts
• Achievment of Break-even Performance
• Expansion
• Additional Funding
• Any other significant milestones
• Increased competition
• Loss of a key employee
• Suppliers' failure to meet deadlines
• Regulatory changes
• Change in business conditions
Appendices
May include:
• Management Resumes
• Competitive Analysis
• Sales Projections
• Any other supporting documents
The VC Pitch
Some Tips for Success
Acquiring venture capital funding can consume a large amount of valuable time
and effort. Here are a few tips that can help you secure funding and get on with
the process of building your company.
Carefully research your potential investors. Learn about their focus areas and
their philosophy. Then, go to venture capitalists who have financed firms similar
to your own; they will understand what you are saying. Some VC's are very
hands-off, whereas others regularly become quite involved with the operations of
their portfolio companies. Be sure to talk to those that more closely match your
needs. Once you have identified a good match, be sure to talk to the right person
within the firm. For example, if your idea is in the realm of medical technology, be
sure that you are speaking to those people in the VC firm.
Business Plan
A VC likely will spend only a few minutes looking through your business plan.
Illustrate concepts using diagrams so that one does not have to read the plan to
figure it out. Assume that the VC will not read the entire plan, because he/she
probably won't read it. A full business plan may have 50 pages or more, but the
VC probably will not be interested in that level of detail during the initial review.
As such, it is a good idea to have an executive summary of no more than 10 or
20 pages.
Build Credibility
Focus on the results of your team, showing any demonstrations at the beginning
of your presentation. An initial demo helps to eliminate any questions that may
otherwise linger throughout the presentation and distract from your pitch. Many
start-ups originate from a team of students, but it is wise to recognize that you
will need a broader team with more experience and contacts, so it is not a good
idea to list a team of only students. A team that already has worked together has
a better chance of securing funding. In this context, working together means
having done a similar business project together. If you have no team, you may do
better by seeking an incubator; a major job of incubators is to help you build a
team. While venture capitalists may spend time helping their portfolio companies
to recruit, VC's do not want to be your HR person.
Partner Firms
Use the logos of your partners and potential partners on the opening page of
your presentation. Use big names if possible. VC's are clubbish and would like to
be able to associate with your high-profile partners. However, if a potential
partnering firm already has decided not to work with you, be sure to remove it
from the list.
Competitors
When listing potential competitors, it is not a good idea to mention giants like
Cisco Systems or Microsoft, or any other competitors that are heavily funded.
Even if they currently are far behind, they have the resources to quickly take the
lead. Don't forget how Microsoft overtook Netscape's huge lead in the browser
market.
Revenue Model
Be sure that you are prepared to clearly articulate how you will make money.
VC's like proven models, for example, one that signs up customers and
automatically hits their credit card each month for a certain amount. Such a
model often is considered superior to one that requires you constantly to have to
encourage people to use your service.
You should have an estimate of your customer acquisition costs. If you have a
web site, know how many people will visit the site per dollar spent to get them
there. If you do not know this number, take the time to come up with a rough
estimate because you likely will be asked.
Valuation
Presentation Style
VC's want to see visionaries who are passionate about their idea. As such, you
should be able to talk without using notes or looking at the projector screen. The
VC is investing in vision and passion, so show it. Your style is important because
you have to able to sell. Even if you secure the first round of financing, if your
company is going to go public you will need additional rounds. You have to be
able to sell to investors, partners, and customers. When you are giving the pitch,
project confidence by not speaking too quickly. Show preparedness by including
answers to expected questions in the presentation. Finally, project the image that
the train is leaving, and if the VC's do not get on now they will miss out.