1.
Lecture 2: Executive Summary &
Business Plan
Dr Bernard Leong
CTO & Co-founder
MPS 812 Course Taught in:
1

2.
The Big Picture
2

3.
Layout
of
Business
Plan
&
Execu4ve
Summary
• Execu&ve
Summary
• Introduc&on
-­‐
Type
of
Business
• Problem
&
Opportunity
• Technology/Service/Product
• Management
Team
• Business
Strategy
&
Route
to
Market
• Opera&ons
(Timelines
&
Milestones)
• Financials
and
Valua&on
• Exit
Strategy
3
3

4.
The
Mantra
• Name
of
your
Company/Project/Idea.
• Logo
and
Tagline.
• Mission
Statement
4
4

5.
Type
of
Business
• What
is
the
Industry?
• Product
or
Service
based?
• How
Product
or
Service
delivers?
• Who
are
the
customers
to
your
business?
B2B,
B2C?
5
5

6.
Industry Sample
Introduc2on
MaterialSoX
aims
to
be
the
provider
in
crea&ng
proprietary
fabrics
that
can
withstand
Materials
Engineering
Product harsh
condi&ons.
We
sell
our
fabrics
to
the
users
in
the
defence
and
coal/mining
industry.
RealTime
is
a
Singapore
based
company
that
focuses
on
delivering
an
innova&ve
real
&me
IT
based
Product adver&sing
solu&on
to
brands.
Our
chief
consumers
are
brand
marketers
and
digital
marke&ng
agencies.
6
6

7.
Problem
&
Opportunity
• You
are
selling
the
solu&on
to
a
problem.
• What
is
the
“blue
ocean”
you
are
exploi&ng?
• Is
there
any
interest
in
your
business
lately?
• Lies,
Damn
Lies
&
Sta&s&cs
7
7

8.
Opportunity Example
Descrip2on
Recently,
the
Singapore
government
has
allocated
S$13.5B
into
high
technology
research
and
development
and
placed
their
efforts
in
three
industries:
biomedical
sciences
Facts/Sta&s&cs/News (S$5.75B),
renewable
energies
and
digital
media.
The
solu&on
we
proposed
is
in
the
life
sciences
market,
where
we
can
reduce
drug
development
process
by
a
half
with
our
technology.
Based
on
the
assump&on
that
Singtel
has
sold
a
100K
iPhones,
we
es&mate
each
smart
Es&mate phone
will
purchase
about
5-­‐10
applica&ons
and
spent
on
average
S$10
on
them
each
month.
8
8

9.
Technology
or
Idea
• You
must
make
your
technology
or
idea
understandable
to
your
audience.
• For
an
execu4ve
summary,
never
put
too
much
jargon
into
your
descrip4on.
• Make
comparisons
on
how
your
solu4on
can
increase
produc4vity
and
efficiency.
9
9

10.
Technology Example
Descrip2on
MaterialSoX
uses
an
improved
composite
ceramic
material
to
build
fibres
which
can
efficiently
hold
vehicles
on
muddy
grounds.
Materials Our
solu&on
supercedes
the
present
ones
with
half
the
cost
but
twice
the
material
strength
to
hold
vehicles
above
muddy
grounds.
Our
solu&on
uses
a
proprietary
based
algorithm
developed
to
resolve
blurred
objects
Digital
Media of
movies
in
a
format
1000
&mes
beher
than
the
formats
which
are
adopted
by
the
industry.
10
10

11.
Team
• Diversified
and
Complementary
Skill
Sets.
• Get
Grey
Hairs
and
put
them
in
your
advisory
board.
• Don’t
give
too
much
4tles
to
your
team.
• Be
mature
about
your
experience.
11
11

12.
People Example
Descrip2on
John
Ho
is
the
CEO
of
MaterialSoX.
Prior
to
joining
this
company,
he
was
the
Vice
President,
Sales
in
Nippon
Fabrics,
a
MNC
Experienced specializing
in
fabrics.
His
experience
with
the
market
will
help
to
generate
sales
lead
for
the
company.
Larry
Pang
is
the
founder
of
Project
AceFire.
Currently
a
second
year
undergraduate,
he
has
spent
a
year
working
in
Prof
Johnston’s
Young
Rookie mul&media
laboratory.
He
will
act
as
the
CTO
of
AceFire
and
will
seek
to
find
a
CEO
who
can
mentor
and
guide
the
team.
12
12

13.
Route
to
Market
• Who
are
your
customers
and
how
do
you
reach
them?
• 80-­‐20
rule
on
market
segmenta&on?
• What
are
the
marke&ng
channels
on
your
product?
• What
is
the
market
size
that
your
product
size
is
likely
to
reach?
13
13

14.
Market
Research:
Customers
• Who
are
the
customers
for
the
products
or
services?
Iden4fy
common
characteris4cs
&
behavior.
• Who
and
where
the
major
purchasers
for
the
products
are
in
each
market
segment?
• Indicate
the
rela4ve
reach
for
customers
and
how
they
purchase
the
product
or
service,
and
what
influences
their
buying
decision.
14
14

15.
Market
Size
&
Trends
• The
size
of
the
market
based
on
market
segment,
demographic
by
sex,
region
or
country
and
poten4al
profitability.
• The
poten4al
annual
growth
for
at
least
3
years
or
the
compound
annual
growth
rate
(CAGR)
of
the
business
based
on
industry.
• Major
factors
affec4ng
market
growth,
for
e.g.
industry
trends,
socio-­‐economic
trends,
popula4on
changes,
government
regula4on.
15
15

16.
Compe&&on
&
Compe&&ve
Edges
• Realis4c
assessments
of
compe4tors
based
on
strengths
&
weaknesses.
Iden4fy
disrup4ve
or
alterna4ve
products/services.
• Unique
Selling
Point:
how
does
your
product
differ
from
exis4ng
products
and
what’s
the
addi4onal
requirements.
• Unfair
Advantage:
How
do
you
use
your
strength
to
covet
market
share
for
your
product/service?
16
16

17.
Es4mate
Market
Share,
Sales
&
Evalua4on
• Determine
the
scalability
of
the
product.
• Iden4fy
possible
partnerships,
clients
and
trends
of
sales
per
unit
in
the
next
3
years.
• Evalua4on
based
on
profitability
and
plan
for
expansions
for
the
produc4on
facility
or
manpower
into
other
markets.
17
17

18.
How
to
Es&mate
Market
Size
• Start
with
simple,
reasonable
and
valid
assump&ons.
• Approximate
to
the
closest
figure
(10K,
1M)?
• Prac&ce
makes
perfect
by
making
es&mates
to
problems.
18
18

19.
Prac&ce
Problems
• What
is
the
average
number
of
internet
users
are
there
per
household
in
Singapore?
(Hint:
Think
about
how
many
people
per
household.)
• How
many
hospitals
are
there
in
the
first
&er
ci&es
in
China?
(Hint:
define
the
first
&er
ci&es
-­‐
how
many
of
them,
then
work
out
how
many
hospitals
per
city
on
average
based
on
a
certain
radius?
• How
many
seats
are
there
on
a
A380?
(Think
from
the
numbering
of
seats)
19
19

20.
• How
many
seats
are
there
on
a
A380?
(Think
from
the
numbering
of
seats):
–Start
from
seat
number
30-­‐65
in
economy
class,
take
an
average
of
10
seats
=
350
seats.
–First
Class:
4
seats
per
land
and
only
4
rows
=
16
seats
–Business
Class:
6
seats
per
row,
and
15
rows
=
90
seats
–Economy
class
on
2nd
floor
=
11
x
8
=
88
seats
• Total
number
of
seats
=
544
seats
• Actual
number:
450-­‐654
(depending
on
which
airline).
20
20

21.
Route
to
Market
• Who
are
your
customers
and
how
do
you
reach
them?
• 80-­‐20
rule
on
market
segmenta&on?
• What
are
the
marke&ng
channels
on
your
product?
• What
is
the
market
size
that
your
product
size
is
likely
to
reach?
21
21

22.
4
Ps
of
Marke4ng
22
22

23.
23
23

24.
Business
Strategies
24
24

25.
Business
Strategies
• How
do
you
generate
revenues
and
subsequently
profits
for
your
business?
• What
is
your
business
model?
• How
are
the
revenue
sources
available
for
your
startup?
• What
business
strategies
do
you
use
to
generate
revenues?
25
25

26.
Business
Model
• Business
Model:
the
summa4on
of
the
core
business
decisions
&
trade-­‐offs
employed
by
a
company
to
earn
a
profit.
• Business
decisions
and
trade-­‐
offs
fall
in
4
groups:
–Revenue
Sources
–Cost
Drivers
–Investment
Size
–Cri4cal
Success
Factors
26
26

27.
Revenue
Sources
• How
many
different
revenue
streams
will
the
business
model
generate?
• What
is
the
source
of
each
revenue
stream
(sales,
service
fees,
adver4sing,
subscrip4on)?
• What
is
the
rela4ve
size
&
importance
of
each
revenue
stream?
• How
quickly
is
each
revenue
stream
likely
to
grow?
27
27

28.
Case
Study:
Travel
Search
Engine
Consumers Travel
Agent Flights
-­‐
Air
Tickets
Revenue
Stream:
Travel
Agent
charges
a
referral
fee,
an
admin
fee
from
the
consumers.
28
28

29.
Case
Study:
Travel
Search
Engine
Consumers Travel
Search
Engine Flights
-­‐
Air
Tickets
Revenue
Stream:
Online
adver&sing
which
replaces
the
consumer’s
admin
fee,
and
possible
referral
fee.
29
29

30.
Business
Strategy Example
Descrip2on
MaterialSoX
engages
directly
with
known
industry
partners
in
the
fabric
industry.
The
company
does
not
deal
directly
with
customer
base
but
sells
via
resellers
or
fabric
Partnerships/Licencing distributors.
One
alterna&ve
strategy
to
generate
revenues
is
done
via
licensing
of
the
proprietary
technology
to
other
fabric
producing
companies.
Real&me
offers
the
customers
a
free
beta
version
of
the
soXware
with
limited
features
so
that
they
can
en&ce
them
to
buy
the
Freemium
Model premium
version
(with
addi&onal
features)
of
the
soXware.
The
company
is
currently
in
nego&a&ons
on
strategic
rela&ons
with
different
gaming
companies.
30
30

31.
Risks
&
Barriers
to
Entry
• Who
are
your
compe&tors?
• How
do
you
prevent
your
compe&tors
trumping
you?
• What
are
the
problems
you
face
against
them?
• Don’t
assume
that
you
are
the
only
one
or
have
indefensible
patents.
31
31

32.
Barriers
to
Entry/
Example
Descrip2on
Compe2tors
MaterialSoX
faces
the
risk
of
a
saturated
and
tradi&onal
ceramics
industry
mindset
not
to
adopt
new
technologies.
To
mi&gate
the
risk,
Tradi&onal
Industry
Mindset the
company
will
launch
marke&ng
campaigns
and
present
the
product
in
various
conferences
to
provide
industry
players
an
awareness
of
the
product.
The
compression
format
of
RealTime
soXware
cannot
be
replicated
based
on
the
proprietary
algorithm
used
in
performing
the
Unique
Selling
Point compression.
We
are
in
the
process
of
paten&ng
the
product
to
act
as
a
deterrence
against
our
compe&tors.
32
32

33.
SWOT
Analysis
33
33

34.
34
34

35.
Financials
• How
much
do
you
need?
• How
much
equity
you
want
to
give?
• How
do
you
raise
that
amount
of
money?
• Can
you
bootstrap
without
raising
funds?
35
35

36.
Investment
Size
• How
much
cash
is
required
to
launch
the
business
model?
• How
much
working
capital
is
required
to
sustain
the
business?
• What
are
the
4mings
of
these
cash
needs?
• Will
the
cash
expended
produce
a
sustainable
and
profitable
business
en4ty?
36
36

37.
37
37

38.
Financials Example
Descrip2on
MaterialSoX
seeks
US$300K
as
an
ini&al
investment
to
build
a
proof
of
concept
and
will
raise
US$2M
to
bring
the
prototype
to
market.
Fundraising The
company
generates
revenues
via
sales
in
producing
fabric
for
the
defence
and
coal/
mining
industries.
Real&me
generates
revenues
via
the
number
of
purchases
made
on
the
premium
version
and
online
adver&sing
with
the
huge
traffic
Bootstrapping generated
by
visits
from
the
site.
The
company
seeks
to
bootstrap
via
hiqng
1M
sales
target
within
two
years.
38
38

39.
39
39

40.
Who do you raise funds from?
• Friends, Family and Fools.
• Business Angels.
• Super Angels*
• Venture Capitalists.
• Government Institutions.
• Foundations and Agencies.
• Private Equity Firms
• Banks
40
40

41.
41
41

42.
Source:
Meng
Weng
Wong
and
published
on
SGEntrepreneurs.com
hhp://sgentrepreneurs.com/dummys-­‐guide/2009/03/05/a-­‐map-­‐on-­‐venture-­‐capital-­‐in-­‐singapore/
42
42

43.
Exit
Strategy
• What
happens
to
the
company
in
3
to
5
years
4me?
•
Possible
Exits:
– Ini4al
Public
Offerings
(IPO)
– Trade
sale/Merger/Management
Buyout
– Family/Company
Succession
– Wind
it
Down!
• Exit
Strategy
depends
on
industry
that
the
start-­‐up
is
in.
43
43

44.
Exit
Strategy Example
Descrip2on
MaterialSoX
hopes
to
exit
in
3
years
with
a
profit
margin
of
20M
via
a
trade
sale
to
a
Trade
Sale/Buyout larger
player
within
the
industry,
for
example,
Cepheus
Ceramics.
RealTime
seeks
to
IPO
in
3
years
as
an
exit
IPO strategy.
44
44

45.
References
• McKinsey & Co., “Starting Up”
• Robert et al, “New Business
Ventures & the Entrepreneur”
• Kotler et al, “Marketing
Management: An Asian Perspective”
• Megginson & Byrd, “Small Business
Management”
• Timmons & Spinelli, “New Venture
Creation”
• Thompson, Strickland & Gamble,
“Crafting & Executing Strategy”
45