MBA School Mannheim - How to write a Business Plan _Entrepreneurship Club

How To Write a Business Plan.
Michael Altendorf CEO & Co-Founder of Adtelligence
Date: March 22nd 2012
Time: 07:00pm-09:00pm
Place: Education Centre Dalbergplatz (2nd floor); N2, 10
Please register in http://doodle.com/wm9ddci3n8ga5bkr

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Who is Adtelligence?

 Founded in 2008 by Michael Altendorf & Dr. Cyrille Awards 2010 & 2011
Waguet (SAP Chief Architect)
 Teams in Mannheim (HQ), Düsseldorf, London
 Team of 25+ tech- & media experts from e.g. SAP,
Google, WPP Group and IBM
 Funded by 6 leading European Internet Investors
Connected to:

 1 of 10 Facebook preferred developer consultants in EU
 Only certified Facebook Advertising provider (API) in
central Europe
 Performance:
Manage terabytes of data
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Confidential Information

HOW TO START A VENTURE ?

How to start?
Iterate, iterate, iterate…

Questions to ask yourself before the start
 Do I have a good idea?
 Am I good enough to be an Entrepreneur?
 Where do I get the money for my Company from?
 Who gives me the Money?
 How do I get to know such people?
 Why do the rich people do this?
 What do I have to do?
 What kind of questions do the Investors ask?
 How much Money do they give to me (& how much do they want from me?)
 When do I get the Contract and the Money?
 What happens then?
Source: Computer History Museum
Web: www.adtelligence.de | Email: info@adtelligence.de | Tel: +49 (0) 621 87 204 066 | Julius-Hatry-Str. 1 | 68163 Mannheim, Germany

From Idea to concept

No…

…Better…
…Maybe…
…Yes

From first idea to first version of a product – sometimes it
takes only some days – Sales Funnel Analysis Tool


The Team

How to built a great team for the start?
• Motivation is key!
• Experience is something but not much
• You need some experience in several disciplines
but no senior team
• Combination of experience and fresh ideas is best
• Minimum 2 people for the start, 3-4 are better

Source: A-Team

The CV problem

When others will think that you will become a real entrepreneur
 80% of the success is determined by the Team
 Your Qualification: 1,0 in Informatics + 1,0 MBA + 2 own (sold) companies + 5 years work experience
would be “good”
 BA in XYZ + an internship at McKinsey is not enough to get VC
 Quote from former CFO SAP: “The guys who sold
nothing switched to marketing”

Show that you are able to build the product and the company
 Work on your Idea:
 Identify markets
 Calculate Costs and Revenues
 Develop a Prototype
 Talk to experts
 …


Some FAQ for the (Business) Plan

 Yes, you will write it for yourself, but the VC wants to see the potential (100 Mio in 5 Years is the
key, not in one VC round, you need at least 3-5) – start small (50K rev e.g. for the first year and
show how to grow to 100M) think big
 No, salary of more than 50.000€ per Year is not ok for the start when your just graduated
 No, with 3 People you won't reach 5% Market share - please calculate bottom-up
 No, you don't have to mention Gartner and IDC, but 1 Big Player would be good
 No, you can't do it without a business plan (…but with a product which has 10.000 users +)
 No, it should not be longer than 10-25 Pages (10/ 20/30 rule) – no McKinsey 80 page plan with 40
page competitive feature analysis – you can do the longer analysis for you but not for the VC –
VC‟s do not have time to read more than 10 pages
 As short as possible, not longer than necessary
 The core problem is  to write a short plan, not long one!


Typical Points in the Business Plan

BUSINESS PLAN PRESENTATION FORMAT (Draft from Accel Partners)
“Agenda”
1. Overview - 1 Slide
2. Market – 4-5 Slides
3. Product / Service of Company - 4 slides
4. Technology - 1-2 slides
5. Distribution - 3-5 slides
6. Competition - 2-3 slides
7. Management - 1 slide
8. Financials - 3-4 slides
9. Capitalization - 1 slide
10. Risks - 1 slide
11. Summary - 1 slide
Total: 23 – 28 slides
http://www.accel.com/pdfs/Draft_Business_Plan_Presentation_Format.pdf

Typical Points in the Business Plan
or even Shorter – The 10/20/30 Rule

10 slides:
1. Problem
2. Your solution
3. Business model
4. Underlying magic/technology
5. Marketing and sales
6. Competition
7. Team
8. Projections and milestones
9. Status and timeline
10.Summary and call to action

Typical 20 min presentation time in a 1 hour VC meeting(!)
30 point font type
Read more: http://blog.guykawasaki.com/2005/12/the_102030_rule.html#ixzz1prhvT800


But first start with a one pager
1 page (not 5)

Elevator Pitch
What can the investor tell his wife in the evening
afterwards
Technology
Unique Selling Propositions - We have 10 patents, and 2
competitors who can not do this in that way
Market Info
Size, growth rate, Gartner means market is 100bn in 2
years and we approach it in a fast way with abc
Team
One who build, one to sell is minimum
First Success
Proof of Concept or prototype exists, first 5 clients
Business Model
We need X to bring Y
Optimistic financials
for 5 years (be able to get VC!)


Where do I get the Money for my Company

Typical Sources for first angel money:
 Own Money
 Family, Friends & Fools
 Business Angel
 Bank
 Seed Venture Capital Fonds
(Seedcamp, Y Combinator)

Prefer Smart Money in the Beginning!

 Venture Capitalists most times didn't had an own company with problems you will get
 Prefer Business Angel with Experience and a lot of spare time

Who gives me the Money?

Prefer an experienced Business Angel with "proven track record", a good
network, and Experience in the right Segment

Source: John Doerr/Ted.com

Source: Ron Conway/Techcrunch Source: Forbes Magazine


How do you meet those people?

 Recommendations by other CEO‟s or VC‟s
 Best Place to pitch VC‟s: University Coffee in Palo Alto/Sillicon Valley
Or on local Events
 Our own matching event:
Rhein Neckar Technology Ventures (www.technologyventures.de)
 Heidelberger Innovationsforum or other local events
 Contacts (Lawyer, Tax Accountant)
 BAND/BA Networks
 Karlsruhe
 Frankfurt
 Heilbronn
 Stuttgart

 Mentor or Public Consultant
 Do not pay, if it is not necessary the best advice you will get for free!


How much should I raise?
Phase Who invests? Volume Success Factors
Idea Nobody 0 Experience and Background
Orientation Fools 0 Meet the right People
Planning Fools 25.000 € Background - Who can write a
clean Plan and make a good
Calculation - only Serial
Entrepreneurs in Silicon Valley are
getting Money for Ideas
Founding / Business Plan Family & Friends, BA with 0 - 1 Mio. Own Funds, persuasive Power, can
Experience in this Segment you get VC with your Plan and your
Idea - Can you realize the Plan
Seed / Prototyping Business Angel - prefer smart Up to 1 Mio, but 50k -500k average How good is the Team and the
Money Prototype
Startup Business Angel (HTGF) Up to 1 Mio. Development, Financial Plan
Early Stage BA, VC Up to 10 Mio. International, 1-5 The right Contacts, Potential and
Mio. national Fonds Team
Expansion VC 5-25 Mio. Growth in Sales, Business Model
(reoccurring revenues)
Late Stage IPO, VC, etc. Unlimited Growth in Sales, EBIT, Market
Share


Ideal Way of increasing value – Facebook (at least till 2011)

Source: Techcrunch.com


Define a Business Model, test it and iterate, iterate, iterate…

1 Infrastructure 2 Offering
3
3 Customer

Core Partner Customer Customer
Competencies Network Relationship Segments
Value
Proposition
Value Distribution
Configuration Model

Costs 4 Finance Revenue Model

Source: A. Osterwalder Business Model Design Template


The unique selling proposition of your product?

Some questions to answer:

• Why should somebody buy your
product?
• What needs to you address?
• What are the key USP‘s for your target
customer?
• Why are you better?
• Is there a market?
• If there is no competition there is no
market! That is not an USP – nobody
will buy it!

Source: Forbes Magazine


The Whole Product (by Geoffrey Moore)

Outsourcing Hardware

Application
Complementary Engineering
Software
Complementary
Services Core Products
Installation Offering
and support Peripherals

Design Databases

Minimum set of products and services
to fulfill target customer's reason to buy.

5 Forces (Porter)

Potential
Entrants
Threat of new
Entrants

Bargaining Industry Competitors
Suppliers Power of Rivaly among
Bargaining
Buyers
Power of Buyers
Suppliers existingfirms

Threat of Substitute
Products or Service

Substitutes


The Competition


New Markets are different

Source: Steve Blank


How to find the first Customer

Search

Customer Discovery Customer Validation

Pivot


Crossing the Chasm in an existing market

Source: Crossing the Chasm, Geoffrey Moore


Crossing the Chasm in a New market takes much longer

Source: Steve Blank


Customer Development - How the find the Target Customer

• Week 1: Define a beachhead where to
enter the market
• Define the pricing

• Week 2: define a new target customer
• Define a better package and better
pricing

• Week 3: …

• After one year:
• Market should be clear and positioning
has improved (in a new market)


Plattform vs. One Trick Pony

Easier to enter the market, niche leader
but can become obsolete with game
Very hard to sell, indirect business models, high changing technology (Facebook vs.
investment but maximum ROI
Studivz
Source: Facebook


Distribution – Where do you fit in the value chain?

Source: Slideshare


What's up with the Marketing - there is no Budget

WEB 2.0 TOOLBOX  Todays Online Marketing Technologies for the Web 2.0 are
more Creative
Viral Marketing  The new Tools are used to make all kinds of Advertising:
PR News, Blogs or Twitter
Early Adopter Marketing
 An interesting and interactive way of Advertising is the viral
Buzz & Guerilla Marketing marketing (Word of Mouth Marketing)

Blogging & Twittering  The Problem of these creative Advertising:

Brand Page
 You can't predict the effect
Facebook Fan Pages

Online Events / Webinar
 Viral Campaigns are unique - you can't replicate them
Youtube Video PR

Company Radio & TV


Raising VC & Sales – Money is Oxygen

Raise 50% more money than you need in the
beginning

Example for good first invest:
HTGF gives 500K for 15%
(+one time anti dillusion) as they know that
you will need it


Working Capital

• There is some time between
order entry and cash flow

• This can become your core
problem – you need a good
banker!

• If you have contracts, the
bank can be used for this but
not unlimited


European Startups need break even faster than US!!!

…cash flow break even
is important


Building a great Team

 Look for talent not for CV
 Hungry people are the best
 Motivation is more important than previous
internships etc.
 An MBA does not make you a great sales
guy


The SMT – Building a Senior Management Team

 Like in a rock band: All instruments have to be played and not everybody can play everything
 Very important to find 5 key people in the company
 In the beginning you need 2: one to sell, one to build
 Later you need: CEO, VP Sales, COO, CFO, CTO/visionary


Finance Planning and Venture Capital

 Create a Financial Plan in 2 ways
 Bottom Up
 Top Down

 From where to you get the Numbers?
 Gartner for top down
 Excel for bottom up

 Calculate 3 Scenarios (+/+/=) (if you have a
negative scenarios – how to innovate the
business mode to still make money?

 Can you get VC with your calculation?

Who are the Key Players to get VC?


Scaling the Company & Establish an Expansion Strategy

Many ways to grow:

• Product differentiation
• Go into verticals
• Expand into other countries
• Start partnerships

Problem: Which way is right?
Try everything but stop fast if ist not
working

Exit Scenarios
Revenues x Market Hype + Competition = Exit multiple

Different Options:
• Selling to Google is best, but there are
many other which are ready to buy
• IPO – not necessary, you can use
private equity first
• As an expert first before you sell (M&A
advisors in London, NY , silicon
valley)
• Stay with your company?
• Merger with competitor
• …


Key Learnings

 Being self-employed means working the every day
and own your own - 60 - 100 hrs a week is normal
 There is no work life balance – as there is no
difference
 Never Stop Learning, iterate every day and improve
 Writing and Optimizing the Business Plan
 Get a "Level of Trust" - Visit Events and enlarge
your network
 Investors are paying for the growth of the Company,
not for luxury like concord flights – don‟t worry you
will be invited to cool locations and events all the
time all over the world!
 Get in the Market when everybody makes fun of you


Thank You
Information: www.adtelligence.de
Become a fan: www.facebook.com/adtelligence
Twitter: www.twitter.com/Michael1980
Connect: www.linkedin.com/in/michaelaltendorf
www.xing.com/profile/Michael_Altendorf

Books to Read

 Starting a Venture - The Art of the Start – Guy
Kawasaki

 Go to market and productization - Steve Blank – 4
steps to epiphany

 Got to market - Crossing the Chasm


What kind of Questions do the Investors ask?

Product - What is the Product Roadmap? What are you developing next, how long will it take, and who are your hires to
develop it? How did you make the decisions regarding the Direction the Product is right now? We want to understand your
Decision making Process and your vision of the company. This last point is extremly important.
Market - How big is the market and how will it grow? What are the trends in the market that make now the right time for your
product? If you're in a big enough market, you can afford to make some mistakes (which as startups you will always do!). Who
are your first customers? Are they referenceable? What does your pipeline look like?
Competition - Who are the competitors? What is your competitive advantage and is it sustainable? Hint: IP patents are not
enough.
Team - What are your backgrounds, where did you meet, and why are you the right team to execute on this plan? Who does
what, and who else do you need to hire to build out the right team? Be lean with your costs. No VC likes to see a company that
is spending extraneous money.
Scalability - What are the barriers to growth? There will always be some; be aware of what they are. This could be from the
business model side or the technical product side. Within this there is also the issue of customer acquisition strategy and cost.
Finally, although we do not ask the founder this question, we ask ourselves: In what ways do WE as the VC investor
provide value to this particular entrepreneur/team/startup?

Source: Janet Zhou //Silicon Valley VC May 2010

Week 1: When do I get the Contract and the Money?

 When the Investor is interested : First
Round 2 -3 Month Due Diligence Phase
 "Finding the Rock": Investors asking
question Founders are answering
 Months of Contract Negotiations

 Meeting with Notary (Founding GmbH)
 Open an Account Source: Wooga

 Don't wait for the certificate of
registration, start immediately
 Then the Money comes


Week 2: What happens then?

 Get an Office
 Go to IKEA or buy on eBay
 Get a Phone
 Write Job Ads
 Hire People - Is the Team complete?
 No, you can't order a Porsche, a Macbook
or an iPhone
 Long Term Investments  You can„t go to
the Customer with a ALDI Notebook?

Source: Blog


After 1 year – Breakthrough invention?

 Product should be ready
 first clients
 Pricing clear
 Gain clients
 Automate process
 Build up the team

 Iterate!


MBA School Mannheim - How to write a Business Plan _Entrepreneurship Club

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