42629 lecture 6 pt1

Writing a Business Plan
Tim C. McAloone
tmca@dtu.dk
With major contributions from: Internet sources, McKinsey & Venture Cup

Unless otherwise stated, this material is under a Creative
Commons 3.0 Attribution–Share-Alike licence and can be
freely modified, used and redistributed but only under the
same licence and if including the following statement:
“Original material by Tim C. McAloone for course 42629 – Innovation and Product Development
Department of Mechanical Engineering, The Technical University of Denmark”

2 Original material by Tim C. McAloone for course 42629 – Innovation and Product Development 2012
Department of Mechanical Engineering, The Technical University of Denmark

Business plans – prior experience

• How many of you have or have had your own business?

• How many of you plan to have your own business in the next year?

• How many of you plan to have your own business in the next two years?

• How many of you plan to have your own business in the next five years?


Key objectives of this lecture
• What are the elements of a promising business idea
• How to make your business idea irresistible
• What to keep in mind when presenting your business in a
plan
• How to analyse your market and the competition
• How to choose your target market
• How to determine your market strategy
• What a business system is, and what to look out for when
designing one
• What to include in your financial planning
• How to consider and represent risks

Main focus on new startups, but most of principles are
valid for established business

Today’s agenda

• How to identify a business idea – concept and presentation

• Developing the business plan

1. Executive summary

2. Product/service concept

3. Marketing strategy

4. Business model/system

5. Business case and risks

6. Implementation plan & Checklists

• Video case exercise

Today’s agenda










Elements of a promising idea


Clear Customer Value
• The key to success in the marketplace is satisfied
customers, not great products

• The product developer’s view:
• Our device can perform 200 operations per minute
• Our new device has 25% fewer parts

• The innovator’s view:
• Our new device will save the customer a quarter of
the time and therefore 20% of the costs
• Our new solution can boost productivity up to 25%

• The product is merely a means of delivering value to
the customer

• The customer value expresses what is novel or
better about the idea, compared to competing offers

[Apple marketing material]

Sufficient degree of innovation
• Business ideas can be classified along the two
dimensions products/services and business system

• In each of these categories, you can develop something
new or capitalise on something that already exists

[McKinsey]




[McKinsey]


Feasibility and profitability
• “Back of the envelope” financial and resource
assessment

• Traditionally, profit calculations for a business are
made as follows:
• A company buys material or services, thereby
incurring costs
• It also sells products or services to customers,
thereby earning revenues

• Many new businesses do not, however, function
according to this model, e.g.:
• McDonalds, 7-Eleven
•
•
•


Elements of a promising idea


Key questions – Business idea

BUZZ GROUPS

• Discuss for 5 minutes with the person next to
you, what key questions you should have the answers
for, if you are to successfully present and promote a
new business idea.


Today’s agenda










The good business plan
Five core qualities:
• A good business plan impresses
with its clarity
• Concise, answers all questions

• A good business plan convinces with its objectivity
• Marketing jargon alone will irritate more than appeal
• Don’t be too critical of own project though

• A good business plan can be understood by the technical layman
• Practice on your granny!
• Use sketches, photos, mock-ups

• A good business plan is written in one consistent style
• Especially important if you are more than one person writing

• A good business plan is your business card
• Pay attention to detail

Today’s agenda










Executive summary

• Aim: To pique the interest of decision-makers and
investors
– Brief overview of the important aspects
– Highlight the product/service, customer
value, relevant markets, management
expertise, financing requirements, ROI

• Clear objective and concise description of business
idea
– Remember to describe your key audience

• The executive summary should be a standalone
document
– It’s not just the intro or the abstract


Today’s agenda










Product/Service concept
• Describe the concept
– This is the core of the business plan – describe it
simply and crisply

• Customer value
– Must be better than current market offerings
– The function of the product/service and the value
transferred to the customer must be in focus
– Define the business area in detail – and if your
innovation is a range of products/services, define
their uniqueness wrt. each other

• Development status of your product/service
– Include photos or sketches
– A prototype would be even better
– Describe patents and protection of your concept

42629 lecture 6 pt1

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42629 lecture 6 pt1