Business plans are essential to the success of any enterprise. There is no single format that will meet every planning requirement. During the evolution of any enterprise, there is a requirement for the following types of business plans:
- New Venture Business Plan – describes the business objectives of a new enterprise and identifies its investment requirements;
- Long Range (Strategic) Plan – an annually updated plan that projects the activities of an enterprise over the next three to five years;
- Operational Plan – describes an enterprise’s activities in detail for the next year – typically accompanies the long range plan; and
- Financing Plan – a modified version of the long range plan prepared for the specific purpose of attracting new funding to an enterprise.
Doyletech offers its services in the preparation of all types of business plans plus other services related to the planning process. The following is a case history of a new venture business plan prepared by Doyletech.
We were approached by a consultant who specialized in monitoring the after-effects of explosives operations to assist him in bringing to market an instrument that would provide an immediate readout of all pertinent blast parameters. We focused on the statement of opportunity which was deemed to be as follows: “recent changes in microprocessor and signal processing technologies have made it possible to produce a portable blast monitoring instrument that could be sold in large quantities to the mining, quarrying, and construction industries”.
Since the main purpose of the new venture business plan was to attract funding to the new venture, we then described the blast monitoring industry using terminology that could be easily understood by potential investors. We then provided an introduction to the entire business plan that explained the problem to be solved, the status of the product development, and how the new venture might evolve over time.
We analyzed the three target markets in terms of their potential and possible penetration over the first five years of operation as well as the share of each that the new company/product line could reasonably be expected to achieve. A preliminary set of financial projections was drawn up at this time so that some estimates of selling and marketing expenses could be made because this would have a major impact on sales revenues and profitability.
The next major step was the compilation of a full set of financial projections. This was obviously an iterative process because trade-offs had to be made in the allocation of resources to production, selling, marketing, research and development, and administrative overhead.
We arrived at a business plan that called for sales of $5 million in five years, a gross profit of 55% within two years, positive cash flow after two years, based on an initial investment of $400,000 in risk capital. The company’s performance turned out to be in line with the above projections. In fact, its strong cash flow enabled it to expand into another market that supported an even higher growth rate and higher profitability.
The following is a case history of a strategic plan prepared by Doyletech.
We were asked by the three owner/managers of a high-tech company to help them sort out their various roles going forward. The company’s ownership was split equally among them and one of them was president/CEO, another was the V.P. Sales/Marketing, and the third was a technical specialist who theoretically reported to the V.P. Engineering. They were comfortable with those roles going forward but there was a great deal of conflict between them in the day-to-day running of the company. The two founders who were at lower levels than the president/CEO felt that they could challenge his decisions on the basis that they owned two thirds of the company. They were obviously confused about their roles as shareholders versus their roles as managers/employees.
We recommended that they prepare a strategic long range plan (LRP) that would spell out the current and future roles for the three founders. The LRP would be presented to the shareholders at the beginning of their next fiscal year. It would be like talking to themselves because they were also the shareholders. In fact, they were also the board of directors whose job it is to represent the interests of shareholders. Nevertheless, the process reminded them of the three distinct roles. In fact, since they were in the process of attracting more capital, it reminded them that it would be helpful to change the structure of the board of directors. They realized that if the company was to be successful, there must be a clear understanding of their various roles. The strategic plan helped them achieve that understanding.
As mentioned earlier, Doyletech can assist in the planning process in several ways:
Business Plan Preparation – we can assume complete responsibility for the preparation of all types of business plans or will assist enterprises that choose to prepare their own. Our major added value is the exhaustive market research we conduct to support the financial projections in these business plans. We can also help you to update your plans annually.
Business Plan Review – we offer a review service that provides an independent and objective assessment and, if necessary, recommends changes. This review consists of a detailed evaluation of your plan, including its key business assumptions and its overall presentation. A section-by-section review is conducted to identify strong points, weak points, and missing points, and provides recommendations on how to improve the plan as well as the business itself.
Business Plan Presentations – we can work with you to extract key points from your completed business plan, translate technical issues into clear terms, help fill in gaps such as market research and financial summaries, and prepare a presentation that is professional in every aspect. We anticipate the questions most likely to be asked by a potential investor, buyer, or approval authority and prepare you with the answers. We can assist you in the presentation of your business plan to investors, whether they be angel investors, venture capitalists, or bankers.
Business Opportunity Documents (BODs) – this document is an abbreviated version of a business plan. Its concept has been pioneered by Doyletech. As described in our publication “Making Technology Happen”, this tool identifies exploitable technology and captures the essence of the business opportunity in terms of product, market, and payback. It serves to establish a ‘common dialogue’ between a scientist or entrepreneur and a potential technology exploiter. It can also be used in performance appraisals for people whose job it is to generate exploitable technology. Finally, it can be used to safeguard the technology and to control the flow of information relating to it.
Commercial development officers in research laboratories and universities and even economic development officers at the municipal level will find an inventory system of BODs useful in their work because it provides them with a menu of opportunities to present to outside investors. BODs have been used by NRC’s IRAP Program, incubator managers, and several Canadian university technology transfer officers. For more information on the use of BODs, see the ‘Commercialization Programs’ page of this website.
Product Migration Strategies – we have worked with the management of many established and embryonic companies to assist them in the development of product migration strategies. For good reason, these strategies tend to be closely related to the business planning process in these companies. In the words of our founder, Denzil Doyle, a single product company is not viable, especially in the technology industry. Also, investors will want to be assured that the company will be able to compete with new entrants to the marketplace.
Doyletech uses product migration charts (such as the one below) as competitive analysis tools. For example, if all (or most) of the existing products on the market fall above the line (see figure below), the new venture has a fighting chance, but if they fall below the line, it is likely doomed to failure.
One difficulty will be in determining what constitutes the true functionality (and in some cases the true price) of the competitive products. The target market must be taken into consideration in answering these questions. In fact, a product migration chart should be drawn for each target market.
In summary, Doyletech has assisted in the preparation and/or review of literally thousands of Canadian business plans over the years. These plans have ranged from early-stage technology companies to large domestic companies to provincial and federal operating agencies and laboratories.