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C HAPTER 8 W RITING B USINESS P LANS 8.0 E NTREPRENEUR S D IARY Launching your business beyond the friends and family stage will require you to rewrite your business plan, probably for the umpteenth time! I will guarantee you one thing for sure : the circle of professional acquaintances that you thought might invest in your company (well, most won't) will have more advice for you than you'll ever need. Advice can be a good thing, but when one person says "go right" and the next person says "go left, ", you will likely find yourself wondering just what should you do. You have to do something . This is particularly relevant to writing your business plan. I was successful in raising capital. My business plans were a critical component of my successful fundraising. Were they perfect? No, but these plans did raise money. In fact, one of the VC investors said several times that she thought my business plan for my aquaculture tilapia startup was one of the best business plans she had ever read. This is more impressive when I tell you that her VC firm required a supporting partner (proponent for the venture firm to make an investment) to make a personal investment in any company that was brought forth to the VC group for consideration. Well, the tilapia business eventually ended up under new management and one of the first objectives of the new management team was to write a "really good" business plan. My plan got tossed out the window. What does this tell you? 8.1 The B USINESS P LAN —A N ECESSITY You saw an opportunity for a new piece of technology that had been developed by a large publicly traded company (Big-Co, Inc, we'll call this company Big-Co) where you u are currently working . You tried to convince Big-Co to pursue this opportunity, but Big-Co was not interested, since you clearly told them that maximum potential sales were only $3M or $5M over the next 3-5 years. In fact, Big-Co said that type of cash flow was insignificant to them (review the lessons in Chapter 2, where disruptive technologies are discussed and why new technologies are often ignored). Well, to you $3M or $5M seemed like a pretty 1
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significant cash flow in your house's book keeping system. So, you decide to pursue this opportunity. You make the smart move of negotiating rights to this neglected opportunity from Big-Co, for a modest royalty of 2% of your gross sales. (You might want to review Chapter 4, section 4.5: Strategic Resources and Intellectual Property.) Since you are currently working in the field where the new technology will be applied, you have a solid knowledge base about the market, the competition, and basic technical information on supply chains, distribution, and manufacturers. So, what else do you need? Namely, two things, or really one—capital to launch your business, but
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This note was uploaded on 02/03/2009 for the course BEE 489 taught by Professor Timmons during the Spring '09 term at Cornell University (Engineering School).

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