Hello to each and everyone of you. I will discuss the importance of the business plan for the innovative businesses creators. But first, a few definitions. A business plan serves to finance a project, to get capital aid or investors whether they be internal ou external. Second thing is, the business plan must be adapted to the audience to which you will submit it, because the audience may completely vary. If you try and get subsidies, you will talk jobs creation, you will talk land management. If you try and get venture capital funds, you will talk capital gains accrued. Each time you will thus address the investors in the manner they are expecting you to. Then, the problem of the business plan is that in fact, you will anticipate on the future. And when you set up a business you anticipate a future based on a present that doesn't exist, Hence very complicated to achieve. Incidentally a well known thinker, Mike Tyson, is used to saying: "All the people who want to beat me, everybody think they have a plan till they get punched in the mouth." And indeed, it is a very acceptable metaphor for business creators which are getting on the ground and are faced with much wilier competitors than they'd have imagined, or simply even clients who are much more difficult to convince. However, carrying out a business plan is possible, and the business plan is a key exercise. Why? Well, because if you achieve a good business plan, and as you may see on this imagery 25 % of business creator who write business plans that is: the two green zones, are very close to the goal they had fixed at the beginning. So, writing a business plan and being right on tracks is possible. Yet, the business plan is now being most criticised. Why ? Because we are discussing a bunch of concepts and the business plan simply looks so uncool. Don't believe a word from that. A good business plan is extremely interesting and always allows to convince. Nonetheless, a business plan, is quite standardised an exercise. In other words, the people to which you will present it expect a very precise canvas from you. For instance, you have an appointment with an investor who traditionnaly gave you a set hour. Well, as it turns out the investor is running late and in the end all you are left with is 30 minutes. Given that you are granted a quarter of the time to speak and the three others are in fact rather reserved to a question & answer session well, you only get a mere ten minutes for the presentation. And, as it happens your presentation was very good and the investor is captivated after all, he goes get his boss in the office next door. And at that very moment, his boss says, "You have five minutes". So... on the five minutes, you have one minute and a half to talk and three minutes and a half for the Q & A session. So there, these are the standards, be in the know. In general, if it's a PowerPoint, you will have over 15 minutes. If it's a Word document, you will have up to twenty pages, one page and a half for the executive summary. But it could perfectly be one single sentence during a cocktail reception. That is, if you bump into the investor you have sought for a long time and it happens you are sipping champagne. So you all will have is one sentence because, needless to say you won't give a PowerPoint presentation in a cocktail reception. You will only have one sentence to convince him. What will you do? It's very simple. With one sentence you will not explain what you are doing, which no one really cares about. You will explain what your clients do owing to you. Before your eyes, is an example of aquarelle.com it is a flower delivery website, and when Henri de Maublanc, who founded the website explains his business, he doesn't say "I am a florist". But "I am a messenger". It means that what is important to him, is the capacity of a timely delivery of a message that is affective between two persons. In other words, the resource allocation for his company is not to favour the flowers, chocolates, or the wine... in short, all the products they deliver, in his viewpoint the logistics and information system must be favoured because the most important thing is the message. So, when all you have is only one sentence to explain your activity, don't talk about what you produce, talk about what the client can do owing to your product or service. The important thing for a business plan, is being on the top of the pile. That is, to have the ability to confront two types of competition. The first competition is found within your business, and we will discuss it later on. But also mainly, the competition that comes, as I put it, from those who seek the same investors as you and who yet, are not your rivals. They compete against you to appeal to these investors. So, you need to have the capacity to be on the very top of the pile, and the figures you see are those of an average French venture capitalist. Every year, over 2,000 executive summaries are sent to an average venture capital firm. 75% loss from the beginning since only 500 of the business plans will be read. The 20 pages version I mentionned earlier. And then, there is another 40 % loss since these investors only agree to a little less than 200 appointments. In the end, in the good years, between 0,5 % and 1 % of the business plans get financed. So you see, there is a great number of applicants but extremely few successful candidates so, if you write a good business plan you could make it to the top the pile. What will there be in this business plan? Well, I will introduce a nine parts plan which can... say, be organised in a different way, but which in my viewpoint has a certain logic. The first thing, is that as soon as you get involved in technological innovation, there is suspicion about the assets which are not guaranteed. So, you need to start explaining that the house you are building well, is being constructed on solid underpinning, not on sand. In other word, the absolute need to explain how strong are the assets that are available for the team. Of course, it begins with a team, but it's not all about the team, there is also the intellectual proprerty, the expertise, networks, and so on. Therefore, once the investors reassured about the available assets, you will need to explain, and this is probably one of the most complicated aspects of the business-plan for the creators of innovative businesses, to give reassurance on the capacity of this innovation to create business. And to do so, we will talk about potential applications based on the assets that have been described in Part 1 and explain. We will start a segmentation process to explain which are the most interested clients and which are the most profitable. In other words, we will try to split them between what are called the early adopters and the pragmatical. The third part, well, is that once the segmentation carried out we are capable of knowing our competitors and more specifically the most dangerous. You must make a quick scan of the competition and dovetail, differentiate your business from the most dangerous competitor. Then, you will see how you may stand out from this competition. Let us say that the first 4 parts are rather reflective points which of course thrive on field expertise. From the fifth part on, we'll switch to the operational stage of the business which is quite complicated but also incredibly important. Especially since it covers how to get to the client, in pratice, how this works, and how much it will cost. What are the main steps of the business plan? How long will it take, and implicitly, how much time this will all cost us? That, is our next point. We will also try, depending on the various scenario that have been considered, to know what visibility or profitabilty expectations will the business get. Evidently we will conclude on the return on investment for the potential people who will agree to finance your business because obviously, they help you because they expect a well deserved return. If we go a little further in detail, quickly because we are only granted a limited time for this exercise, we are definitely going to focus quite specifically on the team, because whatever the business plan, when you set up a business, moreso an innovative business, the team is probably the number one asset. You may own the most amazing patent in the world, if you have no suitable team to turn it into a business, nothing will happen. In the team, you have to keep two things in mind: the social skills and expertise. The expertise you may learn. A school like HEC teaches entrepreneurship, but the social skills are more intuitive. So, what do you learn as part of the expertise? Well, you will learn about strategy, i.e. give up on being anything for the clients, get focused. You also learn to get a consistent progression for the most complicated tasks and spend optimum time dealing with each of these hard tasks. You obviously learn to sell, market and finance. In itself, it's already complicated. It is a profile that is more that of a rare bird or even a unicorn. But if you add in the sociial skills, where a good entrepreneur must be capable of course of being a leader and also negociating and deleguating, and prove of a very special resiliency too. What happens in such cases? Well, you do combine the social skills and expertise, but your are left with a super rare unicorn bird. And to the point, nobody can gather all these qualities. Then, what shall be achieved in a business plan? It's rather simple after all, you need to show the investors that you are aware of all the social skills and expertise your team must cover. And if it's not really the case at the time you write your business plan, it doesn't matter, simply explain who you are seeking to hire to complete the founders' team, who you want as associates, the kind of deal you will offer them, and how the team's synergy means that in the end you will indeed combine the renowned expertise and social skills. We have a team, hence the number one asset for a start-up, we now need to check if there is a potential market, so on this slide you are looking at the market study carried out for a pipe designed by Dupont de Nemours which is called Alaton 25 and for this pipe you may see two axis, a horizontal axis for the potentiel market and a vertical axis which is the economic value. Essentially, what the chart says is that the pipe may be used in different forms and for multiple purposes. It will altogether be used for the disposal of industrial toxic waste which is a remarkable added value since if you don't own this revolutionary pipe, well you are forced to load the waste on trucks and tranship them; in a nutshell: a terribly complicated and expensive process. But he who can do more can do less, and consequently if you are capable to clear these toxic waste, you also have the capacity to carry out subsurface irrigation, as you can see at the bottom of the slide. The idea is then to understand the market according to the different use that can be made of this innovative pipe. Thus, the entreprenur will evidently favour the use which generates more value, i.e. it will allow to appeal to people whom are called the early adopters, they buy the product very fast and at a high price as soon as it gets marketed These people will help your revenue taking off, and financially speaking they are extremely valuable but not only, for they will also give you a bunch of feedback on the product itself, which in a second time will allow you to, and I suggest you'd refer to the work of Geoffrey Moore called "Croosing the Chasm". So this will then help you to appeal to the pragmatical, the next segment, for instance maybe the industrial non toxic waste, which really have a substantially larger market and with which you will get profit. So what must be explained through a business plan, is how you have identified the first segment of the first buyers, again these famous early adopters who buy fast and the expensive product, and then how you will understand the second segment toward which you will head in a second time and from which you will generate profits. And above all how you will be capable of transforming the product to convince segment B like you convinced segment A. As soon as you understand the type of business you wish to set up, the type of segment you wish to address, because you create a lot of value, of course you will have a competitor. A business plan without competition does not exist, and stating in a business plan "I have no competition" is a deadly sin. So there are many sorts of competitors, the further you get into technological innovation, the more your rivals will be of the substitute kind, this is what is called "gost competition" which means it's a company, product or service, which addresses the same need of the client, but in a completely different manner than the one you planned. You will certainly be tempted to regard the foreign competiton coming from far away, for instance a foreign country and to explain that these competitors might be very dangerous for you. No, the business plan is a picture, assess the competition that is on the same market as you at a given time when you write this business plan, you may explain that you keep an eye on competitors from foreign countries and who might enter the French market someday, you have no certainty that it will happen so you won't discuss it further. If you identify the wrong competitor, you may completely fail the business plan, thus you must pay cautious attention to this logic. Let me take the Segway example, the Segway has failed because the promoters of the product, as you know it's the strolling gyro, had considered the Segway as a car alternative, when in fact it has proved an alternative to walking. And the number of business plans, products or services that have failed is genuinely huge. Between 60 and 80% of the new products that are launched each year fail, one of the main reasons for this failure is the incapability to understand who is the real competitor. Also, you need to work on the right focus. I.e. when you present the competition, it is less a matter of competition presentation and more a matter of presentation of the product or services that are marketed by the competition because the benchmark should be done on a product or service, not a company. Finally, be objective when looking at the competition, take a look at this sentence from a iTélé journalist who says that in the end, there is the reality of the figures, showing his company way behind the competition and him, who is really convinced that he is fundamentally doing quality work. The quality, the value, are not the goal at all, it's subjective, there is no absolute value, the value comes from the comparison to a rival. Hence, you can't say your competitor is better than you but all's for the best in the best of all possible worlds, this speech will no be accepted by investors. Once you'll have combined the social skills, expertise, assets, potential business developments, you will have the opportunity to dovetail and design a value proposition which is the essence of the business plan. This value proposition simply consist in explaining that through the product or service you are marketing you will provide your client such a differenciated value that he will evidently buy your product and give up on his regular provider. You are looking at a slide which has been designed by some veterans of the HEC incubator, called WinMs and which idea is to provide a diagnosis on cables, and so there is a bunch of devices, for instance 400 kilometres cables in a big aircraft, a lot of machines for which the kilometres of cables are a real terrible issue because the failure may not always be located and there isn't always an explanation for the failure. In their case for example, they have simply showed that there was a huge need in electric cables As you may know, there are a lot of places, just look around Paris, where the public lighting is down, simply because the cables got stolen. Well one of the flagship applications of WinMs is the ability to understand, almost in real time, at least very accurately the place of the cables theft. Now you can imagine what anticipation it allows, it also enables to fix things more siwftly and possibly to develop security and suppression projects for cable thefts. So WinMs has an extremely spectacular value proposition since they are able to assess their costs, i.e. from €500 to €1,000 per minute of traffic interruption, so you may easily imagine how intense is the client's concern and there is a major flaw in the market, hence spectacular value offer in this regard. In a business plan, the devil lies in the details. The investors will be able to screen your document or presentation, looking for some inconsistencies. So go in as much detail as you can, here are two examples to illustrate the team's productivity as you imagine it in your business plan, So I will only examine one of the two. You may see the productivity scheme of a restaurant of which employees will proceed to a sale every four minutes and the cashing of a menu every minute and a half. How can we get that figure? From the field, as for every figure stated in a business plan, or at least most of the figures stated in a business plan. And if you can't get that number on the Internet, firstly it's a good news, because it means the more information there is, the less opportunities. So in the end, for this figure, well, we will get down the ground and run a simulation. We will analyse the time needed by the competitors to complete a sale, the time they need for cashing and if we are new in the business, well we will count a little safety margin and where an experienced contestant would cash... say, every minute well we would need a minute and a half in our productivity assumptions, we will know how to justify them and it will grant us a little safety margin when comes the time of the financial elements. Of course, a business plan can not be designed without a clear and, say, powerful exit strategy for the investors. There you have a dream where the founder of Stonefield Farm, second leading yogourt brand in the United Stated and which has been sold to Danone a few years ago, explained at this end of his business plan, that in his industry sector, his industry, there were concentrations. So the concentrations, are the caused by the brands on the left of the slide which, except maybe for Ben&Jerry's, are not famous and all these brands have been purchased over the past 18 months by those in the middle, which are very famous, because they are big players on the market, with incredibly deep pockets. So the first message we send is: there are concentrations in this industry, and as such there are exit strategies. And as the purchaser companies are, well, listed on the stock exchange we have access to the average deals that have been closed and you can read the figures that are a clear cut. On average, 3.2 times the revenue or 57 times the net profit. Well then, it is obviously extremely appealing to the investor because he understands there is a very credible possibility of exit strategy. Admittedly, you won't always such extraordinary stories to tell in your business plans. But please show you care about that matter. Try to think of a believable scenari, with a five to ten years plan, which in this industry would allow telling the investors how interesting it is for them to invest in your business. Lastly, the business plan is also a formal exercise. It is very unfair, but that's that. In other words you may sweat over you business plan for weeks or months, and ruin the whole work because you have the wrong attitude or because your are dressed the wrong way and because you are not aware of the codes of the environment you will be presented to. So we will resort to Cicero to simply tell you that they are three key words as regards a presentation. Whether this presentation lasts an hour or a minute, it does not matter in the end, the three words apply. The first is to be credible. After all, this is all that is expected from you being credible and trustworthy. Then you'll be expected to be charming because deep down they want to work with you and when they will invest in your company, they will work with you on a long term. And so they need to be in company of delightful people who share a certain set of values and common occupations. Finally, you need to be moving, because what matters when writing a business plan, when launching a business, is to help the clients out. And being helpful to the clients, taking a thorn out of their side, can possibly be moving and be the theme of a story telling which may convey some emotions. Naturally, a business plan must be well concluded, that is: you have 15 minutes of presentation, you must get off to a good start and a good finish. So to conclude we may use the famous SWOT you are certainly familiar with. Only, what you need to do, for the conclusion, is to focus the left side, hence on the strengths and opportunities. the threats and weaknesses have been brought to light all through the business plan, they have been discussed. We talked about the competition, difficulties, we discussed all that. You must now focus on the strengths and opportunities because it's the conclusion and it's the right time to say: " Listen, now that you have been presented an outstanding project, you must invest in our business". And you should end on a positive touch. A few tips to end. Let's first go down the ground, on the ground you will understand if the clients have a problem and if they need the solution you consider selling. You also need to get on the field because they are so many things to understand about the existing competitors There is a widly great number of things you need to understand about the product or service you are about to market. So at least two field experiences are required to build a good and right business plan. And if on a three months process and you have spent one single month on the field, it doesn't matter at all because the more cleverly you will work on the field, the easier will be the writing of the business plan itself and formal aspects of the business plan. A second thing, if your grand-mother doesn't understand your business plan, you have a problem. The innocents must understand that whatever be the intensity of innovation, the technological potential, Everybody must be able to understand the business plan. If it's not the case, you are in trouble. Third point : be cautious of the consistency. A business plan, is a consistency exercise. You must be able to explain strong capacity of innovation, while being capable of telling that you innovate, But you are aware this innovation will change the habits and you put a great care in analysing these habits in the most clinical way, the most objective way possible and that you will endeavour to make this change the less traumatic possible for the clients, investors and every stakeholder of the business plan. Finally, a business plan is positive. It's a very beautiful story but not a fairy tale. Nobody ever believes in fairy tales. A lot of people who write business plans have the impression that a fairy tale will appeal to the investissors: no, this is not true. What will appeal to them is an enhanced reality, most certainly not a fairy tale. If you manage to do all this, you will notice two effects. The first is the reduction of your uncertainty. And don't expect from a business plan something it can not achieve. A business plan, reduces the doubts. Yet, at the beginning of a business creation project the uncertainty reaches its climax. So, it's an uncertainty reducer. And if you manage to reduce that you will be able to increase the value of your project and so reduce to its minimum the dilution you will be subjected to after the investors' input. So reduce the uncertainty and increase your project's value, that's all the best I wish for your in the writing of business plan. And I would like to offer a tiny exercise to conclude this business plan sequence. In your opinion, what is a business plan really? A seduction exercise? Sales exercise ? Consistency exercise ? Or a figures exercise ? In fact it's a little bit of all that but above all, it really is a sales exercise. So the second proposition is right. Because seduction is often just bluff, it's the form. It will be exciting for a couple of minutes but it won't last, it won't work. The sale, it really is about selling your business plan to every investor you will meet. And it's your capacity to sell them your project, to defend its content. As I said it's also an exercise of consistency, but it is less meaningful than the sale because sales blends in the notion of presentation, of cosmetics which is so important to the business plan when the consistency is about the content. And finally, figures, it's a major element of the business plan. A lot of investors say they only check the numbers. So a business plan must not be limited to the financial part. The financial part is a consequence of the strategic assumptions and choices that have been decided in the business plan.
