Lesson 4: Presentation Materials March 6, 2010Posted by drspaceshow in Uncategorized.
I. Presentation Material from Bruce Pittman, Guest Panelst, NASA Space Portal:
II. Dr. John Jurist, Co-Host, The Space Show Classroom
Jurist’s 16 Commandments of Space Investing
If you see any of the following, run away
1. The principals cannot understand why the coolness factor is not enough to get capital.
2. The principals adhere to the “build it and they will come philosophy” instead of specifically defining their market by depth and size in their business plan.
3. The principals do not carefully adhere to securities rules and fail to give at least quarterly financial reports to their investors.
4.The principals aspire to increase capitalization by orders of magnitude, as in having raised and spent $500 Thousand, they now want to raise $50 Million without a track record or a clear implementation plan.
5. The principals dismiss other disciplinary contributions – “We are great engineers and don’t need a finance person’s help (by the way, what does ‘present value’ mean?).”
6. The principals casually talk about staff expansion by orders of magnitude – “There are 2 of us, but we will hire 50 engineers and technicians the month after we raise the money and fly within 2 years.” Yet, none of the principals have ever run a group of 50 engineers and technicians.
7. The principals display a casual attitude about angel investors and shareholders in a closely held corporation – “It is my playground, don’t bother me.”
8. The principals don’t have adequate tracking and business systems in place – “We will implement them when we need them.”
9. The web site uses the present tense to describe concepts without associated hardware – “We offer cheap access to LEO.” This is akin to vaporware in the software industry.
10. The announced corporate goals expand faster than milestone achievements. For example, the first announced goal of achieving LEO is renounced in favor of the goal of rescuing the Hubble telescope without ever achieving LEO.
11. Logos and logo shirts from Lands End cost more than the rockets they have built.
12. The principals cannot convincingly demonstrate an annual ROI of at least 20 percent.
13. The organization displays obsessive secrecy about plans, markets, progress, etc.
14. A balance sheet with intellectual property dominating the asset list.
15. There is no realistic budget allocation for regulatory compliance, licensing, etc.
16. The principals appear to be more interested in talking to CNN about future dreams than in working to make those dreams happen.
III. Dr. David Livingston, Co-Host, The Space Show Classroom
Business Plan Outline
Part I: Summary
This part of the Business Plan creates the initial impression for both the company and its management. The contents of the Business Plan are briefly summarized in this section.
Part II: The Business and Its Future
This section contains the topics which explain the business. Starting with this section, it is important to show why the business is unique. Why is this business special in the world of business. The “keys to success” are included in this section. Some suggested topics are as follows:
A. General: Start with the obvious such as where the company is located and what it does. This is strictly general information. Identify type of corporate structure and what changes you might be recommending for the future growth of the company.
B. Nature of the Business: This is the basic synopsis of the business. The description of what it does. The trick is to enable the reader to understand the business using as few words as possible.
C. Business History: Here you tell how it was founded, when, and any milestones which may be good or bad. It is a chronological report of the business operations from start to present.
D. Future Business: In this section, the chronological sequence plan for the company is spelled out. This states how you move from where you are now to where you want to be in five years. It clearly states your goals and how you intend to get there. Indicate the changes and be prepared to support the changes you state in this section. You can also set shorter term goals in this section, perhaps 3 and 6 months, 1 year, 3 years and five years using several intervals. This section gives management a great deal of freedom to plan the business with effective strategies, but it also puts restraints on management in that the objectives and goals need to be supported with facts and specifics.
E. Uniqueness: In this section, you detail why the company is unique and will remain unique throughout the period of the plan. Competitive, marketing, financial and other advantages can be stated and supported in this section.
F. Product/Service: This is where you describe in detail the product and service of the company and what it will be during the period of the plan. If the plan calls for adding new products and services, they should referenced here and supported. This section requires thoughtfulness, nothing too hasty or “too pie in the sky.”
G. Customers: Here you must describe in detail your customer and who your customer will be over the period of the plan. If it changes, discuss how you will find the new customer and grow and change to meet this customer’s needs. You should show who purchases the product, list the purchasers and their needs, their purchasing power, what they buy, etc. Talk about how you can improve the situation with each of them. Name the potentially new customers.
H. Your Industry and the Market: Describe the general market place for the product using total dollar volume, the rate it has grown, the overall demand for the product, etc. A projection is needed for the future size of the marketplace and your position in it. If you state entire industry sales, make sure you also state your market share of the entire industry stales.
I. Competition: Here is where you really go into the detail of competition. Who and what it is, the specifics of it and how you can compete and grow. How can you get market share from them. Know the dollar volume of sales for your competition so you will know what is achievable. Describe and support how the competition will change during the period of the plan.
J. Marketing: The details of the marketing plan are spelled out in this section. In a sense, this is a mini-business plan. It includes, dollars, channels of distribution and so forth. It requires a careful analysis of the market now and for the period of your plan.
K. Production: Here you describe all aspects and costs involved in the production process of the product. Fixed and variable costs are discussed in detail. Also discussed are the characteristics of the product’s production. Talk about crucial components, risks, difficulties, advantages, skills.
L. Employees/Subcontractors: Discuss the employment/subcontracting needs of the company in detail now and for the term of the plan. Include general detail such as salaries, the cost of benefits to the company, potential obligations and liabilities such as healthcare and workers compensation programs (based on possible government action or modifications), their impact on the company, etc.
M. Suppliers: Highlight the source of supply for the production of the products. Identify the sources, alternate sources, cost out the sources and alternate sources and plan for using the alternates with contingency plans. If higher priced suppliers are used, what will be the impact on the company? What about delivery times, terms, etc.
N. Equipment/Governmental Regulations: Identify the specifics about the usage of special equipment or regulations. Attention to costs are crucial.
O. Property and Facilities: Discuss the rent, the location, proximity to markets, etc. Identify and discuss weak points and strong points for a balance.
P. Patents/Trademarks/Manuals: Identify patents and trademarks if applicable. Consider applying for such if necessary. Make sure all formulas, etc. are detailed in a company manual stored in safekeeping.
Q. Litigation: Detail the litigation history, the outcome and present situation. Discuss any future problem areas and potential liabilities.
R. Conflicts of Interest: Discuss these for the company and management. Make sure everything is disclosed. Give it thought for at first something might not be a conflict of interest but when examining it further, it is one.
S. Inventory/Backlogs: Identify inventory and backlog problems, discuss how they are solved and avoided for the future. What is the cost to the company of backlogs, if they exist, both in dollars and in irritation to the customers.
T. Insurance: Identify insurance policies and carriers, coverage and costs/premiums. Project what will be needed for the future growth as outlined in this plan.
U. Taxes: Detail tax obligations now and in the future as goals are achieved. Costs to the company should be part of financial statements and projections.
V. Publications, Associations, Publicity: Detail the specifics in this category if applicable.
Part 3: Management
A. Identify Directors and Officers. Discuss liabilities, obligations, functions and the availability if possible, of insurance protection. Discuss the cost of such protection to the company if available. Terms, compensation, equity holdings should be presented here.
B. Key Employees: Identify present key employees and detail the specifics about the employment of these individuals. Each employee should write a manual for replacing his position in case of illness, death or departure. Terms of employment should be spelled out. Discuss future needs in all these categories per the Business Plan.
C. Benefits/Stock Option/Incentive Programs: Management should create programs in this area for the present or for the future if specific performance criteria are met.
D. Liabilities/Shareholders/Equity: Detail shareholders, equity positions and liabilities.
E. Employment Agreements: Reference them if they exist. Recommend and highlight them if needed.
F. Consultants, Accountants, Lawyers, Bankers and Others: Be specific about the use and costs for these outside professionals. Plan for them for the future per the plan.
Part 4: Financing
A. Identify the capital structure of the company. Identify what it should be if goals are met for the plan.
B. Detail present financial condition of the company. Show how this can change. Support it with footnote explanations tied to achieving the goals in sales, etc.
C. Profits/Losses: This entire section is where this subject is discussed in detail with all the supporting documents, figures, explanations, forecasts, projections and tables.
D. Outside Funding: If the company will need additional or outside funding, this is where it is detailed.
Part 5: Risk Factors
A. Identification: This is where the risk factors are listed and identified. They are ascertained from the contents of this plan. Some examples are short company history, limited resources, limited management experience if applicable, market and financial uncertainties, production uncertainties, liquidation, capital shortages, dependence on key management (most likely without key man life insurance) plus other problems.
B. Problems and Opportunities: Detail the problems in this section and discuss how they can be turned into opportunities for the company.
Part 6: Return on Investment and Exit
A. ROI: Show what the shareholders can make with their investment in the company. Show its present ROI and project it out regarding meeting the goals and objectives in the Business Plan.
B. Exit: Show how the shareholders can realize their profits, returns or get their money out of the company. Is it to be sold, financed, taken public or are investment dollars left in indefinitely.
Part 7: Analysis and Projections
A. Here is where you detail your own analysis of prior history of company operations and the projections for the future of the company. Use whatever tools are needed including ratio analysis, statistics, comparisons, charts and graphs.
B. Financial Information: Discuss in detail the current financial statements. Is the company liquid, discuss the accounts receivable and payable.
C. Identify and discuss any contingent liabilities the company may have.
Part 8: Financial Statements
A. Present a complete set of financial statements. You may also want to approximate what they will look like when meeting the various goals discussed in the plan.
Part 9: Financial Projections:
A. This is the section containing all the projections discussed in the Business Plan. Three sets of projections are used, worst case, medium and superb performance. Explain the assumptions so the reader can test them for soundness and see how they are supported.
Part 10: Conclusion
A. The conclusion is similar to the summary except that it is more specific. It does not need to be long. It should be positive without forgetting the risks.