Quarter 4: Making PlansQuarter 4: Making Plansfor the Futurefor the Future

May 3, 2023Copyrighted in its entirety, Innovative Learning Solutions,

What is new?Venture capital opportunityWhat goes into a business plan?Venture capital presentationsLearning points

Feature R&D // Licensing // DebtVC Investment // Tactical plan

Time

Demand

Introduction

You Are Here

Growth

Maturity

Decline

New brand features, sales offices, and plant capacity will push you into the growth phase.

Time

Profit

Costs to setup and grow the business

0

Time

Profit

Costs to setup and grow the business

0

Revenue

Time

Profit

Costs to setup and grow the business

0

Revenue

You are here You are tryingto get here

Free cash flow

Cash shortfall

Expand owners’ equity (bring in new investors)

Leverage your investment (borrow money from others)

Sell part of the company to venture capitalists• venture capitalists are willing to invest up to $4,000,000• venture capitalists may ask for up to 60% of the company in

exchange for their investments

Borrow money

Demand is up for the entire industry.

Your firm has established itself as a viable competitor.

New sales outlets would greatly expand distribution, drive up unit volume, and thereby reduce unit costs.

New brand features could be brought on the market if you invest in R&D. These brand features will increase customer satisfaction, and thereby demand.

New production capacity will allow substantial market expansion.

Copyright Dominique Garval 2003

Objectives Strategy Tactics

Actual actions and operations that are

necessary toexecute strategy

Set of carefullyselected / integrated

business prioritiesto achieve objectives

Results to be attained beforea certain date

- Gen. George Patton

- Gen. Dwight D. Eisenhower

- Adm. Rickover

- Almost any venture capitalist

History of firm // Performance to date Strategic analysis // Corporate strategyMarketing strategy // Channel strategy

Manufacturing strategy // Human resource strategyFinancial strategy // Tactical details

Pro forma financial statementsWhat is in it for the investors?

A tactical plan is a series of interconnected tactics purposely organized to be executed in a particular order in time and space for the purpose of achieving specific strategic goals

Q4 Q5 Q6 Q7 + Going Forward

Larger flat screenFast internet

Comfort keyboard High speed processor

R&D

NewBrands

Sales Offices

Prices

New laptop

Chicago Paris Sao Paulo

Penetrate

Porta 2800Main 2000

Penetrate

Porta II 3200Premium new brand

Main II 3100

New desktop

Historical Future

Q4 Q5 Q6

0 13,680 12,130Beginning Cash Balance

Q1 Q2 Q3

616,106 2,234,341311,966

Revenues+ Licensing Income+ Other Income+ Interest Income

= Total Receipts from Operations

Production

+ R&D+ Quality Cost

+ Licensing Fees

+ Advertising

000

000

13,680 6,450

671,1000 0

2,542,48000

0

0

5,325,162 12,681,800

00

000

13,680 6,450 671,100 2,542,480 5,325,162 12,681,800

0

00

00

0

00

00 0 0 0

104,516 299,8140 417,078 735,148

16,863 210,938 273,799 595,811185,000 2,451,927 400,00

595,215 1,160,403 2,383,428 5,682,588125,00

Receipts from Operating Activities

Disbursements from Operating Activities

0

120,000

Each team is given 12-15 minutes to present its business plan to 4 investors.

One or more Venture Capitalist will later visit your firm to ask questions for 5 to 10 minutes in order to better understand the plan, the team and the risks and rewards of investment.

One or more VCs will enter into negotiations to invest in your firm.

Each venture capitalist will quickly assess the risk of an investment in each team and decide the amount to invest and the price at which he/she is willing to buy stock.

Each venture capitalist can invest up to $4,000,000.

Investors are encouraged to consider a stock price between 70 and 120 per share.

The venture capitalists are independent investors, they do not have to agree.

The venture capitalists may not give you all the money that you request if they are worried about the balance of the risk and reward of your plan.

To make up the difference, the Fast Eddy Venture Capital Fund will be contacted.

Fast Eddy will invest the balance of what is needed at $10/share less than the lowest share price in industry.

The business plan consists of a Power Point presentation, plus the tactical plan and pro forma financial statements.

The $4,000,000 in common stock currently in your firm’s Q4 financial statements is only for planning.

Your Business Coach will adjust the amount of stock and stock price paid by each investor after they have made their decisions.

Quarter 4 decisions will be due a little later in order to give you time to review your financial options and let your Coach enter the correct investment amounts.

Complete Q4 decisions. Next, prepare the tactical plan and pro forma financial statements

through Quarter 6 and have them ready to review by your Business Coach.

Meet with your Business Coach to review your tactical plan and pro forma statements during your normal executive briefing.

Then prepare your Power Point presentation and submit it to your Business Coach for review and feedback.

Your Coach will provide a presentation schedule with times and dates.

Complete Q4

Work on TacticalPlan & Pro Formas

Review with BusinessCoach Normal EB Time

Work on Business Plan Presentation

Ask BusinessCoach for Review

Present Business Plan to VCs

Receive Final Equity Investment

Wrap up Q4

President owns the presentation

VP of Finance/Accountingowns the tactical plan, proforma financial statements,and stock price negotiations.

Have a stock price andinvestment amount in handbefore you meet with theVCs.

Manage the future Take the initiative now by expending resources that will shape the events and opportunities of the future.

Management of StrategyDiscover the causes of performance shortfallsAdapt to new opportunities and problemsWork on the margin to improve performance

• where should money be spent next?• how can we get more out of our current investments?

Strategic and tactical planningSpecify objectivesPerform strategic analysisEvaluate strategic optionsChoose strategic directionSelect strategic thrustsTime phase tactics into the futureWork investment money and debt to support tactical plans

Understanding cash flowsc

ash is king

how is profit different from cash?

You can not go to Hawaii on market share (at the end of the day, wealth creation is the goal)

Competition or cooperation - strategic alliances with competitors• multiplying resources• developing markets more quickly versus helping the competition

Game theory and prisoner’s dilemma (if I do this and they do that, then …….?)

Negotiations

Marketconditions

Marketingstrategy

Marketingtactics

Marketassessment

Marketperformance

Manufacturingconditions

Manufacturingstrategy

Manufacturingtactics

Manufacturingassessment

Manufacturingperformance

Human resourceconditions

Human resourcestrategy

Human resourcetactics

Human resourceassessment

Human resourceperformance

Financialconditions

Financialstrategy

Financialtactics

Financialassessment

Financialperformance

ENVIRONMENTAL ANALYSIS

BusinessStrategy

FEEDBACK

BusinessPerformance

Assessment of Business Conditions

BUSI

NES

S LE

VEL

FUN

CTIO

NAL

LEVE

L

STRATEGY

Marketobjectives

Manufacturingobjectives

Human resourceobjectives

Financialobjectives

Strategic analysis

Strategic PlanCorporate

Each function

Tactical plan through Q6

Pro forma financial statements through Q6

Competitor AssessmentSWOT (strengths, weaknesses, opportunities and threats)

Market positionSegments Geography

Competitive strength Ranking in market Which firm is a threat?Market performance

Demand and market shareCustomer satisfaction (brands, prices)

Financial performanceCashProfitability

Mission // Culture // ProblemCorporate objectives // Financial Resources

Basis of Competitive AdvantageStrategic Thrusts

Controls (targets to be achieved by Q6)

Strategic analysis

Strategic thrusts

Tactics to support strategic thrustsL

ist key decisions to be made over next three quarters

Link key decisions to strategic thrusts