How to Wow With a Business Plan: Legal Aspects

Green & Green

Before The Plan

Try to get most of the following together:

Original Financing History

Creative Team

Product and Service inventors

Concept and R&D Team

Marketing Team

Professional team

ATTORNEY:

Help define and protect TS and intellectual property.

Immediately keep agreements, records, licenses and hiring clean and accountable.

Help select best form of business, prepare for Due Diligence by investors

CPA: Help keep Books straight, GAAP, budget, prepare for audits, Due Diligence

INSRANCE AGENT: Immediately cover for contingencies, supply litigation defense.

Board of Directors

Professional advisors

Founders

Major Investors

Making the 1^st Plan

Table of Contents

Mission Statement

Executive Summary 2-3 pages

Tells the basic story – what is the product / service?

How does it make money?

Models

The Team: Personnel 2 pages

Background

R&D, Board and Professionals

The Market, Opportunities, Competition 3 pages

Properties 1 page

Intellectual property and inventions, stock in trade, tools and real properties

History, projects, growth in work and current projects.

The Industry and its Risks 1-2 pages

Be HONEST

Financials & Key Issues 3-4 pages

Current picture

Demand for your Product / Service

Caution on the Future

Mission Statement

A clear statement of your company’s long-term mission. Try to use words that will help direct the growth of your company, but be as concise as possible.

Make this a part of the beginning of your Executive Summary.

Include Selling Points.

Executive Summary

In 2-3 Pages:

Communicate your company's particular competence

The factors that will make your business successful in a competitive market.

Use Plan Titles consistently

Coin important phrases

Define terms of Art

Raise Value of Intellectual Property

Mention its protection, licensing schemes.

List Personnel

Professionals Attorney – CPA - Insurance

CEO and Board

Partner companies, Parent Company

Engineering and R&D, Sales Staff

Caution on Financial Disclosures

Agreements tell investors that it is high risk, that the debt is non-recourse and that they may not get their money back.

Unless you have a PROFESSIONAL marketing analysis or long history, do not project profits.

Executive Summary:
The Board – Core Team

List CEO and key management by name

Have a CEO with track record.

Include previous accomplishments to show these are people with a record of success.

Summarize number of years of experience in this field.

“Partners”

NOTE: if they have not actually signed an agreement they should not be mentioned as partners or joint venturers.

Executive Summary:
The Market

Market: past, present, & future:

Review those changes in:

market share,

leadership,

players,

market shifts,

Costs & pricing, or

competition

that provide the opportunity for your company’s success.

The characteristics of your target market

demographic,

geographic, etc.

the size of your target market.

Executive Summary:
Opportunities

Problems and opportunities:

State consumer problems, and define nature of product/service opportunities created by those problems.

Tell how this will become profitable and why it is expected to quickly gain market share

If the product or service is unique, why and how you will remain ahead of the crowd.

Executive Summary:
Business Concept

Summarize:

key technology, how it has a large market

concept or strategy on which your business is based

ONE paragraph on each should do here.

IF you cannot sell this to the investor how can you sell it to the market?

Executive Summary:
Competition

Summarize competition

Outline your company’s competitive advantage

The Plan:
Goals & Objectives

Immediate goals

The next steps

What it Costs to get there.

Five-year goals

State specific measurable objectives

State market share objectives

State revenue/profitability objectives

The Plan:
Financial Plan

High-level financial plan that defines its financial model, pricing assumptions, and reviews yearly expected sales and profits for the next three years.

Do not Use other’s projections or an “overall industry” model of profitability.

Be Realistic, use some graphics, have a CPA with experience prepare financials.

Present an actual Profit Model

Disclaimers are a MUST to avoid SEC violations and fraud actions.

All claims to repayment must outline the risks

Investors Agreement contains disclaimers

Non-Standard: Every industry has its own risks.

The Plan:
Resource Requirements

Technology requirements

Personnel requirements

Resource requirements

Financial, distribution, promotion, etc.

External requirements

Products/services/technology required to be purchased outside company

Be Prepared:
Risks & Rewards

Risks

Summarize risks of proposed project

Addressing risk

Summarize how risks will be addressed

Rewards

Estimate expected pay-off, particularly if seeking funding

Caution in estimating: base on experience and/or professional marketing

Be Prepared: Audit & Due Diligence - Legal Needs

Intellectual property

© ® & Pat Pending increases value

Typically 90% + of Company’s future value.

Contracts

Letters of Intent for Convertible Stock ,Term Sheet

Financing Agreements

Cap Worksheets – capitalization is a benchmark valuation – what can be liquidated?

SEC & Dept. of Corporations

Registration of non-exempt sales of shares

Exemptions Reg. D, Rule 504 (<$1mm)

Limited Offerings (<35 persons, minimal advertising)

Accredited Investors

Key Issues

Near term

Isolate key decisions and issues that need immediate or near-term resolution

Long term

Isolate issues needing long-term resolution

State consequences of decision postponement

If you are seeking funding, state specifics

Thank you!

Visit Phil Green at the Mentoring sessions.

Green & Green:

Entertainment

Intellectual property

Virtual In-House Counsel Services

Litigation

Estates & Probate

Business law

www.greenandgreen.com

(415) 457-8300


Try to get most of the following together:
	Original Financing History
	Creative Team
		Product and Service inventors
		Concept and R&D Team
		Marketing Team
	Professional team
		ATTORNEY:
			Help define and protect TS and intellectual property.
			Immediately keep agreements, records, licenses and hiring clean and accountable.
			Help select best form of business, prepare for Due Diligence by investors
		CPA: Help keep Books straight, GAAP, budget, prepare for audits, Due Diligence
		INSRANCE AGENT: Immediately cover for contingencies, supply litigation defense.
	Board of Directors
		Professional advisors
		Founders
		Major Investors


	Table of Contents
	Mission Statement
	Executive Summary 2-3 pages
		Tells the basic story – what is the product / service?
		How does it make money?
		Models
	The Team: Personnel 2 pages
		Background
		R&D, Board and Professionals
	The Market, Opportunities, Competition 3 pages
	Properties 1 page
		Intellectual property and inventions, stock in trade, tools and real properties
		History, projects, growth in work and current projects.
	The Industry and its Risks 1-2 pages
		Be HONEST
	Financials & Key Issues 3-4 pages
		Current picture
		Demand for your Product / Service
		Caution on the Future


	A clear statement of your company’s long-term mission. Try to use words that will help direct the growth of your company, but be as concise as possible.
		Make this a part of the beginning of your Executive Summary.
		Include Selling Points.


In 2-3 Pages:
Communicate your company's particular competence
	The factors that will make your business successful in a competitive market.
		Use Plan Titles consistently
		Coin important phrases
		Define terms of Art
		Raise Value of Intellectual Property
			Mention its protection, licensing schemes.
	List Personnel
		Professionals Attorney – CPA - Insurance
		CEO and Board
		Partner companies, Parent Company
		Engineering and R&D, Sales Staff
	Caution on Financial Disclosures
		Agreements tell investors that it is high risk, that the debt is non-recourse and that they may not get their money back.
		Unless you have a PROFESSIONAL marketing analysis or long history, do not project profits.


	List CEO and key management by name
		Have a CEO with track record.
		Include previous accomplishments to show these are people with a record of success.
		Summarize number of years of experience in this field.
	“Partners”
		NOTE: if they have not actually signed an agreement they should not be mentioned as partners or joint venturers.


Market: past, present, & future:
	Review those changes in:
		market share,
		leadership,
		players,
		market shifts,
		Costs & pricing, or
		competition
	that provide the opportunity for your company’s success.
The characteristics of your target market
	demographic,
	geographic, etc.
	the size of your target market.


	Problems and opportunities:
		State consumer problems, and define nature of product/service opportunities created by those problems.
		Tell how this will become profitable and why it is expected to quickly gain market share
		If the product or service is unique, why and how you will remain ahead of the crowd.


	Summarize:
		key technology, how it has a large market
		concept or strategy on which your business is based
		ONE paragraph on each should do here.
		IF you cannot sell this to the investor how can you sell it to the market?


	Summarize competition
	Outline your company’s competitive advantage


	Immediate goals
		The next steps
		What it Costs to get there.
	Five-year goals
		State specific measurable objectives
		State market share objectives
		State revenue/profitability objectives


	High-level financial plan that defines its financial model, pricing assumptions, and reviews yearly expected sales and profits for the next three years.
	Do not Use other’s projections or an “overall industry” model of profitability.
		Be Realistic, use some graphics, have a CPA with experience prepare financials.
	Present an actual Profit Model
		Disclaimers are a MUST to avoid SEC violations and fraud actions.
		All claims to repayment must outline the risks
		Investors Agreement contains disclaimers
		Non-Standard: Every industry has its own risks.


	Technology requirements
	Personnel requirements
	Resource requirements
		Financial, distribution, promotion, etc.
	External requirements
		Products/services/technology required to be purchased outside company


	Risks
		Summarize risks of proposed project
	Addressing risk
		Summarize how risks will be addressed
	Rewards
		Estimate expected pay-off, particularly if seeking funding
		Caution in estimating: base on experience and/or professional marketing


Intellectual property
	© ® & Pat Pending increases value
	Typically 90% + of Company’s future value.
Contracts
	Letters of Intent for Convertible Stock ,Term Sheet
	Financing Agreements
	Cap Worksheets – capitalization is a benchmark valuation – what can be liquidated?
SEC & Dept. of Corporations
	Registration of non-exempt sales of shares
	Exemptions Reg. D, Rule 504 (<$1mm)
		Limited Offerings (<35 persons, minimal advertising)
		Accredited Investors


	Near term
		Isolate key decisions and issues that need immediate or near-term resolution
	Long term
		Isolate issues needing long-term resolution
		State consequences of decision postponement
	If you are seeking funding, state specifics


Visit Phil Green at the Mentoring sessions.
	Green & Green:
		Entertainment
		Intellectual property
		Virtual In-House Counsel Services
		Litigation
		Estates & Probate
		Business law
		www.greenandgreen.com
		(415) 457-8300