Gil Keret, the founder of Brooks-Keret just joined the validation panel. He brings with him immense know how, and is a fine addition to the team. Welcome Gil, and thank you for your support of the cause.
Gil Keret, CPA. Founder - Brooks-Keret group.
Mr. Keret has over 15 years of experience in management and finance within the Israeli high-tech industry. In his role as Co-founder of Brooks-Keret (http://www.brooks-keret.co.il) Mr. Keret is exposed to dozens of high tech and start-up companies, providing them with a full range of high level financial and managerial services. Mr. Keret offers a wide view together with rich experience in supporting business needs. In the past few years, Gil was involved with the Israeli activities of multi-national companies such as BAAN, AOL and British Telecomm. Now a days Brooks-Keret is serving over 250 start-up’s and VC’s as well as international companies provided by staff of 75 professional employees.
In the last chapter we discussed the way the market of your choice behaves and who are the major players in it. Now it’s time for you to explain how you are going to penetrate that market, what your strategic goals are and how you intend on reaching them.
Definition of Objectives and Strategic Goals – This is where the word “plan†in “business plan†comes into place. Explain to the reader where you intend on being over a period of time. Remember and follow the basic rules of differentiation between strategy and tactics. Strategy is where you intend on being; tactics is how you intend on getting there. If you don’t the reader to raise an eyebrow or have a laughing fit, try and avoid phrases such as “We intend to dominate a significant part of the market within one year of launchâ€. Do your best to put in reasonable goals and milestones that are feasible – they will be the basis for investment if one should arrive….
Market Penetration and Competitive Edge – What is it that makes your business unique? If we take into account that you have competition (everyone has competition), what is it that makes you unique? Why would people choose you over the competition? How do you intend on penetrating and establishing a foothold in the market? Try and figure out where the soft spot is and attack it with full force.
Do you know where to attack? There is an old saying – “form a beach headâ€. Every penetration strategy must be combined with good tactics. The tactics should take into account the problems that might emerge during the penetration phase, and offer feasible solutions. Also, it’s better to have more that once scenario – think of it as a “plan Bâ€.
SWOT Analysis – The simplest and most common analysis of them all. A SWOT analysis is basically trying to put down on paper the four elements that comprise success. These elements are Strengths, Weaknesses, Threats and Opportunities.
Here are the things needed to be addressed in each category of a SWOT analysis:
Strengths: attributes of the organization that are helpful to achieving the objective.
Weaknesses: attributes of the organization that are harmful to achieving the objective.
Opportunities: external conditions that are helpful to achieving the objective.
Threats: external conditions that are harmful to achieving the objective.
Future Services / Products – Isn’t it obvious that investors are looking for companies that can show a clear vision of where they intend on going? Try and focus your attention in this paragraph on the derivatives that will emerge from your current product or service. Make sure that the reader fully understand the potential of your current offering, yet acknowledges that future services or products will result in new streams of revenue.
That’s it for today’s post.
If you missed out on previous ones, please check out the intro to this series.
The validation panel took place yesterday at Yigal Arnon’s Law Office, and was a tremendous success.
I would like to personally thank all of the panelists for taking the time to review the companies that participated in the event. Their reviews were highly professional and provided valuable insight.
Here is a photograph taken at the end of the panel, it features (left to right):
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Jonathan Griffit - AngelsIP CEO
Ron Porat - Hacktics CEO
Doron Habshush - Myself, DHConsulting CEO
Joeri Kreisberg, Adv. - Yigal Arnon Law Office
Roi Carthy - L Capital Partners, TechCrunch
Tal Karmon - KarmonTax CEO
Shlmoy Gantz - BlueBrick CEO
So once again, my personal thanks to everyone. I will be hosting another validation panel in a month or so, if you wish to showcase your company drop me a line to doron@dhconsoulting.info
Finally we were able to schedule a date for the up and coming validation panel.
It will be held on the 25th of May, at Yigal Arnon’s offices.
We are still looking for more and more interesting start-up’s that wish to showcase their idea to the panel and receive free advice from industry experts.
For any more information, please feel free to contact me at doron@dhconsulting.info and I will send you more details.
When trying to analyze the market, different factors must be taken into consideration. You will need to review the state of the market today as well as future projections, the competition, segmentation and do you best to describe the overall atmosphere in the market. Look for substantial facts and figures, but don’t overdo it. It is enough to show that the market is in constant growth and that there is forward momentum.
Current State of the Market – Google your way around the data and try to find relevant statistics showing the way the market behaved over the past few years. Show the growth (preferably in graph or table format) and explain why this happened. Spice it up with a quote or two preferably from experts in the field or a well respected research company.
Future State of the Market – This is basically assumptions made by both market leaders) and respected market research companies who give out a yearly forecast on the growth potential of a market.
Example: According to Juniper Research, “Internet advertising spending has surpassed predictions. In 2005 alone the growth rate jumped by 40%, and this year we expect the growth to reach 21%. An additional trend worth noting is the passage of commodity advertisers, such as car manufacturers, to online advertising. This trend can be explained by the declining effectiveness of television advertising, and the appearance of appliances such as TIVO that allows skipping commercials. In addition, a broad range of advertising possibilities using video, animation etc increases the effectiveness of online advertising.”
Porter’s Analysis - Prof. Michael Porter, in his book “Competitive strategy: Techniques for analyzing industries and competitors”, defined a model by which we can examine the competitive forces that work on a specific industry. This model is really straightforward and once you put all of the pieces into place you should be able to have a better view of the forces in the market. Read more about Prof. Porter’s model at http://www.quickmba.com/strategy/porter.shtml for a better understanding of how to implement it into your plan.
Market Segmentation / Target Audience – Who are you trying to target? Who will be the end consumer that will buy your product or use your service? The more you break it down, the easier it will be for a person reading the plan to get a clear view of the business potential. Here is  Wikipedia’s definition:
“Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way and promoted in a certain way.â€
Not all businesses require an in depth market segmentation analysis. When the product or service you intend on developing or providing is intended for the end consumer (meaning a person and not a company), it is wise to perform such an analysis (even if it just looks like extra work to you). I have taken the liberty of providing you with the basic variables for market segmentation. Don’t use all of them but definitely use some of them:
Geographic Variables: region of the world or country (East, West, South, North, Central, coastal, hilly, etc.), country size, MetropolitanCities, Density of Area (Urban, Semi-urban, Rural), climate (Hot, Cold, Humid, Rainy).
Demographic Variables: age, gender, sexual orientation, family size, family life cycle, Education (Primary, High School, Secondary, College, Universities), income, occupation, education, socioeconomic status, religion, nationality/race (ethnic marketing), language.
Psychographic Variables: personality, life style, value, attitude
Behavioral Variables: benefit sought, product usage rate, brand loyalty, product end use, readiness-to-buy stage, decision making unit, profitability, income status.
Direct and Indirect Competition – This section is doubly important, mainly because it will probably be the first question you will encounter when talking to anyone else. Some entrepreneurs tend to say that they have no real competition, but unfortunately, that is the wrong answer. If a business has no competition, than it has no market either. If you couldn’t find direct competition, you can definitely find indirect one. You simply didn’t Google enough.
Key Success Factors – This is the part of the plan where you must specify what key elements need be aligned in perfect harmony for the business to function properly, or die. For example, if the business is technological by nature and based on a specific algorithm that needs to be developed, and you fail… it’s safe to say that the business will go belly up.
The Business Environment – You did your best in trying to analyze the market. You checked out the competition, the market as it is today and what people think it will be in the future, you segmented and found statistics to back up your ideas, analyzed the forces in the industry that influence it directly and now its time to sum it all up. In just a few lines, explain in plain English why the time is now.
 This concludes part two of this blog series. Next week I will post part three that will cover the subject of “Marketing Planâ€. If you missed out on previous posts in this series, here is a link to the first post in the series (the intro) and a link to chapter one and chapter two.
If you have any comments or feedback about this post, feel free to drop me a line at doron@dhconsulting.info and I will gladly answer all your questions.
Just a quick note regarding the validation panel I will be hosting soon.
The following industry experts have graciously accepted my invitation to be part of the panel. They will be devoting their knowledge, experience and time with no financial rewards.
As I stated in my previous post, this validation panel will offer start-up entrepreneurs the chance to showcase their idea in front of a well respected team of industry experts and receive solid advice in different fields relating to the venture. The date and location of the panel is yet to be determined.
Once the meet-up is over, a full review will be sent to each entrepreneur, covering a broad spectrum of niches. This review can be presented to anyone the entrepreneur sees fit.
Anyways, here is the list so far, more will be added soon.
Doron Habshush – Group leader and CEO of DHConsulting
A highly respected business consultant, Doron specializes in aiding start-up companies’ focus their marketing strategy and business model. A veteran of the Internet world he is actively involved in numerous projects. Prior to this he co-founded PayPerLead, Israel’s first affiliate network, founded an asset management company and sold its activity, served as vice president of business development for Start-up Adwise. Prior to this he served as department manager of web technology at Partner Communications (orange Israel). Doron hold a bachelors degree in business administration, with honors.
Joeri Kreisberg, ADV. Yigal Arnon & Co.
Joeri Kreisberg is a partner with the law firm of Yigal Arnon & Co., one of Israel’s leading law firms. Joeri’s practice is in the fields of high-tech and life sciences, venture capital, mergers and acquisitions, Internet & E-Commerce, gaming and gambling. Joeri has represented many of Israel’s top venture capital funds, as well as foreign funds investing in Israeli related companies. Joeri works with high-tech and start-up companies in various fields, advising them on all matters, including financing transactions; M&A transactions; research and development activities, including the sale or purchase of technologies and licensing transactions; and various commercial transactions. In addition, Joeri specializes in Internet and E-Commerce, representing companies and ventures in these fields with a variety of business models, including Israel’s leading media conglomerate. Joeri is vice-chairman of the high-tech committee of the Israel Bar.
Ron Porat, Hacktics CEO. Security Panelist
Mr. Porat has over 15 years of experience in management, sales and technology. In his role as Co-founder and CEO of Hacktics (http://www.hacktics.com) Mr. Porat is responsible for the successful execution of Hacktics’ business vision through well planned marketing and sales strategies. Prior to founding Hacktics, he founded the application and database security unit in Bank Leumi and was previously in charge of technological and strategic projects for Israel’s largest security services company. Prior to entering the security field, Mr. Porat has headed a number of software development teams, and has been responsible for the development of complex software architectures, among them data mining and real time projects.
Roi Carthy - Internet Investment Principal, L Capital Partners
Roi Carthy is the Internet Investment Principal at L Capital Partners, a NY-based Venture Capital fund with $165-million under management. Roi’s expertise is in locating locating unique Internet start-up companies fit L Capital’s investment criteria. He also aids companies in their product launch strategies and covers the Israeli startup scene for TechCrunch, the world’s foremost technology blog.
Technology panelist, Shlomy Gantz, BlueBrick Inc CEO
Mr. Gantz is president and founder of BlueBrick Inc. (http://www.bluebrick.com), a New York based consulting group. He has an extensive background in software engineering and project management and has managed and architected projects for several fortune 100 companies. Mr. Gantz is a published author and a frequent presenter at conferences and user groups around the world. Prior to founding BlueBrick, he has been a Senior Consultant for Computer Horizons, leading large scale projects for the airline industry. Prior to that he was co-founder and vice president of technology for CoreActive ACG., a New York based consulting group.
Financial panelist, Tal S. Karmon- KarmonTax CEO
Mr. Karmon is the founder and CEO of KarmonTax Ltd., a well established financial consulting firm that offers entrepreneurs and established businesses alike a “one stop shop†for financial services. Prior to forming KarmonTax he served four years in the Israeli tax authority. Mr. Karmon specializes in business and tax configuration methods and is the acting CFO in several companies around and outside Israel. Mr. Karmon is a graduate of business administration and accounting.
Jonathan Griffit, AngelsIP CEO
Mr. Griffit, MBA & LLB is an entrepreneur, inventor and a small investor. At the age of 14 he began teaching computers, established his first startup before the age of 20 after which he established numerous companies and applied for more than 11 patents. In the last few years Mr. Griffit serves as a consultant to hi-tech companies and entrepreneurs, guiding them on business models, development and marketing strategy. Aside from maintaining his own companies, and management of AngelsIP (http://www.AngelsIP.com) he is already involved in a few more start-ups among which a new venture in the widget world.
That’s it for now. If you would like to showcase your ideas in the panel, feel free to drop me a line at doron@dhconsulting.info . More new will be posted soon…
This is a chapter that needs to be extremely comprehensive. An investor that had read through the executive summary and decided to continue reading now needs to have a thorough understanding of the business and its field of operations. Explain in plain words what it is that the product does or the service offers. Don’t be shy in elaborating. Remember that if the person reading had reached this stage, he is already interested.
Field of Operation – There is a distinct difference between the market in which the company intends to operate and its field of operations. A company might operate in the field of search engine marketing (SEM) but the market is still online advertising. Defining the field of operation allows differentiating between the business essence and global environment. Now is the time to focus the reader on exactly what it is that you intend on doing. This sub chapter need not be vague. 1 or 2 lines are enough to clarify it all.
Example: “The company deals with enhancing targeting abilities for advertisers and publishers alike, based on orthopedic variables calculated from user interactionâ€
Service Description – Some companies only provide services and not products, but all companies who provide products also deal with services. Everyone provides a service. Explain in detail the value that your clients will find in your service and offer some examples.
If it is a product and not a service that you intend on explaining, choose “Product Description†as your headline instead – Don’t hesitate in providing the reader with information about what the product does and how you do it. The more information you provide, the less questions, to which you thought the answers are clear, will emerge. Provide screenshots and images of the product (a picture is worth a thousand words). Explain the experience a user will have when using the product but refrain from explaining its benefits (this will be discussed later).
Example: “Kadooki’s clients, who choose use the Kadooki engine to enhance their targeting abilities, hence reduce advertising spending, and advertise their products or services through any advertising network that implemented the Kadooki Engine, gain a perceptual change of the online advertising world. Unlike old fashioned targeting techniques, such as geo-targeting and gender based targeting, the company deals with the gathering orthopedic data that enables an advertiser to better focus their online marketing campaign.
The conventional perception model of the advertising world is well known. A company pays for advertising a sum of X dollars. The advertising reaches millions of people out of which only a small percentage constitutes the actual target market, and an ever smaller percentage actually calls in for additional details. An actual sale will be made to very few people. Using the Kadooki engine, advertisers will target their market with simplicity and, simply, sell moreâ€
Technology – If the product is technological in nature, discuss in brief the different elements used or required for the development process. There is no need to get into the fine details since they will be discussed in the due diligence phase of the investment.
Example: “In today’s rapidly changing world, the need for worldwide tracking options is a must. That is the reason why all three platforms were originally designed to be web based systems with advanced servers and high capacity. Ad serving technology needs to be scalable, reliable, redundant and effective. Peak traffic management is an issue by itself, which conforms to scalability. As of today, our servers are located in a server farm in North America, and include the following components: 1 Commodore 64 personal computer, 1 jar of soap, 2 cables and a prayerâ€
Business Model – This is probably the most important part of any business plan. Elaborate as much as you can about business essence of the company. In the previous sections you spoke of the product or service, gave a brief explanation of the market and where you position yourselves and now is the time to explain to the reader why you think the company has a solid financial reason to exist in a competitive market. Always keep in mind that the goal of any company is to provide revenue to share holders. Elaborate to the reader how you intend on making money without explaining a pricing model.
Important note: Every company needs a solid business model. This is by far the make or break point of any business.
Revenue Channels – It is important to have more than one revenue channel, otherwise the company might fall into the famous “Pareto†rule (essentially, don’t put all of your eggs in one basket). Try and locate at least three different revenue channels and offer a brief explanation of each. (For example: A company that develops software products may earn its money from selling the software, implementing it and supporting it).
This concludes part two of this blog series. Next week I will post part three that will cover the subject of “Market Analysisâ€. If you missed out on previous posts in this series, here is a link to the first post in the series (the intro) and a link to chapter one.
If you have any comments or feedback about this post, feel free to drop me a line at doron@dhconsulting.info and I will gladly answer all your questions.
