Israeli Ventures

BME Capital Management

Business Plan Guidelines 

Written by Dr. Gideon Tolkowsky

Business PlanOften, entrepreneurs underestimate the value of a quality business plan for raising capital from professional investors, such as venture capital funds. This often proves to be a grave mistake, as a quality business plan is absolutely critical for investors, as it sheds light on the quality of the founding team.  It also demonstrates to the investor that the founder actually knows how & what they want to do and not just playing it by ear. i.e. a business plan is not just a fund-raising tool, but also an important internal managerial tool.

The following document was initially written in 1986 by Dr. Gideon Tolkowsky; during his activity at Israel’s first venture capital management firm – “Tolkowsky Associates”. At that time, there were no other institutional venture capital firms in Israel and entrepreneurs needed to be educated in the very basic concepts of the entrepreneurial process, such as business plans, marketing strategies etc. In order to give them necessary tools in their quest for growth, this document was written. Notably, it still withstands the test of time.

A business plan should answer the following questions:


  1. What is the problem meant to be solved by the proposed product or service?
  2. Why is the timing right? For how long will the window of opportunity remain open?
  3. What’s the market size? (Globally? In the US?)
  4. What’s the rate of market growth? What are the contributing factors?
  5. What’s the market segmentation and relevant variables (i.e. different applications, different prices, geography etc.)
  6. What is the competition? (Definition: competition is everything the market would do in the absence of the proposed product)
  7. Who are the big players? (competitors, big users, prospective acquirers)
  8. Why and to which extent will the product fulfill a need, better than the competition?
  9. What is the market segment, in which the product would have the most advantage?
  10. What’s the correct product definition for the said market segment?
  11. How will the product be positioned in that same market segment?
  12. What are the products cultural and behavioral barriers of entry into the market? How can they be overcome?
  13. What are the distribution alternatives? Which one is the best option and why?
  14. Who is a friend? Who is a foe? How could one take advantage or cooperate with actual or potential allies?
  15. What is the economic benefit analysis for the customer?
  16. What are the pricing alternatives for the product? What is the optimal pricing policy and why?
  17. Who is the potential buyer?  The user? His superiors? Different individuals simultaneously?
  18. How is the sale cycle expected to happen? How long will each sale cycle take?
  19. How much customer support will be required post sale?
  20. From a marketing perspective, is it sensible to establish the company in Israel? How different is the typically Israeli user from a non Israeli one?
  21. Are there relevant users in Israel with whom the company can interact during product development?
  22. What is the optimal organizational structure, as a derivative of a marketing strategy?
  23. What are the service requirements for the product? What are the alternatives for servicing the product?
  24. What’s the optimal form of service? Why?
  25. What’s the optimal organizational structuring as a derivative of the service strategy chosen?
  26. What is the long term product line that will extend the life of the first product?
  27. What are the main marketing risks and how can they is minimized?


  1. What are the knowledge gaps that need to be closed during product development?
  2. what are the technological disciplines needed for product development
  3. Is the product based on proven technologies & existing components?
  4. What’s the scope of resources required for completing the development? (Time, money & man-power). What parts of the end products can be bought off the shelf?
  5. What are the critical milestones in product development? What are the interim goals, when will those be achieved and how could they be measured?
  6. Does the product definition depend on achieving certain milestones during product development?
  7. What are the technological risks and how can they be reduced?
  8. what should be the composition of the product development team as derived from development needs
  9. How would the production process affect product specifications?
  10. What are the knowledge gaps regarding the product’s production? Is it possible and\or worthwhile to use external resources?
  11. What are the quality control mechanisms in the production process?
  12. How does the 1st product lay a technological basis for future products?


  1. why would one assume that the founding team has a relative advantage in realizing the project better than other teams worldwide
  2. Does the founding team have the full scope of qualifications needed to build this project at its initial stage & subsequently?
  3. which skills are missing in the founding team, at which stage should they be acquired and where can these additional personnel be found  
  4. What is the company’s appropriate structure, as a function of product development, manufacturing, marketing and service requirements?
  5. What are the required resources in manpower, work-place and equipment; initially and as the company enters into manufacturing & marketing.
  6. Can the up-front investment be reduced? (e.g. by using external resources)
  7. How will the staff be incentivized?
  8. How will the business plan be translated into individual goals for each and every employee?
  9. How will each employee and the company as a whole be measured for meeting their respective goals?
  10. What are the principal managerial / organizational risks and how can they be reduced?


  1. what is the cash flow derived from the business plan (on a monthly basis until reaching profitability, quarterly basis for the first 3 years and annual basis for the first 5 years)
  2. What are P&L and balance sheet statements expected for the first 5 years? (yearly basis)
  3. How can the company’s financial requirements be broken down into stages relative to the company’s operational needs and milestones?
  4. What are the capital needs for the company in its various stages, according to the company’s business strategy? At which stages should each source be approached?
  5. Should the company develop slower than expected, what would be the additional required financial resources?
  6. What are the reasonable alternatives for achieving stock liquidity in the future?
  7. According to all of the above, what is the company’s valuation as it was founded and how is it expected to change as each milestone is achieved?