02 prepare business plan
DESCRIPTION
Is sales plan a part of business plan?TRANSCRIPT
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Business Plan Preparation: Business Plan Preparation: Concepts and TechniquesConcepts and Techniques
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AgendaAgenda
• Target Audience for Business PlansTarget Audience for Business Plans
• Purpose of Business PlanningPurpose of Business Planning
• Preparatory WorkPreparatory Work
• Reader ExpectationsReader Expectations
• Document StructureDocument Structure
• Some Tips and Tricks – Common Some Tips and Tricks – Common PitfallsPitfalls
• ReferencesReferences
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Target Audience for Target Audience for Business PlansBusiness Plans
• VCs / Angel investorsVCs / Angel investors
• Potential senior employeesPotential senior employees
• BankersBankers
• AccountantsAccountants
• Leasing companiesLeasing companies
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Purpose of Business PlanningPurpose of Business Planning
• Tangibalizing the vague ideasTangibalizing the vague ideas
• Quantifying the approximate numbersQuantifying the approximate numbers
• Freezing the milestones and Freezing the milestones and deliverablesdeliverables
• Estimating the funding requirementsEstimating the funding requirements
• Sizing up the scale of operationsSizing up the scale of operations
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Preparatory WorkPreparatory Work
• Information collectionInformation collection
• Validation of the assumptionsValidation of the assumptions
• Analysis and planningAnalysis and planning
• Articulation of your basic Articulation of your basic value propositionvalue proposition
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What is a financer looking for in a What is a financer looking for in a BP?BP?
• Basic value propositionBasic value proposition
• Market size, segmentation, target customers, Market size, segmentation, target customers, competitorscompetitors
• Entry barriers, IP protection, Unique Selling Entry barriers, IP protection, Unique Selling PointsPoints
• Technology expertise and domain knowledgeTechnology expertise and domain knowledge
• Alliance and strategic partnershipsAlliance and strategic partnerships
• Promoters, Board of Directors, Top Promoters, Board of Directors, Top management (Business Heads, VPs)management (Business Heads, VPs)
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What is a financer looking for in a What is a financer looking for in a BP?BP?
• Team (Project management, execution Team (Project management, execution capabilities)capabilities)
• Scalability and growth potentialScalability and growth potential• Marketing and selling plan: channels, Marketing and selling plan: channels,
distributors, customer acquisition costsdistributors, customer acquisition costs• Milestones and deliverables (prototype, proof-Milestones and deliverables (prototype, proof-
of-concept, customers)of-concept, customers)• Requirement and application of funds: Setting Requirement and application of funds: Setting
offices, where, how many?offices, where, how many?• Equity/Capital structure, financing policies Equity/Capital structure, financing policies
(debt/equity ratio)(debt/equity ratio)
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What is a financer looking for in a What is a financer looking for in a BP?BP?
• Revenue model: Sources of revenue Revenue model: Sources of revenue (service/product mix)(service/product mix)
• Profitability, break even point, growth Profitability, break even point, growth estimates (revenue, team size)estimates (revenue, team size)
• Risks and contingencies: De-risking/risk Risks and contingencies: De-risking/risk management/risk containment planmanagement/risk containment plan
• Sensitivity analysis Sensitivity analysis • Projected (pro-forma) financial statements Projected (pro-forma) financial statements • Exit strategy (IPO, equity buyer, strategic Exit strategy (IPO, equity buyer, strategic
buyer, Merger & Acquisition)buyer, Merger & Acquisition)• Valuation and offerValuation and offer
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Document StructureDocument Structure
1.1. Executive summaryExecutive summary2.2. Introduction / Company overviewIntroduction / Company overview3.3. Concept / Proposition / Product Concept / Proposition / Product
descriptiondescription4.4. Market opportunityMarket opportunity5.5. Competition surveyCompetition survey6.6. Development plan and milestonesDevelopment plan and milestones7.7. Marketing planMarketing plan8.8. Team Team 9.9. FinancialsFinancials10.10. OfferOffer11.11. AppendixAppendix
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Some Tips and TricksSome Tips and Tricks
• Look for spelling mistakesLook for spelling mistakes
• Provide a table of contentsProvide a table of contents
• Check page number consistencyCheck page number consistency
• Do not use too many colours and fontsDo not use too many colours and fonts
• Explicitly add confidentiality clause in Explicitly add confidentiality clause in the beginningthe beginning
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Common Pitfalls in Business Common Pitfalls in Business PlansPlans
• Too verbose and longToo verbose and long
• Speak in generalities and management Speak in generalities and management theoriestheories
• Weak or non-existent financialsWeak or non-existent financials
• Inadequate competitor analysisInadequate competitor analysis
• Unnecessary details about promoters and Unnecessary details about promoters and their past track recordtheir past track record
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ReferencesReferences Venture FinanceVenture Finance
http://www.vfinance.comhttp://www.vfinance.com http://www.nvca.orghttp://www.nvca.org
Small Business IssuesSmall Business Issues http://www.sba.govhttp://www.sba.gov http://www.startupjournal.comhttp://www.startupjournal.com http://www.bplans.comhttp://www.bplans.com
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Concluding RemarksConcluding Remarks• Business plan preparation is a serious Business plan preparation is a serious
process which takes about 2-4 monthsprocess which takes about 2-4 months• The Founder CEO is perpetually writing The Founder CEO is perpetually writing
a business plan (besides doing many a business plan (besides doing many other things)other things)
• Fund raising itself takes 3-5 monthsFund raising itself takes 3-5 months• Business plan must be treated as Business plan must be treated as
dynamic document with a potential for dynamic document with a potential for continuous and incremental continuous and incremental improvementimprovement