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BUSINESS PLANNING 101
Entrepreneurial Master Class Series
Taiwo O. Adepoju
December 2013
Bonuses:•Tackling the YOUWIN
Questions•Alternative Fund Options
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COURSE OUTLINE
• Introduction
• Business Concept
• Value Chain
• Business Planning
• Tackling The YOUWIN QUESTIONS
• Funding Preparations For Your Business
• Conclusion
• Questions & Answers
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Some men see things as they are and ask why? But I dream things that never were and I ask why not?
Bernard Shaw
FOOD FOR THOUGHT
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WE NEED TO START THINKING?
A CASE IN POINT:• THE TRADITIONAL
GRINDER IN THE NIGERIAN MARKET
• BINATONE
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BUSINESS CONCEPT
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TERM DEFINITION
A BUSINESS CONCEPT is a concise description of an opportunity that contains four essential elements:
1. The customer definition
2. The value proposition and compelling story
3. The product/service
4. The distribution channel
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THE CUSTOMER DEFINITION
– The customer is the one who pays.– The end use customer is as important as the
intermediary customer.
WHO CARES…?
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THE VALUE PROPOSITION• The compelling story is the benefit that the
customer derives from the product or service– It is often intangible
• The compelling story answers the questions:– Why the interest? – What problem does this solve?
SO WHAT…?
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BUSINESS CONCEPT
• The Product/Service– What does the customer need?– What is the team’s core
competency?• The Distribution Channel
– How will the benefit be delivered to the customer?
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THE CONCEPT STATEMENT
• Creating a clear and concise concept statement is not difficult but telling a compelling story can be.
• A compelling story consists of a problem and a solution.
• The problem being solved should be presented in a simple clear way.
• Can you make a good pitch for the concept
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CONCEPT QUICK TEST
• Am I really interested in this business
opportunity?
• Is anyone else interested?
• Will people pay for what is being offered?
• Why me?
• Why now?
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VALUE CHAIN CONCEPT
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TERM DEFINITION
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EXAMPLE OF A BAKERY VC
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THE VALUE CHAIN AND THE CONCEPT
• Upstream activities, those related to the
production of a product or service, which may
include raw materials, product development,
manufacturing, and warehousing.
• Downstream activities, those associated with
selling the product or service such as customer
acquisition, sales transactions, and logistics.
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THE VALUE CHAIN AND THE CONCEPT
• Developing a distribution strategy:– Evaluate strategies of similar companies– Look for the opportunity gaps
• Factors affecting the choice of strategy:– Costs– Market coverage– Speed and reliability
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BUSINESS PLANNING
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BUCKET VERSUS BOREHOLE
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TERM DEFINITION
A “Business Plan” is a “Selling/Strategy Document” that conveys the excitement and promise of your business to any potential backers and stakeholders.
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BUSINESS PLAN, WHY?
• To sell yourself on the business• To obtain bank financing• To obtain investment funds• To establish strategic alliances• To obtain initial contracts• To attract key employees• To assist in the completion of mergers
and acquisitions• To motivate and focus your
management team
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SUMMARY PLAN
10 pages, 3 important points
COMPREHENSIVE PLAN
10-40 pages, seeking capital or
alliances ideally 25 pages
OPERATIONAL PLAN
40+ pages, for going concerns, part
of an annual process
THREE TYPES OF A BUSINESS PLAN
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WHAT INVESTORS LOOK FOR
• Experienced & passionate management team
• Real customer need (pain and/or pleasure)• Large market• Salable business• Cost-effective way to target the market• Sustainable competitive advantages• Realistic revenue model• Return on investment
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A GOOD BUSINESS PLAN …
• … tells a compelling story.
• … is clear and concise.
• … is based on documented facts.
• … does not waste the reader’s time or
attention with extraneous material.
• … drives to a conclusion.
• … is not a guarantee of success.
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BUSINESS PLAN DOCUMENTS
Document Purpose Format Size/Scope
Executive Summary
Get attention, create interest
DOC or PDF
Two (2) pages maximum
Business Plan
Provide details for due diligence
DOC or PDF
Approx. 20-25 pages
Financial Projections
Provide justification for financial investment
XLS Span of 3 to 5 years(one-page summary in Business Plan)
Investor Presentatio
n
Create desire, close the deal
PPT 10-15 slides max.
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BUSINESS PLAN DEVELOPMENT PROCESS
Networking
Research
BusinessStrategy
WORKINGDOCUMENTS PRODUCTION
.
Key PointsOutline
FinancialModeling
BusinessPlan
ExecutiveSummary
FinancialProjections
InvestorPresentation
PREPARATION
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BUSINESS PLAN FORMAT
• Pages: 10 to 30• Kinko’s white bond
is good enough • Simple binding• Examples
– Handout – a good example B Plan
– Discuss examples of bad ones
TYPICAL OUTLINEEXECUTIVE SUMMARYINTRODUCTION AND BUSINESS PREMISEMARKET ANALYSIS AND CUSTOMER
NEEDSPRODUCT OVERVIEWVALUE PROPOSITIONBUSINESS MODELBUSINESS OPERATIONS PLANMARKETING AND SALESMARKET ENTRYTRANSITION TO REVENUE SERVICECOMPETITIVE ASSESSMENTPARTNERSHIP STRATEGYMANAGEMENT TEAM AND ADVISORSFINANCIAL PROJECTIONSKEY BUSINESS METRICSCAPITAL STRUCTURE/FINANCING PLANSEXIT STRATEGYRISK ANALYSISSUMMARY
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TACKLING YOUWIN QUESTIONS
• CLARITY
• CONCISE
• CONCRETE
• COMPELLING
• CONSISTENCY
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FUNDING PREPARATION
• Have A Business Plan
• Register Name
• Obtain Branding / Collateral Materials I.E.
Logos Etc
• Open Two Account
• Create Some Activity
• Approach / Explore Opportunities
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IN CONCLUDING: