essentials of a good business plan @ the startup expo 2016

Essentials of a good business plan

Kalpana Jain23rd April 2016

Agenda

• What is a business plan and why is it important

• Key components of a business plan

• Points to keep in mind while developing a business plan.

©2016 Deloitte Touche Tohmatsu India LLP 2

A business plan is a document that,

• Provides a considered and logical framework to set out a business’s short term and long term plans,

• Shows how the plan can be achieved, and

• Demonstrates that the plan address the requirements of the target audience.

What is a Business Plan?

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One size does not fit all!One size does not fit all!

• 10-15 pages

• For companies in early stages of development

• Typically for internal use.

• Assess viability of business

Summary

• 15-40 pages

• Typically for financing purposes

• Operations & projections presented in greater detail

Full

• More than 40 pages

• For established companies

• Source of guidance to top managers

• Blueprint for company operations

Operational

©2016 Deloitte Touche Tohmatsu India LLP

Roadmap to Success

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Where is your business?

Where do you want it to be?

How are you going to get there?

BUSINESS PLAN A Roadmap

“If you don’t know where you’re going you may end up somewhere else”

Assemble Team

Determine type of Plan

Outline Plan

Gather Data

Preparing a Business Plan


Uses of a business plan

• Planning business growth• Keeping operations aligned • Allowing benchmarks to be set• Committing management to same goals• Anticipating changes in a structured way• Monitoring and managing performance

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Internal Uses

External communication tool for:•Funding agencies•Strategic Alliances•Mergers and Acquisition

External Uses


Components of a Business Plan

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Product/Service

Market Study

Marketing and Sales Plan

Capital Expenditures

ManagementTeam

Executive Summary

• Core competencies/ expertise required

• Summarises key ideas of all the other sections

Source :GE 393 RLP - Business Plan Workshop for Technology Entrepreneurs

• Market share• Price• Volumes

Operating Costs

Financial Plan

Iterative

Other sections may include : Risks/Contingency Plan, Design/ Product Development Plan, Legal/Regulatory Compliance etc.


Be Pragmatic

• The business plan is best written by the management itself,

• Know what you don’t know and make sure you spend the time to figure it out,

• Avoid exaggeration of the facts and support your claims,

• Address key concerns of the audience,

• Tailor make the plan to suit the profile of the audience,

• Discuss all identified risks, don’t be selective,

• Develop the financials and executive summary sections last,

• Get an outsider’s perspective, and

• Avoid jargon and “fluffy” adjectives such as “best”, “superior”, etc. without supporting justification.

The Do’s & Don’ts of Business Plans

7©2016 Deloitte Touche Tohmatsu India LLP

• Underestimating the strength of one’s competitors,

• Not clearly explaining the opportunity,

• Unrealistic and simplistic projections,

• Overstated management’s strengths,

• Miscalculation of market size and achievable market share,

• Disorganised, unfocused or even poor presentation,

• Lack of risk assessment and contingency planning, and

• Deficient description of a viable exit strategy.

Common Pitfalls to Avoid


Some points to keep in mind

• Consistent, realistic financial forecasts,

• Contingency planning,

• Plans for additional financing, and

• Tailor made plans to suit different audiences

Before you Pitch to Potential Investors


An Investor’s Preference Spectrum

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Many investors will focus on specific attributes to screen the idea!

MOST ATTRACTIVELEAST ATTRACTIVE

RevenueStream

MarketProtection

CompetitiveAdvantage

Intangible models

Transaction Fee

Product sales

No other competitors

High switching costsBrand Equity“First Mover”

Lower cost Operations

Unique Operatn Process

Source :GE 393 RLP - Business Plan Workshop for Technology Entrepreneurs©2016 Deloitte Touche Tohmatsu India LLP

• High margin product/service in a high growth market,

• Product / service addresses an “unmet” customer need for which customers are willing to pay a premium,

• An idea that is competitively “advantaged”,

• High “positive” cash flow,

• Financially and competitively sustainable, and

• A great management team.

An Investor’s Delight

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• A five minute pitch with clarity, completeness, and precision that one believes in the future success of the business.

• Conveys to investors your company, the overall business case, the customer, the customer’s needs, your catchy solution for meeting those needs, the numbers….and what is special about you and your management team.

• No more than five sentences regarding each topic (less than 10 –slide presentation); trying to impress with more is as counterproductive as giving less information.

Supporting the BP with “Elevator Pitch”

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