lecture 4 - business plan

8/6/2019 Lecture 4 - Business Plan

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Seminar 2: Business Plans that work

Baharuddin KhalidBaharuddin Khalid


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New Venture Development

Seminar 2: The Business Plan

Roadmap for Starting the Venture

Translate Ideas into Business Opportunities

Translate Ideas into Business Opportunities

Learn the Entrepreneurial processLearn the Entrepreneurial process

Prepare an Opportunity AnalysisPrepare an Opportunity Analysis

Feasibility AnalysisFeasibility Analysis

-- Product/service feasibilityProduct/service feasibility

-- Industry/market feasibilityIndustry/market feasibility

-- Organizational feasibilityOrganizational feasibility

-- Financial feasibilityFinancial feasibility


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What is a Business Plan?

A written document that describes where the

business heading and how to achieve its goalsand objectives.

- develop a road map to follow inexecuting its strategies and plans.

- introduces potential investors and otherstakeholders with the business opportunitythe firm is pursuing and how it plans topursue it.


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Create or add significant value to a customeror end user

Solve a significant problem, or meet asignificant want or need for which someonewill pay a premium

Have robust market, margin, andmoneymaking characteristics

Fit well with the founder(s) and managementteam at the time, in the marketplace, and withthe risk-reward balance

What Does It Reveal?

A business plan for a high potential venturereveals the business ability to:


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Consequences of different strategies andtactics can be considered

Human and financial requirements forlaunching and building the venture canbe examined

Reasons notto hire an outside professionalto prepare the business plan

Who Develops the Plan?


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Identifying Niche or Target Markets

- Define the Market Segmentation

Market Structure

-- Emerging; Fragmented; MaturedEmerging; Fragmented; Matured

Market SizeMarket Size

Growth RateGrowth Rate -- revenue growthrevenue growth

Market TimelinessMarket Timeliness--first mover advantagefirst mover advantage

Opportunity Analysis

Is there a marketto build a viable business?


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New Venture DevelopmentSeminar 2: The Business Plan

1. What is the primary product or service?

2. Is there a market for the product or service? Has theopportunity been well defined?

3. Who are target customers ?

4. Who is the competition and what and what are the barriers toentry?

5. Who is the management team and what are their specifictalents?

6. What is the pricing strategies?

7. What risks and market constraints are involved?

8. What sales distribution channels will be needed to sellproduct or services?

9. What is the current financial cash flow and break even plan

10. What are the immediate financial needs of the business?

Questions that every Business Plan should answer:


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BUSINESS PLANS THAT WORKBUSINESS PLANS THAT WORK

Before You Start:Before You Start:

Asking the Right Questions

THE FRAMEWORK:THE FRAMEWORK:

The People

The Opportunity

The Context

Risk and RewardGetting Started:Getting Started:

Outline for a Business PlanBusiness Plan

Quick ScreenQuick Screen

Business Plan GuideBusiness Plan Guide

Write The PlanWrite The Plan

Update The PlanUpdate The Plan

Segmenting information Creating an overall schedule Creating an action calendar Doing the work and writing

the plan


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The Quick ScreenThe Quick Screen

Weed out unpromising ideas quickly andefficiently

Four anchors of opportunities:

- create or add significant value for end user- solving a significant problem or meeting asignificant need

- robust market, margin and money making

characteristics- good fit with the founders and themanagement team


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Getting StartedGetting Started

25-word statement of your current vision short expanded summary

The story model: A plan for whom? All good stories have a plot line

absolutely, positively has to be overnightabsolutely, positively has to be overnight create visual catch points

detailed table of contents is critical- many investors prefer to spot read business plansmany investors prefer to spot read business plans


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Business Plan OutlineBusiness Plan Outline

I.I. CoverCoverII.II. Title PageTitle PageIII.III. Executive SummaryExecutive SummaryIV.IV. Market AnalysisMarket Analysis

V.V. Description of VentureDescription of VentureVI.VI. Marketing PlanMarketing PlanVII.VII. Operation PlanOperation PlanVIII.VIII. Development PlanDevelopment PlanIX.IX. Management TeamManagement Team

X.X. Critical RisksCritical RisksXI.XI. Financial PlanFinancial PlanXII.XII. OfferingOfferingXIII.XIII. AppendixesAppendixes


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Executive SummaryExecutive Summary

Short and concisely lays out what the business is Hook the reader create the right tone Highlight firms customer value proposition Common subsection:

- description ofopportunity and strategy- business concept- industry overview- target market and projections- competitive advantages- compelling economics, profitability and harvestpotential

- team- offering


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New Venture DevelopmentSeminar 2: The Business Plan Technology Ventures: From Idea to Opportunity

A. The Industry

Present the current status and prospects for theindustry in which the proposed business will operate.Be sure to consider industry structure.

Discuss briefly market size, growth trends, and

competitors

Discuss any new products or development, newmarkets and new customers, new requirements, newentrants and exits, and any other national oreconomic trends and factors that could affect theventure s business positively or negatively.

The Industry and the Company andIts Product or Service


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New Venture DevelopmentSeminar 2: The Business Plan Technology Ventures: From Idea to OpportunityTechnology Ventures: From Idea to Opportunity

The Industry

In 2004, the international toy industry surpassed RM250 billin sales. Malaysia traditional toy market was RM2 bill in 2005,growing at approximately 2% per year. Traditional toysinclude plush animals, dolls, games, and so forth but not

video games. The toy industry is consolidated , with threeinternational major players namely Hasbro, Mattel, and Legoaccounting for 60% of the revenue. Several trends impact theindustry.

Less time available for unstructured Play

Children are more scheduled today. On average, children 3 to12 years of age spend 6 hours a day in school or preschool.Outside of school, kids continue structured play with sports,dance, and other extracurricular activities. This all results inless per day of unstructured play. Thus children have lesstime for toys.

Sample - Industry Analysis Section


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New Venture DevelopmentSeminar 2: The Business Plan Technology Ventures: From Idea to OpportunityTechnology Ventures: From Idea to OpportunityTechnology Ventures: From Idea to Opportunity

Getting Older Younger Phenomenon

Kids face more pressure at an earlier age, whether it is a lackof downtime or an increased emphasis on scholasticperformance. In 2003, 45% of children reported that theyreceived rewards for getting good grades This has led to aconvergence of play and other elements in the childs life.Thus, Toys connect these disparate elements of a childs life,

such as education and play.

Growth of Educational Toy Market

Internet research and analysis firm Dell Research found thateducational toys are the fastest growing segment of the toyindustry, having reached RM xxx in 2000. Consumer

purchasing trends indicate that parents want wholesome toysthat remind them of their childhood and that provide theirchildren with tolls for learning. Educational toys usually aresold at big outlets like ToysrUS or trusted catalogs wherethere is a greater emphasis of child development



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Define Customers in terms ofdemographics and psychographics

Is customers reachable and receptive?

D

escribe customers purchasing processes Market size and trends Estimated market share and sales Ongoing market evaluation

Market Research and AnalysisMarket Research and Analysis


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New Venture DevelopmentSeminar 2: The Business Plan Technology Ventures: From Idea to Opportunity

B. The Customer

XYXs target market end customers are caregivers who aremeeting the needs of a preschool-aged child or childrencoping with a stressful life challenge. These acarecigers aresplit into two segments:

Parents and direct care givers

Caregivers in institutional settings

Parent and Direct Caregivers:

XYXs target market segment is composed of literate

adults between 25 to 49 years of age. This age rangecaptures the bulk of parents..

Care Givers in Institutions



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Evolves directly out of the customer analysis Competitive profile matrix followed by

text analysis and its implications- Eg. of key success factors : location, price,quality etc

Competitor AnalysisCompetitor Analysis


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3.0 Competition.

The therapeutic toy segment is emerging from the educational toyniche. Currently there are few competitors in this space, but like the

overall toy industry, the segment has the potential to be highlycompetitive with low barriers to entry and multiple niche players.The key to success is differentiating the product based on a numberattributes, including price, quality, branding, distribution, andancillary features. Exhibit 3.1 highlights three of XXX primarycompetitors and shows how XXX compares to trhem.

Competitor AnalysisCompetitor Analysis--samplesample


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The CompetitiveMatrixThe CompetitiveMatrix

Company A B C XXX

Product Puppets Toys, stuffedanimals

Teddy Bears andCDs

ComfortCreatures & kits

Price

Features High quality,handmade

Attractivematerials/designs,simple

Plush, cds inside Bundled toys,plush animals,books..kits

Packaging

Marketing In store partnerships Website, specialevents, PR, ads

Distribution Specialty stores Independent Hospitals,philantropicorg.specialtystores

Sales 2.2 m 8.9 m 1.5


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The Venture and Product descriptionThe Venture and Product description

Describe your venture descriptionpassionately

Communicate why you believe you have acompelling product

- highlight how your product fits into thecustomer value proposition

- value added deliver to customer Highlight its competitive advantage

- better quality, cheaper,faster etc Present persuasive entry strategy Followed by an exciting growth strategy


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Marketing Plan: Reaching the customerMarketing Plan: Reaching the customer

How the sales projections will be attainedHow the sales projections will be attained Overall Marketing Strategy

- The target market strategy

The product/service strategy Pricing strategy Distribution strategy Advertising and promotion

Sales strategy Sales and marketing forecasts

- comparable and build up method


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Development PlanDevelopment Plan

Development strategyDevelopment strategy-- lays out initiatives, which then arelays out initiatives, which then areillustrated in timelineillustrated in timeline

Development timelineDevelopment timeline-- highlights major milestoneshighlights major milestones-- monitor progress and make changesmonitor progress and make changes-- provides a guidepost of promisedprovides a guidepost of promisedaccomplishmentaccomplishment


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Financial Plan: telling your story in numbersFinancial Plan: telling your story in numbers

Actual income statements and balance sheets

Pro forma income statements / forma balance

sheets Pro forma cash flow analysis

Breakeven chart and calculations

Cost control

Highlights


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The Critical Risks andOffering PlanThe Critical Risks andOffering Plan

Market acceptance an example of critical riskMarket acceptance an example of critical risk Identify the risk and then state theIdentify the risk and then state the

contingency plancontingency plan

market interest and growth potentialmarket interest and growth potential competitors actions and retaliationcompetitors actions and retaliation time and cost to developmenttime and cost to development operating expensesoperating expenses

availability and timing offinancingavailability and timing offinancing

Offering plan : how much do you need?Offering plan : how much do you need?


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ProposedCompany OfferingProposedCompany Offering

Desired financing

OfferingCapitalization

Use of funds

Investors return


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lecture 4 - business plan

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