Business Plan

Business Planning and preparing a Business Plan Anjana Vivek www.venturebean.com [email_address]

BEFORE YOU START
Spend some time on some analysis
WHAT is the purpose of the business plan
Is it for internal use
Is it for investors (VC/bank/angel investor)
For other purpose (incubation)

BEFORE YOU START
Think through
WHAT are the strengths – that you bring to this business
WHAT are the constraints that you have to either
Address or
Accept (and work keeping this in mind)

AT THE STARTING POINT
Before starting on preparing the business plan, think through the following:
PUT YOURSELF IN THE READER’S PLACE
What is the reader looking for in a business plan?
What is the message you are trying to convey through the business plan?

Different persons may view the business plan differently
Try to understand background and experience of person/group to whom plan is shown

Just because someone rejects or scoffs at your idea, does not mean it is bad
Try to take some learnings from rejections

THE PLAN DOCUMENT
You may prepare a detailed plan in sections, which you may be stand alone and kept for different purposes, ie sections for internal use, for investor and for banker
Keep a track on versions to minimise confusion and possible errors
Keep control of access to the document

BUSINESS PLAN
The document must be self speaking: ie minimum clarification must be required from your end (particular attention to be paid to explaining abbreviations/short forms and technical terms)
The document must be reader friendly: key information that you want to convey should not be hidden amongst too much details
Do not think only of what you want to tell, rather think about what your target would want to hear

Plan on format of report and how data, information, analysis, comments etc. are to be presented
To move what is not essential to flow of document to main report
Think of content required to capture attention of reader; avoiding excessive information overload
BUSINESS PLAN

Avoid using graphs for the sake of using graphs; tables for the sake of using tables etc. without substance in the document
Avoid information overload, i.e. temptation to disclose all you know and demonstrate your knowledge and experience about the business
Make attempts to protect your intellectual property if any
BUSINESS PLAN

CONTENTS
Table of contents
Executive summary
Sections/chapters/paras
Summary/conclusion
Appendix of abbreviations, references, other annexures
Graphs, tables, figures to be numbered and labelled

CHAPTERS - Illustrative
Company and background information
Management team, organisation structure
Business idea, strategy and implementation plan
Marketing plan
Financial details
Other information such as implementation schedule, statutory environment applicable etc.

Background history if existing company; current status
Rationale for existing business or new start up
General industrial environment of business
Brief background of promoters

Vision and mission statement
Goals and objectives
Key business drivers and key constraints; SWOT and business strategy
Other key information to make initial background information complete

Management team, organisation structure
Experience and qualification of promoters and key team
Organisation structure
Any key organisation/HR policies

Business idea, strategy and implementation plan, including inter-alia:
Vision, mission
Product/service offered
Operational details
USP(unique selling point); barriers to competition
Differentiator
Strategy to handle competition

Business idea, strategy and implementation plan, including inter-alia:
Details of any in-house techonology/process or idea; or source of technology, ie technology transfer through collaboration
Details of alliance partners, current as well as proposed
Details of any intellectual property associated with the business

Marketing plan
Target market size
Market research details
Customer profiles; existing, potential/pipeline
Marketing strategy
Pricing strategy

Financial details
Past financials: Balance sheet, P&L account and cash flow summary for five year period if available
Future forecast – five years in summary (detailed schedules may be in appendix)
Details of how funds will be raised and utilised
Details of contribution from promoters (cash/kind)

Financial details
Sensitivity analysis for key parameters, eg sales variations of + / - 10%
Scenario analysis:
optimistic, normal and pessimistic (budget)
Key ratios, break even, project IRR
Other information such as quality of key parameters, ie revenue based on geography
Cash burn, i.e. monthly requirement of cash and requirement for capital investment in phases

Other information
Time lines, implementation schedule, expected date of commercialisation
Regulatory environment if applicable, ie environmental laws for pharma company
Other information which may be relevant to the business
Include any required references, contact information, data and statistics

PREPARING THE BUSINESS PLAN
PRESENTATION IS THE KEY
CAPTURE THE READER’S INTEREST
Think through the format of report and how data, information, analysis, comments etc. are to be presented

Document should be consistent, flow well (date formats, number formats, serial number flow, prefix to names, grammar and tense used, avoid long sentences, spell check, US/British English not to be mixed etc.)
Source information for data, content to be disclosed

Format and style should be neat, consistent, professional giving attention to details of:
format styles, font sizing, colours not too light, legibility, header, footer, headings, para alignment, spacing

BUSINESS PLAN
Points to consider
You must believe in the idea to sell it
Homework before hand, adequate knowledge
Credibility is important, ie if caught with one falsehood, nothing said would be believed

UPDATES AND CHANGES IN BUSINESS PLAN
Points to consider
If there has been substantial change, update the plan
The difficulty is when there are too many versions which are around

UPDATES AND CHANGES IN BUSINESS PLAN
Points to consider
If there is inconsistency between one plan and the other, this is to be reconciled, at least for internal records if not for external communication
While the plan is to be updated to reflect reality and changes, too many such changes give wrong signals

PRESENTATION OF BUSINESS PLAN
Content, value to listener, any take away?
In preparing a presentation
Master slide can be useful
Include page numbers
Use clear headers to demonstrate slide topic

PRESENTATION OF BUSINESS PLAN
In preparing a presentation
Avoid clutter (generally not more than 5 points per slide)
Pay attention to details: colour combinations, business logo legibility, consistency of message
Clarity, tone, steady speed in speaking

APPENDIX
Planning for a business
Plan for advisors / accountants / lawyers
Educate oneself about the law and regulations to be followed
Educate oneself on basics of managing a business and finance
Plan for long term impact of decisions taken with regard to hiring employees, taking office space etc.

Business Plan

by Anjana Vivek on Sep 07, 2009

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Business Plan — Presentation Transcript