Business Planning 12 Points (1)

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  • Eg. awards, uniqueness not communicated in a company which was a leader in their space in India. This was to be backed by data etc. Form: Key imp info lost in clutter
  • While some content is the same for all the plans, there may be other material which is specific to a specific reader
  • Business Planning 12 Points (1)

    1. 1. Business Planning: 12 points ‘ to trigger thinking’ Anjana Vivek [email_address] www.bizkul.com
    2. 2. BACKGROUND BUSINESS PLANS www.bizkul.com
    3. 3. I : A Business Plan is a Communication Tool BUSINESS PLANS www.bizkul.com
    4. 4. COMMUNICATION TOOL Both substance and form are important Often , a reader’s perception of your business/idea will be based on the business plan you prepare
    5. 5. II : Think about whom are you communicating to BUSINESS PLANS www.bizkul.com
    6. 6. COMMUNICATION TOOL Is it - a VC - an angel investor - a strategic investor or - someone else? Each one of these will look at the business plan differently
    7. 7. COMMUNICATION TOOL Is it an expert who has some understanding of your business, i.e. such as a technologist or domain expert? Is it someone who is a an expert in some other area without knowledge of your industry?
    8. 8. III : Logical structure to the plan BUSINESS PLANS www.bizkul.com
    9. 9. STRUCTURE OF THE PLAN The plan must have structure and include the following: - Business / idea - People behind idea/project - Market size expected - Marketing strategy - Competition - Financials - Other information which makes this complete
    10. 10. SOME PRACTICAL ASPECTS BUSINESS PLANS www.bizkul.com
    11. 11. IV : Projections in new or uncertain markets BUSINESS PLANS www.bizkul.com
    12. 12. TARGET MARKET SIZE The markets may be: - new - unexplored - latent - uncertain Think of testing markets or doing market research in creative ways as well as through standard practices
    13. 13. V : Financial Projections when the future is unpredictable BUSINESS PLANS www.bizkul.com
    14. 14. FORECAST FINANCIALS There are so multiple variables in a business, which impact the financials, including, but not limited to: - revenue streams - costs, capital and revenue in nature - capital infusion at different stages - resource constraints
    15. 15. FORECAST FINANCIALS These uncertainties can be factored in to some extent by using the tools of - scenario analysis and - sensitivity analysis
    16. 16. VI : Valuation BUSINESS PLANS www.bizkul.com
    17. 17. VALUATION Valuation is based on: - intangibles and - tangibles Valuation can be computed in multiple ways, the popular methods: - multiples of revenue; profit etc. - multiples of key drivers, eg.user base - cash flow based
    18. 18. VALUATION Valuation may be driven by - the stake the entrepreneur is willing to give up at a particular stage of investment in the business and - the amount of money required by the business at that stage
    19. 19. VALUATION Different persons can value the same business differently because they may - use different methods of valuation - use variations in the methods - have different inputs in the methods Thus, valuation perceptions can vary, and we do have situations where there are divergent views on valuation
    20. 20. VALUATION Deals can sometimes be structured in such a way that the differences in valuation perception are factored, e.g. linking valuation to performance
    21. 21. VALUATION Valuation is also the outcome of negotiations, so it is important to identify one’s bargaining power in relation to the deal issues
    22. 22. VII : Protection of Intellectual Property BUSINESS PLANS www.bizkul.com
    23. 23. IP PROTECTION If you do not disclose your plan; you cannot expect an investor to evaluate your business idea and fund you If you do disclose this, you may lose the idea to someone else, i.e. there is a chance of your idea being stolen or adapted and misused by someone else What do you do?
    24. 24. IP PROTECTION You need to do your homework and background check on the potential investor/partner; i.e. you also need to do a due diligence on them just as they do a due diligence on you If you are looking for investment, at some stage, you will need to disclose much of your idea, so be prepared for this; a VC typically does not sign an NDA
    25. 25. Miscellaneous points to think about BUSINESS PLANS www.bizkul.com
    26. 26. VIII : Do you disclose weak points ? BUSINESS PLANS www.bizkul.com
    27. 27. DISCLOSURE If you do not disclose the negatives, the investor will not automatically assume that you do not have any negatives in your project/idea
    28. 28. DISCLOSURE Prepare for due diligence by identifying pitfalls upfront and taking steps to mitigate/de-risk to the extent possible
    29. 29. IX : What are the deal drivers BUSINESS PLANS www.bizkul.com
    30. 30. DEAL ISSUES Every business has issues which are - deal drivers and - deal breakers Try to identify key deal issues from - your perspective and - the investors perspective
    31. 31. DEAL ISSUES This can help you plan on how you can leverage on your strengths This can help in negotiating a better deal
    32. 32. X : Roles of team members ? BUSINESS PLANS www.bizkul.com
    33. 33. TEAM MEMBERS Plan on roles and responsibilities of team members in terms of execution Plus think through issues of members’ contribution - in money - in kind - in intangibles
    34. 34. TEAM MEMBERS Human egos can be fragile and can lead to the break up of the team Recognise this and try to have realistic expectations of yourself and others
    35. 35. XI : Getting educated on the basics of managing a business BUSINESS PLANS www.bizkul.com
    36. 36. MANAGEMENT & EXECUTION Educate yourself about the basics of managing your business Some things cannot be outsourced
    37. 37. XII : Issues of transition to be thought through BUSINESS PLANS www.bizkul.com
    38. 38. TRANSITION Look at the stage of your business and plan accordingly Growing to the next level may lead to issues such as - letting go of control - letting go of leadership Are you ready for this?
    39. 39. THANK YOU Wishing you all success

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