TiE Institute Early Stage Entrepreneurs

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This deck was prepared by Kanchan Kumar, Nandini Mansighka and presented by Nandini at the #TiEInstitute session on creating B Plans for early stage companies.

This deck was prepared by Kanchan Kumar, Nandini Mansighka and presented by Nandini at the #TiEInstitute session on creating B Plans for early stage companies.

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  • 1. Business Plan for early stage companies27-Apr-2013TiE Institute Knowledge SeriesTiE Institute Knowledge Series
  • 2. Objective Understand what/why/how of business-plan Outline for our own business-plan Not meant to help you pitch to the investorTiE Institute Knowledge Series
  • 3. Agenda Introduction : what & why of business-plan Identifying the problem Whats your solution Competitors and Differentiators Estimating Market Size Projecting Revenue Estimating Expenses Growth Strategies for 12/18 months Present your business-planTiE Institute Knowledge Series
  • 4. Session Format Each session 30 minutes including Q&A Followed by 15 minutes for you to work on your B-planTiE Institute Knowledge Series
  • 5. What is a Business Plan?What is it? Like a road map for your road trip A script of the movieWhat is not? Just a fancy spreadsheet with projection of revenue & numbers A document to be prepared and left in cold storage A document to be prepared when looking to raise funding Remember : you would revise every ~3 monthsTiE Institute Knowledge Series
  • 6. Why make a Business Plan? Gives you a sense of direction and a baseline Benchmark of planned route vs. diversions BTW Diversions arent necessarily a bad thing Inculcates a sense of discipline Bring your team on a common page Makes it easy to communicate your ideas Forces you to think thru Prevents impulsive decisionsTiE Institute Knowledge Series
  • 7. How?Hopefully youd learn the answer of How in this sessionTiE Institute Knowledge Series
  • 8. Identify the problem & market What is the problem you are trying to solve Do you have personal experience of the problem How big & common is the problem Will someone pay for the solution? Common pitfalls Make a hammer and then look for a nail to hit Gross generalizations Every smart phone user is my customer Every small company is my customerTiE Institute Knowledge Series
  • 9. Whats your solution Segment the market & focus on one segment at a time Avoid being everything to everybody Design a product/service which focus on the pain pointof the identified segment Hit the market early with the product & iterate faster Understand minimum viable product Can you communicate your product/service in onesimple sentence conveying the valueTiE Institute Knowledge Series
  • 10. Competition, Differentiators & G2M Know your competition. There is nothing worthwhile whichdoesnt have competition Do not think only in terms of direct competition & similarproducts Remember : cell phone cam vs. point & shoot cam Focus on differentiators – for your chosen market segment Plan your go-to-market strategy keeping your target customerin mind Focus on communicating value of your product/service offersTiE Institute Knowledge Series
  • 11. Estimating market size Common pitfalls – gross generalizations, e.g. Education is a $18bn market There are 37mn smart phones in India If I get 1% of market wed have xxx Crores of turnover Focus on specific numbers to arrive at market size Who exactly is your target customer In which geography How many of those are willing & capable of paying How much would they pay Value of alternative product they are buying In case of recurring purchase – how often do they buyTiE Institute Knowledge Series
  • 12. Projecting revenue numbers Be realistic & conservative In the identified market & of the market size estimated : Final figures are irrelevant, devil is in the assumptions. Assumptions drive the projection – so write it down Every time you learn about certain assumptions being right or wrong –re-visit the numbers How many prospects can you reach given your g2m strategy & givenyour resource constraints Understand the sales cycle & sales funnel How many of these prospects would convert into sales Now arrive at sales figuresTiE Institute Knowledge SeriesTiE Institute Knowledge Series
  • 13. Key financial conceptsKey concepts Discussion termsRevenue/ Sales Sales Unit / QuantitySales PriceCosts Fixed CostsVariable CostsCapital costs - expenditureProfit Gross ProfitProfit before taxProfit after taxCash Cash requirementCash burnWorking CapitalCash generated by the business
  • 14. Estimating expenses Always over-estimate your expenses How much money do you have? Work back-wards (particularly if you arebootstrapping) Write down every little expense head (including the salary that you need to draw) Benchmark expenses of other similar companies, ask fellow startups,research Understand the customer acquisition cost, cost of delivery etc Understand how every month your expenses will increase with increasedsales/deliveries/procurement/capacity etc Understand Cash flow, how to stretch every rupee – negotiate for earlyreceipt from customer and late payments to vendors Never hurts to run it thru people who have done it beforeTiE Institute Knowledge Series
  • 15. Plan for 6-12-18 months Your Product, market, revenue & expenses – everything wouldchange over a period of time What took you from 0-10 customer is not what would take youfrom 10-100 and so on... Plan for 12-18 months rolling – but revisit the numbers every 3months minimum, if not earlier Make assumptions for hiring, attrition, competition, regulatory,other risksTiE Institute Knowledge Series
  • 16. Putting it all together Present your business-plan Ask audience to critique based on todays learningsTiE Institute Knowledge Series
  • 17. THANK YOUFollow @tiemumbai for entrepreneurial insightsin 140 charactersTiE Institute Knowledge Series