Anjana Vivek; anjana@venturebean.com
Business Planning; Business Plans
VentureBean Consulting Private Limited
At the start
Kinds of Investors
Project Requirement
Building the BPlan
Summary
Agen...
VentureBean Consulting Private Limited
BEFORE YOU START
Do take time out to think/reflect…
• WHAT are the strengths – that...
VentureBean Consulting Private Limited
AT THE START
• What do you believe you can achieve, for example
in terms of
– Reven...
VentureBean Consulting Private Limited
At the start
Kinds of Investors
Project Requirement
Building the BPlan
Summary
Agen...
VentureBean Consulting Private Limited
‘to trigger thinking’
Do take time out to think/reflect…
• What are the kinds of Fu...
VentureBean Consulting Private Limited
Investors: Equity (Linked): One Slide Checklist
• HNIs, informal and formal angel g...
VentureBean Consulting Private Limited
Contributors
• Corporates
• Banks and FIs
• FIIs
• Family Business Groups
• HNIs
• ...
VentureBean Consulting Private Limited
Caselet: You are an investee
• Zyco Fund has a life Cycle of 10 years, this is a
fu...
VentureBean Consulting Private Limited
Caselet – Debrief - Illustrative
• Promoters should make an effort to understand th...
VentureBean Consulting Private Limited
Caselet – Debrief - Illustrative
• Founders of an investee company should think
thr...
VentureBean Consulting Private Limited
Caselet: You are an investor
• GR Fund is a fund of alumni of GR Institution
• The ...
VentureBean Consulting Private Limited
Caselet – Debrief - Illustrative
• Each Investor and Fund Manager will approach it
...
VentureBean Consulting Private Limited
Stages of investment
• Idea / Seed
• R&D / Pilot / Proof of Concept
• Commercializa...
VentureBean Consulting Private Limited
Trends: ‘to trigger thinking’
“The Indian startup ecosystem has reached an inflecti...
VentureBean Consulting Private Limited
Trends: ‘to trigger thinking’
• Anywhere you turn, anywhere you look, investors are...
VentureBean Consulting Private Limited
At the start
Kinds of Investors
Project Requirement
Building the BPlan
Summary
Agen...
VentureBean Consulting Private Limited
What a project must have
• High upside potential
• Potential for extraordinary retu...
VentureBean Consulting Private Limited
4 Points: Investors look for
• Team – leadership, multidisciplinary, integrity,
com...
VentureBean Consulting Private Limited
Business Plan
• An output based on business model and
strategy, expected to evolve ...
VentureBean Consulting Private Limited
Due diligence reviews (DDR)
Investment decision is based on DDR, some
illustrative ...
VentureBean Consulting Private Limited
An Illustrative Sales Quality Review..
• Illustrative indicative parameters, for DD...
VentureBean Consulting Private Limited
Value Creation Review
• Investment should have potential for value
creation not val...
VentureBean Consulting Private Limited
At the start
Kinds of Investors
Project Requirement
Building the BPlan
Summary
Agen...
VentureBean Consulting Private Limited
A BUSINESS PLAN COMMUNICATES…
• Many times, a reader’s perception of your
business/...
VentureBean Consulting Private Limited
AT THE STARTING POINT
Before starting on preparing the business plan,
think through...
VentureBean Consulting Private Limited
AT THE STARTING POINT
• Different persons may view the business plan
differently
• ...
VentureBean Consulting Private Limited
AT THE STARTING POINT
Before starting on preparing the business plan,
think through...
VentureBean Consulting Private Limited
AT THE STARTING POINT
• Just because someone rejects or scoffs at your
idea, does n...
VentureBean Consulting Private Limited
BUSINESS PLAN SET … Illustrative
• Word document (15 – 25 pages)
• Presentation dec...
VentureBean Consulting Private Limited
THE PLAN DOCUMENT
• You may prepare a detailed plan in sections,
which you may be s...
VentureBean Consulting Private Limited
BUSINESS PLAN
• The set should be self speaking: ie with limited
clarification requ...
VentureBean Consulting Private Limited
BUSINESS PLAN
• Plan on format of report and how data,
information, analysis, comme...
VentureBean Consulting Private Limited
BUSINESS PLAN
• Avoid using graphs for the sake of using graphs;
tables for the sak...
VentureBean Consulting Private Limited
CONTENTS : Illustrative
• Table of contents
• Executive summary
• Sections/chapters...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Company and background information
• Management team, org...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Company and background information
– Background history i...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Company and background information
– Vision and mission s...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Management team, organisation structure
– Experience and ...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Business idea, strategy and implementation
plan, includin...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Business idea, strategy and implementation
plan, includin...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Marketing plan
– Target market size; TAM (total addressab...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Financial details
– Past financials: Balance sheet, P&L a...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Financial details
– Sensitivity analysis for key paramete...
VentureBean Consulting Private Limited
CHAPTERS - Illustrative
• Other information
– Time lines, implementation schedule, ...
VentureBean Consulting Private Limited
PREPARING THE BUSINESS PLAN
• PRESENTATION IS THE KEY
• CAPTURE THE READER’S INTERE...
VentureBean Consulting Private Limited
BUSINESS PLAN
• Points to consider
– You must believe in the idea to sell it
– Home...
VentureBean Consulting Private Limited
UPDATES/CHANGES IN BUSINESS PLAN
• Points to consider
– If there has been substanti...
VentureBean Consulting Private Limited
At the start
Kinds of Investors
Project Requirement
Building the BPlan
Summary
Agen...
VentureBean Consulting Private Limited
IN SUMMARY: At the starting point
As an entrepreneur
• What are your strengths/weak...
VentureBean Consulting Private Limited
Some more points on the TO-DO list
• Plan for the business
• Plan for advisors / ac...
VentureBean Consulting Private Limited
Thank You!
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Business Plan

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Business Plan

  1. 1. Anjana Vivek; anjana@venturebean.com Business Planning; Business Plans
  2. 2. VentureBean Consulting Private Limited At the start Kinds of Investors Project Requirement Building the BPlan Summary Agenda 2 2
  3. 3. VentureBean Consulting Private Limited BEFORE YOU START Do take time out to think/reflect… • 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) 3
  4. 4. VentureBean Consulting Private Limited AT THE START • What do you believe you can achieve, for example in terms of – Revenue – Number of offices – Lines of business/products/service – Kinds of customers / categories – etc.. – .. Over a period of time • Are you confident that you can achieve.. i.e do you have faith in yourself and the power of your dreams? 4
  5. 5. VentureBean Consulting Private Limited At the start Kinds of Investors Project Requirement Building the BPlan Summary Agenda 5 5
  6. 6. VentureBean Consulting Private Limited ‘to trigger thinking’ Do take time out to think/reflect… • What are the kinds of Funding options available today for business? • What are the alternate equity investment options? VC/ PE/ Incubation? This session focusses on equity linked funding options and strategies 6
  7. 7. VentureBean Consulting Private Limited Investors: Equity (Linked): One Slide Checklist • HNIs, informal and formal angel groups • Seed Funds • Venture Capital • Private Equity • Banks exploring innovative ways to fund SMEs • Strategic Investors • Corporate Funds; (Family) Business Groups, Indian & Global – Directly and/or through a special division or subsidiary – For employees alone or open to public – As intellectual and/or financial capital with other facilities • Government supported funds • Impact Investors • Incubators • Accelerators • Crowd funding • Online funding platforms 7 Which One is the … Right Fit for You?
  8. 8. VentureBean Consulting Private Limited Contributors • Corporates • Banks and FIs • FIIs • Family Business Groups • HNIs • Combination / others • 3Fs ? 8
  9. 9. VentureBean Consulting Private Limited Caselet: You are an investee • Zyco Fund has a life Cycle of 10 years, this is a fund with overseas investors • In year 7 of the fund, Zyco has offered 1 million USD for a 15% stake in Amaze Co., in Bangalore • The promoters of Amaze also have another offer from Indo, a Rupee Fund; they are offering Rs.6 crores for 20 % stake in the company. • What are the key deal aspects the Amaze founders should consider 9
  10. 10. VentureBean Consulting Private Limited Caselet – Debrief - Illustrative • Promoters should make an effort to understand the mandates of potential investors and their reasons for investing • Some contributors want money back in a finite time period, some are not particular • The value add and brand accretion or depletion due to an potential investor need to be factored, it is not only about money and equity stake percentage • The clauses in the contract need to be checked with care 10
  11. 11. VentureBean Consulting Private Limited Caselet – Debrief - Illustrative • Founders of an investee company should think through possible scenarios over the next 3-5 years, assuming the company does as well as projected and also assuming a scenario where projections are not met • Valuation today and valuation expected tomorrow, both have a role to play in decision making • Valuations expected in 3-5 years, depend on assumptions for projections. These need to be thought through carefully from multiple angles, operations, finance, team, competitive landscape and more 11
  12. 12. VentureBean Consulting Private Limited Caselet: You are an investor • GR Fund is a fund of alumni of GR Institution • The Fund invests directly and sometimes the alumni may also invest in individual capacity • Blyitz, a for profit company, which is working on a BOP (Bottom of the Pyramid) model has got a commitment from an Angel Fund (AF) • AF tells Blyitz that they will put in money along with another co-investor, so Blyitz approaches GR Fund • Another HNI Fund managed by a professional also hears of this deal and asks for information • How will you evaluate the investment proposal from Blyitz if you are a Fund Manager for GR Fund? What if you are the HNI Fund Manager, will your approach be different? 12
  13. 13. VentureBean Consulting Private Limited Caselet – Debrief - Illustrative • Each Investor and Fund Manager will approach it from his or her fund mandate and how the investment and disinvestment from this company will fit into this • Internal aspects, such as stage in the Fund Life Cycle, current portfolio on hand, etc. will also play a key role in evaluation • If multiple fund managers are involved, the differences and similarities in the mandates of the funds will need to be assessed • There needs to be collective discussion as to who will lead the deal, do the due diligence and play an active role post the funding. One or more of the Funds may be involved in these aspects and more 13
  14. 14. VentureBean Consulting Private Limited Stages of investment • Idea / Seed • R&D / Pilot / Proof of Concept • Commercialization / Scale up • Early Stage • Growth / Later Stage / Expansion • Turnaround • Acquisition, Inorganic expansion • … etc.
  15. 15. VentureBean Consulting Private Limited Trends: ‘to trigger thinking’ “The Indian startup ecosystem has reached an inflection point, with 800 new tech startups sprouting in a year. This, taken in conjunction with rising investment flows, makes it the world’s fastest growing startup ecosystem, NASSCOM” • https://www.techinasia.com/india-is-fastest-growing-startup- ecosystem-in-world/ • http://www.nasscom.in/india-fastest-growing-and-3rd-largest- startup-ecosystem-globally-nasscom-startup-report-2014 • Too much money chasing limited deals, i.e. demand is clearly greater than supply, despite India currently being rated country with 3rd largest number of startups as per the NASSCOM report • Technology based companies, ecommerce linked business, product ventures, businesses leveraging on smart phone user bases, solutions attempting to fix problems or providing solutions that address large populations and customer segments… and more are the flavors of this season.
  16. 16. VentureBean Consulting Private Limited Trends: ‘to trigger thinking’ • Anywhere you turn, anywhere you look, investors are seeking startups to fund • Start ups are also attracting the interest of investors from the traditional businesses and business houses from the so-called ‘old-economy’ • New categories of investors are emerging, with their own investment philosophy, due diligence process; rules of the game are being re written, depending on the potential investors and business models • Consortium funding is finding many takers, with safety being seen in a large set of co-investors. – This comes with its own set of challenges – for both the investors and the investee. – Consortium investors can also be a mix of individuals, funds and corporate groups
  17. 17. VentureBean Consulting Private Limited At the start Kinds of Investors Project Requirement Building the BPlan Summary Agenda 17 17
  18. 18. VentureBean Consulting Private Limited What a project must have • High upside potential • Potential for extraordinary returns to investor • Exit route plan • This implies – Rapid Growth, i.e. – Total addressable market is really high – Company has potential to address this market – Company has ambition to address this market – Company has the capability to Execute to achieve high growth – Risks are articulated – .. Etc MUST Have Key Requirements: • TEAM with Execution Capability and • Huge Addressable Market
  19. 19. VentureBean Consulting Private Limited 4 Points: Investors look for • Team – leadership, multidisciplinary, integrity, competence, capability to execute, domain knowledge • Idea/Service/Product potential to attract large numbers of paying customers • Market, opportunity, growth expected, barriers to competition • Exit avenue What else do you think investors may seek?
  20. 20. VentureBean Consulting Private Limited Business Plan • An output based on business model and strategy, expected to evolve over time • To be forward looking, based on past knowledge of promoters and their work experience in the existing or new venture • Assumptions to be tested to see if they will be valid for execution, i.e. to demonstrate this is not a business plan on paper alone • Risks to be factored in plan • Multiple scenarios are looked at, revenues expected are discounted, expected costs and expected cash flows factored, sensitivity to key parameters checked
  21. 21. VentureBean Consulting Private Limited Due diligence reviews (DDR) Investment decision is based on DDR, some illustrative reviews are below. Some of these or aspects of these may be done in-house by the investor, others may be out-sourced to experts and professionals: • Business • Market • Accounting • Tax and Legal • Technical • HR
  22. 22. VentureBean Consulting Private Limited An Illustrative Sales Quality Review.. • Illustrative indicative parameters, for DDR – Sales Quantity – Quality of revenue - in terms of product/service/vertical/location etc. – Average revenue per employee – Number of customers, number of high value customers – New customers added – Customers lost – Pipeline customers – Customer acquisition strategy 22
  23. 23. VentureBean Consulting Private Limited Value Creation Review • Investment should have potential for value creation not value depletion; i.e. beyond – Top line (revenues) – Bottom line (profits) and – Cash flow • To understand financial and non-financial aspects of business and investment into business and impact on growth and sustainability 23
  24. 24. VentureBean Consulting Private Limited At the start Kinds of Investors Project Requirement Building the BPlan Summary Agenda 24 24
  25. 25. VentureBean Consulting Private Limited A BUSINESS PLAN COMMUNICATES… • Many times, a reader’s perception of your business/idea will be based on the business plan you prepare • Different persons will look for different things, a banker will check if a loan can be repaid, the VC will look for value multiples on exit • Substance and form matter, more so, when hundreds of plans are reviewed 25
  26. 26. VentureBean Consulting Private Limited 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? 26
  27. 27. VentureBean Consulting Private Limited AT THE STARTING POINT • Different persons may view the business plan differently • Try to understand background and experience of individual/group to whom plan is shown 27
  28. 28. VentureBean Consulting Private Limited AT THE STARTING POINT Before starting on preparing the business plan, think through the following: What are you looking for? PUT YOURSELF IN THE READER’S PLACE • What is the reader looking for in the business plan? • What is the message you are trying to convey? • Is there some common ground between the two? Or is there a disconnect? 28
  29. 29. VentureBean Consulting Private Limited AT THE STARTING POINT • Just because someone rejects or scoffs at your idea, does not mean it is bad • Try to take some learnings from rejections 29
  30. 30. VentureBean Consulting Private Limited BUSINESS PLAN SET … Illustrative • Word document (15 – 25 pages) • Presentation deck (15 – 20 slides) • Spreadsheet with financials (Balance Sheet, Profit and Loss Account, Cash Flow; 3-5 years) • You may like to keep in hand a separate executive summary or summary business plan as an initial teaser document (3-10 pages) 30
  31. 31. VentureBean Consulting Private Limited 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 31
  32. 32. VentureBean Consulting Private Limited BUSINESS PLAN • The set should be self speaking: ie with limited clarification required (including with regard to abbreviations & technical terms) • 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 share, rather think about what your potential reader may want to know 32
  33. 33. VentureBean Consulting Private Limited BUSINESS PLAN • Plan on format of report and how data, information, analysis, comments etc. are to be presented – 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 33
  34. 34. VentureBean Consulting Private Limited 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 34
  35. 35. VentureBean Consulting Private Limited CONTENTS : Illustrative • Table of contents • Executive summary • Sections/chapters/paras • Summary/conclusion • Appendix of abbreviations, references, other annexures • Graphs, tables, figures - numbered and labeled 35
  36. 36. VentureBean Consulting Private Limited CHAPTERS - Illustrative • Company and background information • Management team, organisation structure • Business idea, strategy and implementation plan • Marketing strategy; sales plan • Financial details; funding strategy • Other information such as implementation schedule, statutory environment applicable etc. 36
  37. 37. VentureBean Consulting Private Limited CHAPTERS - Illustrative • Company and background information – Background history if existing company; current status – Rationale for existing business or new start up, value proposition etc. – General industrial environment of business; competitive landscape in brief, brief background of promoters 37
  38. 38. VentureBean Consulting Private Limited CHAPTERS - Illustrative • Company and background information – Vision and mission statement – Key business drivers and key constraints; SWOT and business strategy – Plan in terms of short term/immediate, medium-term and long term goals – Other key information to make initial background information complete 38
  39. 39. VentureBean Consulting Private Limited CHAPTERS - Illustrative • Management team, organisation structure – Experience and qualification of promoters and key team – Roles and responsibilities – Organisation structure – Any key organisation/HR policies 39
  40. 40. VentureBean Consulting Private Limited CHAPTERS - Illustrative • Business idea, strategy and implementation plan, including inter-alia: – Vision, mission – Product/service offered – Operational details – USP(unique selling point); barriers to competition – Differentiator – Brand building plan – Social media plan – Strategy to handle competition 40
  41. 41. VentureBean Consulting Private Limited CHAPTERS - Illustrative • 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 41
  42. 42. VentureBean Consulting Private Limited CHAPTERS - Illustrative • Marketing plan – Target market size; TAM (total addressable market) – Market research details – Customer profiles; existing, potential/pipeline – Marketing strategy – Pricing strategy 42
  43. 43. VentureBean Consulting Private Limited CHAPTERS - Illustrative • 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) 43
  44. 44. VentureBean Consulting Private Limited CHAPTERS - Illustrative • 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 – Funding plan and strategy 44
  45. 45. VentureBean Consulting Private Limited CHAPTERS - Illustrative • 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 45
  46. 46. VentureBean Consulting Private Limited 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 46
  47. 47. VentureBean Consulting Private Limited BUSINESS PLAN • Points to consider – You must believe in the idea to sell it – Homework to be done before hand, adequate knowledge required to be demonstrated – Credibility is important, ie if caught with one falsehood, nothing said would be believed 47
  48. 48. VentureBean Consulting Private Limited UPDATES/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 floating around 48
  49. 49. VentureBean Consulting Private Limited At the start Kinds of Investors Project Requirement Building the BPlan Summary Agenda 49 49
  50. 50. VentureBean Consulting Private Limited IN SUMMARY: At the starting point As an entrepreneur • What are your strengths/weaknesses? • What do you like to do or think you like to do? • What do you think you are good in? • How would you bring this into your business? As a business • Have you thought about the business model? • Have you thought about the soft issues such as team dynamics, roles and responsibilities, leadership plan? • Have you thought about your business plan structure? • Have you thought about who will read/review your plan? 50
  51. 51. VentureBean Consulting Private Limited Some more points on the TO-DO list • Plan for the 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, renting space etc. Additional information/articles/resources at: • www.slideshare.net/anjanavivek : Content in TOP 4% of Viewed in 2013 • http://www.linkedin.com/company/venturebean- consulting-private-limited 51
  52. 52. VentureBean Consulting Private Limited Thank You! 52

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