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.

1. Business Plan for early stage companies
27-Apr-2013
TiE Institute Knowledge Series
TiE 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 investor
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3. Agenda
 Introduction : what & why of business-plan
 Identifying the problem
 What's your solution
 Competitors and Differentiators
 Estimating Market Size
 Projecting Revenue
 Estimating Expenses
 Growth Strategies for 12/18 months
 Present your business-plan
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4. Session Format
 Each session 30 minutes including Q&A
 Followed by 15 minutes for you to work on your B-plan
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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 months
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6. Why make a Business Plan?
 Gives you a sense of direction and a baseline
 Benchmark of planned route vs. diversions
 BTW Diversions aren't 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 decisions
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7. How?
Hopefully you'd learn the answer of How in this session
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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 customer
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9. What's 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 point
of the identified segment
 Hit the market early with the product & iterate faster
 Understand minimum viable product
 Can you communicate your product/service in one
simple sentence conveying the value
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10. Competition, Differentiators & G2M
 Know your competition. There is nothing worthwhile which
doesn't have competition
 Do not think only in terms of direct competition & similar
products
 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 customer
in mind
 Focus on communicating value of your product/service offers
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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 we'd 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 buy
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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 & given
your resource constraints
 Understand the sales cycle & sales funnel
 How many of these prospects would convert into sales
 Now arrive at sales figures
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TiE Institute Knowledge Series

13. Key financial concepts
Key concepts Discussion terms
Revenue/ Sales Sales Unit / Quantity
Sales Price
Costs Fixed Costs
Variable Costs
Capital costs - expenditure
Profit Gross Profit
Profit before tax
Profit after tax
Cash 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 are
bootstrapping)
 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 increased
sales/deliveries/procurement/capacity etc
 Understand Cash flow, how to stretch every rupee – negotiate for early
receipt from customer and late payments to vendors
 Never hurts to run it thru people who have done it before
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15. Plan for 6-12-18 months
 Your Product, market, revenue & expenses – everything would
change over a period of time
 What took you from 0-10 customer is not what would take you
from 10-100 and so on...
 Plan for 12-18 months rolling – but revisit the numbers every 3
months minimum, if not earlier
 Make assumptions for hiring, attrition, competition, regulatory,
other risks
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16. Putting it all together
 Present your business-plan
 Ask audience to critique based on today's learnings
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17. THANK YOU
Follow @tiemumbai for entrepreneurial insights
in 140 characters
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