TSH Masterclass - Business Plans: Don't Be A Gnome


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The key points and highlights from Anastasia Kovaleva’s presentation “Business Plans: Don’t Be A Gnome!”

Internally, business plans develop and validate an idea. It is an essential tool to track progress of the business.

Your business plan also provides your shareholders (investors, debt providers, co-founders, and customers) an idea of how you intend to take care of their investment in your business.

The key components of your business plan are: Market Positioning (identification of an unsatisfied need), Product or Service (your solution to satisfy the need), Market Strategy (your competitive edge or unfair advantage), Operations (your business model), Team (your human capital / engine room), and Financials (your bottom line).

It is more than just writing a glossy book, the most important part is doing detailed research to convince your readers that your business is feasible.

Anastasia’s presentation was part of TechStartHub Startup Masterclass: How to make sure you’re investment and exit ready held last November 8 at University College London – Roberts Building. The next masterclass, Expert Advice on Website Content Strategy, Analytics, and Community Building, will be held on November 28 at the Innovation Warehouse.

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TSH Masterclass - Business Plans: Don't Be A Gnome

  1. 1. Business Plans:Don’t be a gnome!
  2. 2. VIDEOhttp://www.youtube.com/watch?v=TBiSI6OdqvA&feature=player_detailpage
  3. 3. The “how” matters...GNOMEVIDEO They won‟t always come if you build it...
  4. 4. Contents1. Purpose of a business plan2. The “thinking behind”3. What to include4. „How to‟ tips and resources
  5. 5. Purpose of a business plan• Internal • Develop / validate an idea • Track progress• External One doc but may need o Investors tweaking for different audiences o Debt providers o Co-founders o Customers
  6. 6. The “thinking behind” (1/2) Before writing the glossy book thinkQ1 Is there an unsatisfied need? Do you have a way of effectively addressing this need? through the basics o OR is there a need you can satisfy better than alternatives?Q2 What is your target market prepared to pay you to satisfy the need? What will it take to get them to switch from using an alternative? o OR is there another way to monitise? (e.g. advertising)Q3 Do economics work once the business is “up and running”?
  7. 7. The “thinking behind” (2/2)Q4 How long much ££ and time does it take to reach “up and running”? What are the risks?Q5 Do overall economics work on a reasonably short timeframe (2-3 years)?Q6 Do you have what it takes (people, expertise, experience, ££) to get from point A to point B? Can you get what you lack elsewhere?Q7 Are you committed enough (be honest with yourself)? If you answered YES to all of the above – you are now ready to write a business plan!
  8. 8. Elevator pitch This will be refined after doing proper research but important to have• By now you should have something along the lines of... basics early • For [target customers] • Who have [compelling reason to buy] • Our product is a [new product category / challenger] • That provides [key benefit (which solves problem)] • Unlike [competitor / substitutes] • We have [key point of differentiation] 30-60 seconds to generate interest Source: Crossing the Chasm
  9. 9. Key components• Market positioning -- NEED• Product / services -- SOLUTION• Market strategy -- UNFAIR ADVANTAGE• Operations -- BUSINESS MODEL (rest of)• Team -- ENGINE ROOM• Financials -- BOTTOM LINE Show you have done your research (market, costing, customer needs/demads/price sensitivities)
  10. 10. Market positioning • Solve a significant problem? • Robust market, margin, and• Size + growth of addressable market moneymaking characteristics? ($50m+, 20%+ growth, 40%+• Porter‟s 5 – market attractiveness margins) (margins, trends)• Target market defined & described - – how will you reach them?• Competition / substitutes – never say “no competition”!• Market dynamics / likely response to entry from incumbents• Broader picture – economy, regulations geopolitics, culture
  11. 11. Product / service• Product / service• Pricing• What makes it different?• Is it ready? What is still required to develop?• Need to have defensible barriers o Technology (patents, etc) o Domain knowledge o Network effect o Partnerships o Culture / loyalty
  12. 12. Market strategy• Describe how plan to reach target customer ahead / better than of competition o WOM / direct marketing / SEO• What is your unfair advantage? o First mover o New category o Price leader (efficiency? volume?) o Quality leader (domain expertise? premium?) o Niche (knowledge of niche)
  13. 13. Operations• How different is business model from competition? o Direct vs. indirect o In-house vs. outsource vs. crowd-source o Franchise vs. owned o Auction• Other components o Location o Offices o Logistics o Manufacturing
  14. 14. Team• Demonstrate to boost investor confidence o Expertise (sector, knowledge of customer base, technical) o Experience (startup, BD) o Passion o Personality (ability to attract talent / lead) o “team” experience (overcome obstacles)• Address any gaps in skills / resources o Make sure have “core” in-house (e.g. technology expertise) o Be clear on what is missing
  15. 15. Financials It’s easy to underestimate costs / overestimate revenues / get timing wrong here – get reader comfortable by showing you have done research (comparable businesses, quotes from suppliers, survey of customers)• Projections o Income statements – accounting profit, EBITDA, how long takes to get to break even, show until “exit” (e.g. 5 years) o Cash flow – “king”, timing matters, monthly typically for Yr1 and Yr2, show seasonality, working capital requirements, capex• Funding o Be clear on how large is the gap / how plan to plug it AND repayo Exit o When / how (IPO, trade, PE) o How much (exit multiple, resulting IRR, cash flow x)
  16. 16. Tips and resources• The Great British Business Show – Nov 17/18 (free)• Business Link – www.businesslink.gov.uk• Smarta – www.smarta.com• Business plan software – www.paloalto.com• Business model inspiration – www.businessmodelinspiration.com• Business plan templates – www.bplans.com• For random questions – kovaleva.anastasia@gmail.com