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Business Plan Workshop


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The following presentation is a version from a business plan development workshop conducted by Biruwa Ventures at Thames College, Kathmandu on January 11, 2012. Biruwa conducts similar works on issues related to business in colleges across Nepal.

If you are an entrepreneur in Nepal, this is a must see presentation for you.

Published in: Business, Economy & Finance

Business Plan Workshop

  1. 1. Presented by Biruwa Ventures
  2. 2. WhyEntrepreneurship?
  3. 3. Why start a business in Nepal? • Nepal is a virgin market – unmet demand • Nepal is full of problems – look at this as an opportunity • More educated young people, fewer jobs • Entrepreneurship is not work!
  4. 4. Risk vs. Reward • Starting a business is risky • Linear returns vs. Exponential returns – socially, financially, personally… • Be insane, never be scared of failure “You won’t succeed, unless you try” - Michael Jordan
  5. 5. Rise of an opportunity • Change is good for business – Social – Demographic – Economic – Political – Technological – Industry/market – New technology or innovation
  6. 6. An Idea GenerateEvolve Assess
  7. 7. The Business Plan
  8. 8. What is a business plan? • It is NOT a report • It is the PROCESS of finding out how to develop your business venture • A business plan describes all the parts of the company necessary to make money
  9. 9. Why Write One?• Plots a course • Reality check – Helps you think long term – Identify strength and weaknesses – where you will need help• Feasibility study – Is your idea viable? • Implementation plan – Use it as a guide• Become a better – Keeps you honest / decision maker accountable – Helps you anticipate – Creates a time line problems – Will increase your knowledge • Selling tool – Use it to sell to your potential investors, partners, customers and suppliers
  10. 10. Where to begin?
  11. 11. Business Plan Research • Where to start? – Talk to other entrepreneurs, business leaders, professors, friends, etc. – Secondary data • Newspaper, reports, census, database, etc. – Primary Data • Questionnaires, focus groups, product sampling, company data etc.
  12. 12. Business Plan Outline1. Table of Contents 6. Operational Plan2. Executive Summary – Supply Chain – Production &3. Product Overview Distribution – Operations4. Industry Overview – Human resources – Industry trends 7. Financial Plan – Rules & Regulations – Competitive analysis – Cost Estimates – Cash flow statement5. Marketing Strategy – Income statement – Target Market – Balance sheet – Marketing Channel – Pricing Strategy 8. Appendix
  13. 13. Executive Summary• What is it? • Why is it important? – Summary of business – Will help capture interest opportunity and support of your readers – Usually around 2-pages – Usually an investor will – Demonstrates your read this section of the knowledge of the business document first and decide if it is worth – Proves that any spending more time on it investment in the venture will yield good return • Complete this section at the end
  14. 14. What to include in the Executive Summary?• Introduce the • Operational Highlights business opportunity – Critical legal issues and vision for your – Supplier summary business – Management team overview• Marketing Highlights – Product/Service • Financial Highlights distinctive features – Summary of finances – Target market and projections summary – Equity investment of – Competitive analysis owners – Key marketing strategies
  15. 15. Case study: Microbrewery • Create a brew-pub to serve the beer enthusiast market in Kathmandu • Marketing Highlights – Distinctive taste – Focus on experience, quality, taste – Beer enthusiasts and budget conscious customers – Large brewers (Gorkha Brewery, foreign beers, etc.) – Strict government Regulation
  16. 16. The Product
  17. 17. Product: the Five W’s • What you should know: – Who are you selling to? – What are you selling? – Where do you sell? – When do you sell? – Why and how do you make money?
  18. 18. Product Description• Why is it important? • What to include? – Communicating your – What are your product completely and product’s/service’s concisely unique feature? – Fill gaps identified in – What are the value the market added features? – How is your product – Identify and use your different? Value Proposition – History of the product in the market
  19. 19. Product Description (Microbrewery) • We will deliver premium quality draft beer inside the bar and sell to beer enthusiasts at affordable prices • Better tasting beer, variety, unique bar atmosphere • More options for customers • Different taste from competition, constantly changing - evolving
  20. 20. The Industry
  21. 21. Industry Trends• Why is it important? • What to include? – Understand current – Changing Environment economic and industry trends • Social; Economic; Demographic; – Identify if your product Environmental; will meet customer needs Technological; & Political – Past, present and future – Provides you strategic industry trends information to make your business competitive – Key success factors in your industry – Assists you in – Barriers to entry, size of determining the longevity industry of the market
  22. 22. Industry Trends (Microbrewery) • Large number of young professionals (20-35 years in age) • Increasing disposable income • Rising consumption of micro- brews in U.S. and Europe; New entry into Indian market • Customers seeking variety • Government action against larger corporations • Dominant position of Gorkha Brewery in market (80% market share) • Increasing market share of imported beer
  23. 23. • Rs. 31,00,00,000 worth of alcoholic products imported in Nov/Dec 2011• Rs. 19,00,00,000 of liquor imports last fiscal year
  24. 24. Operating Regulations• Why is it important? • What to include? – Includes all application – Filing dates government regulations – Restrictions required to operate your business – Industry specific considerations – You have to ensure that your business – Permits required meets these – Qualification required regulations – Quality assurance – Insurance
  25. 25. Operating Regulations (Microbrewery) • Liquor permits / license • Yearly licensing fees • Meeting quality standards • Regular testing • Can you follow certain international standards to assure customers?
  26. 26. Competitive Analysis• Why is this important? • What to include? – Helps you differentiate – Years in business your business – Product/service – Helps identify areas / description customers not being – Product/service targeted differentiation – Helps you understand – Customer profile what the market likes – Pricing of dislikes – Strengths/weaknesses – Identify threats – Opportunity/threats to your business
  27. 27. Competitive Analysis (Microbrewery) • Gorkha Brewery (80% market share) – 50-50 Khetan Group and Carlsberg Group – Large control in market • Barriers to entry – financial, supply chain, distribution, legal • Price in market higher than consumer preference - Rs. 200+ a bottle (higher – Rs. 300+ in restaurants) • Create a brand (Sam Adams Beer)
  28. 28. The Marketing Mix• What is it? • Why is it important? – Methods you choose – A new business to communicate with should create your target market awareness among – It is a well-defined customers to plan of action that generate revenue includes timing, – The timing of costs, and expected promotional methods return of chosen will have an direct promotional methods impact on cash flow
  29. 29. Target Market• Why is this important? • What to include? – Helps you forecast the – Age range sales and cash flow projection – Income range – Determines whether – Gender there are enough – Location customers in the market to make your – Average / frequency of business profitable purchase – Helps you make critical – What need does your and focused marketing product fulfill? decisions – Who influences their purchasing decision
  30. 30. The Marketing Strategy
  31. 31. Target Market(Microbrewery) • Young professionals: 20-35 yrs • Medium to high income (Rs. 20,000 and above) • Mainly male • Do women prefer fruiter beers? • Near work areas, offices • Nepal 1.2 lt per annum (Kathmandu 3.5 lt) = total 3,21,00,000 lt • Total market value of beer market in Kathmandu = Rs. 3,50,00,000 (Rs. 3.5 arab) • Need for variety and affordable prices
  32. 32. The Marketing Mix - Channels• Why is it important? • What to include? – A description of how and – How to market? where you plan to sell your product – Different costs associated with marketing channels – You must match your location and distribution – What is the marketing strategy based on buying importance each of the patterns of your customers channels? – Always consider your – Potential for future growth customers preferences – Traffic flows at the before making a move potential location – How will your method affect: sales, services, promotion, timing, economics?
  33. 33. The Marketing Mix – Channels (Microbrewery) • Print vs. Social media • Target areas near offices or existing bar areas like Thamel or Jhamisikhel • Usually works near colleges (KU, Manipal) • Sponsor events, get endorsements • Need areas with heavy foot traffic
  34. 34. The Marketing Mix - Pricing• Why is it important? • What to include? – This is how you will – Know your costs: labor, position yourself in the cost of materials, market against your overhead, profit margin competitors – Pricing considerations: – Price is a function of your Low, Medium, or High costs, competition, and your customers – Customer’s perception of value – This will determine your profitability – Discounting (trade or volume) – An effective pricing strategy can help you enter the market quickly
  35. 35. The Marketing Mix – Pricing (Microbrewery) • High capital equipment cost Rs. 8 lakh for equipment from China • Government licensing fees • Sell more, lower margins vs. Sell less, higher margins • Price lower than Rs. 100 per pint (473 ml) • Make premium brews for high end customers, make higher margin
  36. 36. The Operational Plan
  37. 37. Supply Chain• Why is it important? • What to include? – Can you find necessary – Pricing suppliers and – Trade discounts equipment? – Supply shortages – Helps you identify suppliers that best fit – Exclusive product your business needs rights – Answers if you need – References backward linkages – Back up suppliers – How much inventory will you need?
  38. 38. Supply Chain(Microbrewery) • Chinese suppliers vs. local fabrication • Regular maintenance • Finding key ingredients for quality brew – Keeping supply local vs. importing (question about quality) – Malt extract (liquid or dried), Hops, Specialty grains, Yeast • Maintain exclusive rights to ingredients
  39. 39. Production / Distribution Plan• Why is it important? • What to include? – Outlines the method of – Production methodology production & distribution – R&D requirements – Ensures that you have considered all components – Cost analysis (direct and of the production process indirect overhead) – Impacts your physical – Time requirement location, human resources, – Equipment and plant licensing, etc. requirement – The ability to protect your – Facilities description intellectual property, patents, trademark – – Leasehold improvements impacts competitive – Warehousing requirements advantage – Sub-contracting arrangements
  40. 40. Sierra Nevada Brewing Co.•Established in 1980 with $50,000 loan –produced 950 barrels of craft beer•In 2010, it produced 786,000 barrels of beer•6th largest brewing company in United States
  41. 41. Production / Distribution Plan (Microbrewery) • State of the art-equipment, to maintain utmost sterility during production, cooling and storage • Creating a recipe for great tasting beer; experiment, give free tasting • First distribute at bar, consider bottling options and distribution at other retailers and bars • 6-months to set up facility, 6- months to brew the first sellable batch • Build storage facility to keep brews
  42. 42. Human Resources• What is it important? • What to include? – Forces you to do a skills – Organizational structure inventory of yourself and and staffing plan (Full develop a plan to “fill the time & Part time) gaps” – Salaries and benefits – You have limited time, do what you are best at and – Job description find help – Roles and responsibilities – If there is a need to hire, – Service and employee factor that into the cost contracts structure – Future HR plans – A strong management team is extremely – Business skills audit important for potential investors
  43. 43. Human Resources (Microbrewery) • Need someone with brewing experience, take training overseas? • Bar tenders also work as brewers; can share knowledge with customers • Give training to brewers • Find someone with distribution/logistics experience • Account professional brewer into cost structure
  44. 44. The Financial Plan
  45. 45. Financial Statements• Why is it important? • What to include? – Determines your – Balance sheet business’ liquidity • Current assets, fixed (Balance Sheet) assets, other assets • Do you have enough • Current liabilities, long- current assets to meet term liabilities, your current liabilities? shareholders equity • What is your debt to – Income statement equity ratio? • Sales/Revenue – Provides overall profitability summary • Expenses (variable and over a period of time fixed) (Income Statement) • Profit/Loss • Tax owed
  46. 46. Cash Flow Statement• Why is it important? • What to include? – Shows the actual flow of – Sources of cash: sales, money in the business loans, equity investments – Determines if the – Uses of cash: expenses to business is viable be paid, start-up cost, – Helps you make – Balance (Monthly receipts purchasing and hiring minus disbursements) decisions – Factors to consider: – Tells you if you need a seasonality, return on loan or cash injection promotions, payment items
  47. 47. Financial Estimates (Microbrewery) • Start-up costs – Build-out cost (Building, bar, tables, chairs, electrical, refrigerator, etc.) = Rs. 25 lakh – Capital Equipment (brewing equipment, barrels, keg fillers, lab equipments, etc.) = Rs. 20 lakh – Starting Inventory (barley malt, specialty grains, hops, yeast, water, etc.) = Rs. 15 lakh for first year – Labor Cost (1 brewmaster, 3 bartenders, 1 manager, 3 waiters, 1 help) = Rs. 16 lakh for first year • Total Start-up cost = Rs. 76 lakhs
  48. 48. Wrapping Up
  49. 49. DILBERT!
  50. 50. Building your Company Business Size of the Customer CustomerIdea Plan Opportunity Discovery Validation Theory Implementation Source: Steve Blank – The Lean LaunchPad
  52. 52. VALUE PROPOSITIONS images by JAM
  53. 53. CHANNELS images by JAM
  55. 55. REVENUE STREAMS images by JAM
  56. 56. KEY RESOURCES images by JAM
  57. 57. KEY ACTIVITIES images by JAM
  58. 58. KEY PARTNERS images by JAM
  59. 59. COST STRUCTURE images by JAM
  60. 60. key value proposition customer activities relationships key customerpartners segments cost revenuestructure key streams resources channels images by JAM
  61. 61. images by JAM
  62. 62. Case Study & Presentation• Executive Summary • Supply Chain• Product Overview • Rules & Regulation• Industry Overview • Production &• Target Market Distribution• Marketing Strategy • Human Resources – Marketing Channel • Financial Estimates – Pricing Strategy – Cost Estimates – Breakeven analysis – Cash flow statements