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.

1. Presented by Biruwa Ventures
www.biruwa.net
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2. Why
Entrepreneurship?

4. 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!

5. 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

6. Rise of an opportunity
• Change is good for
business
– Social
– Demographic
– Economic
– Political
– Technological
– Industry/market
– New technology or
innovation

7. An Idea
Generate
Evolve Assess

8. The Business Plan

9. 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

10. 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

11. Where to begin?

12. 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.

13. Business Plan Outline
1. Table of Contents 6. Operational Plan
2. Executive Summary – Supply Chain
– Production &
3. Product Overview Distribution
– Operations
4. Industry Overview – Human resources
– Industry trends
7. Financial Plan
– Rules & Regulations
– Competitive analysis – Cost Estimates
– Cash flow statement
5. Marketing Strategy – Income statement
– Target Market
– Balance sheet
– Marketing Channel
– Pricing Strategy 8. Appendix

14. 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

15. 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

16. 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

17. The Product

18. 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?

19. 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

20. 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

21. The Industry

22. 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

23. 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

24. • 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

25. 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

26. Operating Regulations
(Microbrewery)
• Liquor permits / license
• Yearly licensing fees
• Meeting quality
standards
• Regular testing
• Can you follow certain
international standards
to assure customers?

27. 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

28. 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)

29. 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

30. 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

31. The Marketing
Strategy

32. 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

33. 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?

34. 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

35. 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

36. 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

37. The Operational
Plan

38. 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?

39. 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

40. 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

41. 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

42. 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

43. 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

44. 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

45. The Financial Plan

46. 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

47. 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

48. 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

49. Wrapping Up

50. DILBERT!

51. Building your Company
Business Size of the Customer Customer
Idea
Plan Opportunity Discovery Validation
Theory Implementation
Source: Steve Blank – The Lean LaunchPad

52. CUSTOMER SEGMENTS

53. VALUE PROPOSITIONS
images by JAM

54. CHANNELS
images by JAM

55. CUSTOMER RELATIONSHIPS
images by JAM

56. REVENUE STREAMS
images by JAM

57. KEY RESOURCES
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58. KEY ACTIVITIES
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59. KEY PARTNERS
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60. COST STRUCTURE
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61. key value proposition customer
activities relationships
key customer
partners segments
cost revenue
structure key streams
resources channels
images by JAM

62. images by JAM

63. 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