Business Plan


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This presentation describes the structure of a business plan and the contents to put in each section.

Published in: Economy & Finance
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Business Plan

  1. 1. Business Plan for VC Funding
  2. 2. Purpose of a Business Plan <ul><li>Provides clarity of thought and purpose </li></ul><ul><li>Introduces Business Model </li></ul><ul><li>Introduces the company and the team </li></ul><ul><li>Attempts to persuade investors </li></ul><ul><li>Highlights risks and challenges </li></ul><ul><li>Serves as an entry point for further discussions </li></ul>
  3. 3. Target Group - VC <ul><li>VC firms see many plans </li></ul><ul><li>Usually smart and knowledgeable </li></ul><ul><li>Referrals – very critical </li></ul><ul><li>VC’s objective to assess quantum, type, and manageability of risks </li></ul><ul><li>Hence, business plan is an important document though not the “be-all, end-all” </li></ul>
  4. 4. Key elements of a plan <ul><li>Explain business model in simple terms </li></ul><ul><li>Fit the plan to the company </li></ul><ul><li>Be credible and informative </li></ul><ul><li>Do your homework; Know your market and competitors </li></ul><ul><li>Highlight Risks and steps to overcome the risks </li></ul><ul><li>Execution Risk as critical as market or technology risk </li></ul>
  5. 5. Business Plan Contents <ul><li>Executive Summary </li></ul><ul><li>Company Description </li></ul><ul><li>Product/Service </li></ul><ul><li>Market Analysis </li></ul><ul><li>Marketing Plan </li></ul><ul><li>Operations Plan </li></ul><ul><li>Financial Plan </li></ul><ul><li>Management Team </li></ul><ul><li>Exit Strategy </li></ul><ul><li>Risks </li></ul>
  6. 6. Executive Summary <ul><li>The most important section of the plan, often the only read section! </li></ul><ul><li>Compact version of the big plan </li></ul><ul><li>Stick to hard facts; no room for exaggerated optimism </li></ul><ul><li>Limit to a concise summary; no more than a couple of pages </li></ul><ul><li>Summary is the prelude to further meetings </li></ul>
  7. 7. Executive Summary (2) <ul><li>Summary should answer questions: </li></ul><ul><ul><li>What sort of company is it? </li></ul></ul><ul><ul><li>What’s the product/service and what’s special? </li></ul></ul><ul><ul><li>Who are the managers? </li></ul></ul><ul><ul><li>How much money do you need? In what stages? What will it be used for? </li></ul></ul>
  8. 8. The Company Description <ul><li>A brief history of the company </li></ul><ul><li>How you started? What was the original idea? </li></ul><ul><li>Share your mistakes and what you learnt; adds credibility </li></ul><ul><li>Share financials; actual vs. planned; if applicable </li></ul><ul><li>Should lead up to the discussion as to where you intend to go from here </li></ul>
  9. 9. Product/Service <ul><li>What is your value proposition? </li></ul><ul><li>How are you going to solve their problem better than your competitor? Than what they are doing now? </li></ul><ul><li>Any patent protection possible? </li></ul><ul><li>Technology details: defensible? Unique? Sustainable competitiveness? </li></ul><ul><li>Time to market? Ability to execute? </li></ul><ul><li>What prevents someone else from doing it more cheaply? </li></ul>
  10. 10. Market Analysis <ul><li>Who is your target market? </li></ul><ul><li>Profile of the people? What is their behavior pattern? </li></ul><ul><li>Any complementary products or services? </li></ul><ul><li>How large is your market? Growth rates? </li></ul><ul><li>What are the trends in the market? </li></ul><ul><li>How do you see the market evolving? </li></ul>
  11. 11. Marketing Plan <ul><li>Detailed note on how you will convert large market into revenue </li></ul><ul><li>Provide different marketing tactics – cheapest to most expensive </li></ul><ul><li>Costs and strategy of acquiring customers </li></ul><ul><li>Sales and Marketing strategies </li></ul><ul><li>Respect your competitors </li></ul><ul><li>Risks and Unknowns </li></ul><ul><li>Strategies for reducing risks </li></ul>
  12. 12. Operations Plan <ul><li>The nuts and bolts – how will you make it? How will it be available to your customers? </li></ul><ul><li>What’s involved in running the company? </li></ul><ul><li>Location, equipment needs </li></ul><ul><li>Labor requirements </li></ul><ul><li>Risks at different levels and how best to mitigate risks </li></ul>
  13. 13. Management Team <ul><li>Provide CVs of the key members </li></ul><ul><li>Relevance of past experience </li></ul><ul><li>Start-up experience </li></ul><ul><li>Market creation experience </li></ul><ul><li>Team dynamics – very critical when more than one founder </li></ul><ul><li>Clarity of roles </li></ul><ul><li>GREAT TEAM + MEDIOCRE PLAN > </li></ul><ul><li>MEDIOCRE TEAM + GREAT IDEA </li></ul>
  14. 14. Financial Plan <ul><li>Detailed numbers not the key </li></ul><ul><li>Assumptions very critical </li></ul><ul><li>Key drivers of revenue </li></ul><ul><li>Realistic projections </li></ul><ul><li>Exercise prudence </li></ul><ul><li>Benchmark your model </li></ul><ul><li>Revenue estimate: bottoms-up </li></ul><ul><li>Expenses – past and/or industry average </li></ul>
  15. 15. Funding <ul><li>Capital – internet time delivery </li></ul><ul><li>Brand building </li></ul><ul><li>Scaling the business </li></ul><ul><li>Funding based on 18 – 24 months projections? Till customer traction? </li></ul><ul><li>Choose funding partner with care – it’s a marriage! </li></ul>
  16. 16. Exit Strategy <ul><li>Exit strategy for the investor; not necessarily the entrepreneur </li></ul><ul><li>Exit could be merger, acquisition, or IPO </li></ul><ul><li>Each strategy should be plausible and defensible </li></ul>
  17. 17. Venture Funds Today <ul><li>Early stage investing: Only in Technology Product companies with strong background of entrepreneurs </li></ul><ul><li>Mid-Late stage investing: More the norm, also more common for service companies </li></ul><ul><li>Many Indo-US companies getting funded; even by Indian VCs </li></ul>