Case Study: Making an Investor Business Plan


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This is a case study of the process employed by the Schweiger & Associates team to create an investor business plan for one of their clients.

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Case Study: Making an Investor Business Plan

  1. 1. Case Study:Making an Investor Business Plan Challenges facing the client We brainstormed with the entrepreneur and his team to answer some basic business related Our client, an entrepreneur and questions. Some of them are venture capitalist, was passionate mentioned below. about a new business concept, had done some secondary research and  What is the most compelling had prepared a draft business plan. value proposition of this He envisioned that China and US business concept? It is important for S&A to could largely benefit from his understand the vision and business service and hence several  What value (tangible and intangible) will this service bring passion of the entrepreneur investors will back it up once they are presented with a solid business to customers and promoters and be convinced about the plan. He believed that his research alike? concept to write a was thorough and that he needed a  What are the sources of his compelling business plan professional company to translate his research and how current is the for the investor. thoughts, ideas, and research into an information? executable business plan that could be presented to investors for funding.  Why target China first? Why not Thus, he was referred to the any other country? Schweiger & Associates (S&A) team  Have they discussed with any to help him overcome his challenge. prospective customer if they would be interested in this Our Initial Assessment service and how much will they be willing to pay for it? In a situation like this where  What are some of the personal entrepreneurs are involved, it is and professional reasons that important for the Schweiger & the entrepreneur is passionate Associates (S&A) team to about the business? understand the vision and passion of  What in his opinion should be the entrepreneur on venturing into the market entry strategy and this business. Other than having a why? good business idea, it is important that the entrepreneur believes in his  Are there any investors that he own idea and is committed to it. Also, has in mind that he wants to it was important for the S&A team to approach first and why? be convinced about the concept to write a convincing plan for investors. ©2010 Schweiger & Associates  17 Sweetspire Dr. Elgin, SC 29045  803.622.2659 1
  2. 2. After spending several hours Project Scope:together over two sessions, the client  Validate draft business planand the S&A team concluded that: through secondary and primary research  The business concept was innovative enough that it’s worth  Prepare a concise and everybody’s time to pursue this actionable business plan and 5 further. It was important for the year financial plan S&A team to believe in the  Advise on appropriate market business concept to deliver a entry strategies good quality product. Our intent was not to just make a business  Present a financial package plan; we wanted to make this proposal for investors business happen!  Research and profile key investment firms to target  The existing research material was dated. We needed to get current information. Hence, it Market Validation was important to conduct secondary and primary research Since the S&A team believed in the and get direct customer viability of the business concept, we feedback. There is nothing more dived into understanding the market Our intent was not convincing than the customer further to validate the below to just make a saying that they would like to information: have this service and that they business plan; we will pay for it.  Market size, revenue, wanted to make this  It was required to research on profitability, key players, growth business happen! investment firms that will be drivers, key success factors, and interested in supporting a more business venture like this one  Market pain areas and and get their relevant contacts. challenges that could justify the need for this business serviceDeliverables Finalized  Estimate the tangible and intangible benefits that the valueOne of our key tasks at chain will gain by the business serviceSchweiger & Associates is tohelp businesses understand Since the initial target market waswhat they need to make their China, there were several challengesbusiness grow profitably. that we had to overcome.What are the kinds of information,  Information about the currenttools, and processes that they need dynamics of the Chinese marketto be armed with to succeed? was not openly written about orFinalizing the deliverables is the readily available. Also, a lot ofmost critical aspect of any project so information was in Chinesethat the expectations between each which made the task even moreteam are set appropriately to ensure difficult.complete satisfaction of ourcustomer.©2010 Schweiger & Associates  17 Sweetspire Dr. Elgin, SC 29045  803.622.2659 2
  3. 3.  Being a new concept, there was Even though the interview process no market precedent of anybody increased our estimated timeline for trying this concept and hence this project, the client understood the there were "technically" no rationale for our actions and realized competitors. We had to think and the efforts that were being made to brainstorm about who could do a thorough job. It is always better become a potential competitor to do the job right first time around once the business concept was instead of doing patch work later! proven and was viable.  Since the business concept was The primary research helped the It is always better business plan drastically since it to do the job right a more efficient way of achieving specifically addressed the areas that the same result, the challenge first time around were most critical to the success of that we had to answer was will this business concept: instead of doing the people in China change their patch work later! way of working to be more  64% of the respondents efficient or there were any confirmed that they face the specific reasons why they would same issues which we had pre- want to stick to their old empted. processes.  56% of the respondents wereWith so many issues at hand, the open to try the new businessbest way to answer the above service.questions was to conduct primaryresearch into the Chinese market  Respondents further confirmedand get the answers ourselves. the existing business model and a few of them even proposed a  We researched on obtaining new business model that could contact information of be more efficient for the industry. prospective interviewees who could possibly answer our With a solid backing of secondary questions and help us and primary researched information understand the market better. we were able to write a solid Interviewees included industry business plan for our client. A typical participants, authors of related format of our business plan is books and articles, and people at highlighted in our blog "Writing a industry forums. Solid Business Plan".  We hired a bi-lingual resource One of the biggest that could translate our The Financial Plan challenges with questionnaire into Chinese and this business was also conduct interviews in that there was no Chinese where people where not One of the biggest challenges with comfortable to talk in English. this business plan was that there precedence of a was no precedence of a similar similar business or  We tried to connect with relevant business or concept in any industry. people in the US who had concept in any Everything had to be estimated and connections in China. "Guanxi", rationalized to make this business industry which means "connections" or successful. "relationships”, is very important in China and it helped us open a lot of doors.©2010 Schweiger & Associates  17 Sweetspire Dr. Elgin, SC 29045  803.622.2659 3
  4. 4. Some of the areas that we worked justified profit, if it grew as planned.on extensively included: The financial plan was completedBusiness Model with short-term and long-term cashGiven the business concept, we flows, P&L statements, Balancecreated the business model that sheets, customer ROIs, and Investorwould be most efficient for the ROIs up to the satisfaction ofcustomer and the business. It is industry experts and theimportant to understand how and entrepreneur’s team.when the cash will flow through thebusiness and who will be the Investor Researchstakeholders at each stage. Based on the probability of successSales Methodology we focused our research onThis is an important piece of any identifying investors from threebusiness. Especially in a service- groups of firms – private/publicoriented business, the sales price is companies that could benefit thenot so easy to determine as it is for a most from the business service,product-based business. venture capitalist and banks thatAdditionally, if the service is openly fund new businesses in that industry.priced, it is easy for any customer to About Schweiger & Associates Other than identifying the right set ofunderstand the cost structure and investors, we also ensured that our We are a team of experiencedthen bargain on the price paid. consultants with both applied and client understood their deal processService-oriented businesses need to academic strategic management and and history and the key players organizational expertise who arebe compensated based on the value within each firm. For each committed to helping executives andgained by the customer and it should prospective investor, our team their managers and employees buildnot be based on the traditional model sustainable profitable organizations. provided insights on the approachof cost plus profit. Value-based and strategy specific to each We accomplish this by providing life-model is also difficult to comprehend investor. cycle strategy solutions across theand hence it gives businesses a solid Ideation, Validation and Executioncompetitive advantage. Along with phases. There are five key areas in Final Results which we offer solutions:the entrepreneur, the S&A teaminnovated a pricing mechanism  Strategy Development Solutionswhich was simple enough to justify Our client, an entrepreneur and a  Strategy Execution Solutionsthe value to the customer and at the venture capitalist was happy to  Strategy Leadership Solutionssame time it was difficult enough for receive a comprehensive and  Market Research Solutionscompetition to duplicate our business professional set of documents thatmodel anytime soon. included a thorough and actionable  Mergers & Acquisition Solutions business plan, financial plan, andExpenses other relevant presentation materials Reach us:This was an interesting piece of the for prospective investors. Wefinancial plan. We formed a panel of continue to advice and guide our Dr. David Schweiger, Presidentindustry experts and brainstormed client as they actively seek funding. David@scaas.comwith them on all possible expenses The aim of the Schweiger andthat one would need to make to run Associates team is to always ensure Vishal Khushalani, Vice Presidentthe business cost-effectively. Every that our clients succeed in achieving Vishal@scaas.comexpense was estimated that the their goals which gives us the mostbusiness would make in the near satisfaction than anything else.term and long term and still make a©2010 Schweiger & Associates  17 Sweetspire Dr. Elgin, SC 29045  803.622.2659 4