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Elements of a Business Plan

Business Planning
"In preparing for battle I have always found that plans are useless, but planning is indispensable." -Dwight Eisenhower

Those who fail to plan, plan to fail. -George Hewell

The Business Plan


Understanding business plans is not only important for those who are starting businesses. More and more banks are requiring business plans for loans, for new projects and on-going operations. Business plans are used in large companies to justify projects. No matter where you work, it is increasingly likely that you will need to evaluate somebody elses business plan.

The (very) Basics of a Business Plan


Executive Summary Company Overview Market Environment Marketing and Sales Strategy Team Composition Operations Financial Plan Risk Analysis and Mitigation

Your Business Plan Will...


Discuss a particular market opportunity Examine the markets that you will compete in, and explain who your customers will be Describe the products or services that your company will provide Your competition, and how you will defend against it The operation that you will put in place in your company The management team that will implement the plan The size and profitability of your company

Executive Summary
The written version of the One minute pitch Many people who read your plan, will only read your Executive Summary... ...and then they may read your financials. NOT an introduction, but a short version of the whole plan

Company Overview
Explanation of history, structure, and organization of your company Strategic direction Mission statement Goals and objectives Values and vision People Relevant skills and expertise of management team Directors Relationships with experts in the field

Market Environment
All factors of the market that are outside your direct control: Market structure Market trends Competition Opportunities/Threats

Marketing and Sales Strategy


Products or services offered Follow-on products Intellectual property or other defendable positions Market research Marketing plan Brand strategy Distribution strategy Product strategy Pricing strategy Promotion

Team Composition
Capability of the management team to run a promising business The management team Professional experience and past successes

Operations
Practical details required to meet the plan Facilities Manufacturing or out-sourcing Personnel Varies widely depending on type of business

Financial Plan
Three key reports, in a five-year plan: Income statement Balance sheet Statement of cash flows

Risk Analysis & Mitigation


Risk scenario Market risk Competition risk Technology risk Regulatory risk Financial risk Management risk

What measures are proposed to counter these risks?

Writing a great business plan


A great business plan is one that focuses on a series of questions relating to the four factors critical to the success of every new venture: the people, the opportunity, the context, and the possibilities for both risk and reward. William Sahlman

1. The questions about people revolve around three issues: What do they know? Whom do they know? How well are they known? 2. As for opportunity, the plan should focus on two questions: Is the market for the venture's product or service large or rapidly growing (or preferably both)? 3. Is the industry structurally attractive?
Source: How to write a Great Business Plan, William Sahlman, Harvard Business Review

Outline of Business Plan


Section
Executive summary
Suggested# of pages

2-3

Market opportunity and Market Size


Your offering/product/service/IP Competitive landscape -analysis with data Marketing Strategy- Positioning, Differentiation, Pricing, Distribution

2-4
2-5 1-2 1-2

Financial Plan Projections, Use of Funds


Risk scenario & mitigation Your team

5-6
1-2 2-4

Supporting data, research, resume

5-10

Evaluating Business Plans what does one look for?


1. The questions about people revolve around three issues: What do they know? Whom do they know? How well are they known? 2. As for opportunity, the plan should focus on two questions: Is the market for the venture's product or service large or rapidly growing (or preferably both)? 3. Is the industry structurally attractive?

Source: How to write a Great Business Plan, William Sahlman, Harvard Business Review

Evaluating a Business Plan: Tips


Objectivity is ensured when the criteria for evaluation are clearly laid out Eliminate possible bias e.g, you like the idea, you like/are familiar with the industry, you like the student Prioritize content over format and presentation Relevant Content (market opportunity, attractive industry, investment potential, business model and distinctive competence) earns more weightage than a well laid out incomplete plan

Opportunity to Business Model to B Plan Evaluation What is common?


All three Focus on Market/Customers Industry/Competition Team/People

Is there any standard format of a B-Plan?


Many formats exist Each business plan has to be unique general templates/software may not be effective to communicate your idea We provide you with a Detailed Guide for writing a B plan Available on the NEN CD: Kick-Starting the Entrepreneurial Campus

Videos and Links


EY Business Plan Guide How to write a great Business Plan NEN Videos on B plan

Credits
Ed Rubesch, Thammasat Business School, Thailand Indus Khaitan, Venture Partner, Morpheus Ventures, Bangalore, India

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