Business Planning and Preparing a Business Plan

Anjana Vivek; anjana@venturebean.com
Business Planning and Preparing a BPlan
TiE Bangalore
2nd August 2018
Bengaluru

VentureBean Consulting Private Limited
At the start
The Business Model Canvas
What Investors Want
Building the BPlan
Summary
Agenda
2 2

AT THE START
• Can you explain to a stranger in 1
minute what your business/idea is
about? Can you articulate this in 1-2
sentences?
• Test with a couple of persons and see if it
appeals to them and if you are satisfied.
3

AT THE START
Do take time out to think/reflect…
• WHAT are the strengths – that you bring to this
business
• WHAT are the constraints that you have to
either
– Address or
– Accept (and work keeping this in mind)
4

Setting Goals and Planning
• In 3 dimensions of time: short term, medium
term and long term
– Long term: dreams and aspirations drive you and the
business
– Short term: details are easier to think through,
assumptions are fewer
– Medium term : more of guess work and trend
analysis and less of data
• It is good to periodically go back and forth
between these time horizons...
5

Setting Goals/Targets
Planning for Alternate scenarios for eg:
• Funded/Non-Funded/Boot-strap
• Pessimistic, realistic and optimistic
• With alternate business models; impacting
strategy and cash flow
• And more..
6

At the start
What Investors Want
Building the BPlan
Summary
Agenda
7 7

WHAT IS A BUSINESS MODEL
• Investopedia definition
“The plan implemented by a company to
generate revenue and make a profit from
operations. The model includes the
components and functions of the business, as
well as the revenues it generates and the
expenses it incurs.”
(Ref: http://www.investopedia.com/terms/b/businessmodel.asp).
• HBR article by Andrea Ovans: What is a
business model
https://hbr.org/2015/01/what-is-a-business-model).
8

EXAMPLES OF INDIAN COMPANIES…
Where the business model was different from those existing at
that point in time:
Some years ago
• Bharti Airtel, Big Bazaar, RedBus, Café Coffee Day
Later
• E-commerce companies, platform business, for example
Flipkart, Zomato, Big Basket, Paytm, Practo, Ola …
Now & emerging
• Any names to suggest?
• YOU and TEAM?
9

Business Model Canvas: 9 building blocks
BUSINESS MODEL CANVAS (BMC)
• Customer segments
• Value propositions
• Channels
• Customer relationships
• Revenue streams
• Key resources
• Key activities
• Key partnerships
• Cost structures
SOURCE:http://www.businessmodelgeneration.com/canvas
• Acknowledgements:
– Wikipedia, the free encyclopedia
– http://www.businessmodelgeneration.com
– http://www.businessmodelhub.com
– Alexander Osterwalder
10

At the start
What Investors Want
Building the BPlan
Summary
Agenda
11 11

‘to trigger thinking’
Do take time out to think/reflect…
• If you need money to start/build your business,
whom should you approach?
• What are the alternate options including
investment options? Incubation, acceleration,
Angel Funding, Seed Funding, Loan?
• How can you build a plan that is of interest to an
investor?
12

Investors: Equity (Linked): One Slide
Checklist
• HNIs, informal and formal angel groups
• Seed Funds
• Venture Capital
• Private Equity
• Banks exploring innovative ways to fund SMEs
• Strategic Investors
• Corporate Funds; (Family) Business Groups, Indian & Global
– Directly and/or through a special division or subsidiary
– For employees alone or open to public
– As intellectual and/or financial capital with other facilities
• Government supported funds
• Impact Investors
• Incubators
• Accelerators
• Crowd funding
• Online funding platforms
13
Which
One
Could
be the
…
Right
Fit
for
You?

Seeking equity investment? Must haves…
• High upside potential
• Potential for extraordinary returns to investor
• Exit route plan
• This implies – Rapid Growth, i.e.
– Total addressable market is really high
– Company has potential to address this market
– Company has ambition to address this market
– Company has the capability to Execute to achieve high growth
– Risks are articulated
– .. Etc
MUST Have Key Requirements:
• TEAM with Execution Capability and
• Huge Addressable Market

Growth
Key Growth Parameters
• Sales / Customers
• Profit
• Cash-flow
• Other such as employees; multiple city branches; retail
outlets etc.
• .. etc
• Value
15

Product/Service Offerings: Analysis
• Product Lines
• Service Lines
• Combination solutions (product/service)
– bring some tangible into the intangible
– tangibilise the intangible;
• Pricing – an art and science
• Costing – math with assumptions
16

Sales (Plan): Analysis
• Segments
– B2B
– B2C
– Retail
– online etc.
– Analyse % of sales and quantity of sales in each
category (as applicable)
• What are the activities to reach out and get
revenue from each of these segments?
17

Business Plan
• An output based on business model and
strategy, expected to evolve over time
• To be forward looking, based on past knowledge
of promoters and their work experience in the
existing or new venture
• Assumptions to be tested to see if they will be
valid for execution, i.e. to demonstrate this is not
a business plan on paper alone
• Risks to be factored in plan
• Multiple scenarios are looked at, revenues
expected are discounted, expected costs and
expected cash flows factored, sensitivity to key
parameters checked

At the start
What Investors Want
Building the BPlan
Summary
Agenda
19 19

A BUSINESS PLAN COMMUNICATES…
• Many times, a reader’s perception of your
business/idea will be based on the business
plan you prepare
• Different persons will look for different things, a
banker will check if a loan can be repaid, the
VC will look for value multiples on exit
• Substance and form matter, more so, when
hundreds of plans are reviewed
20

AT THE STARTING POINT
Before starting on preparing the business plan,
think through the following:
What are you looking for?
PUT YOURSELF IN THE READER’S PLACE
• What is the reader looking for in the business
plan?
• What is the message you are trying to convey?
• Is there some common ground between the
two? Or is there a disconnect?
21

AT THE STARTING POINT
• Just because someone rejects or scoffs at your
idea, does not mean it is bad
• Try to take some learnings from rejections
22

BUSINESS PLAN SET … Illustrative
• Word document (15 – 25 pages)
• Presentation deck (15 – 20 slides)
• Spreadsheet with financials (Balance Sheet, Profit
and Loss Account, Cash Flow; 3-5 years)
• You may like to keep in hand a separate executive
summary or summary business plan as an initial
teaser document (3-10 pages) or deck (3-5 slides)
23

BUSINESS PLAN
• The set should be self speaking: ie with limited
clarification required (including with regard to
abbreviations & technical terms)
• Reader friendly: Key information that you want
to convey should not be hidden amongst too
much details
Do not think only of what you want to share,
rather think about what your potential reader
may want to know
24

BUSINESS PLAN
• Plan on format of report and how data,
information, analysis, comments etc. are to be
presented
– Move what is not essential to flow of document to
main report
– Think of content required to capture attention of
reader; avoiding excessive information overload
25

CONTENTS : Illustrative
• Table of contents
• Executive summary
• Sections/chapters/paras
• Summary/conclusion
• Appendix of abbreviations, references, other
annexures
• Graphs, tables, figures - numbered and labeled
26

CHAPTERS - Illustrative
• Company and background information
• Management team, organisation structure
• Business idea, strategy and implementation plan
• Marketing strategy; sales plan
• Financial details; funding strategy
• Other information such as implementation
schedule, statutory environment applicable etc.
27

– Background history if existing company; current
status
– Rationale for existing business or new start up, value
proposition etc.
– General industrial environment of business;
competitive landscape in brief, brief background of
promoters
28

– Vision and mission statement
– Key business drivers and key constraints; SWOT and
business strategy
– Plan in terms of short term/immediate, medium-term
and long term goals
– Other key information to make initial background
information complete
29

• Management team, organisation structure
– Experience and qualification of promoters and key
team
– Roles and responsibilities
– Organisation structure
– Any key organisation/HR policies
30

• Business idea, strategy and implementation
plan, including inter-alia:
– Vision, mission
– Product/service offered
– Operational details
– USP(unique selling point); barriers to competition
– Differentiator
– Brand building plan
– Social media plan
– Strategy to handle competition
31

• Business idea, strategy and implementation
plan, including inter-alia:
– Details of any in-house technology/process or idea; or
source of technology, ie technology transfer through
collaboration
– Details of alliance partners, current as well as
proposed
– Details of any intellectual property associated with the
business
32

• Marketing plan
– Target market size; TAM (total addressable market)
– Market research details
– Customer profiles; existing, potential/pipeline
– Marketing strategy
– Pricing strategy
33

• Financial details
– Past financials: Balance sheet, P&L account and cash
flow summary for five year period if available
– Future forecast – five years in summary (detailed
schedules may be in appendix)
– Details of how funds will be raised and utilised
– Details of contribution from promoters (cash/kind)
34

• Financial details
– Sensitivity analysis for key parameters, eg sales
variations of + / - 10%
– Scenario analysis:
– optimistic, normal and pessimistic (budget)
– Key ratios, break even, project IRR
– Other information such as quality of key parameters,
ie revenue based on geography
– Cash burn, i.e. monthly requirement of cash and
requirement for capital investment in phases
– Funding plan and strategy
35

• Other information
– Time lines, implementation schedule, expected date
of commercialisation
– Regulatory environment if applicable, ie
environmental laws for pharma company
– Other information which may be relevant to the
business
– Include any required references, contact information,
data and statistics
36

PREPARING THE BUSINESS PLAN
• PRESENTATION IS THE KEY
• CAPTURE THE READER’S INTEREST
• Think through the format of report and how data,
information, analysis, comments etc. are to be
presented
37

BUSINESS PLAN
• Points to consider
– You must believe in the idea to sell it
– Homework to be done before hand, adequate
knowledge required to be demonstrated
– Credibility is important, ie if caught with one
falsehood, nothing said would be believed
38

UPDATES/CHANGES IN BUSINESS PLAN
• Points to consider
– If there has been substantial change, update the plan
– The difficulty is when there are too many versions
which are floating around
39

At the start
What Investors Want
Building the BPlan
Summary
Agenda
40 40

IN SUMMARY
As an entrepreneur
• What are your strengths/weaknesses?
• What do you like to do or think you like to do?
• What do you think you are good in?
• How would you bring this into your business?
As a business
• Have you thought about the business model?
• Have you thought about the soft issues such as team
dynamics, roles and responsibilities, leadership plan?
• Have you thought about your business plan structure?
• Have you thought about how you will pitch your plan?
41

Some more points on the TO-DO list
• Plan for the business
• Plan for advisors / accountants / lawyers
• Educate oneself about the law and regulations to be
followed
• Educate oneself on basics of managing a business and
finance
• Plan for long term impact of decisions taken with regard
to hiring employees, renting space etc.
Additional information/articles/resources at:
• https://www.slideshare.net/anjanavivek/writing-a-
business-plan-1914663
• www.slideshare.net/anjanavivek
42

Business Planning and Preparing a Business Plan

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