Myths

1. Myths • 90% Small startup fall into a financial crises and fail in the first 3 years In S’pore when I was involved with EDB for small and medium size (SME) business survey—all, repeat all had closed in the first 3 years of startup because of owners ill-health or some personal reason like a family issue. Not financial crises. • A great idea combined with a strong surge of wanting to start a company are the key success factors Passion is great. Love for your business is good. But you must have customers to start with. This is what will make you survive. • Jobs are more secured than your business. The answer is perhaps a shade more than your own business. There are other aspects for consideration! Being shunted to a lousy role which you don’t enjoy. Dragging yourself each morning to go to work and to face a boss you dislike to such an extent that you wish he gets a heart attack and stays home for a year.

2. Just Do It • Biggest problem for a budding entrepreneur is Negative Advise. By and large the Parsis of my generation were risk averse. Happy to do a bank job or steady secured job So your elders who come from my generation type are the wrong people to go to for any inspiration. They can only get worried that you wish to risk so much. • Most entrepreneurs I know do it because they want to, not just to get rich.

3. Planning Your Business

4. Who Needs Business Plan About the only person who doesn't need a business plan is one who's not going into business. You don't need a plan to start a hobby or to moonlight from your regular job.

5. Who? • Startups. The classic business plan writer is an entrepreneur seeking funds to help start a new venture. Many great companies had their starts on paper, in the form of a plan that was used to convince investors to put up the capital necessary to get them going

6. Old Companies too ! Business owners find plans useful at all stages • There's been a significant market change • Your firm develops a new product, technology, service or skill • Your company has crossed a threshold • You have had a change in management • Raising money or persuading new partner to join the firm

7. Types of Business Plan • B.P. depends on type of business • Details of content • Emphasis on different aspects of business • Mini Version--to test a business concept • Working Plan-- a tool to be used to operate your business

8. A Mini Plan • Business concept • Financing needs • Marketing plan • Financial statements--- cash flow, income projection and balance sheet

9. Business Desciption • Sole proprietorship, Partnership or Listed • Type of business-wholesale, retail, food service, manufacturing or service-oriented • Describe the products or services • Present industry outlook • Future industry possibilities • Whom will sell to, how the product will be distributed

10. Success Factors Explain factors you think will make it successful, like the following: it's a well-organized business, it will have state-of-the-art equipment, its location is exceptional, the market is ready for it, and it's a dynamite product at a fair price.

11. Market Strategies Market Strategies results from a meticulous market analyses. This helps to- • define target market • establish target pricing • sales and promotional strategies • growth potential within the industry • develop your estimates for future of business

12. Market Analyses • total available market • size, structure, growth prospects, trends and sales potential

13. Market Share • Projecting the market share is a subjective estimate. It's based on not only an analysis of the market but on highly targeted distribution, pricing and promotional strategies • In order to project market share over 3 years, consider two factors: • 1. Industry growth which will increase the total number of users. • 2. Conversion of users from the total feasible market

14. Positioning Your Business • Positioning strategy is affected by the motivations and requirements of target customers as well as actions of competitors. • You need to answer several strategic questions : • How are your competitors positioning themselves? • What specific attributes does your product have that your competitors' don't? • What customer needs does yourproduct fulfill?

15. Pricing-- price to sell • Demand pricing • Competitive pricing • Cost-plus pricing • Value pricing

16. Distribution Depending upon the industry and the size of the market • Direct sales • OEM (original equipment manufacturer) sales • Wholesale distributors • Retail distributors • Direct mail

17. Promotion/Communication Plan • Advertising • Packaging • Public relations • Sales promotion

18. Identify and Analyze Your Competition Competitive Analyses • Determine strengths and weaknesses of the competitors • Think of strategies that will provide you with a distinct advantage, • What barriers can be developed in order to prevent more entries into your market • What weaknesses that can be exploited

19. Competitive Edge • What do you need to provide enduring competitive advantage. • Define the elements that will set your product or service apart from your competitors (You will be better because you will supply full line of products; You're going to provide unique service after the sale; You'll give a money-back guarantee )

20. Design and Development Plan • Product development • Costs that should be included in the development budget include: • Material. All raw materials used in the development of the product. • Direct labor. All labor costs associated with the development of the product. • Overhead. • G&A costs. The salaries of executive and administrative personnel • Professional services. Those costs associated with the consultation of outside experts such as accountants, lawyers, and business consultants. • Capital equipment.

21. Risk Mitigation Assessing Risks Risks involved should be assessed and a plan developed to address (mitigate) each one.

22. Financing Start up • There are two areas that need to be accounted for when planning a start up • the organization structure • the start up expense and capital requirements

23. Overhead expenses • Travel • Maintenance and repair • Equipment leases • Rent • Advertising & promotion • Utilities • Packaging & shipping • Payroll taxes and benefits • Uncollectible receivables • Professional services • Insurance • Loan payments • Depreciation

24. P&L • Sales Revenue • Raw Material Cost • Gross profit margin. • Operating expenses. Includes all overhead and labor expenses associated with the operations of the business. • Total expenses. The sum of all overhead and labor expenses required to operate the business. • Net profit (PBIDT) • Depreciation. • Net profit before interest (PBIT) • Interest. • Net profit before taxes (PBT) • Taxes • Profit after taxes (PAT)

25. Cash Flow Statement The cash-flow statement is one of the most critical information tools for your business, showing how much cash will be needed to meet obligations, when it is going to be required, and from where it will come. It shows a schedule of the money coming into the business and expenses that need to be paid • Total PAT + Depreciation This amount is carried over to the next period as beginning cash • Cumulative cash flow. The difference between current cash flow and cash flow from the previous period.

26. Balance Sheet 1. Assets 2. Liabilities 3. Equity

27. Assets • Fixed—machine,land building (long term) • Current—cash, inventory, receivables Liabilities • Long Term—debt of over a year • Current—loans of less than year,payable Owners Equity—total assets less total liabilities

28. Classic Problems with new business—valley of death (3years) • inadequate market knowledge • ineffective marketing or sales approach • inadequate knowledge of competitive pressures • potentially faulty product performance • rapid product obsolescence • poor timing for the start of a new  business - under capitalization - unforeseen expenses