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Developing a Business Plan. BIT Final Year Project. Learning Outcomes. Understand the objectives of the business planning process for a start up venture. Gain an insight into how to write such a business plan.

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developing a business plan

Developing a Business Plan

BIT Final Year Project

learning outcomes
Learning Outcomes
  • Understand the objectives of the business planning process for a start up venture.
  • Gain an insight into how to write such a business plan.
  • Understand what the various audiences who will see the plan will be looking for.
presentation structure
Presentation Structure
  • Business plan overview
  • Content of a Business Plan
why prepare a business plan
Why prepare a Business Plan?
  • The primary objective of many business plans is to set out a convincing case to secure financing, either internal or external, for the start-up or expansion of a business venture.
  • However, just as importantly, business plan is a ‘living document’ that should be updated on a regular basis.
useful websites
Useful Websites
  • - Student EnterpriseAwards

- Kauffman Fellowships


Internal Audience

  • Self
  • Management team
  • Board of Directors
  • Employees

External audience (potential funders).

  • Banks
  • Government agencies
  • Business Angels
  • Venture Capitalists
  • Corporate Partners
  • Banks provide loan capital.
  • Overdraft, short term, payable on demand.
  • Business Loan, fixed term.
  • SFLGS, reduces risk to bank
  • Key issues: Security, interest & capital repayment therefore not suitable for hi-tech start-up ventures, little security and no early cashflow.
government agencies
Government Agencies
  • Invest NI, provides grant support.
  • Business Development
  • Revenue, Marketing, Management Salary, Preference Shares.
  • R&D
  • Key issues: Additionality, Admissibility, percentage contribution, export focus.
business angels
Business Angels
  • Business Angels provide risk capital seeking a return over 5-10 years.
  • High net worth individual
  • Probably ‘exited’ from previous venture
  • Brings skills, expertise and cash.
  • Key issues: <£100k, ‘hands-on’ role, capital growth.
venture capital
Venture Capital
  • Investment fund of risk capital, which will seek a return in circa 5 years.
  • Local funds: Crescent Capital, Enterprise Equity, Viridian Growth Fund (Clarendon).
  • May bring sectoral expertise, contacts and experience of similar ventures.
  • Relatively high investment threshold, high fixed costs.
  • Key issue: >£400k, capital growth, Board seat, focus.
other funders
Other Funders
  • Seed Capital Funders: QUBIS Ltd & University Challenge Fund (NI). Basically a VC investing £10k to £100k.
return on investment
Return on Investment
  • Investors, whether business angels, venture capitalists, banks will all be looking for a return on their investment.
  • The size of that return and the cost of their money is governed by the risk of the project.
key elements within a business plan
Key Elements within a Business Plan
  • Executive Summary
  • Background
  • Corporate Objectives
  • Product/Technology
  • Manufacture
  • Market
  • Marketing/Sales
  • Management Team/Structure
  • Finance/Funding
corporate objectives
Corporate Objectives

This section should set out objectives for 3/5 years:

  • Financial projections - sales

- profits

- return on investment

  • Markets - geographic

- market segments

  • Customers
  • Products
  • Management and organisation
product technology

This section should answer the following questions:

  • What are you going to make/will there be a product range?
  • How much will the product cost to produce?
  • What are the product features/how does it work?
  • What are the product applications?
  • What is the R&D plan and cost?
  • How long/much will it take to get the product to market?
  • What is novel about your product/IP?
  • What associated services are being offered?
product vs service
Product Vs Service
  • A product based business model is scalable; a service based business model is not.
  • To increase sales in a service business you have to add bodies.
  • To increase sales in a product business you don’t.
  • Ideally service based businesses should be profitable from day 1.
  • Services can be useful in reducing risk during the product development phase.
technology ve
Technology -ve
  • Unproven technology, this will require a lot of product development, i.e. time and money before there is a product which can be sold.
  • Frequent problem with hi-tech start-up proposals which can often be ‘technology’ and not ‘market’ led.
technology ve1
Technology +ve
  • Early stage sales, especially ‘good quality’ early stage sales, i.e. blue chip customers who appreciate the technology/product.
  • Provides an endorsement of technology,especially if the product has been sold to a ‘knowledgeable’ customer.

This section should answer the following questions:

  • In-house or sub-contract manufacture?
  • What is the production process?
  • What are the plant and equipment requirements?
  • What is the capital spend and timetable?
  • What are the production inputs – premises, labour, suppliers, raw materials?
  • What are the production and quality control procedures?
manufacture checklist
Manufacture Checklist
  • How will you make the product and what inputs are required?
  • What plant and machinery is required and what are the costs?
  • What management and labour skills are required?
  • What management/quality controls are in place?

This section should answer the following questions:

  • What is your target market?
  • What size is the market and is it growing?
  • What market segments will you target?
  • What is the market structure and how does the market operate?
  • Who are your customers, where, how many, how big, purchasing power?
  • What are your customers’ requirements and how do your customers buy?
  • Who are your competitors, where, market share, strengths/weaknesses?
market research sources
Market Research Sources
  • Libraries – Invest NI, Belfast Central Library,

Queen’s, UU

  • Internet
  • Published reports
  • Customers/potential customers
  • Competitors – annual reports, promotional material, product manuals
  • Magazines/newspapers
  • Trade Associations
  • Companies Registry
market ve
Market -ve
  • #1 turn off
  • Gaining a small % of a BIG number
  • Plan to achieve 1% of the UK/EU/US etc market within one/two/three years will result in sales of £10m
market ve1
Market +ve
  • Clear knowledge of the existing marketplace and a ‘channel to market’.
  • Knowledge of the existing competitors, i.e. who they are and their strengths and weaknesses.
  • Awareness of the potential end user/customer needs, i.e. what they want and how the existing products/services fall short.
route to market checklist
Route to Market Checklist
  • What is the geographic scope of the market: world, Europe, local?
  • What is the market value in terms of units and value?
  • How fast is the market growing and where are the opportunities?
  • Which market segments will you concentrate on & why?
  • What is your target market share?
route to market checklist1
Route to Market Checklist
  • If there is no existing market or if the market is being developed, what is the expected take up rate?
  • How will your company’s entry affect the market?
  • What is the market structure?
  • What are the key customer requirements?
  • How will you meet these?
route to market checklist2
Route to Market Checklist
  • Who are your major competitors?
  • What are their strengths and weaknesses?
  • What is their pricing, profitability etc?
  • How will they react to your entry?
  • What are your competitive advantages?
bottled water the uk market
Bottled Water – the UK market
  • 2001 – 1.6 billion litres; £900 million
  • 12% growth on 2000; £1.1 billion forecast for 2003
  • 10-12% growth to 2006 => 2.6 billion litres
  • Average consumption/person/year – UK 26 litres; French 139 litres; Italians 183 litres; Euro average 93 litres
  • 40+ producers Top five producers = 52% of market
  • Customers – supermarkets (50% of total); independent grocery outlets; petrol station forecourts; CTN’s; sandwich bars; kiosks; department stores; variety stores;on-trade (pubs, restaurants, hotels); off licences
  • End customer needs – healthier lifestyles; convenience; working lunches; hot(!!) summers
  • Own label; branded; packaging and labelling
  • Planned; impulse
  • Spring; mineral; flavoured Still 82%; sparkling 18%
  • End market segments – young professionals, especially females; children; sports people; housewives; office workers; diners; drivers
marketing sales

This section should answer the following questions:

  • What are your target market segments?
  • What are your competitive advantages?
  • How will you sell to your customers?
  • What promotional activities will you undertake ?
  • What prices will you charge/discounting?
  • How will you transport your products?
  • What customer service will you offer?
  • Will you brand your products?
  • What packaging and labelling will be used?
marketing ve
Marketing -ve
  • Waiting for the telephone to ring.
  • Developing the ‘perfect’ product.
  • Note: only sales generate income; everything else is a cost.
marketing ve1
Marketing +ve
  • Knowing your customers and markets.
  • Being proactive, persistent and professional.
  • Note: customers will only buy from suppliers they believe will have a long term market presence.
marketing checklist
Marketing Checklist
  • Who are your customers and what are their needs?
  • What are your competitive advantages?
  • How will you sell and support that sales effort through promotional activities and customer service?
  • What pricing and distribution strategies will you use?
management team structure
Management Team/Structure

This section should answer the following questions:

  • Who will execute the plan and deliver the projected returns?
  • How will the various individuals fit together/what roles will they play?
  • What are their strengths?
  • What are their weaknesses and how will they be addressed?
  • What is the balance of company ownership?
  • What is the organisational structure?
  • What are the management control systems?
an a quality team
An ‘A’ Quality Team
  • Investors will invest in an ‘A’ quality team and a ‘B’ quality product, but not the other way around.
  • An investment decision is based on many things but one of the main elements is the combination of individuals who make up the team
management ve
Management -ve
  • ‘All conquering hero’.
  • Not prepared to acknowledge areas of weakness.
  • Note: hi-tech start-up businesses have a certain level of business naivety.
management ve1
Management +ve
  • ‘Previous’.
  • Substantial previous business experience, possibly specific experience.
  • Ability to bring together a strong team and address areas of potential weakness.
management team checklist
Management Team Checklist
  • Who are the key team members?
  • What are their skills and experience?
  • What are their roles and responsibilities?
  • What are the gaps in the team?
  • How are you going to plug those gaps?
  • Cash flow
  • Balance Sheet
  • Profit & Loss Account

Note: Financial forecasts within start–up venture business plans are heavily discounted.

finance ve
Finance -ve
  • ‘Hockey stick’ projected sales growth.
finance ve1
Finance +ve
  • Cash investment from promoters.
  • Cash investment from other ‘knowledgeable’ investor.
raising funding
Raising Funding
  • 3Fs, Friends, Family & Fools
  • Self, from your own resources
  • Revenue generated
  • Grants
  • J/V or Commercial Partner
  • Business Angels
  • Venture Capital
finance checklist
Finance Checklist
  • What is the project cost?
  • How will the project be funded?
  • When will income begin?
  • What are the costs?
  • When will profitability be achieved?
  • What is the level of profitability?
executive summary
Executive Summary

This section is critical, it may be the only part of the plan that an investor reads!

  • The purpose of the plan
  • The business opportunity
  • The market the product is aimed at
  • The competitive advantages
  • The management team
  • Financial profile
executive summary checklist
Executive Summary Checklist
  • What is the business name and activity?
  • Who are the key contacts?
  • What is the scope of the business and the market potential for its products?
  • What are the competitive advantages?
  • What resources (human & financial)are needed for the venture to succeed?
  • What skills and expertise do the team bring?
appraisal of the business plan
Appraisal of the Business Plan
  • Management team: capability, experience and balance.
  • Market: size, potential for growth, competitive nature.
  • Finance: funding, realism of projections and profitability.
  • i.e. Man/Market/Money
  • Ideally have some initial sales