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Business Plan Preparation: Concepts and Techniques. Professor Rajendra K. Lagu Shailesh J. Mehta School of Management October 22, 2005. Agenda. Target Audience for Business Plans Purpose of Business Planning Preparatory Work Reader Expectations Document Structure

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Business Plan Preparation: Concepts and Techniques

Professor Rajendra K. LaguShailesh J. Mehta School of ManagementOctober 22, 2005

Business Plan Preparation

agenda
Agenda
  • Target Audience for Business Plans
  • Purpose of Business Planning
  • Preparatory Work
  • Reader Expectations
  • Document Structure
  • Some Tips and Tricks – Common Pitfalls
  • References

Business Plan Preparation

target audience for business plans
Target Audience for Business Plans
  • VCs / Angel investors
  • Potential senior employees
  • Bankers
  • Attorneys and accountants
  • Leasing companies

Business Plan Preparation

purpose of business planning
Purpose of Business Planning
  • Tangibalizing the vague ideas
  • Quantifying the approximate numbers
  • Freezing the milestones and deliverables
  • Estimating the funding requirements
  • Sizing up the scale of operations

Business Plan Preparation

preparatory work
Preparatory Work
  • Information collection
  • Validation of the assumptions
  • Analysis and planning
  • Articulation of your basic value proposition

Business Plan Preparation

what is a financer looking for in a bp
What is a financer looking for in a BP?
  • Basic value proposition
  • Market size, segmentation, target customers, competitors
  • Entry barriers, IP protection, Unique Selling Points
  • Technology expertise and domain knowledge
  • Alliance and strategic partnerships
  • Promoters, Board of Directors, Top management (VPs)

Business Plan Preparation

what is a financer looking for in a bp7
What is a financer looking for in a BP?
  • Team (Project management, execution capabilities)
  • Scalability and growth potential
  • Marketing and selling plan: channels, distributors, customer acquisition costs
  • Milestones and deliverables (prototype, proof-of-concept, beta customers)
  • Requirement and application of funds: Setting offices, where, how many?
  • Equity/Capital structure, financing policies (debt/equity ratio)

Business Plan Preparation

what is a financer looking for in a bp8
What is a financer looking for in a BP?
  • Revenue model: Sources of revenue (service/product mix)
  • Profitability, break even point, growth estimates (revenue, team size)
  • Risks and contingencies: De-risking/risk management/risk containment plan
  • Projected (pro-forma) financial statements
  • Exit strategy (IPO, equity buyer, strategic buyer, Merger & Acquisition)
  • Valuation and offer

Business Plan Preparation

document structure
Document Structure
  • Executive summary
  • Introduction / Company overview
  • Concept / Proposition / Product description
  • Market opportunity
  • Competition survey
  • Development plan and milestones
  • Marketing plan
  • Team
  • Financials
  • Offer
  • Appendix

Business Plan Preparation

some tips and tricks
Some Tips and Tricks
  • Look for spelling mistakes
  • Provide a table of contents
  • Check page number consistency
  • Do not use too many colours and fonts
  • Explicitly add confidentiality clause in the beginning

Business Plan Preparation

common pitfalls in business plans
Common Pitfalls in Business Plans
  • Too verbose and long
  • Speak in generalities and management theories
  • Weak or non-existent financials
  • Inadequate competitor analysis
  • Unnecessary details about promoters and their past track record

Business Plan Preparation

references
References
  • Venture Finance
    • http://www.vfinance.com
    • http://www.nvca.org
  • Small Business Issues
    • http://www.sba.gov
    • http://www.startupjournal.com
    • http://www.bplans.com

Business Plan Preparation

concluding remarks
Concluding Remarks
  • Business plan preparation is a serious process which takes about 2-4 months
  • The Founder CEO is perpetually writing a business plan (besides doing many other things)
  • Fund raising itself takes 3-5 months
  • Business plan must be treated as dynamic document with a potential for continuous and incremental improvement

Business Plan Preparation

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Thank You !!

Questions ??

Business Plan Preparation