Robert L. Walker USC - Establishing an effective Business plan

1. Establishing an effective Business plan Establishing an effective Business plan More than just a checklist …

2. Menu • What is a business plan / venture plan? • The three important questions • The importance of a ‘Business model’ • Different formats • Now it is your turn!

3. What is a Business plan? “a plan for the business” Nothing more or less from an entrepreneurial point of view

4. The three important questions • What? • Why? • How?

5. What? What, – Be as specific as possible. – Indicate the added value. – Brief description. – Elevator pitch. – Normal language, slang. What, is it you want to do?

6. Why? Why •Is it needed? •Inspiration. •Higher (social) values. •The your ultimate goal. •The Why Why you going to do it?

7. How? • Make it plausible (feasibility, competitors, legal) • Show the mechanisms. • What are your (unique) resources. • With whom? (Stakeholders) • Predict the future in a way of: – Financial – Material – Market (development)

8. Different formats Minimal requirements: • What • Why • How • Feature / design the future by: – Models – Calculations – Scheme / draught • Who What is it? Why is it needed / important? How it will made happen? Who is / are doing the action?

9. How it works? • For whom the plan is written for? • Which setting? • What is your goal? Every target / target group favour its own type of plan. Less is more, more less! It starts with: the (brilliant / award winning) idea!

10. Elements of a model

11. Starting a business in practice Survival ? Early trading Recognis e opportunit y Access & gain resources Planning ? Business & product developme nt Considerati on Launc h Social connectio n Have an idea

12. Principles of a succesfull business • Realistic planning • Control over costs and cashflow • Generating turnover • Funding And… • A simple idea • Teamwork to make it happen

13. Ingredients of effective planning • The plan is a projection, not reality • Research: use real information not assumptions • Set realistic targets for sales and production • Teamwork – get everyone involved in planning • Plans should be dynamic not static – markets and other factors will change • ‘Planning’ is more important than ‘having a plan’ • Always consider and plan for the downside

14. What is your business model? • Who are your target customers? • What value is created for them? • Why will they buy the product from you? • How is it superior to its competitors? • How will you produce, market and distribute it? • How and when will it generate cash and profits? • What financial investment is required? • Can you draw a simple diagram to show the process?

15. Is the business a sound investment proposition? • Growth potential? • Perceived risk? • Return on investment: profit stream? • Competition and differentiation? • Breakeven • Timescale • Potential exit routes • The people – capability and incentives

16. The growth business plan: typical contents • Summary of the business proposition • Vision, goals and targets • Market opportunity: research, analysis and plan • Product/service concept • Business model or process • SWOT analysis in relation to competitors and differentiation from them • People: who will run the business, track records • How the business will operate: capabilities, resources, people, processes • Financials: investment and working capital requirements, breakeven, pricing, gross and net margins, cashflow, return on investment

17. Vision • What do you want to achieve? • what business are you in ? • How do you see the business in 2–5 years’ time? • What is the purpose of the business? • What are the values? Start with yours. • Is it memorable and inspirational? • Can it be understood by everyone in the business? • Dreams need numbers to make them into business goals

18. Opportunity • What are the most attractive opportunities for the business? • Current market opportunities – exist now • Future opportunities – need to create • Why are they attractive for the business? • What is the business model? • What factors drive profitability? • What investments are needed? • What are the projected returns?

19. Risk factors • Market risk: customer demand, volatility, competitor action • Technical risk: performance, production capacity and responsiveness to demand • Financial risk: investment, cost control, increase or reduction over time

20. Marketing and sales plan • Your SWOT compared to competitors • Success factors and buying triggers • Current and future clients – groups or segments • Market matrix • Products and services in relation to client groups • Pricing (incentives etc) • Place (route to market, delivery, distribution) • Promotion and selling (How you will reach and retain clients) • Marketing budget and action plan • Sales targets

21. Operations plan • Products and services to be provided • Sales order and key processes/systems • Maximising use of capacity • Continuous improvement – eg: – Quality, customer service – Efficiency – use of resources, time reductions – Effectiveness of processes, ‘make or buy’ – Economy – cost savings – Use of information, measurement

22. People plan • Leadership • Team roles, areas for development • Organisation – structure, responsibilities • Capabilities and knowledge needed in the business • How to develop or acquire these? – Plan to develop existing staff – Recruitment plan – Motivation and rewards

23. Characteristics of an effective venture plan Twelve features of an effective venture plan: 1. 2. competitors 3. 4. opportunity 5. 6. of IPR [Intellectual Property Rights]) 7. 8. 9. 10. Financial planning is accurately costed and realistic 11. Potential exit routes and timescales for investors are shown 12. The venture team demonstrate capability and motivation Demonstrates a clear opportunity which has not yet been exploited Displays strong customer attraction and differentiation from Shows significant, quantified growth potential in identified markets Demonstrates a credible strategy and plan to exploit the Deploys innovation which can be shown to work effectively Has unique aspects which can be prevented from copying (control Success factors with risks identified and minimised Investment required is shown with realistic return on investment Timescale to breakeven and anticipated profit stream are realistic