Chetan Shah and Ricarda Micallef

“will make money through risk and innovation”


◦ The need for Business Planning ◦ Creating a business plan ◦ Tools to support business planning  Risks  Financials  External environment  Project Management

◦ ◦ ◦ ◦ ◦ ◦ ◦

Consolidation of ideas Inspire credibility A document for future reference A document to track progress A document to keep focus To identify the aim & value of the plan To secure financial and resource commitment for a business start-up ◦ Identify and address risks ◦ Appreciate any health and safety aspects of the plan A business plan is an internal and external CONTROL and SELLING document


a business plan?


 What is a Business Plan? ◦ The business plan is a forward-looking risk control document  What and where are the risks ?  Are the strategies are in place to minimise the risks? ◦ The business plan converts the opportunity into reality ◦ A plan can be used at any stage of the business cycle 5 .

final plan for public floatation (200+ pages) ◦ Initial flyer to attract investors (no more than 200 words) 6 .Types of Business plans: ◦ Summary: for internal financing (10–15 pages) ◦ Traditional: for extensive financing (20–40 pages) ◦ Operational: blueprint for company operations (50–100 pages) ◦ Detailed.

Consistent content kindles credibility: ◦ Executive Summary  „Tell them what you are going to tell them‟ ◦ Body  „Tell them‟ ◦ Summary  „Tell them what you told them‟  NB – remember your audience and your desired outcomes 7 .

problems and their mitigation The financial plan/offering Summary 8 . Business plan should include ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Executive summary Background and description of the business concept Market research & analysis The marketing plan The economics of the business Operations plan Management team Critical risks.

9 . projections & returns The management team What is being requested  Think about what you want to bring to Dragons Den. Executive summary ◦ Readable summary of  Description of the business concept  Opportunity & the strategy     The target market & competitive advantages The economics. profitability.

Background and description of the business concept: ◦ What is the business? ◦ Who are the customers? ◦ How does the product or service appeal to the customer? ◦ What is “special” about the service or product? ◦ What is the competition and what is your competitive advantage? ◦ How will the market be protected from new entrants? 10 .

 The opportunity and strategy ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ What is the opportunity? Why is it compelling? The entry strategy to exploit it? The key facts & conditions Competitor vulnerabilities Uniqueness and sustainability Industry trends Growth Strategies beyond the initial start up 11 .

 Target market and projections ◦ The Industry & the market ◦ Who are the customers?  Demographics ◦ ◦ ◦ ◦ ◦ How will the product be positioned? Technology trends How will you reach & service the customers? Market structure? The size & growth rate of the market segments 12 .

 The competitive advantages ◦ What are they? ◦ Do they exist or have to be created?  It may be the “Product” itself. or competitor Vulnerabilities ◦ Is the advantage Sustainable? ◦ How can it be protected? ◦ Are there strategic alliances? 13 . Market conditions.

experience & skills of the lead entrepreneur & team members ◦ Previous accomplishments ◦ Management experience ◦ People management skills ◦ Previous successful ventures ◦ Financial management skills 14 . ◦ The relevant knowledge. Directors. The management team ◦ Who.Chairman.

 The Management Team The management team is critical to delivery Most deals will be done in the first 5 minutes First impressions are key Are the senior management team likeable externally?  Do they instil confidence? ◦ Personnel problems are the dominant headache in any business ◦ Are they credible? ◦ Have they adequately predicted the risks and have they addressed the risks adequately? ◦ ◦ ◦ ◦ 15 .

  How will you keep the project on track? How will you monitor progress? When monitoring progress consider:  Competitive rivalry – how much competition is there and how good is it?  Bargaining power of suppliers  Bargaining power of customers  Threat of new entrants  Threat of substitutes 16 .

Tools to help with risk management: ◦ PESTLE ◦ SWOT ◦ Risk Management Plan 17 .

◦ Helps you to identify the environmental influences that could affect the strategic development of the business ◦ ◦ ◦ ◦ ◦ ◦ Political Economic Social Technological Legal Environmental ◦ Identifying PESTLE influences is a useful way of summarising the external environment in which a business operates…….PESTLE analysis….. ◦ …but must be followed up by consideration of how a business should respond to these influences 18 .

You are buying an existing pharmacy business… Conduct a PESTLE analysis to define the environmental factors which might influence your strategy for the business moving forward? 19 .

corporation tax) Lifestyle changes (e. single households) 20 . gender. changing nature of occupations) Labour / social mobility Drug reimbursement Competition regulation Healthcare policies Social benefits (minimum wage. grants) Taxation (disposable income. capital investment. family size and composition.g. home working. PESTLE analysis Political Taxation (corporate. unemployment benefits. consumer) International trade regulation Economic Economic growth Social Income distribution (change in distribution of disposable income) Demographics (age structure of the population.

 PESTLE analysis Technological Rate of innovation Legal Consumer protection Environmental Environmental regulation R&D productivity Employment Law Pollution controls Rates of technological obsolescence Internet Competition Law Carbon tax DTC marketing Package disposal 21 .

Opportunities and Threats are external factors Strengths Opportunities Weaknesses Threats 22 . Opportunities. Weaknesses. Strengths and Weaknesses are internal factors ◦ In general.◦ Define Strengths. Threats of the business opportunity ◦ In general.

Prepare a SWOT analysis for buying a single practice pharmacy in Hatfield 23 .

Actions on the basis of SWOT:  Protect and exploit the Strengths and Opportunities Create an action plan to address the Weaknesses Focus on Threats – could undermine your business Risk management plan to address each Threat    24 .

Identify risks from PESTLE and SWOT analyses Rank risks according to:  Likelihood  Impact: L Likelihood H L Impact H 25 .

could undermine your business 26 . high impact or both Risks should be eliminated > mitigated > managed    Focus on high likelihood.Actions on the basis of RMP:  Define a plan to address each risk which is either high likelihood. high impact risks Prioritise .

27 .

2009 28 .“Revenues are the food. Cash is the oxygen” “Cash is King” “92% of start ups that fail in the first 3 years do so because of poorly managed cash flow” Robert Peston. Profit is the drink. BBC website blog.

 Investment is an essential input into your Business Control Loop Need for capital investment and working capital and a slush fund for perceived and unknown risks Must predict cash flow and plan for shortfalls   29 .

 Build a forward-looking spreadsheet model to predict cash flows in and out of the business each month     Clearly state your assumptions Be pessimistic (worst case)! Be realistic (don’t try and fool yourself)!! Use it to conduct scenarios and test sensitivity 30 .

31 .

 Target Market and Projections ◦ ◦ ◦ ◦ The size & growth rate of the market segments Sales estimates and market share? Pricing strategy? How are you going to grow the business? 32 .

 Economics. Profitability and Return ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Gross & operating margins Expected profitability Durability of the profits Time to breakeven & positive cash flow Key financial projections Return on investment Operating & cash conversion cycle Need a 5 year plan 33 .

◦ ◦ ◦ ◦ ◦ Sales Government grants sponsorship Licensing Internal 34 .

Payroll. waste disposable. PR. utilities Consumables Travel & Entertainment Lab/Office Rental Equipment & Maintenance Equipment Depreciation Telephone Printing and Stationary Postage & Carriage IT equipment and expenses Marketing & Advertising Professional Fees & Accountancy Insurance Banking costs Contingencies 35 .◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Wages & Salaries Recruitment Costs Staff Training costs & Welfare Outside services. HR.

What is the Deal? ◦ ◦ ◦ ◦ ◦ ◦ How much money is required? Cash for equity What return is offered for the investor? What exit is proposed? Added value of investor? Think „Dragon‟s Den‟ 36 .

15% of a company worth £100m is more than 100% of a company worth £2 million 37 .

 What next? ◦ ◦ ◦ ◦ ◦ Design the roll-out Share your plan judiciously Take ownership Revisit and revise Learn from mistakes 38 .

 Issues ◦ ◦ ◦ ◦ ◦ Tailor plan to primary audience Consider having more than one version Know your risks and their mitigation Data must be accurate and convincing Make sure forecasted and past performance are aligned 39 .

Managing the business – Project Management 40 .

 Why do projects fail? ◦ ◦ ◦ ◦ ◦ ◦ Poor project specification Unrealistic time scales Time scales that are too long Inappropriate staff Failure to manage user expectations Failure to manage the change required 41 .

 What is a project? 42 .

What? ◦ Provides a visual summary of a project ◦ Allows identification of key milestones and critical path ◦ Excellent project planning tool How? 43 .

 Critical path analysis? ◦ Minimum time to complete the project (or an individual task) ◦ Uses 2 key dates  Earliest start date  Latest finish date (last date which causes no delay)  Task can‟t start to day 7 and must finish by day 11  This allows 4 days however task itself takes 2 days  Provides a float of 2 days ◦ For example ◦ Critical event on a critical path is when the float is zero 44 .

project management. middle and end  Regular reviews of progress against plan  Assurance that the project continues to have a business justification  Flexible decision points  Management control of any deviations from the plan  The involvement of management and stakeholders at the right time and place during the project  Good communication channels between the project. and the rest of the organisation  A means of capturing and sharing lessons learned  A route to increasing the project management skills and competences of the organisation's staff at all levels 45 . Project management ◦ PRINCE (which stands for Projects in Controlled Environments) is a common tool used for project planning ◦ Benefits of using PRINCE:  A controlled and organised start.

◦ ◦ ◦ ◦ Prepare and launch a business plan Perform risk analysis Appreciate the need for financial controls Understand project management and the systems involved 46 .

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