Business Planning:

12 points ‘to trigger thinking’

Anjana Vivek
anjana@bizkul.com

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BUSINESS PLANS

BACKGROUND

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BUSINESS PLANS

I: A Business
Plan is a
Communication
Tool

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COMMUNICATION TOOL

Both substance and form are

important
Often, a reader’s perception of
your business/idea will be
based on the business plan you
prepare
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II: Think about

whom are you
communicating
to

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COMMUNICATION TOOL
Is it
- a VC
- an angel investor
- a strategic investor or
- someone else?
Each one of these will look at
the business plan differently
COMMUNICATION TOOL
Is it an expert who has some
understanding of your business,
i.e. such as a technologist or
domain expert?

Is it someone who is a an expert

in some other area without
knowledge of your industry?
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III: Logical
structure to the
plan

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STRUCTURE OF THE
PLAN
The plan must have structure and include
the following:
- Business / idea
- People behind idea/project
- Market size expected
- Marketing strategy
- Competition
- Financials
- Other information which makes this
complete
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SOME
PRACTICAL ASPECTS
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BUSINESS PLANS

IV: Projections
in new or
uncertain
markets

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TARGET MARKET SIZE
The markets may be:
- new
- unexplored
- latent
- uncertain
Think of testing markets or doing
market research in creative ways as
well as through standard practices
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V: Financial
Projections
when the
future is
unpredictable
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FORECAST FINANCIALS
There are so multiple variables in a
business, which impact the financials,
including, but not limited to:
- revenue streams
- costs, capital and revenue in nature
- capital infusion at different stages
- resource constraints
FORECAST FINANCIALS

These uncertainties can be factored

in to some extent by using the tools
of

- scenario analysis and

- sensitivity analysis
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VI: Valuation

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VALUATION
Valuation is based on:
- intangibles and
- tangibles

Valuation can be computed in

multiple ways, the popular methods:
- multiples of revenue; profit etc.
- multiples of key drivers, eg.user base
- cash flow based
VALUATION
Valuation may be driven by
- the stake the entrepreneur is
willing to give up at a particular
stage of investment in the
business and
- the amount of money required
by the business at that stage
VALUATION
Different persons can value the same
business differently because they may
- use different methods of valuation
- use variations in the methods
- have different inputs in the methods
Thus, valuation perceptions can vary,
and we do have situations where there
are divergent views on valuation
VALUATION
Deals can sometimes be
structured in such a way that the
differences in valuation
perception are factored, e.g.
linking valuation to performance
VALUATION
Valuation is also the outcome
of negotiations, so it is important
to identify one’s bargaining
power in relation to the deal
issues
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VII: Protection
of Intellectual
Property

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IP PROTECTION
If you do not disclose your plan; you
cannot expect an investor to evaluate
your business idea and fund you
If you do disclose this, you may lose
the idea to someone else, i.e. there is
a chance of your idea being stolen or
adapted and misused by someone else
What do you do?
IP PROTECTION

You need to do your homework and

background check on the potential
investor/partner; i.e. you also need to do a
due diligence on them just as they do a due
diligence on you
If you are looking for investment, at some
stage, you will need to disclose much of
your idea, so be prepared for this; a VC
typically does not sign an NDA
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Miscellaneous
points to think about
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VIII: Do you
disclose weak
points ?

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DISCLOSURE
If you do not disclose the
negatives, the investor will not
automatically assume that you
do not have any negatives in
your project/idea
DISCLOSURE

Prepare for due diligence by

identifying pitfalls upfront and
taking steps to mitigate/de-risk
to the extent possible
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IX: What are

the deal drivers

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DEAL ISSUES

Every business has issues which are

- deal drivers and

- deal breakers

Try to identify key deal issues from

- your perspective and
- the investors perspective
DEAL ISSUES
This can help you plan on how
you can leverage on your
strengths

This can help in negotiating a

better deal
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X: Roles of team
members ?

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TEAM MEMBERS
Plan on roles and
responsibilities of team members
in terms of execution

Plus think through issues of

members’ contribution
- in money
- in kind
- in intangibles
TEAM MEMBERS
Human egos can be fragile and
can lead to the break up of the
team

Recognise this and try to have

realistic expectations of yourself
and others
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XI: Getting
educated on
the basics of
managing a
business
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MANAGEMENT &
EXECUTION
Educate yourself about the
basics of managing your
business

Some things cannot be

outsourced
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XII: Issues of
transition to be
thought
through

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TRANSITION
Look at the stage of your business
and plan accordingly

Growing to the next level may lead

to issues such as
- letting go of control
- letting go of leadership

Are you ready for this?

THANK YOU

Wishing you all success