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Developing a Business Plan

Prajakt Raut
President – Angel Investors Consortium Executive Director – The Hatch

Agenda
• What is a business plan • Key elements of a business plan • Establishing a business case

Agenda
• What is a business plan • Key elements of a business plan • Establishing a business case

A business plan is useless product.
But it is a priceless process.
Provides a structured and logical framework for planning your business Plans means nothing. Planning is everything.

Should address the following questions
o What problem or opportunity are we addressing? o How are we addressing it? o How are we planning to do it? o Why are we doing it? Create wealth Serve the poor/reduce unemployment/make people happy Do what I enjoy Etc., etc. The market/Target Audience

Product / service

Organization & Operations planning

Business case : measure against YOUR goal

Not all businesses are VC fundable.
And yours need not be.
VCs invest ONLY in businesses that can scale. You can have a small, yet profitable business.

VCs are not the only funding option.
Bootstrapping:
Debt:

Self-sustaining
Banks, SIDBI, etc.

Strategic investors :
Friends & Family:

Perhaps a potential customer?
Traditionally the most active ‘Angels’

A business plan has internal as well as external uses
Internal uses • Understanding business case • Planning your business • Provides parameters to evaluate and External uses • Funding • Alliances • Board members /

made adjustments
• Monitoring progress • Ensures team alignment

advisors
• Partnerships • Mergers and

• Help recruit senior personnel

acquisitions

What’s the process of working on a business plan?
o Start with a ‘story’ - ‘See the film in your mind’ o Work out rough milestones and goals o Think deeply of how you will implement it o Work out the ‘structure’ of an excel sheet – with formulae

o Start working in the excel sheet – assumptions are critical
o Work on multiple ‘scenarios’

o Finally, articulate it into the ‘presentations’
It’s a little bit like planning a journey

Having a good idea is not the same as having a business plan.

Setting up a chain of coffee shops is more than just making great coffee

Building a coffee chain requires the following competencies
• Real estate procurement
• Food handling

• Facilities management
• Brand identity • Marketing • Sales • Legal, finance, audit


• •

Supply chain / procurement
Processes Standardization


HR – hiring, training, retention
Service management

• Vendor management
• MIS

Etc. etc., etc….

Dynamics of an e-commerce business
Procurement Technology Platform Look & Feel – user experience Ordering mechanisms – including ‘order on phone’ Payment gateways & methods Value proposition & Delivery & fulfillment mechanisms Warehousing Logistics partners Order Management Marketing strategy as well as tactical idea, sales strategy Media Plan & Budgets CRM Strategies & Ideas including loyalty programs, referrals, etc. Production/Packaging Supply chain

Portal

Product

Vendor management Capacity utilization

Logistics

Ecommerce

positioning

Brand Strategy

Target Audience Pricing

Brand Personality

Roles & Responsibilities identification
HR policies Team hiring & retention plan

Team

Marketing

How many vendors are involved?
19 Partners / Vendors involved in the implementation process
Technology & portal development partners Marketing & Brand Communication partners 1. Brand identity specialists 2. Photographer 3. Direct Marketing agency 4. Social Media Agency 5. Advertising Agency Operations partners 1. Packaging & printing partners 2. Logistics partners 3. Recruitment consultants 4. CRM partners/CRM platform vendors 5. Database vendors 6. Process Training Consultants

1. E-commerce capable
Technology partners 2. Hosting partner 3. User Interface partner

4. Payment Gateway
5. Testing & bug fixing experts

6. Media Buying agency

7. Soft Skill Training Consultants
8. Outsourced Call Centre

Assumptions are critical.
Wrong assumptions can be fatal.

How detailed should a biz plan be?
o Excel Sheet should be super detailed o Different ‘presentations’ for different uses/audiences

‘Elevator pitch’ for introductions 1-2 page summary for preliminary intros 10 slide deck for initial presentation

Detailed presentations for follow-up meetings

Agenda
• What is a business plan • Key elements of a business plan • Establishing a business case

Different stages of entrepreneurship carry different kinds of risks

And hence plans too need to address these

Different stages of the venture carry different risks

Scale

Stage

Risks at early stage • • • Concept risk Execution risk Scale-up risk

Risks at growth stage Risks at early stage • • • Concept risk Execution risk Scale-up risk • • Execution risk Scale-up risk

Risks at growth stage Risks at early stage • • • Concept risk Execution risk Scale-up risk Risks at mature stage • Scale-up risk • • Execution risk Scale-up risk

Risks at growth stage Risks at early stage • • • Concept risk Execution risk Scale-up risk Risks at mature stage • Scale-up risk • • Execution risk Scale-up risk

• • •

Proving concept Jugaad Flexibility

• • •

Fine-tuning offering Processes Focus

• • •

Operational efficiencies Increasing profitability New markets/new

capabilities/new concepts

Angel Investors/Seed Stage Funds

Venture Capitalists

Private Equity Funds

A Business Articulates the following
1) What you are going to do
2) How do you plan to do it 3) How will you make money from it A plan for your business
Do it for yourself… not just for investors

Company Name /logo
One line business description: e.g. “We are an online music release platform for artistes to sell or share their music’

City: Stage: i.e. concept, post-pilot stage, growth stage Contact Person: E-mail id: Mobile:

Overview of your business
• What is your service/product/concept? i.e. what do you do? i.e. Concept • Whom is this service targeted at? i.e. your customers/consumers? i.e. The Target audience What is the business model? I.e. Who will pay how much and to whom What is the pain point you are addressing or what is the opportunity you are targeting? i.e. the need/value proposition What is the scale of aspiration? i.e. how large do you see yourself as in a 3-5 year time period?

Team
• Brief description of each team member with key points on what he/she brings to the team [e.g. someone could lead technology, someone could lead marketing, etc.]

Product / Service Differentiator
• Highlight the uniqueness of your offering i.e. why would your users be excited about your offering?

Business model
Types of business models
• • • • • • Free for users – advertisers pay SAAS – pay only for service / rental Pay per use Pay up front Annual / periodic payments Pay in installments

B2B2C

Example of a business model “We have a B2B2C model. We will charge parents Rs.250 per child per month. This will be collected by the school from parents who subscribe to our service and will be paid to us at the beginning of every quarter. Students will be pre-registered but subscription is not compulsory and parents can choose to opt out. School will keep 20% of total revenues, which we will give them at the end of the year on achieving a pre-agreed minimum revenue commitment.”

What is the size of the opportunity

• Potential

• What markets are you addressing e.g. India, global, etc. – be specific for the 18 – 24 months horizon

Implementation plan
How do you intend to implement this concept?
• Operations: procurement/supply chain/logistics/fulfillment, etc.

• Marketing Strategy: how will you reach your customers
• Sales strategy: How will you sell to those you reach • Org chart: What team do you envisage to deliver this • Mention your key assumptions, and highlight if different than generally accepted numbers

Your goals
• • • In the next 3 – 6 months In the next 12 – 18 months or 24 months In the next 5 years

Indicate when you become profitable

Current achievements / status:

Competitive landscape

• Who will you compete with? [current or in future] • Why would someone choose you over them?

• Why do you have a chance to be a dominant player?

Funding objective
• How much do you need • What do you need the money for i.e. what will you achieve with this money, when do you see profitability

Also mention any fund raising history, if any

Matrices being tracked

Sample.
Please use your own parameters

.

Needs gaps/disclosures/risks
What areas do you need assistance on

Agenda
• What is a business plan • Key elements of a business plan • Establishing a business case