business plan basics-vinod manvi (savoire faire oct 2010

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Vinod ManviPrincipal Consultant

Savoir faire Management Services Pvt Ltd

Evaluating Potential-Understanding Scale & Growth

October 23, 2010

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Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

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Growth Object of Growth

Bigger,Larger,Stronger,Higher Smaller,Leaner,Flexible,Faster

The impossibility of Freeze Frame Questions –

Growth for Grow into

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Growth Metamorphosis

When Where How much Outcome

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Metamorphosis When

Is the time to grow now or later? Indian condition – demographic boom The Exponential Rule-doubling time

Where Products Sectors

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Metamorphosis How much

Volume Value Rate

Outcome Financials Non-Financials

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Key Points Purpose Vantage Point Be in the driver’s seat Desired Outcome

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Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

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Understanding Scale & Scope Economy of Scale Economy of Scope

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Understanding Scale Economies of Scale

Mass Production Lower transaction frequency Seeks to lower per unit cost Size matters

Basics Designing of business Concept of “Sunk Cost”

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Understanding Scope Economies of Scope

Increased Customisation Thrives on Flexibility High Product Proliferation Small is beautiful

Basics Market/Customer oriented Limitations of volume

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Considerations of Business Design Timing Funding Resources

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Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

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Growth Strategies The tasks of Strategic management

Develop Strategic Vision and Business Mission Set Objective Prepare strategy to achieve objective Implement or Execute above strategy Evaluate Performance Revise all of the above whenever needed

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Growth Strategies Generic Strategies

Cost Leadership Differentiation Focus Benchmarking Continuous Improvement

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Growth Strategies Moving beyond generic strategies

Continuity of strategy Continual Innovation Choosing new battlefields

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Moving Beyond Generics Continuity in Strategy

Cost Leadership- Lowest cost to Best Value Alliances 360 degree integration

Continual Innovation Definition of Ever changing Customer Value Transfer of Passion Speed

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Moving Beyond Generics Choosing new battlefields

Understanding hidden Value Creating “Blue Oceans”. Granularity of Customisation

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Key Points The strategic management process Understanding and implement Generic

strategies Go beyond the Generics Revise whenever needed

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Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

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Key functions Seek to serve Seek to operate Seek to earn Seek to manage

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Key Functions Seek to serve Seek to operate Seek to earn Seek to manage

• Customers • Markets• Sales•After Sales•Customer Support

• Operations• Production• Quaility of Output• Delivery• Managing Money

• Costing• Working Capital

• Resource Planning• Recruitment & Staffing• Training and Development

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Key Functions Seek to serve Seek to operate Seek to earn Seek to manage

•MARKETING

•OPERATIONS

• FINANCE• HUMAN RESOURCES

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Key functions Marketing

Marketing Plan Brand Building Sales Promotion

Finance Funding Options Investment Mix Working Capital Management

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Key functions Operations

Systems thinking Ensuring Quality and Performance Managing Costs

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Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

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Sustainability Clarity of thought Consistency in action Inequity in effort

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Clarity of thought Clarity of purpose of growth Clarity about implementability of the plan Built in scalability considerations of the plan Built in flexibility in the plan

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Consistency in Action Consistency in the thought processes Consistency in the key functions Consistency in monitoring of functions

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Inequity in action Understanding the current and near future

focus areas Adjusting the emphasis based on the current

needs Having a plan B ready. Taking time off to reflect- and act swiftly

whenever required.

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Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

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Key points for action Articulate the purpose of growth Have some clarity of the kind of organisation

that you wish to grow into Articulate what kind of economy that you wish

to adopt Articulate broadly the kind of strategy for

growth Have a vision of how and what your key

functions will look like Make a business plan for growth

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Vinod ManviPrincipal Consultant

Savoir faire Management Services Pvt Ltd

Starting Up – Creating a Business Plan

June 19, 2010

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Stability Rigidity

Flexibility Confusion

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Road Map Understand the “Customer” of the Business

Plan Egg or Hen – starting point for the business

plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

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Customer of the Business Plan

Long Term Investor Lender

Venture Capitalist/ Private Equity Customer

Yourself

Long Term Profit Earning Potential

Scalability; Exit

Will my money be

safe?

Intention of showing the Business Plan to

the Customer?!

Convincing yourself

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Road Map Understand the “Customer” of the Business

Plan Egg or Hen – starting point for the business

plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

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Balance Sheet Basics

Money Required

Fixed Assets

Working Capital

Money Funded

Share Capital

+ ReservesLoaned Funds

Net Worth

Source of Funds

Application of FundsFinancing Investing

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Egg or Hen? This is what I require…. ஃ this is the funding

required ……. OR This is the funding available … ஃ this is what

I’ll do with that fund

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Sourcing options Venture Capital Seed Capital Angel Investor Private Equity Lender Boot Strap

• Long Term• Managerial and Tech expertise• High risk, High return• Long term influence in the venture

• Friends and relatives• Pre-revenue stage• To attract the attention of the Venture Capital• To get the business off the ground•“At risk” investment of promoters

• More favourable terms than other type of investors• For the person than the project• Focus on helping the business succeed than huge profit for the future

• Not quoted on exchanges• Revival, multiple investors• Buy, Strip and Flip

• Building company from own finances

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Road Map Understand the “Customer” of the Business

Plan Egg or Hen – starting point for the business

plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

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Market or Capabilities Key factor/ Limiting Factor/ Constraint I know the size of the market I am going to

address I know the amount I require to run my

business to start with

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Road Map Understand the “Customer” of the Business

Plan Egg or Hen – starting point for the business

plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

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Assumptions Ockham’s razor (Pluralis non est

ponenda sine neccesitate) Explicit vs implicit assumptions

Understand the domains of control and influence

Info.Sources

Growth

Timing

Controls

Valid Assumption

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BeyondInfluence &

Control

Within

Sphere of Influence

Domains of Influence and control

WithinSpan of Control

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Assumptions

Assumptions proving incorrect Mistrust the obvious

Ockham’s razor (Pluralis non est ponenda sine neccesitate)

Explicit vs implicit assumptions

Understand the domains of control and influence

Info.Sources

Growth

Timing

Controls

Valid Assumption

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Road Map Understand the “Customer” of the Business

Plan Egg or Hen – starting point for the business

plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

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Purpose

Process

People

Prosper

49494949Sales Plan

Production

Plan

Cost Plan

Projected Profit and Loss Account

Investment Plan

Debt/ EquityPlan

Projected Balance Sheet

Cash Flow StatementMilestone

reporting

Assumptions

Charts/ Graphs

and Pictures

Critical Annexure

s

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What makes a good plan?

Simple Is it easy to understand

and to act on? Does it communicate its contents easily and practically?

Specific Are its objectives

concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible and specific budgets?

Simple

Specific

Realistic

Complete

Follow up

Actions

Results

Plan

• Realistic• Are the sales goals,

expense budgets, and milestone dates realistic? Is the plan complete?

• Complete• Does it include all the

necessary elements?

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Have a satisfied customer to have satisfied investor

Thank youvinod@sfccostmanagment.comwww.sfccostmanagement.com

+919867851919