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How to Build A Successful BusinessPlan for a Small Business
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Bill Gates
Born 1955
15 years: first virus
18 years: Harvard Law School 19 years: read THE article
21 years: started Microsoft
22 years: launched MS DOS
23 years: Sold 2 million copies of MSDOS
NOW: 45+ Billion USD
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Why write a Business Plan
1. Because I have to
Needed for financing
Strategic partnering Attract key people/investors
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Why write a Business Plan
2. Because I Need to Understand My Business
The Plan is the result of a planning process
People Dont Plan to Fail; They Fail to Plan Who are my customers? Why will they buy my product or service? What will they pay? How will I make and deliver/sell the service/product?
What resources (people, money, technology) do I need? Can I make money / create value? Do I have the right team on board?
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The Right Ingredients
ATEAM with Relevant Experience
Market Size
Idea
Technology
Competitive Advantage
Reasonable Projections Exit Strategy
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Company
Structure
Financials
Operations
&
Production
Team
Idea
Market
Competitive
Edge
Marketing
Strategy
Business
Plan
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Business Planning Steps
1. Idea generation, Vision, Mission,Objectives, Strategies
2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation
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1. The Idea
Innovative product or service
Visualize a market gap youcan add value
Imported idea
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Vision
1st Objective
2nd Objective
3rd Objective
4th Objective
Strategy
Where do you want to go at
the end?
What is the road
map and major mile
stones?How will
you reach
your
objectives?
Vision
Objectives
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Mission:Stakeholders
Family
Work
Friends
Religion
Country
Community
Who are your stakeholders and what is
your mission to each one of them?
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Mission:Stakeholders
Shareholders
Employees
Customers
Suppliers
Country
Community
Who are your stakeholders and what is
your mission to each one of them?
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Business Planning Steps
1. Idea generation, Vision, Mission,Objectives, Strategies
2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation
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2. MarketAnalysis
Market size How big is it NOW?
Trends how fast is it or will it grow? Market Players Competitors
Competitive Advantage
Estimated market shares Existing/planned products in the marketplace
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MarketAnalysis (contd)
Market segmentation Demographical
Age, gender, marital status, income Geographical Life style Consumer buying behavior decision makers
Is this the RIGHT time for my product? Is there a gap that I can fill?
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Business Planning Steps
1. Idea generation, Vision, Mission,Objectives, Strategies
2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation
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Who are my TARGET customers?
Why would they buy my product? How much would they pay?
What are the special features in my product?
What is my competitive advantage
It is all about your EDGE
3. Marketing Strategy
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Business Model
How Shall I reachmy target customers?
Direct Sales Mass Media - Advertising Retail The Web Telemarketing / Phone Sales Trade Shows and Conferences Channels, Distributors and Partners
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Business Planning Steps
1. Idea generation , Vision, Mission,Objectives, Strategies
2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation
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4. Production plan
Technology
Equipment
Raw Material Sourcing
Operation Plan and Capacity
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Business Planning Steps
1. Idea generation , Vision, Mission,Objectives, Strategies
2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation
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5. Management Plans
Getting the RIGHT Teamon board
Training
Delegation
Empowerment
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Business Planning Steps
1. Idea generation , Vision, Mission,Objectives, Strategies
2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation
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6. Financial Plans
Income Statement Projections Revenues Assumptions Costs/Expenses Assumptions Depreciation Assumptions Interest Expenses Assumptions Taxes
Cash Flow Projections
Initial investment Working Capital (Payables vs Receivables) Capital Expenditure (Capex) Debt Assumptions
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Income StatementObjective:provides information about the firms operating activities over a
specific period of time.Revenue: 100 100%
- Cost of Goods Sold (COGS): 60 60%
Gross Profit (Profit Margin) 40 40%
Operating Expenses:
General & Administration 8 8%
Sales & Marketing 12 12%
- Total Operating Expenses 20 20%
Earning Before Interest, Tax, Depreciation & Amortization (EBITDA)20 20%
- Depreciation & Amortization 5 5%
Earning Before Interest and Tax (EBIT) 15 15%
- Interest Expenses 5 5%
Net Income Before Tax 10 10%
-Taxes 2 2%
Net Income 8 8%
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Financial Plans (contd)
Financial Measures ROI Break-evenNPV IRR
Providing needed Capital Equity Debt
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Business Planning Steps
1. Idea generation
2. Market research and Analysis
3. Marketing strategy
4. Production planning
5. Management and Organization
6. Financial plan
7. Company formulation
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7. The Company
Name logo - slogan
Legal structure
Location
Mission Values - Objectives
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Elements of the
Business Plan
1. Executive Summary2. The opportunity, the company and
product/service
3. Market research/analysis4. Economics of the business5. Marketing strategy and plan6. Design and development plan7. Manufacturing and operations plan
8. Management team9. Action Plan: Schedule, risks, problems10. Financial plan
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Finally: No Risk No Gain
If we all did the things we are really capable of doing,
we would literally astound ourselves
Thomas Edison
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