Business Planning for Social Business

Prepared & Presented by:

William P. Kittredge, PhD

Social Business Launch Social Business Launch PadPad

Why Have a Business Plan?

Value lies in the process of researching and thinking

about your business in a systematic way

The act and learning process of making a business

plan may make you a better entrepreneur

Allows you to avoid big mistakes by developing a

game plan

Why Have a Business Plan?

One survey study shows that companies who

completed business plans were almost twice as likely to effectively

expand their businesses or acquire capital

compared to those who didn’t.2

General Company Description

Products and Services

What factors will give your product or services

competitive advantage or disadvantage?

What are the pricing, fee, or leasing structures of your

products or services?

Marketing Plan

Marketing PlanMarket Research

Why? Make sure your business is on track

How? Public information & gathering your own data

Economics:

What is the total size of your market?

What are its growth potential and opportunities?

What barriers to entry do face?

ProductFor each product or service

What are the most important features and why?

What will the product do for the customer?

Marketing PlanCustomers:

Who are your target customers (businesses or consumers)?

What are their characteristics (demographics)?

CompetitionWhat products and companies will compete with you?

How will your Competitive Analysis look?

Marketing Plan

Marketing Plan• Niche

• How does your company fit into the world?

• Strategy• Promotion: How will you get the word out to

customers?• Promotional Budget: How much will it cost to get

the items needed for promotion?• Location: Is your location important to costumers?

Is it convenient?• Distribution Channels: How will you sell your

products/services?

Marketing Plan: Sales Forecast Spreadsheet

Attaches numbers to your plan

Based on historical sales, marketing strategies, market research, industry data

Two forecasts: “best guess” and “worst case”

Operational Plan

Management and Organization

• Who will manage the business on a day to day basis?

• What experience does that person bring to the business?

• What special and distinctive competencies?

• What is the plan if this person is lost in incapacitated?

Management and Organization

• Identify and list professional and advisory support– Board of directors

– Management advisory board

– Attorney

– Accountant

– Insurance agent

– Banker

– Consultant(s)

– Mentors and key advisors

Personal Financial Statement

Shows assets and liabilities held outside the business and personal net worth.

Startup Expenses and Capitalization

• Estimate expenses. Will you have sufficient capital?

• Your business may cost more than you anticipate• Add “padding” to the budget

• Add separate “contingencies” to account for the unexpected

• Explain your research, sources, amounts, and terms of proposed loans.

• Explain how much each investor contributes and what percent of ownership each will have.

Expenses and CapitalizationSpreadsheet

Budgeting

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Financial Plan• 12-month profit and loss projection What

it will take to make a profit and be successful?

• 3- year profit and loss projection Optional projection if company wants to forecast longer term

• Projected cash flow Plan how much you need before startup for preliminary expenses, operating expenses, and reserves

Financial PlanProfit and Loss Projections

Financial Plan• Opening day balance sheet what

assets the company holds, what its liabilities are

• Break-even analysis predicts sales volume at a given price required to recover total costs

Financial Plan

Financial Plan

Break-Even Point Q = Fixed Cost / (Unit Price - Variable Unit Cost)

Appendices• Include details, studies, graphs and charts in

your business plan, for example:• Brochures and advertising materials

• Industry and market research studies

• Blueprints and plans

• Maps and photos of location

• List of equipment owned and to be purchased

• Copies of leases and contracts

• Letters of support

• List of assets available for a loan

Refining the PlanFor Raising Capital

Bankers: Amount of loan, how the funds will be used, what will it accomplish, requested payment terms

Investors: Funds needed for short term and long term, how the funds will be used, estimated return on investment, exit strategy for investors, financial reporting

Refining the PlanFor Types of Business

Refining the PlanFor Types of Business

Refining the PlanFor Types of Business

Refining the PlanFor Types of Business

Executive Summary• Write this section last with 2 pages or fewer

• Explain the fundamentals of the business:• What is your product?

• Who are your customers?

• Who are the owners?

• What do you think the future holds?

• Enthusiastic, professional, complete, and concise.

Reporting Reporting ResultsResults

Monitoring & Impact Measurement : Social ROI

ROI refers to a single ratio - SROI is more like TBL reporting.

Value based, in part, perception and experience of stakeholders

Employs indicators of change

Where possible, uses monetary values for these indicators.

It is an emerging management discipline: a skill set for the measurement and communication of non-financial value.

Monitoring & Impact Measurement : Social ROI

Example: Water purification systems social business

Impacts: Educational FinancialPublic Health

Indicators:Attendance and Test Scores; also testimony of teachersDisplacement of prior costs, including health careImprovement in public health; measured as lower cost to

government and charity provided healthcare systems

Social ROI:Monetisation principle

Practical benefits of Monetary proxies :

it induces transparency since it precipitates the clarification of which values have been included and which have not been included;

it permits sensitivity analysis to show which assumptions are more important in that the result is more affected by changes in some assumptions than others;

it helps identify the critical sources of value and so streamlines performance management.

Social ROI:Monetisation principle

Practical benefits of Monetary proxies :

it induces transparency since it precipitates the clarification of which values have been included and which have not been included;

it permits sensitivity analysis to show which assumptions are more important in that the result is more affected by changes in some assumptions than others;

it helps identify the critical sources of value and so streamlines performance management.

Social ROI:Monetisation principle

Don't get crazy with the numbers

Some things cannot be quantified or monetised

How many kilos do you love your Mother?

How many meters do you love Thailand?

Who would be silly enough to ask this type of question?

Social Business Social Business Action Plan Action Plan

Action Plan

1. Clearly define your objective: it must be measurable and achievable.

2. Decide who is to be involved in your action-planning group.

If your objective is a small, personal goal, it may be only you.

However, if it is a company objective you may want to include people who will be involved in carrying out the action plan.

3. Hold a brainstorming session with the participants to establish all possible courses of action that must be taken in order to achieve the desired objective.

Action Plan4. Develop an action plan according to the template handed out in class or something that works for you that contains the same information.

5. Review the plan thoroughly to check that it is complete.

6. Implement your action plan.

7. Track the progress achieved and tick off completed tasks.BE HONEST

8. Review and amend the action plan on an on-going basis.

9. Communicate with all of the people involved throughout the process.

Action Plan

8. Review and amend the action plan on an on-going basis.BE RUTHLESS

9. Communicate with all of the people involved throughout the process.

Funding Social Funding Social Business Business

Social Business is Still Business

The addition, or substitution, of a 'social good' to, or for, 'profit'

• Changes the purposes (outcomes) of the activity

•Intention to create a 'social good' rather than 'profit' for investors

• Does not change the mechanics of enterprise

•Cannot survive if cannot pay the bills•Must still recruit, train, support and manage people•Must acquire financing

Social Business Financing

Crowd-sourcing very popular

Good source for finding potential capital funders:

Google: Charity Navigator

DAF Direct

Indiegogo

Kickstarter

StartSomeGood.com

Social Business Financing

Direct purchase support:

Google: Shopfunder

Ebay Store

Micro-loans:

Google: Kiva.org

donationpay.org

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Social Business Financing

Local and National Business Groups – social business funding may be part of their CSR or could be

Banks doing CSR

International Corporations in Thailand, e.g. Toyota

Do Not Be Shy!!

Social Business Financing

Where to learn how:

Google: RocketHub Success School

AIT Yunus Center

StartSomeGood Crowdfunding 101

Final Thoughts Final Thoughts

Social Business Networking

Networking globally with social entrepreneurs:

Facebook:

Social Business and Economics https://www.facebook.com/SocialBusiness.org?fref=ts

Social Business Student Forum: https://www.facebook.com/SBSForum?fref=ts