Business Plan

Business Plan
Antonio Ghezzi, PhD

antonio1.ghezzi@polimi.it
What is a business plan?
A process/group of activities aimed at gathering, analyzing and

evaluating information
A group of methodologies developed in various disciplines (e.g.

Strategy, Marketing, Accounting, etc.) but integrated in a new
framework
A document reporting the main results of the analyses and of

the evaluations
Politecnico di Milano 2
When is a Business Plan needed?
Type of company
Existing company Start-up
Strategic decisions
which require a
comprehensive
analysis
Investment evaluation Business Plan
Business Plan objectives
Planning
To evaluate the feasibility/profitability of the new company
To find resources and competences
To analyse and face the major risks
Communication
External players
Internal players
Control
Evaluation
Learning by doing
Sources of financing
Debts
Financial Institutions
Government Agencies
Services
Incubators
Science & Technology Parks
Equity
Venture capitalists
Business angels
Big corporations
Business Plan contents
Executive summary
Description of the business model
Strategic plan
Marketing plan
Operating plan
HR plan
Economic and financial plan
Executive summary
Business Idea
Business Area attractiveness
Resources/competences
Expected results
Business Plan objectives
Description of the business
model
The Business Model Canvas
10
Value
Infrastructure Value Proposition
Economic Formula
11
The Building Blocks of a Business Model
A. Osterwalder, Y. Pigneur, 2009
A business model can be described by looking at a set of nine building blocks. To get a
good picture of the business model the following aspects must be described:
1. Customer segments: the groups of customers with specific characteristics.
2. Value proposition: The bundles of products and services that satisfy the customer
segments needs
3. Distribution channels: The channels through communication is made with
customers and value propositions are offered.
4. Customer relationships: The types of relationships entertained with each
customer segment.
5. Revenue streams: The streams through which revenues are earned from
customers through value creation and customer management activities.
6. Key resources: The key resources on which the business model is built
7. Key activities: The most important activities performed to implement the business
model.
8. Partner network: The partners and suppliers we work with.
9. Cost structure: The costs incurred to run the business model.
12
Ryanair BMC
The Lean Canvas
Strategic plan
The SWOT analysis
Vision and mission

Objectives and constraints
SWOT analysis
External analysis Internal analysis
PEST analysis Resources/competences

5 forces analysis Value chain
Generation and evaluation
of strategic options
Vision and mission
Strategic objectives
Measurable
Linked to the Economic Value
Credible and attainable but
ambitious (they have to lead to attractive financial results)
Objectives and economic value
Economic value
Net Cash Flows Terminal value
Economic profitability Financial profitability Intangible R/C

Volume
e.g..: e.g..: e.g..:
e.g..:
margin IRR brand reputation & awareness
critical mass
gross margin know-how, skills
growth rates PBT (pay back time)
EBITDA strategic options
Time based objective

(i.e. 1st mover)
External analysis
Environmental macro-variables
Identification of key variables
Evaluation of their impact
Broad competition
Identification of industrys boundaries and segmentation
Enlarged competitive analysis through five competitive forces
model
Strategic segmentation
Generation of significant segmentation variables

Features of products/services portfolio
Reference geographical market
Degree of vertical integration

...
Mapping of companies toward segmentation variables
Definition of the reference strategic group

and other strategic groups
Business area attractiveness
Bargaining power
toward customers
Substitute Internal Potential new

products rivalry comers
Bargaining power
toward suppliers
Internal analysis
Start-up
Definition and evaluation of core resources and competences
resources and competences to exploit
resources and competences to develop
Existing company
Definition of sustainable competitive advantage through the Value Chain approach
support
activities
Suppliers Customers
primary activities
Marketing Plan
Value Proposition
Politecnico di Milano
24 24
Possible approaches
Market share
Analysis and evaluation Forecast of revenues
of the market
Action on the
marketing
Forecast of revenues levers related
Check of the to the
related to the actions on
Market share forecasted
the marketing levers
revenues
Marketing mix and bdg

top down
bottom up
Market analysis
General outlines of the market
size
demand sources
estimated growth rate
Market segmentation
desired product attributes

Generation of
demographic variables segments toward
which the company
psychological variables wants to focus
methods of purchase
Market analysis: sources of information
Information sources
more innovative business

ideas
primary secondary
market in house Internet

research
companies Magazines, publications
Research companies
Statistics

Desk research
Expert opinions
Others
Marketing mix strategy
Product/Service
Price
Place (channels)
Promotion
Products/services
Physical description of products/services
Uses
Plus
Cost
Quality
Service

Stage of development
Price
Definition of price strategy
Level (high, medium, low range)
Motivations of price policy (costs, market

characteristics, strategy, competitors, etc.)
Future dynamic
Discount policy and/or seasonality
Place (Channels)
Choice of points of sales
direct interface with market

franchising
points of sales managed by other companies
Choice of commercial channels

they are paid as a percentage on sales volume
Use of internal sales force
Use of commercial agents
Use of wholesalers they buy and re-sell products assuming entrepreneurial risk
Size of distribution network

how many sellers
compensation policy
organization
Promotion
Objectives and target
Definition of
promotional channels
Evaluation of efficiency
and effectiveness
distribution
Definition of marketing among
strategy and budget channels
continous monitoring
and learning
Promotion
Traditional Advertising
television/radio
press presentation of
the commercial
billposting / leafleting
offer
Promotion
offers/special sales
free samples incentives for

consumers and/or
discount/premium coupons intermediaries
demonstrations
Promotion
Sponsorship and public relations
press releases
conferences, seminars, congress not expensive
editorial/journalistic
Sponsorship and public relations
spaces
Online
SEO (Search Engine Optimization)

Direct
Online ADV (banner, etc.)
communication
Keyword ADV to consumer or
sales force
DEM (Direct E-mail Marketing)
Social ADV 34
Lead Generation (generation of prospects)
Operating plan
Value
Infrastructure
Key processes
Identification of the key processes
Boundaries of the value chain (make or buy)
Coherence of market and output
Managerial logic
Mapping of the processes (ex. PERT, CPM, )
Key resources, inputs and Partners
Resources:
Tangible assets (plants, machineries, computers, )

Intangible assets (patents, brands, databases, )
Key human resources (skills, competences)
Input: Raw materials, components, services,
Key suppliers and possible partnerships
First-cut evaluation of costs and required investments
Human resources and organisation plan
Core human resources
Organisation
Human resource
management systems
Economic and financial Plan
Economic Formula
39 39
Economic and financial projections
Basic hypotheses
Projected income statement balance sheet
Profitability ratios
Liquidity ratios
Projected cash flow statement
Capital budgeting indicators
Sensitivity analyses
Basic hypoteses
Objective: to synthesize and translate all the planning choices

made in the previous plans in economic values
Example:
Revenues and promotional budget come from marketing plan

Staff cost and technological investment come from operating plan

Also there needs to be an estimate of the reference time horizon on which

economic and financial forecasts are based (3-10 years)
Balance sheets
Projected Profit and Loss
Activities and Liabilites (at least a draft)
Profitability ratios (e.g ROE, ROI, ROS, ROA, break even point,
etc...)
Liquidity ratios: A class of financial metrics that is used to determine a company's

ability to pay off its short-terms debts obligations. Generally, the higher the value of the
ratio, the larger the margin of safety that the company possesses to cover short-term
debts
Current ratio: Ac/Lc

Quick ratio: Ac-s/Lc
Cash Flow/Debts
Net cash flow
Net cash flow(t) = NI(t) + A(t) + D(OWC) + D(IC)
net income change of

invested
capital (total
asset)
amortizations and
depreciation
change of Net Operating Working Capital (account

receivable, inventories, account payable)
Financial needs
Net Cash flow scheme

on a yearly basis Cumulated NCF
Cash flow scheme

on a monthly basis Months
Calculation of cumulated net cash
flow
Financial need = lowest value of

cumulated net cash flow
Financial need
Capital budgeting indicators
NCF t
T
V T T
NCFt V T
NPV I0 I0 0
t 1 1 k 1 k t 1 1 IRR 1 IRR
t T t T
NCF(t) = net cash flow t year V(T)=0
k = cost-opportunity of capital Perpetuity:
I0 = initial investment V(T)=NCF(T) normalized/K
V(T) = terminal value V(T)=NCF(T)

normalized/(k-g)
(g = growths rate of NCF)
Multipliers
Sensitivity analyses
IRR
Sensitivity analysis
revenues
What-if analysis
revenues
IRR
Market
growth rate
Scenario analysis
Optimistic Average Pessimistic
Business Plan
Antonio Ghezzi, PhD
antonio1.ghezzi@polimi.it

Business Plan

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Business Plan

Hochgeladen von

Copyright:

Verfügbare Formate

Business Plan

Antonio Ghezzi, PhD

A process/group of activities aimed at gathering, analyzing and

A group of methodologies developed in various disciplines (e.g.

A document reporting the main results of the analyses and of

Existing company Start-up

Investment evaluation Business Plan

Vision and mission

External analysis Internal analysis

PEST analysis Resources/competences

Linked to the Economic Value

Credible and attainable but

ambitious (they have to lead to attractive financial results)

Net Cash Flows Terminal value

Economic profitability Financial profitability Intangible R/C

Time based objective

Generation of significant segmentation variables

Degree of vertical integration

Mapping of companies toward segmentation variables

Definition of the reference strategic group

Substitute Internal Potential new

Marketing mix and bdg

General outlines of the market

estimated growth rate

desired product attributes

more innovative business

market in house Internet

Level (high, medium, low range)

Motivations of price policy (costs, market

Discount policy and/or seasonality

direct interface with market

Choice of commercial channels

Size of distribution network

Objectives and target

free samples incentives for

SEO (Search Engine Optimization)

Lead Generation (generation of prospects)

Identification of the key processes

Boundaries of the value chain (make or buy)

Coherence of market and output

Mapping of the processes (ex. PERT, CPM, )

Tangible assets (plants, machineries, computers, )

Input: Raw materials, components, services,

Key suppliers and possible partnerships

First-cut evaluation of costs and required investments

Core human resources

Projected income statement balance sheet

Projected cash flow statement

Capital budgeting indicators

Objective: to synthesize and translate all the planning choices

Revenues and promotional budget come from marketing plan

Also there needs to be an estimate of the reference time horizon on which

Activities and Liabilites (at least a draft)

Liquidity ratios: A class of financial metrics that is used to determine a company's

Current ratio: Ac/Lc

Net cash flow(t) = NI(t) + A(t) + D(OWC) + D(IC)

net income change of

change of Net Operating Working Capital (account

Net Cash flow scheme

Cash flow scheme

Financial need = lowest value of

NCF(t) = net cash flow t year V(T)=0

k = cost-opportunity of capital Perpetuity: