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ENTREPRENEURSHIP

Module:- 6
CONTENT

 Project Preparation.

 Feasibility and Evaluation.

 What is the Business Plan?

 Various types of Business plans.


Project Preparation
The project preparation phase, depicted below, focuses at two main activities, i.e. to
make a setup for the TSO and to define a solution vision. These activities allow an
organization to put in on the right track towards implementation.

First Activity:-
The first major step of the project preparation phase is to design and initially staff an
SAP technical support organization (TSO), which is the organization that is charged
with addressing, designing, implementing and supporting the SAP solution. This can be
programmers, project management, database administrators, test teams, etc. At this
point, the focus should be at staffing the key positions of the TSO, e.g. the high-level
project team and SAP professionals like the senior database administrator and the
solution architect. Next to that, this is the time to make decisions about choosing for
internal staff members or external consultants.
Second Activity:-

The second project preparation job is to define a so-called solution


vision, i.e. a vision of the future-state of the SAP solution, where it is
important to address both business and financial requirements
(budgets). The main focus within the vision should be on the
company’s core business and how the SAP solution will better enable
that core business to be successful. Next to that, the shortcomings of
the current systems should be described and short but clear
requirements should be provided regarding availability (uptime),
security, manageability and scalability of the SAP system.
Perform cost of ownership analysis:-

This phase starts with performing a total cost of ownership analysis (TCO
analysis) to determine how to get the best business solution at the lowest costs.
This means to compare SAP solution stack options and alternatives and then
determine what costs each part of the stack will bring and when these costs
will be incurred. Parts of the stack are for example the hardware,
operating system and database, which form the acquisition costs. Next to that,
there should be taken a look at recurring costs like maintenance costs and
downtime costs. Instead of performing a complete TCO analysis for various
solution stack alternatives that would like to compare, it can be wise just to do
a so-called delta analysis, where only the differences between solutions
(stacks) are identified and analyzed. The image at the right depicts the essence
of a delta analysis.
Identify high availability and disaster recovery requirements:-

The next step is identifying the high availability requirements and the
more serious disaster recovery requirements. This is to plan what to
do with later downtime of the SAP system, caused by e.g. hardware
failures, application failures or power outages. It should be noted that
it is very important to calculate the cost of downtime, so that an
organization has a good idea of its actual availability requirements.
Feasibility Study
1. THE NEEDS ANALYSIS
2. THE OPTIONS ANALYSIS
3. FINANCIAL ASSESSMENT
4. ECONOMIC ASSESSMENT
5. DEMONSTRATE PROJECT VIABILITY
6. VERIFY INFORMATION AND SIGN-OFF
The Needs Analysis

In this stage the transaction advisor gathers all the available information on the
project, institutions’ present and future needs, and the resources on-hand for
project development/implementation, including budget. Existing and future
needs of the institution pertaining to the project and resources available for its
implementation are assessed and analyzed.
The Options analysis

Options analysis provides a range of technical, legal and financial options


available to the institution for meeting its output specifications. The various
options identified are evaluated against a set criteria specific to the project,
thus allowing the institution to choose a preferred option from the available.
For example, if the institution were faced with the need to offer working
environment accommodation services for its staff of 1000 people, the
reasonable options available to the institution might be to:
a) rent space in another more suitable building
b) refurbish its current building or refurbish another building, or
c) construct a new building
With the rental option, the institution could enter into a rental agreement for
office space in another building, move its staff and continue operating.
With the refurbishment option the institution could either decide to refurbish
the building itself and provide its own ancillary services (cleaning, security, IT, furniture, etc)
Financial Assessment
In this stage the deliverable is a risk adjusted of the project. Model will analyze the
financial soundness of the proposed project including fiscal sustainability of the project
based on the costs projected for adequate maintenance and operation of the project. The
model will represent the cost of delivering the preferred solution.
Financial model must also include an evaluation of the impact of the project on public
sector/government finances, taking into account
(a)The incremental taxes that would result from the project
(b) The increase in recurrent costs resulting from the project and the prospects for
financing this increase
(c) The overall level of recurrent costs required to operate the project adequately
(d) The budget allocated by the institution where this is relevant and
(e) The availability and certainty of counterpart funds for the project.
Here the transaction advisor calculates the incremental benefits and costs of the
project to the society as a whole based on “with” and “without” project scenarios, and
demonstrate in economic terms that the proposed project is the least cost option when
considering both capital and recurrent costs.
 Determine the economic costs of the project (investment cost and operating
cost)
derived from the financial costs by excluding taxes and project preparation duties

and by converting the non-traded components to the domestic price numeraire;


Determine major assumptions to be applied to the economic analysis including
(i) projected life of the proposed project asset, (ii) constant value (currency and
year) for defining incremental costs and revenues and (iii) opportunity cost of
capital based on the current savings rate of local commercial banks.
 Estimate expected economic benefits to be generated from the project such as
increase in land costs, time saving, employment generation, improved public
Demonstrate Project Viability
Here a projects’ viability is assessed taking into account the following points;
• Is it technically deliverable
• Affordable to users
• Economically viable
• Financially viable to investors
• Socially and environmentally sustainable
Feasibility study must also identify appropriate and comprehensive collateral
security arrangements required for making the project bankable, for example;
in some cases there may be a need for Viability Gap Funding (VGF)
Viability Gap Funding is a strategy for supporting the delivery of basic services
such as; electricity, telecommunications, water, sanitation, and transport where
policy
concerns justify public funding to complement or replace user fees.
Verify Information and Sign-Off
The Institution must ensure that all information used in the feasibility study is
as accurate and verified as possible. This will include
• A statement from all advisors on the reasonableness of the information collected
and the process by which the information was collected.
• A description of how the assumptions used in constructing the financial model
are realistic and appropriate, taking into account past practice, performance,
current practice and anticipated future developments. For complex projects an
independent party will check if the assumptions are reasonable, and confirm that
they have been correctly incorporated into the model to produce an accurate
result .
• Ensuring that all the inputs into the feasibility study are signed off as accurate
and verified by each of the transaction advisor specialists.Once this information
verification and sign off has been completed the approval process must be
completed in accordance with applicable law
What is the Business plan?

The business plan is written document prepared by the


entrepreneur that describes all the relevant external and internal

elements involved in starting a new venture. Business plans are


also called strategic plans, investment plans, expansion plans,
operational plans, annual plans, internal plans, growth plans,
product plans, feasibility plans, and many other names. These are
all business plans.
Different Types of Business Plans

The most standard business plan is a start-up plan, which defines the steps for a
new business. It covers standard topics including the company, product or service,
market, forecasts, strategy, implementation milestones, management team, and
financial analysis. The financial analysis includes projected sales, profit and loss,
balance sheet, cash flow, and probably a few other tables. The plan starts with an
executive summary and ends with appendices showing monthly projections for the
first year.
Internal plans are not intended for outside investors, banks, or other third parties. They might
not include detailed description of company or management team. They may or may not include
detailed financial projections that become forecasts and budgets. They may cover main points as
bullet points in slides (such as PowerPoint slides) rather than detailed texts.

An operations plan is normally an internal plan, and it might also be called an internal plan or
an annual plan. It would normally be more detailed on specific implementation milestones, dates,
deadlines, and responsibilities of teams and managers.

A strategic plan is usually also an internal plan, but it focuses more on high-level options and
setting main priorities than on the detailed dates and specific responsibilities. Like most internal
plans, it wouldn’t include descriptions of the company or the management team. It might also
leave out some of the detailed financial projections. It might be more bullet points and slides than
text.
A growth plan or expansion plan or new product plan will sometimes focus on a specific
area of business, or a subset of the business. These plans could be internal plans or not,
depending on whether or not they are being linked to loan applications or new investment.
For example, an expansion plan requiring new investment would include full company
descriptions and background on the management team, as much as a start-up plan for
investors. Loan applications will require this much detail as well. However, an internal plan,
used to set the steps for growth or expansion funded internally, might skip these descriptions.
It might not include detailed financial projections for the whole company, but it should at
least include detailed forecasts of sales and expenses for the new venture.

A feasibility plan is a very simple start-up plan that includes a summary, mission statement,
keys to success, basic market analysis, and preliminary analysis of costs, pricing, and
probable expenses. This kind of plan is good for deciding whether or not to proceed with a
plan, to tell if there is a business worth pursuing.