Developing a Business Plan

Prajakt Raut
President Angel Investors Consortium Executive Director The Hatch

Agenda
What is a business plan Key elements of a business plan Establishing a business case

Agenda
What is a business plan Key elements of a business plan Establishing a business case

A business plan is useless product.

But it is a priceless process.
Provides a structured and logical framework for planning your business Plans means nothing. Planning is everything.

Should address the following questions

o What problem or opportunity are we addressing? o How are we addressing it? o How are we planning to do it? o Why are we doing it? Create wealth Serve the poor/reduce unemployment/make people happy Do what I enjoy Etc., etc. The market/Target Audience

Product / service

Organization & Operations planning

Business case : measure against YOUR goal

Not all businesses are VC fundable.

And yours need not be.
VCs invest ONLY in businesses that can scale. You can have a small, yet profitable business.

VCs are not the only funding option.

Bootstrapping:
Debt:

Self-sustaining
Banks, SIDBI, etc.

Strategic investors :
Friends & Family:

Perhaps a potential customer?

Traditionally the most active Angels

A business plan has internal as well as external uses

Internal uses Understanding business case Planning your business Provides parameters to evaluate and External uses Funding Alliances Board members /

made adjustments
Monitoring progress Ensures team alignment

advisors
Partnerships Mergers and

Help recruit senior personnel

acquisitions

Whats the process of working on a business plan?

o Start with a story - See the film in your mind o Work out rough milestones and goals o Think deeply of how you will implement it o Work out the structure of an excel sheet with formulae

o Start working in the excel sheet assumptions are critical

o Work on multiple scenarios

o Finally, articulate it into the presentations

Its a little bit like planning a journey

Having a good idea is not the same as having a business plan.

Setting up a chain of coffee shops is more than just making great coffee

Building a coffee chain requires the following competencies

Real estate procurement
Food handling

Facilities management
Brand identity Marketing Sales Legal, finance, audit

Supply chain / procurement

Processes Standardization

HR hiring, training, retention

Service management

Vendor management
MIS

Etc. etc., etc.

Dynamics of an e-commerce business

Procurement Technology Platform Look & Feel user experience Ordering mechanisms including order on phone Payment gateways & methods Value proposition & Delivery & fulfillment mechanisms Warehousing Logistics partners Order Management Marketing strategy as well as tactical idea, sales strategy Media Plan & Budgets CRM Strategies & Ideas including loyalty programs, referrals, etc. Production/Packaging Supply chain

Portal

Product

Vendor management Capacity utilization

Logistics

Ecommerce

positioning

Brand Strategy

Target Audience Pricing

Brand Personality

Roles & Responsibilities identification

HR policies Team hiring & retention plan

Team

Marketing

How many vendors are involved?

19 Partners / Vendors involved in the implementation process
Technology & portal development partners Marketing & Brand Communication partners 1. Brand identity specialists 2. Photographer 3. Direct Marketing agency 4. Social Media Agency 5. Advertising Agency Operations partners 1. Packaging & printing partners 2. Logistics partners 3. Recruitment consultants 4. CRM partners/CRM platform vendors 5. Database vendors 6. Process Training Consultants

1. E-commerce capable
Technology partners 2. Hosting partner 3. User Interface partner

4. Payment Gateway
5. Testing & bug fixing experts

6. Media Buying agency

7. Soft Skill Training Consultants

8. Outsourced Call Centre

Assumptions are critical.

Wrong assumptions can be fatal.

How detailed should a biz plan be?

o Excel Sheet should be super detailed o Different presentations for different uses/audiences

Elevator pitch for introductions 1-2 page summary for preliminary intros 10 slide deck for initial presentation

Detailed presentations for follow-up meetings

Agenda
What is a business plan Key elements of a business plan Establishing a business case

Different stages of entrepreneurship carry different kinds of risks

And hence plans too need to address these

Different stages of the venture carry different risks

Scale

Stage

Risks at early stage Concept risk Execution risk Scale-up risk

Risks at growth stage Risks at early stage Concept risk Execution risk Scale-up risk Execution risk Scale-up risk

Risks at growth stage Risks at early stage Concept risk Execution risk Scale-up risk Risks at mature stage Scale-up risk Execution risk Scale-up risk

Risks at growth stage Risks at early stage Concept risk Execution risk Scale-up risk Risks at mature stage Scale-up risk Execution risk Scale-up risk

Proving concept Jugaad Flexibility

Fine-tuning offering Processes Focus

Operational efficiencies Increasing profitability New markets/new

capabilities/new concepts

Angel Investors/Seed Stage Funds

Venture Capitalists

Private Equity Funds

A Business Articulates the following

1) What you are going to do
2) How do you plan to do it 3) How will you make money from it A plan for your business
Do it for yourself not just for investors

Company Name /logo

One line business description: e.g. We are an online music release platform for artistes to sell or share their music

City: Stage: i.e. concept, post-pilot stage, growth stage Contact Person: E-mail id: Mobile:

Overview of your business

What is your service/product/concept? i.e. what do you do? i.e. Concept Whom is this service targeted at? i.e. your customers/consumers? i.e. The Target audience What is the business model? I.e. Who will pay how much and to whom What is the pain point you are addressing or what is the opportunity you are targeting? i.e. the need/value proposition What is the scale of aspiration? i.e. how large do you see yourself as in a 3-5 year time period?

Team
Brief description of each team member with key points on what he/she brings to the team [e.g. someone could lead technology, someone could lead marketing, etc.]

Product / Service Differentiator

Highlight the uniqueness of your offering i.e. why would your users be excited about your offering?

Business model
Types of business models
Free for users advertisers pay SAAS pay only for service / rental Pay per use Pay up front Annual / periodic payments Pay in installments

B2B2C

Example of a business model We have a B2B2C model. We will charge parents Rs.250 per child per month. This will be collected by the school from parents who subscribe to our service and will be paid to us at the beginning of every quarter. Students will be pre-registered but subscription is not compulsory and parents can choose to opt out. School will keep 20% of total revenues, which we will give them at the end of the year on achieving a pre-agreed minimum revenue commitment.

What is the size of the opportunity

Potential

What markets are you addressing e.g. India, global, etc. be specific for the 18 24 months horizon

Implementation plan
How do you intend to implement this concept?
Operations: procurement/supply chain/logistics/fulfillment, etc.

Marketing Strategy: how will you reach your customers

Sales strategy: How will you sell to those you reach Org chart: What team do you envisage to deliver this Mention your key assumptions, and highlight if different than generally accepted numbers

Your goals
In the next 3 6 months In the next 12 18 months or 24 months In the next 5 years

Indicate when you become profitable

Current achievements / status:

Competitive landscape

Who will you compete with? [current or in future] Why would someone choose you over them?

Why do you have a chance to be a dominant player?

Funding objective
How much do you need What do you need the money for i.e. what will you achieve with this money, when do you see profitability

Also mention any fund raising history, if any

Matrices being tracked

Sample.
Please use your own parameters

Needs gaps/disclosures/risks
What areas do you need assistance on

Agenda
What is a business plan Key elements of a business plan Establishing a business case