Presentation Transcript

1. Business Plan Guide

   HamidHoushmand
2. Purpose of a Business Plan Large company: Business plan from each division/subsidiary or operating unit Merger: A business plan Acquisition: A business plan Selling off a unit: A business plan New project/Product: A business/project plan Acquiring financing for a new growing business Due diligence: Once buying a company Reverse due diligence: Once acquiring a new company
3. Business Plan Functions Business plan: Map out the course of company over a period of time Determining future projects Performance over time: Determining how well goals have been met Raising money: A dynamic plan can facilitate financing Business planning is a continuous activity
4. Who Read The Business Plan Lender/Investor _ Character _ Cash flow _ Collateral _ Equity Contribution
5. Investors Venture capital funds _ Quality of the individual entrepreneur _ Functionality balanced team _ Proprietary Characteristics Time table _ Week 1-2 . Initial contact _ Week 3. Mailing executive summary or the complete plan _ Week 4-6. An Initial meeting _ Week 7-18. Follow-up _ Week 18. An offer from a financing source _ Week 19-26. Negotiation of the deal _ Week 26. Closing Self, family, friends Angles Vendors Corporate venture capitalists
6. Partnership Agreement Legal Tax issue Division of duties Operating rights and responsibilities Partnership structure
7. Due Diligence Valuation (shareholder value analysis) of the acquisition/merger linked to below act ivies with focus on risks Compatibility audit Financial audit Macro-environment audit Legal/environmental audit Marketing audit Production audit Management audit Information systems audit Reconciliation audit
8. Reverse Due Diligence Valuation of a company to be kept Positioning a company for potential sale Positioning a company for potential financing Positioning a company for initial public offering
9. Looking for investors How responsive is the investor What help, beyond financial, do they provide Do they provide strategic advice Transparent and share information How they behave in a crisis _ Calm reaction to pressure How involved do they get with your business - try to keep this open ended so you don’t lead the other founder to the answer you want to hear. One founders “very helpful” could be another’s ”smothering.” Do they prepare for board meetings Do they make helpful introductions (customers, potential members of the team, other funding sources) Have they been transparent with their time frame to exit
10. Business Plan _ Contents Table of contents Executive summary General company description Products and services Marketing plan Operational plan Management and organization Structure and capitalization Financial plan
11. Executive Summary _ Recommendation Be different- solving the problem with a new way Focus on the things you can do Be clear on what you want to accomplish Capitalize on past achievements Learn from your and others’ mistake Enlist the help of experts Check out your ideas with sceptics Network, Network, Network Load your mind with a great deal of information Look forward and never give up
12. Executive Summary The essence of the report _ micro version of the entire plan Should provide a good understanding of the Plan’s concept, finance, and metrices Generate an immediate interest Section by section format is one common format Functional areas: Product profile, marketing plan, operational plan (major milestones), business competence, financial plan Brief sales and profit history Brief on silent data: anticipated break-even points, return on equity Offering a message: a personal assessment on the business performance or optionally a message on the cover letter
13. General Company Description A few pages Fundamental activities and nature of the company Manufacturer, retailer, or service business Where is doing business Where is it located What customer is it attempting to serve What stage the company has reached Business objectives (realistic and attainable) Plan to go public, seek to be acquired, develop new line of business Brief on the management team Availability of capital Evaluation of risks and liquidity of company’s investments
14. Product and Services Attention to company’s products & services Physical description Use and appeal Stage of development Demonstration of prototype
15. Marketing Plan Not a simple concept: Interesting and thought provoking The most critical to a company’s success A real market need Market intensive business: elaborate presentation (compelling market plan)
16. Marketing Plan 2 Market definition and opportunity Competition and other influences Marketing strategy: distribution, advertising, promotion, pricing, selling incentives Market research Sales forecasts Support material: Industry studies, letter of support, brochures, reviews or articles
17. Market Definition and Opportunity Summary of industry growth, Trade association, trade literature, industry studies The source of demand The way demand is satisfied Market share required for success determine the degree of detail Identify relevant target markets, their natures and their importance
18. Competition and other influences Degree of competition Future sources of competition Other influences: Regulation, Terrorist or other threats
19. Marketing strategy How organize and implement its marketing plan Sales and distribution strategy Pricing strategy Advertising, public relations, and promotion Site analysis Related marketing budgets Future marketing activities
20. Market Research Preliminary market research Cost/benefit analysis to see the most effective market research In some market: secondary research Databases are available on line by subscription
21. Sales Forecasts Sales by periods Three forecasts: Typically, conservative, most likely Sales by product or service Sales by customer group Market share Support material
22. Operational Plan What is the general approach to manufacturing Which processes will be used in manufacturing What are the labour requirements How will suppliers and vendors be used?
23. Operational Plan Product development: The gap between design and an actual product. More detail on technical team and on the technology Manufacturing: plant, equipment, material labour, techniques and process, and output What processes in-house and what outsourced Maintenance and services
24. Operational Plan External influences: _ Changing technology _ Factors affecting productive resources (labour and raw materials) _ Customers _ Regulations _ IP protection, patents and licenses _ Risk of imitation
25. Management and Organization Addressing the company’s personalities : _ Will management be participative or autocratic _ Will personnel share in the company’s financial success _ Will responsibility be sharply defined or will be more flexible _ Will management be able to set a tone to entire organization
26. Management and Organization 2 Management team and principals Organizational chart: name, title, years of hiring, and salary Policy and strategy: Timing, Selection of employees, and Compensation
27. Management Team & Principals Founding entrepreneurs Active investors Key employees Directors Advisory board assisting technical, planning, marketing , operation Key advisors such as lawyer or accountant
28. Major Milestones Offer date in a generic manner Financial commitments Prototype development First market test Initiation of production and sales Attaining break even performance Expanding operation Past events Ambitious but achievable Leave a margin of comfort in planning
29. Structure for Capialization Legal form Sole proprietorship Partnership Limited partnership LLC S corporation C corporation
30. Structure for Capitalization Financial participation Capital requirements, how much is invested and how much is needed Term loans Line of credit Convertible bond Bond with a stock warrant Preferred stock Cumulative preferred stock Convertible preferred stock Common stock, voting stock and non-voting stock
31. Financial Plan Company’s anticipated financial performance: Reliable data More than one financial scenario, due to uncertainty of data To review periodically When necessary revise the projection Alignment with other part of the business plan
32. Assumptions on which the projection is based on Income statement: typically for five years, reflect quarterly performance Cash flow statement: in great details in the first two years, quarterly or annual cash flow Current balance sheet: typically for five years A break-even analysis
33. Projected or Historic Performance Liquidity ratios: Current assets / current liabilities Asset management ratios: inventory turnover and accounts receivable turnover Debt ratios: debt-to-equity ratio