Business Plan Preparation: Concepts and Techniques

1. Business Plan Preparation: Concepts and Techniques Professor Rajendra K. LaguShailesh J. Mehta School of ManagementOctober 22, 2005 Business Plan Preparation

2. Agenda • Target Audience for Business Plans • Purpose of Business Planning • Preparatory Work • Reader Expectations • Document Structure • Some Tips and Tricks – Common Pitfalls • References Business Plan Preparation

3. Target Audience for Business Plans • VCs / Angel investors • Potential senior employees • Bankers • Attorneys and accountants • Leasing companies Business Plan Preparation

4. Purpose of Business Planning • Tangibalizing the vague ideas • Quantifying the approximate numbers • Freezing the milestones and deliverables • Estimating the funding requirements • Sizing up the scale of operations Business Plan Preparation

5. Preparatory Work • Information collection • Validation of the assumptions • Analysis and planning • Articulation of your basic value proposition Business Plan Preparation

6. What is a financer looking for in a BP? • Basic value proposition • Market size, segmentation, target customers, competitors • Entry barriers, IP protection, Unique Selling Points • Technology expertise and domain knowledge • Alliance and strategic partnerships • Promoters, Board of Directors, Top management (VPs) Business Plan Preparation

7. What is a financer looking for in a BP? • Team (Project management, execution capabilities) • Scalability and growth potential • Marketing and selling plan: channels, distributors, customer acquisition costs • Milestones and deliverables (prototype, proof-of-concept, beta customers) • Requirement and application of funds: Setting offices, where, how many? • Equity/Capital structure, financing policies (debt/equity ratio) Business Plan Preparation

8. What is a financer looking for in a BP? • Revenue model: Sources of revenue (service/product mix) • Profitability, break even point, growth estimates (revenue, team size) • Risks and contingencies: De-risking/risk management/risk containment plan • Projected (pro-forma) financial statements • Exit strategy (IPO, equity buyer, strategic buyer, Merger & Acquisition) • Valuation and offer Business Plan Preparation

9. Document Structure • Executive summary • Introduction / Company overview • Concept / Proposition / Product description • Market opportunity • Competition survey • Development plan and milestones • Marketing plan • Team • Financials • Offer • Appendix Business Plan Preparation

10. Some Tips and Tricks • Look for spelling mistakes • Provide a table of contents • Check page number consistency • Do not use too many colours and fonts • Explicitly add confidentiality clause in the beginning Business Plan Preparation

11. Common Pitfalls in Business Plans • Too verbose and long • Speak in generalities and management theories • Weak or non-existent financials • Inadequate competitor analysis • Unnecessary details about promoters and their past track record Business Plan Preparation

12. References • Venture Finance • http://www.vfinance.com • http://www.nvca.org • Small Business Issues • http://www.sba.gov • http://www.startupjournal.com • http://www.bplans.com Business Plan Preparation

13. Concluding Remarks • Business plan preparation is a serious process which takes about 2-4 months • The Founder CEO is perpetually writing a business plan (besides doing many other things) • Fund raising itself takes 3-5 months • Business plan must be treated as dynamic document with a potential for continuous and incremental improvement Business Plan Preparation

14. Thank You !! Questions ?? Business Plan Preparation