Developing A Business Plan and Model

1. Developing A Business Plan and Model ShefiuOlabanjo, MSc. ACCA

2. Ice Breaker? • Which came first? OR Business Model Business Plan

3. Looking Ahead At the end of this session, participants should be able to: • Understand the key concepts. • Assess the quality of a business plan and model • Identify the key components of a business plan and model. • Appreciate the essence of business plan and model

4. OUTLINE • Introduction • Reasons for Business Plan • Basic Components of Business Plan • Common Flaws in Business Plan • Business Model at a Glance • Components of Business Model • Process of Designing a Business Model • Key Takeaways

5. Introduction 01

6. Introduction Search Results A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them. It may also contain background information about the organization or team attempting to reach those goals. Business plan - Wikipedia https://en.wikipedia.org/wiki/Business_plan

7. Introduction… • A Business Plan is a written document that defines the goals of your business and describes how you will attain those goals. • A Business Plan is worth your considerable investment of time, effort, and energy. • A Business Plan sets objectives, defines budgets, engages partners, and anticipates problems before they occur.

8. Introduction… • Business plans differ widely in their length, appearance, content, and the emphasis placed on different aspects of the business. Depending on your business and your intended use, you may need a very different type of Business Plan:

9. Reasons for Business Plan 02

10. Reasons for Business Plan • To attract investors. • To see if your business ideas will work. • To outline each area of the business. • To set up milestones/phases. • To learn about the market. • To secure additional funding or loans. • To determine your financial needs. • To attract top-level people. • To monitor your business. • To devise contingency plans.

11. Basic Contents of A Business Plan 03

12. Basic Components of A good Business Plan… Eight common parts of a good Business Plan are: • Executive Summary • Company Description • Market Analysis • Management Team • Product/ Services Description • Marketing Plan • Financial Plan • Conclusion

13. Basic Contents of A Business Plan • The Executive Summary section includes: • A first paragraph that introduces your business. • Your business name and location. • A brief explanation of customer needs and your products or services. • The ways that the product or service meets or exceeds the customer needs. • An introduction of the team that will execute the Business Plan. • Subsequent paragraphs that provide key details about your business, including projected sales and profits, unit sales, profitability, and keys to success. • Visuals that help the reader see important information, including highlight charts, market share projections, and customer demand charts. • Executive Summary

14. Basic Contents of A Business Plan… Your company description provides information on what you do, what differentiates your business from others, and the markets your business serves. Company Philosophies, Goals, Objectives, Mission Statements • Company Description • A Market Analysis defines the target market so that you can position your business to get its share of sales. • A Market Analysis section: • Defines your market. • Segments your customers. • Projects your market share. • Positions your products and services. • Discusses pricing and promotions. • Identifies communication, sales, and distribution channels. • Market Analysis

15. Basic Contents of A Business Plan… • Organizational Structure: Highlights the hierarchy and outlines responsibilities and decision-making powers. • Management Team: Highlights the track record of the company’s managers. You may also offer details about key employees including qualifications, experiences, or outstanding skills, which could add a competitive edge to the image of the business. • Working Structure • Personnel Plan: Highlights current and future staffing requirements and related costs. • Management Team • What do you sell? Technical Specification • The value chain, • How does it benefit your customers? • What is the product lifecycle?. • Product/ Service Description

16. Basic Contents of A Business Plan… Market Research. Industry Analysis,. Competition. What do you sell? How does it benefit your customers? What is the product lifecycle? Company SWOT. Sales Strategy e.t.c • Marketing & Sales • The Financial Plan is the most essential part of your Business Plan. It shows investors the timeframes you have scheduled to make profits. • Some elements of the Financial Plan include: • Funding Pattern • Important Assumptions • Break-even Analysis • Projected Profit and Loss • Projected Cash Flow • Projected Balance Sheet • Sensitivity Analysis • Business Ratios • Financials

17. Common Flaws in Business Plan 04

18. Common Flaws in Business Plan • Neglecting Cash flows • Too much value & Emphasis on the central idea. • Not being specific • Unrealistic Financial Projections • Being Inconsistent • Including Too much information • Inadequate Research

19. Business Model at a Glance 05

20. Introduction • Today, “ business model” and “strategy” are among the most used terms in business, they are often stretched to mean everything and end up meaning nothing. James C. Collins and Jerry l. Porrat: Built to Last ( HarperCollins, 1994)

21. Introduction… • The similitude of a good business plan without a good business model is like a donkey with stacks of books strapped on its back – no real benefits. No matter how fantastic a plan you have, a poor business model would still mar the success of the business.

22. Introduction…

23. Components of Business Model 06

24. Components of Business Model • Since 2000, theorists have created dozens of lists of business model components, all differing slightly from one another. Three Swiss business professors, Alexander Ostenwalder, Yves Pigneur, and Christopher L. Tucci, analyzed various models and found that the components fell into nine major categories

25. Components of Business Model • Good business model will not find you, you have to find the right business model.

26. Process of Designing Business Model 07

27. Process of Business Model • Good business model will not find you, you have to find the right business model. • Building a Business Model requires the following steps: • Evaluate the business idea • Navigate your environment • Develop your first model • Test the model • Modify the model • Pitch your model

28. Sustaining Your Business Model

29. Sustaining Your Business Model… 3 roles… • Focus on the business model not just the product technology or services • Don’t fall in love with your first model. • Iterate rapidly and test your model early

30. Key Takeaways 08

31. Key Takeaways • Business Plans are critical for the success of any enterprise but the truth of the matter is that the era of the fixed business is over, you need a business module to succeed. • There's not a single business model, and there's not a single type of electronic content. There are really a lot of opportunities and a lot of options and we just have to discover all of them. Tim O'Reilly

32. Key Takeaways… • The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives. Alexander Osterwalder. • Business model is just like a team, you can loose with a good team but you cant win with a bad team.

33. Questions