BUSINESS PLANNING 101

Entrepreneurial Master Class Series

Taiwo O. Adepoju

December 2013

Bonuses:•Tackling the YOUWIN

Questions•Alternative Fund Options

COURSE OUTLINE

• Introduction

• Business Concept

• Value Chain

• Business Planning

• Tackling The YOUWIN QUESTIONS

• Funding Preparations For Your Business

• Conclusion

• Questions & Answers

Some men see things as they are and ask why? But I dream things that never were and I ask why not?

Bernard Shaw

FOOD FOR THOUGHT

WE NEED TO START THINKING?

A CASE IN POINT:• THE TRADITIONAL

GRINDER IN THE NIGERIAN MARKET

• BINATONE

BUSINESS CONCEPT

TERM DEFINITION

A BUSINESS CONCEPT is a concise description of an opportunity that contains four essential elements:

1. The customer definition

2. The value proposition and compelling story

3. The product/service

4. The distribution channel

THE CUSTOMER DEFINITION

– The customer is the one who pays.– The end use customer is as important as the

intermediary customer.

WHO CARES…?

THE VALUE PROPOSITION• The compelling story is the benefit that the

customer derives from the product or service– It is often intangible

• The compelling story answers the questions:– Why the interest? – What problem does this solve?

SO WHAT…?

BUSINESS CONCEPT

• The Product/Service– What does the customer need?– What is the team’s core

competency?• The Distribution Channel

– How will the benefit be delivered to the customer?

THE CONCEPT STATEMENT

• Creating a clear and concise concept statement is not difficult but telling a compelling story can be.

• A compelling story consists of a problem and a solution.

• The problem being solved should be presented in a simple clear way.

• Can you make a good pitch for the concept

CONCEPT QUICK TEST

• Am I really interested in this business

opportunity?

• Is anyone else interested?

• Will people pay for what is being offered?

• Why me?

• Why now?

VALUE CHAIN CONCEPT

TERM DEFINITION

EXAMPLE OF A BAKERY VC

THE VALUE CHAIN AND THE CONCEPT

• Upstream activities, those related to the

production of a product or service, which may

include raw materials, product development,

manufacturing, and warehousing.

• Downstream activities, those associated with

selling the product or service such as customer

acquisition, sales transactions, and logistics.

THE VALUE CHAIN AND THE CONCEPT

• Developing a distribution strategy:– Evaluate strategies of similar companies– Look for the opportunity gaps

• Factors affecting the choice of strategy:– Costs– Market coverage– Speed and reliability

BUSINESS PLANNING

BUCKET VERSUS BOREHOLE

TERM DEFINITION

A “Business Plan” is a “Selling/Strategy Document” that conveys the excitement and promise of your business to any potential backers and stakeholders.

BUSINESS PLAN, WHY?

• To sell yourself on the business• To obtain bank financing• To obtain investment funds• To establish strategic alliances• To obtain initial contracts• To attract key employees• To assist in the completion of mergers

and acquisitions• To motivate and focus your

management team

SUMMARY PLAN

10 pages, 3 important points

COMPREHENSIVE PLAN

10-40 pages, seeking capital or

alliances ideally 25 pages

OPERATIONAL PLAN

40+ pages, for going concerns, part

of an annual process

THREE TYPES OF A BUSINESS PLAN

WHAT INVESTORS LOOK FOR

• Experienced & passionate management team

• Real customer need (pain and/or pleasure)• Large market• Salable business• Cost-effective way to target the market• Sustainable competitive advantages• Realistic revenue model• Return on investment

A GOOD BUSINESS PLAN …

• … tells a compelling story.

• … is clear and concise.

• … is based on documented facts.

• … does not waste the reader’s time or

attention with extraneous material.

• … drives to a conclusion.

• … is not a guarantee of success.

BUSINESS PLAN DOCUMENTS

Document Purpose Format Size/Scope

Executive Summary

Get attention, create interest

DOC or PDF

Two (2) pages maximum

Business Plan

Provide details for due diligence

DOC or PDF

Approx. 20-25 pages

Financial Projections

Provide justification for financial investment

XLS Span of 3 to 5 years(one-page summary in Business Plan)

Investor Presentatio

n

Create desire, close the deal

PPT 10-15 slides max.

BUSINESS PLAN DEVELOPMENT PROCESS

Networking

Research

BusinessStrategy

WORKINGDOCUMENTS PRODUCTION

.

Key PointsOutline

FinancialModeling

BusinessPlan

ExecutiveSummary

FinancialProjections

InvestorPresentation

PREPARATION

BUSINESS PLAN FORMAT

• Pages: 10 to 30• Kinko’s white bond

is good enough • Simple binding• Examples

– Handout – a good example B Plan

– Discuss examples of bad ones

TYPICAL OUTLINEEXECUTIVE SUMMARYINTRODUCTION AND BUSINESS PREMISEMARKET ANALYSIS AND CUSTOMER

NEEDSPRODUCT OVERVIEWVALUE PROPOSITIONBUSINESS MODELBUSINESS OPERATIONS PLANMARKETING AND SALESMARKET ENTRYTRANSITION TO REVENUE SERVICECOMPETITIVE ASSESSMENTPARTNERSHIP STRATEGYMANAGEMENT TEAM AND ADVISORSFINANCIAL PROJECTIONSKEY BUSINESS METRICSCAPITAL STRUCTURE/FINANCING PLANSEXIT STRATEGYRISK ANALYSISSUMMARY

TACKLING YOUWIN QUESTIONS

• CLARITY

• CONCISE

• CONCRETE

• COMPELLING

• CONSISTENCY

FUNDING PREPARATION

• Have A Business Plan

• Register Name

• Obtain Branding / Collateral Materials I.E.

Logos Etc

• Open Two Account

• Create Some Activity

• Approach / Explore Opportunities

IN CONCLUDING: