theoretical framework for business planning for c2r: how to write a business plan

8/11/2019 Theoretical Framework for Business Planning for C2R: How to Write a Business Plan

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Theoretical Framework for

Business Planning for C2R

Prof. dr. Ton Broekhuis

Makassar

Januari 2014

[email protected]

1



How to Write a Business Plan

Prof. dr. Ton Broekhuis

Makassar

Januari 2014

[email protected]

2



• Organic Chemistry @ University Nijmegen

•

PhD @ University Nijmegen

• 23 yrs Research / New Product Devt.

• now: 12-th yr Product Technology

My Background



Incentive

• How much value can you generate by spending money on

research

• Always calculate the value of your research project!!

• My boss: “Come back tomorrow and talk to me again”



My Dream: My Own Business

• To be independent

• Personal fulfillment

• Lifestyle change

• Respect

• Big money

• Power

• Right livelihood



Types of Businesses

BusinessService

Retail

Manufacture

Wholesale

Project



My Dream: My Own Business

• > 80% of new start-ups fail

• 30 – 40 % of owners do not know the money flow

• second round starters are more successful



Why so many fail? • Misunderstanding of the market

– customer and customer needs

– market size and location

– competition

• Misunderstanding of the product – technology – cost

• Wrong investment – too quick

– too late

– wrongly phased

– lack of financial support when needed • Misunderstanding of development time

– product

– market



Why so many fail?

• No Business Plan made

– To be successful you have to do it!

• How to make a Business Plan ? – Quick Plan (1 day)

– Normal Plan (up to several months)

• Writing a Business Plan – Is not rocket science!

– Is like working through a “checklist”



What is a Business Plan?

• Written statement that describes and analyzes your business

and gives detailed projections about the future

What

How

When

Where

Why $$



Why need a Business Plan?

• Improves your chances to success

• It helps you to get money for investment

• Helps you to decide to stop or to proceed

•Lets you improve your business plan

• Helps you keep track

• Making it, tells you what you can and what not – General business skills

– Specific business skills

• It is a document your investor wants to see !!!



Investors

• Yourself

• Your rich father-in-law

• A group of people in a cooperation

• Another company

• Banks (most often)



What Bankers Like

• An owner with a good business plan and an owner whounderstands what he/she is and will be doing

•

For an existing business: sufficient cash flow to make loan payments

• A new business owner with positive experience

•

An owner with financial reserves

• Net Present Value, Payback Time and Return on Investmentevaluations



Product

function

Sales

forecast

Production

system

Manufacturing

processes

Cost / risk

Materials

Product

form

Production

planning

PriceDistribution

coverage

Target

market Promotion

Facilities

Product design

Business

Production

A “Product” Business



General Design Chart



Content Business Plan

• Title Page

• Plan Summary

•

Table of Contents• Problem Statement

• (Need for R&D Investment)

• Business Concept

• Marketing Plan

• Sales Revenue Forecast

• Profit and Loss Forecast

• Capital Spending Plan

•

Personnel Plan – Business personality

– Staffing schedule

– Job descriptions

• Specific Business Goals

•

Personal Background • Supporting Documents



Title Page

• Title of the Plan

• Your name and other contact details

• Date



The Plan Summary

• Is the most important page!

– must be specific

–keep it short and crispy

– it is what makes people read the full plan

• It states the amount of money you seek !

• It further tells the reader:

–who you are

– what you want to do

– how much money you need

– how much money you will make



Example statements for

“Summary of Plan” 1. Must say how much money is needed

2. Must say something about market potential

3. Should say how this potential will be achieved

4. Tells something about the position of the competition

5. Show with financial overview that the loan can be payed back

6. Say how the borrowed money will be used

7. Say why you or the investing team are capable to do the job



Table of Contents

• After the “Plan Summary” !

•

Plan Summary • The Problem Statement

• The Market Plan

• Financial Plan and Project Value Analysis

• Personal Background

• Risk Analysis

• Personnel Plan

• Supporting Documents



The Problem Statement

• Successful businesses solve problems of their customers!

– identify your customer

• Identify and describe the problem of the customer that you willsolve

• Describe how the business will solve this problem (description)

–

also describe what the business will not do – if you can try to qualify and quantify the solution

– ask in this process any general and specific business questions (usePorter’s business models)



Marketing Plan

• Is just a part of the main checklist:

– understand the customer - describe the target customer

–

understand the competition – know your business’ position in the local, regional…. Environment

– how to differentiate from the competition

– how will the customer know about you?

– does your advertising fit with the …. regional spread?

• Create a marketing budget as part of the investment



Business Personality

• Depending on the type of business

– you may want to be “customer intimate”

–“one of many” suppliers

– have a strategy view



Future Trends

• Make analysis of potential future changes affecting the

business

• Write a “future trends statement”



Sales Revenue Forecast

• Actually the 2nd step in starting the preparation of a business

plan:

–

a negative break-even analysis tells you to stop here!• forecast sales revenue (true sales, be realistic )

• list fixed costs per period (week, month or year)

• list gross profit per sale

• break-even sales revenue: amount of money you need to cover variabel and fixed

costs : fixed cost per period / average gross profit = break – even sales revenue

– use Excel or other math system



How to Forecast Sales

• Retail: get “indicators” from similar activities or branch

associations

• Service: estimate time needed per billable service

• Manufacture and Wholesale: Know the business or do

surveys

• Project: pre-project revenue estimation



Profit and Loss Forecast

• Map: (Excel)

– sales revenue

– variable costs• product costs

• logistics

– fixed costs (examples)• equipment and building etc.

•

wages / salaries• payroll taxes

• rent/lease offices

• insurance

• maintenance



Cash Flow Forecast • Collect expenditures and income in one sheet (Excel)

– can be kept simple in early phase

– investors may like to see more detailed (but uncertain) information• like credit sales

• like credit purchases

•taxes

• depreciation

• interest on loans

– calculate net cash flow

– calculate cumulative net cash flow

• Investment needed: sum of: – capital spending

– largest number in cumulative net cash flow



Capital Spending Plan

• Includes everything you have to buy before start-up

– buildings (construction or rental)

–

office furniture – computers

– equipment



Example



Personal Background

• Explain who you are and why you will be good in the

business you propose

–

what are strong and weak points – what do you like and what do you dislike



Your Business Accomplishments

• Investors like to know to whom they trust their money

• Write a resume of accomplished jobs and tasks – not a standard resume

– but facts that you accomplished which relate to the business goals

– no problem to mention mistakes as long as they relate to the goals

–

be proud of yourself



Personal Financial Statement

• Investors may want to see what their risk will be:

– own cash position

–

current income – asset ownership

• house

• car

– duties

•

mortgage• alimony

– rich father-in-law



Risks Facing Your Business

• Analyse and collect possible risk items

– competition

–

developing a new market – evaluate effect of economic cycles and trends

– evaluate cash flow stability

– how does own or personnel expertise take you



Personnel Plan

• How do you want your customers to see you

• Make personnel plan – how many

– which skills and competences: make job descriptions

– when to contract them



Job Descriptions

• Job title

• Job duties

• Skills required, personality desired • Education required

• Supervisor

• Pay rate and salary indication



Supporting Documents

• (Research) Reports – market research

– technical reports

– consultant reports

– make sure you know and understand the contents

– previous financial statements (business extension)

– proposed lease agreements

– capital expenditure details

– bids (in case of construction plans)

• Patents

• Awards



What we expect from you

• x