Chapter 3 Business Plans

What is a Business Plan?

A Comprehensive, Written Description of the Business of an Organisation

Presents the Future Outlook and Potential for the Business of a Company

Specifies Strategy and Action to Exploit Business

Why a Business Plan?Internal Needs- Comprehensive information and road

map to the internal departments and staff of the business

External Needs- To sell your business idea to the outsiderFigures from the venture capital industry indicate that roughly 85% of all business plans are rejected almost at once, 15% are given serious consideration but only 5% reach the negotiating stage. Your target is that final 5%.

Why a Business Plan?Determining Financial Requirements

and Means to SourceInforming Lenders/DonorsInforming EmployeesPlanning and Sourcing Other Critical

ResourcesBusiness Record

Determinants of Business

Market and Expectations of End-users

CompetitionCapitalKnowledge ResourcesRegulations

Business ImperativesVision: An Idealised View of Desirable

Future A Clear, Concise and Compelling Statement that provides Direction and Guides Business

• Mission: An Enduring Statement of Organisational

Purpose • Values: Fundamental Beliefs of an

Organisation as Reflected in its Behaviour and Actions

Business Defined

Business of an Organisation is defined in its Vision, Mission and Values

Business Planning Process

Internal Analysis(SWOT Analysis,

Stakeholder Analysis)

External Assessment(PESTLE Analysis, 5 Force Analysis, Demand Supply

Analysis)

Insights

Future Industry Scenari

os Pre-determined Forces

Key Uncertainties

Business StrategyThrust Areas

Functional Strategy Finance, IT, HR

Projects & Action Plan

Feasibility, NPV, IRR

Business PlanProjected Financials

External Business Environment

PESTLE Analysis Political Factors Economic Factors Social Factors Technological Factors Legal Factors Environmental Factors

External Business Environment

5 Forces Analysis for Your Business:

Threat of New Entrants Threat of Substitute Products & Services Bargaining Power of Buyers Bargaining Power of Suppliers Intensity of Competitive Rivalry

Business Scenario Matrix

Excellent

Poor

Low Key Stakeholder Support High

Scenario – 2

Scenario – 3

Scenario – 1

Scenario – 4B

usin

ess

Ou

tlook

Developing Business Scenario Forecasts

Base Case Scenario: Most Likely SituationOptimistic Scenario: All Positive

Developments MaterialiseWorst Case Scenario: All Negative

Developments Materialise

Business Strategy Formulation

Identify All Business SegmentsEvaluation of Key Business

SegmentsSpecify Strategic Posture

Strategic Posture Alternatives

Strategic Posture Strategic Focus

Shaping the Future Capitalising on your Business Strengths

Adapting to the Future Changing as per Market Dynamics

Reserving the Right to Play Carefully watching developments and taking a calculated decision to move or not to

Business Strategy Development

Strategic Posture Business Strategy

Shaping the Future Assume Market Leadership through setting Standards and Creating Demand

Adapting to the Future Compete through Speed, Agility and Flexibility in Exploiting Business Opportunities

Reserving the Right to Play Stay in the GameAvoid Premature commitment of Investments and Resources

Functional Strategies Development

These are Subordinate to Main Business Strategy

They Articulate Functional DirectionKey Functional Strategies: - Business Development Strategy - Financial Management Strategy - Other Resources Development Strategy

Developing Action Plans

Business Strategy should be translated into Projects for Implementation

Suggestive Action Plan Projects: - Land Development - Infrastructure Development - Marketing - IT and Systems - HRD

How to write a Business Plan?Because you are selling your idea, services or goods, these questions must be asked firstWho is my target customer? Banker, venture

capitalist, private investor or a prospective family backer?

What are my customers’ needs? Return on investment and eventual exit option for a venture capitalist, security for a banker, etc?

What exactly am I selling? Equity, a business opportunity, a license?

What do I want from my customer? Equity, loan (secured or unsecured), expertise or advice?

Business Plan Framework Your plan should encompass the following issues: 1. Summary. 2. Brief history 3. The product or service. 4. Markets and competitors. 5. Marketing plan. 6. Production and operations. 7. Management and is objectives. 8. Finance. 9. Risk, return and exit.

Business Plan Implementation

Validate Action PlansOrganise Action Plans Kick-offsReview and Monitor ImplementationInitiate Mid-course CorrectionsCarry out Annual AppraisalPrepare Action Plans for the

Following YearRepeat the Process

Thank You