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BUSINESS PLAN (BP)WORKSHOP

Sharif University of Technology

Graduate School of Management & Economics

Dr. S. Alireza Feyzbakhsh

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Overview:

IntroductionOne-Page Business PlanFull Scale Business PlanOther Suggestions and Comments

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Introduction

What is a Business Plan?Why a BP?Who reads the plan?Benefits of a BP?

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One-Page Business Plan:

Uses of the One Page BPWhy the One Page BP worksMain Ideas of One Page BPThe Vision StatementThe Mission StatementThe ObjectivesThe StrategiesThe PlansConclusion

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Full Scale Business Plan

Writing a Business planIntroductory pageExecutive summaryIndustry analysisDescription of ventureProduction planMarketing planOrganizational planAssessment of riskFinancial planAppendixThe Elements Of A Business Plan (other two versions)

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Other Suggestions and Comments

Ten planning pitfalls.What factors do loan officers look for?Who reads the plan?Putting package together.Five Minute Reading. Guidelines to RememberOral presentation of BPWhy some Business plans Fail

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Overview:What is a Business Plan?Why a BP?Who reads the plan?Benefits of a BP?One Page BPParts of BPProper preparation benefitsTen planning pitfallsWhat factors do loan officers look for?Developing a well – conceived BPOral presentation of BPWhy some BP’s Fail

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Planning as a part of the business operation

Business plan:Written document describing all relevant internal and external elements and strategies for starting a new venture

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What is the business plan?

The BP, the game plan or road map-answers the questions, where am I now? Where am I going? How will I get there?

Potential investors, suppliers, and even customers will request or require a Bp.

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Why a business plan?

It’s more for you than anybody elseIt allows you to organize your thoughtsIt allows you to see what you are missingIt shows others that you have a rational organized processIt becomes a historical document to let you see what you were thinking at the timeIt is a money raising documentIt is a recruiting toolIt keeps you honestIt is a starting point for a tactical operating plan

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Who reads the plan?

It may be read by Investors EmployeesBankersVenture capitalistSuppliersCustomersAdvisorsConsultants

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Benefits of a business plan

For the entrepreneurFor the financial sources

Business plan help you avoid paying the high tuition Entrepreneur should prepare his own business plan

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FOR THE ENTREPRENEUR

•View the Venture Critically and Objectively•Close Scrutiny of Assumption•Examine Operating Strategies •Comparing Forecast With Actual Results•Communication Tool for Outside Financial Sources

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FOR THE FINANCIAL SOURCES

•Detail of the market potential and plans for securing share•Illustrate the venture’s ability to service debt•identifies critical risks and crucial events with a contingency plan•clear and concise document with necessary information and financial evaluation•assessing the entrepreneur’s ability in planning and managing

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THE ONE PAGE BUSINESS PLAN

Start with a vision, build a company!

Dr S. Alireza Feyzbakhsh

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THE ONE PAGE BUSINESS PLAN

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WritingaBusiness plan

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Writing a Business Plan?

Research, research, researchHonesty, honesty, honestyGutsDetermination that if it does not hold together, change the model or kill the planRecognition that it is cheaper to kill a marginal idea than to try to make it workDo your financial homeworkTalk to your customers; Talk to your competitorsRealize you can never do enough work on your planRemember that it is a living document

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Writing the BP

Introductory pageA. Name and address of businessB. Name(s) and address(es) of principlesC. Nature of BIZD. Statement of financing neededE. Statement of confidentially of report

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Executive summeryThree to four pages summarizing the complete business plan

Writing the BP

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Industry analysisA. Future outlook and trendsB. Analysis of competitorsC. Market segmentationD. Industry forecasts

Writing the BP

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Description of ventureA. Product(s)B. Service(s)C. Size of businessD. Office equipment and personnelE. Background of entrepreneurs

Writing the BP

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Production planA. Manufacturing processB. Physical plantC. Machinery and equipmentD. Names of suppliers of raw materials

Writing the BP

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Marketing planA. PricingB. DistributionC. PromotionD. Product forecasts

Writing the BP

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Emphasize the market

o demonstrating user benefito identifying marketplace interesto documenting market claims

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Find out the market interest

Having heard our pitch, will you buy?how can start-up biz gauge market

reaction?1th . Few customers use the prototype.2th . Offer the product at price

discount.

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Organizational planA. Form of ownershipB. Identification of partnersC. Authority of principlesD. Management-team backgroundE. Roles and responsibilities of members of organization

Writing the BP

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Assessment of riskA. evaluate weakness of businessB. New technologies C. Contingency plans

Writing the BP

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Financial planA. Pro forma income statementB. Cash flow projectionsC. Pro forma balance sheetD. Break-even analysisE. Sources and applications of funds

Writing the BP

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AppendixA. Letters B. Market research dataC. Leases contractsD. Price lists from suppliers

Writing the BP

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The Elements Of A Business Plan

Executive summaryCompany historyBusiness profileBusiness strategyProduct or serviceMarketing strategy

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Continued:

Competitors analysisResumes of officers or ownersPlan of operationFinancial dataLoan proposalImplementation timetable

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Executive summary

The purpose of financial requestThe dollar amount requestedThe way the funds will be usedPlan to repay the loan

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Company History

For exiting small Business History of the operationFinancial and operational events

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Business profile

NatureGeneral description of it’s operationInfluences by government regulation and legislation Overall missionGoals Objectives (time frame)

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Business Strategy

How you can run your Business?How you make your profitsThe ways your industry and Business are likely to change in the immediate future Anticipate the changes

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Description of firm’s product or service

Their position in the product life cycleapplicable patentsmanufactures

production process employedstrategic raw and materials requiredsource of supply used

Honest comparison with competitors

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Marketing strategy

How we are going to attract enough customers?Showing marketplace interestDocumenting market claims

target marketmarket size and trendspricingadvertisingdistributionwarranties, guarantees and servicing

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Competitor analysis

Red Flag to lenders and investorssources of data:

trade associations customersindustry journalsmarketing representative sales literature

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Resume

Individual educationWork historyRelevant Business experience They are look for the

experience, talent, and integrity of the people who will breath life into the plan

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Plan of operation

Functional organizational chartKey positions and the personnel occupying themEmployment contracts, share of ownership and perksForm of ownership

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Financial data

The dollars and cents of the proposed dealmonthly projected financial statementcash flow

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Loan proposal

Purpose of the loanthe amount requestedplans for repayment

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Implementation Timetable

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Ten planning pitfalls

1. Single-purpose use2. One-person commitment3. Benign neglect4. Unworkable document5. Unbalanced application

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6. Disillusionment7. Too action-oriented8. No performance standard9. Poor progress control10. Early consumption

1. Single-purpose use2. One-person commitment3. Benign neglect4. Unworkable document5. Unbalanced application

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What factors do loan officers look for?

CapitalCapacityCollateralCharacterConditions

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Developing a Well-conceived Business Plan

Who reads the plan?

Putting package together

Guidelines to remember

Five minute reading

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Who reads the plan?

Three main viewpoints

The entrepreneur’s The marketabilityThe financial forecast

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Putting package together

Appearance Length The Cover and Title PageThe Executive SummaryThe Table of Contents

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Five Minute Reading

Step 1: characteristic of the venture and it’s industry

Step 2: financial structure of the planStep 3: the latest balance sheetStep 4: the quality of the entrepreneur

in the ventureStep 5: the unique feature in this

venture Step 6: read the entire plan over lightly

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Guidelines to Remember

•Keep the plan respectably short•Organize and package the plan appropriately•Orient the plan toward the future•Avoid exaggeration•Highlight critical risks•Give evidence of an effective entrepreneurial team•Do not over diversify•Identify the target market•Keep the plan written in the third person•Capture the reader’s interest

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Oral presentation of BP

Answer the fundamental questions as discussed in the preceding section on the body of the BPKeep the presentation under a half hourBe sure to catch the audience’s attention in the first 60 secondsStand without using a podiumMove around but don’t paceMaintain eye contact with everyone

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Use visual aidsMake sure the key members of the founding team are involved in the presentationDo a demonstration of the product or service where possiblePractice the presentation in advance for a small group of friends Anticipate questions that may be asked by founders and determine how they should be answered

Oral presentation of BP

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Why some Business plans Fail Goals set by the entrepreneur are unreasonable.Goals are not measurable.The entrepreneur has not made a total commitment to the business or to the family.The entrepreneur has no experience in the planned business.The entrepreneur has no sense of potential threats or weaknesses to the business. No customers need was established for the purposed product or service.

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Dr. S. Alireza Feyzbakhsh B.E-mail: alireza_feyz@sharif.edu

alireza_feyz@yahoo.com

Home Page: http//sharif.edu/~alireza_feyz

Phone(office): 021-602 2757Cell-Phone: 0912-145 4045Fax: 021-602 2759

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