BUG 2011-2012 Workshop 12 (final): Your Business Plan Clive Kerridge 01 March 2012 01-Mar-20121BUG...

BUG 2011-2012

Workshop 12 (final): Your Business Plan

Clive Kerridge01 March 2012

01-Mar-2012 1BUG 2011-12 (New Venture Planning)

BUG seminar programme 2011-12Workshop 1 - Envisioning your Business (Clive Kerridge, UoG)

Workshop 2 - The Mindset of the Entrepreneur (Philip Allen, Impact for Life)

Workshop 3 - Start-up Issues(Peter Doggett, Vistage)

Workshop 4 - Sales and Presentation Skills (Paul Clarkson, PA2C)

Workshop 5 - Intellectual Property Issues (Steven Murray, Rickerbys Solicitors)

Workshop 6 - Is My Business Viable? (Various Members, Chartered Institute of Marketing)

Workshop 7 - Marketing Via Social Networking (Workshop Leader TBC)

Workshop 8 - Money Matters (Oliver Newbold, Randall & Payne Accountants)

Workshop 9 - Sourcing Funding and Business Banking (Neil Griffiths & Darren Hurst, NatWest)

Workshop 10 - How To Value Your Business (Brian Dorricott, Meteorical)

Workshop 11 - Managing People and Processes (John Down, Chartered Management Institute)

Workshop 12 - Putting the Plan Together(Clive Kerridge, UoG)


01-Mar-2012 BUG 2011-12 (New Venture Planning) 4

BUG Business Finalists 2011

Blackbyrds Pies - Handmade Pies

Adventure Labs - Interactive Adventures / Animated Adventures

James’ Kitchen - Home Cooked Meal Delivery

evoquill - Social, marketing and media network for the arts

Monro’s Ice Cream - Ice Cream Lounge/Parlour

Digital-SU - Providing digital signage

Da Spot - Student entertainment events company

BUG Business Projects 2011




A Business Plan

• Why do you need a biz plan, anyway?

• The Planning Process:• understanding where you are• deciding where you want to go• planning how to get there

• Using the [updated!] plan e.g. for funds


A business plan is a model of a future business, and this is typically expressed in a

printed document that uses a combination of written text and numerical financial

projections, perhaps supplemented by diagrams, photographs and other devices,

in order to convey this future to a reader.

The plan in your mind

The planon paper

The plan also exists in

your mind - its

relationship with the

written plan is an

important issue

What is a business plan anyway?


Executive Summary

The quick brown fox jumped over the lazy dog. The quick brown fox jumped over the lazy dog. The quick brown fox jumped over the lazy dog. The quick brown fox jumped over the lazy dog. The quick silver-brown fox jumped over the lazy dog. The quick, brown fox jumped over the lazy dog.

The quick brown fox jumped over the lazy dog. The quick cyan fox jumped over the lazy dog. The quick brown fox jumped over the lazy dog. The quick brown fox jumped over the lazy dog. The quick brown fox jumped over the lazy dog. The quick magenta fox jumped over the lazy dog. The quick purple fox jumped over the lazy dog. The quick brown fox jumped over the lazy, pale violet but ageing dog.

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Detailed written plan?

Detailed mentalplan?

No

Yes

Just a formalityJust openingand hoping

YesNo

All in the mind A dynamic document

The Virtual Plan The Living Plan

The Dead PlanThe Non-plan

Types of Business Plan


Planning your business

Planning and writing your business plan

Planning your business and writing your business plan


Benefits of writing a formal business plan


• The process of writing it forces you to to think it through

• It also helps you to integrate your ideas, plans and sub-plans

• It helps you to think through strategic issues before start-up – you tend not to have time afterwards!

• It gives a degree of tangibility to your ideas - this is important

• It kick-starts the processes of research, analysis and learning that you must continue through the life of your business

• It communicates your thinking to external audiences

• It is a portfolio of your work - a showcase for your competence as a management team

Management team withappropriate capabilities

Clearlydefined

opportunity

Clearcompetitiveadvantage

A business that might workwith the right management team

A business that couldpossibly work if themanagement teamknew what to do aboutthe opportunity

The management team arekidding themselves aboutthe competitive advantage

A business thatInvestors and lendersare likely to believe in

What you must project in your business plan to win over readersWhat you must project in your business plan to win over readers


01-Mar-2012

Fundamentals of a Business Plan:essential themes – ”VAPOUR”

• V – Vision of the future business: objectives, nature and activities

• A – Analysis and Assumptions that support the business plan (to be discussed in short exercise 1)

• P – the Plan itself: the steps that you will take to realise the vision

• O – Outcomes: the financial and other outcomes you will achieve

• U – YOU: the management team, who must make the plan work

• R – Rigour and Robustness, essential qualities of a good plan

18BUG 2011-12 (New Venture Planning)

Salesforecasts

Plan OutcomesAnalysisVision

Costforecasts

Financialforecasts

Externalplan

Internalplan

Visionand goals

Research& analysis

The basic structure of a business plan


short exercise(1)

For each business……• State two key assumptions which you are making?

• Do these assumptions relate to external or internal aspects of your plan?

• What are the implications if your assumptions are

– inaccurate? (i.e. subject to revision )

– wrong? (i.e. false)

• Be prepared to challenge the other person/team’s assumptions?


01-Mar-2012

Essential Elements of a Business Plan• The Business

– Business details – name, address, legal form, business activity

– Business aims & objectives

• The Market and your offer– Market information - size, growth, competitors (validated by market research?)

– Strengths, weaknesses & competitive advantage

– Marketing strategy - marketing mix, positioning etc.

• Your Operations– Premises and equipment needs

– Key people - functions & background

– Costs!

• Financial highlights - turnover, profit, break-even, funding details– Detailed sales forecast

– Detailed profit forecast “P+L”

– Detailed monthly cash flow forecast

21BUG 2011-12 (New Venture Planning)

Quality of

presentation

(production,

structure,

style,

spelling,

grammar,

etc.)

Quality of business plan

Good Poor

Good

Poor

This plan will be taken seriously and generate a halo effect for the management team

This plan will raise serious doubts but good presentation may result in an interview

This plan will probably result in an interview but raise some doubts about the management team

Why quality mattersWhy quality matters

This plan would probably go straight into the waste-basket -or at least not be taken seriously


Finding the right style - a problem of balanceFinding the right style - a problem of balance

May seem: Over-cautiousand negative

May seem:Naively confident and over-optimistic

The right balance ofprofessionalism and

high commitment

Enthusiasm Prudence

Both in your written plan and in the interview, your challenge is to project your professionalism and prudence but also your enthusiasm and commitment. This may require finding a fine balance:

You can demonstrate this professionalism and balance through:

• The content and quality of your business plan• The language that you use in the business plan• Your behaviour and language at interviews/meetings 01-Mar-2012 23BUG 2011-12 (New Venture Planning)

• An executive summary,

– outlining the opportunity, the business concept, competitive advantage, financial highlights, funding requirements

• A table of contents

• An introduction, outlining the market opportunity and the business concept

• An analysis of the business environment:

– markets, competitors, suppliers, trends and forces for change

• An analysis of the market, supported by market research evidence

• A marketing plan,

– summarising your strategy and marketing activities

– explaining how and why the first and subsequent orders are achieved

– An explanation of the uniqueness and competitive advantage of your offering - why will you succeed?

• An operations plan, explaining how the business works;

– infrastructure and equipment, orders fulfilment, key processes, staffing, procurement, controls etc.

– Human capital requirements at start-up and a development plan to support growth

Contents of a good Business Plan (1) – why it’s a good/great businessContents of a good Business Plan (1) – why it’s a good/great business


short exercise(2)!

Each explain to another person or team:

• what is your business mission and goals?

• what timescale until you “break even”?

• how much money will you need– from investor? (from whom?)

– to borrow? (from where?)

• How many people will you employ?


• A sales forecast, explaining assumptions made

• Financial highlights: sales and profit outcomes, profitability analysis, funding requirements and proposed sources

– A profit and loss forecast over (say) three years, in monthly or quarterly periods

– A cash flow forecast over the same period, in monthly or quarterly periodsnote: with clear indication of when and how loans to be received and paid pack

– End of period balance sheets (or rolling monthly balance sheet forecasts)

• An assessments of risks and limitations– Appropriate contingency plans

• Outline plans for the longer term i.e. – future development of the business

– exit routes for the stakeholders?

• Profile of the management team

• Appendices including – research data, management team CVs, property details, a floor layout, artist’s impression (if appropriate),

partnership or shareholder agreements, details of advisors, accountants, solicitors etc.

Contents of a good Business Plan (2) – why it is a good/great financial prospectContents of a good Business Plan (2) – why it is a good/great financial prospect

link to chartlink to chart

link to end

link to end01-Mar-2012 26BUG 2011-12 (New Venture Planning)

Competitor 3

You

?

Competitor 2

You

A

Competitor 1

B

Competitor 3

Competitor 2

Competitor 1

The basic marketing challenge for any new business: to get from A……. to B


A B C D E

Pre-salesperiod

Initialsales

Takeoff andgrowth

Slowdown Steady state

Time

Sales

T1 T2

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

0 0 5 10 20 40 60 75 85 90 95 95

What does a start-up sales forecast look like?What does a start-up sales forecast look like?

- expressed in numbers, which may be sales units or financial sales revenue:

A sales forecast models the pattern of sales over time


short exercise(3)

Forecasting sales: • How long will your pre-sales period [T1] be?

• Draw a growth curve for Year 1 of your business[T2]

• Compare with another person/group’s business– how and why do they differ?

– do you believe their forecast? (why? why not?)

– what expenditure will you each have before your first sales?

note:Sales forecast is the basis for your financial projections i.e. it’s of vital importance, so needs to be based on good research!


There is a very big difference between

‘Setting up a business’

and

‘Creating a sustainable and profitable business’

You, your investors and your bankare interested in the latter !


‘I am often asked what it is to be an entrepreneur and there is no simple

answer. It is clear that successful entrepreneurs are vital for a healthy,

vibrant and competitive economy.

If you look around you, most of the largest companies have their

foundations in one or two individuals who have the determination to turn a

vision into reality.’

Richard Branson 01-Mar-2012 32BUG 2011-12 (New Venture Planning)

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BUG 2011-2012 Workshop 12 (final): Your Business Plan Clive Kerridge 01 March 2012 01-Mar-20121BUG...

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