Business Plan Writing for Business Plan Series 20110624

LiveWIRE Brunei (c) 2011 1

Writing a Business Plan

If you fail to plan, then you plan to fail – Harvey Mackay

the plan is useless, but planning is essential - Dwight D. Eisenhower


About the speaker

Mohd Fadhilullah Tudun Bin Haji Hassan @Mohd Hasbolah Bobby

Entrepreneur, Computer Trainer and Business Counsellor

Interests: IT, Biz and EducationContact:

Phone: +673 8651632E-mel: [email protected]

mailto:[email protected]


Introduction

Getting to know each otherNameFrom WhereHobby and InterestsOccupation/Employment/BusinessReason for Attending Workshop


Business Plan Series Dates

Session 1 (24 June 2011) Introduction to Business Plan Business Plan Structure Company Profile and Startup Table

Session 2 (1 July 2011) Products and Services Market Research, Analysis and Strategy Human Resource Management

Session 3 (8 July 2011) Financial Analysis Making a Business Plan Using IT Presentation


What is a Business Plan?

It is a medium to communicate your business idea

It is a document that shows the inner workings of the business.

Business Blueprints and Roadmap


Business Plan Crash Course

Business Plan StructureBusiness ProfileProducts and ServicesMarket Research and Market StrategyOrganizationOperation StrategyFinancial StrategyWinning Strategy


What’s the Purpose of a Business Plan?

Business Profile – To convince investors/bankers of the business feasibility.

The Business Roadmap – To clarify the structure of the business and how it will be managed.

Operations Manual – To communicate to employees on their responsibilities in relation to the company objectives.

The Style of the Business Plan will differ with different purposes.


What Biz Ideas Can You Plan?

Conventional but Feasible e.g. restaurant, stall, bakery, workshop,

retail shop, SchoolSimpleevaluated by the business plan writing,

and how you can make it different.

Innovative but Unprovene.g. new franchise, technology company,

new inventionsChallenging evaluated by the Business idea and its

feasibility


The Perfect Business Idea


Where to learn to create a Biz Plan?

Books – Bookstores, LibrariesInternet –

www.bplans.com, www.sba.gov, www.shell-livewire.com, www.livewire-brunei.com, www.howstuffworks.com, www.soyouwanna.com, www.entrepreneur.com, www.google.com.

CoursesSinaut Entrepreneurial Development CentreLiveWIRE – Business Plan Series iCentre - Think Big Biz Plan Workshops

http://www.bplans.com/

http://www.sba.gov/

http://www.shell-livewire.com/

http://www.livewire-brunei.com/

http://www.howstuffworks.com/

http://www.soyouwanna.com/

http://www.entrepreneur.com/

http://www.google.com/


Formal Business Plan Structure

Cover Table of Contents Executive Summary Business Profile Products and Service Operations Strategy Marketing Analysis Market Strategy

Organization Strategy Operation Strategy Financial Analysis and Forecasts Milestones, Future Plans and Exit Strategy Appendices


Executive Summary


Executive Summary

Often Written Last, Shown First.Make it interesting for the reader.Make the reader want to read more.Make it simple point form for every

section, or a simple abstract summary.1 or 2 pages Maximum.E.g. 30 second Movie Preview


Business Profile

Introduce the business Legal Structure of Business

Sole Proprietor, Partnership, Sendirian Berhad, Koperasi

Nature of business Food, Service, Manufacturing, IT,

Mission and Objectives Startup Cost Milestones/Achievements


Products and Service

What is it?Who are you going to sell it to?What problem is it solving?How much will it cost them?What makes it unique?Intellectual Property Involved?Sales Forecast


Market Analysis

Who are you going to sell to? Who are your competition? What do they do? SWOT Analysis (Strengths, Weaknesses,

Opportunities, Threats) - What are the Market Forces that affects you? Political, Economic, Social, Technological

(PEST) – Factors for Success


Market Strategy

How are you going to tell your customers that you are there?

4 P’sProductPricePlace and DistributionPromotion


Human Resource Management

Who are involved? Organization Chart Personnel Roles and

Responsibilities Personnel

Qualifications Key

Roles/Management Payroll Cost

Manager

Worker 1 Worker 2

Assistant

Worker 3

Admin


Operations Strategy

How is the business going to run? How is the business making money? Location and Working hours Product Life Cycle - e.g. Agricultural vs Retail Production Process

Input Process Output Technology/equipment Involved Sales Forecast in relation to Operations or

Season (can also be in product section)


Financial Analysis and Forecast

Start up costs Sales Forecast Personnel/Payroll

Cost Profit and Loss Cash flow Forecast Balance Sheet Break-even analysis

0102030405060708090

1st Qtr 2ndQtr

3rd Qtr4th Qtr

nett income

Expenses

nett


Future Plans and Exit Strategy

What are you going to do with the business in the long-term: Expand Sell Handover to family member Go Public Get Merged or Acquired

or if anything goes wrong. If Bankrupt or unsuccessful what will you do?


Appendices

Marketing MaterialsResearch Materials and ResultsSample of AdvertisementsSurveyResults

Full Financial Tables2-5 years


Business Profile


Business Profile

Introduce the business and its history “Biodata” of the Business

Name, Location, Contact no., Year Started, etc.Legal Structure of Business

Sole Proprietor, Partnership, Sdn Bhd, Cooperative

Nature of business Food, Service, Manufacturing, IT, etc

Startup Cost or Milestones/Achievements


Vision and Mission

Vision vs MissionMission – What is the desired GoalVision – How you see the future

Why does the Business Exist?The Purpose of the Business.Usually Intangible, Broad, and Abstract


Examples of Mission

Google's - to organize the world's information and make it universally accessible and useful.

Rich Dad Company’s - to elevate the financial well-being of humanity

Microsoft’s - To help people and businesses throughout the world realize their full potential


Objectives

What you need to do to achieve the mission Objectives are SMART:

Specific Measurable Attainable/Achievable Relevant Timely

This might be clearer after the biz plan is done


Examples

To earn $1 million dollars in revenue in the 2nd Year

to sell 1000 units in the first yearto achieve 50% market share in the 2nd

year.


Exercise

Create you Business ProfileBusiness NameLegal StructureNature of BusinessProducts and ServicesMission and Objectives


Startup Costs – Accounting Terms

Capital – money that was put in by the owner. Liability – money put in by banker/investor to

be paid back. Assets – property that can be turned to cash Expenses – purchases or payments that

cannot be redeemed for cash Income – Money coming in from business

operations or sales.


Startup Costs – Assets and Expenses

Assets Assets Purchase

Equipment Furniture Building

Current Assets Cash in hand Raw materials Work In Progress

Intangible Assets (IP)

Expenses Legal Expenses

Registration Business License

Initial Operation Expenses Rental Deposit Utilities Marketing Employees

Decorations and Design


Exercise

Create your Startup TableAssets

Fixed AssetsCurrent Assets Intangible Assets

ExpensesLegal Initial OperationRenovations


Products or Services


Know your product or service

What do you provide?What are the Features and Benefits.What makes it unique?To who do you provide?

Business to Business (B2B)Business to Customer (B2C)


Features vs Benefits

What you offer E.g.

Food Phone House Hotel Room Furniture Gym

What customers get E.g.

Satisfaction/Full Communications Home Rest/Sleep Comfort Health/Look Good


Intellectual Property Rights

Copyright – Books, Software, Audio, Video

Trademark – Logo, Signage

Patent – Inventions, Mechanisms

Design – Physical Appearances

E.g. Android OS, iOS

Android Logo, Apple Logo

The combination of the chips and circuits

The look and feel of the phone.

37LiveWIRE Brunei (c) 2011

What to Who? Product to Consumer Matrix

PCConsumer

High End Medium Low End

Student

Professionals

Office

Geeks/Gamers


Market Research


Resources on Marketing

Books Ziglar on Selling – zig ziglar Salesdogs – Blair Singer

Websites Smallbusiness.yahoo.com, bnet.com,

salesdogs.com, howstuffworks.com, en.wikipedia.org

Courses LiveWIRE BSOM EDC – Pemasaran yang berkesan, Jurujual

Profesional


Why is Market Research Necessary?

To know your customers See what type of people or how many would be

interested? Where can you get your customers? How much people will want to pay?

To know your competitors Who they are What they do/provide? What are their Pros and Cons

To see how feasible your biz idea is.


What you need to know first

Understand your products or service Its benefits, quality

Your basic operations and product life cycle e.g. farming, manufacturing, etcSeasonality (weeks, months, years)

Your Product’s HistoryPrice, Promotions, Distribution


Where can you get Market Research?

Primary Research – research you get and analyze yourself

Secondary research – research that has already been done


Primary Research

Phone Call SMS Interview Survey Letters

Design, Print, Photocopy, Gather, Data entry and Analyze

Use Internet e.g. Facebook and Survey Poll.


Secondary research

www.depd.gov.bn – Department of Economic Development and Planning Perancangan Kemajuan Jangka Panjang NBD Brunei Statistical Yearbook 2004

Other Government Newsletters Internet

Internet statistics www.internetworldstats.com Cia world factbook www.cia.gov

http://www.depd.gov.bn/

http://www.internetworldstats.com/



http://www.cia.gov/


What you need to Ask?

How Big is the market?Market Segmentation. Who are your

Customers? (Don’t say everyone)Age group, Geographic Location,

Employment, Income Level, etc.Who are your Competitors/Allies

What they do well or badly.What your targets wants in your

product/service?Price, quality, feature, benefits.


PEST factors

Political Factors – how does the government affect your market.

Economic Factors – how does the economic status affect your market.

Social Factors – cultural and social trends.

Technological Factors – technology that affects the market.


SWOT

Internal Strength Weakness

External Opportunities Threats


Porter’s 5 Forces


Exercise

Product and Market ResearchWhat are your Product(s) or Service(s)Who do you Sell to? Market Size?

Segmentation e.g. Age, Income, OccupationWho else is trying to get your customers?How does the market affect your business?

PEST, or porter 5 forcesWhat are your SWOT’s


Market Strategy

“Getting someone, who has a need, to know, like and trust you”

– John Jantsch (Duct Tape Marketing)


Why do you need a Marketing Strategy?

Focuses your Marketing efforts more effectively

So you can decide how and when are you going to Market yourself.

So you can allocate the Budget for Marketing Strategies


How do you choose a strategy?

Choose thoseThat focuses on your target marketAffordableEffective

Not energy consumingNot time consuming


What is your Marketing Mix?

The 4 P’sProduct – Unique Selling Advantage,

Packaging and Value added servicesPrice – Pricing of the products compared to

competitors.Place – Location of your business or/and

Distribution of your productsPromotion – Advertising, Public Relations,

Word of Mouth, Point of Sale.


What Promotion Strategies can you do?

Fliers Posters Newspaper Brochures Business Cards Exhibition TV Radio Letters/faxes Stationery and gifts

Referrals Word of Mouth Direct Selling New Technologies

E-mail Website Web advertising Social networking Blogs

And Many More!!!


Market Strategy Implementation

Marketing Calendar – when are you going to implement the strategies? Look at your production capacityLook at the market seasonality

Marketing Budget – how much will it cost during those times.


Marketing Costs

Month 1 2 3 4 5 6 7 8 9 10 11 12 Total

Fliers

Business Card

Online

Exhibition

Total


Marketing Costs Pie Chart

$500.00 , 25%

$300.00 , 15%$1,000.00 , 50%

$200.00 , 10%

Fliers

Posters

Online

Exhibition


Exercise Marketing Strategy

Keep in mindWhat is are your products?Who do you sell to?Who is also trying to sell to them?

How are you going to reach your customers?What are your 4P’sWhat does your marketing cost you?


Organization Strategy/ HR Management


Why do you need an organization strategy?

Judges see this as how strong your team can build the business

Investors see this as how good the people are that can make their money.

To calculate costs for Personnel / PayrollTo see any management gaps


Management Team and Gaps

Briefly describe who are in your team (who you already have)

A summary of each team member’s CVAlso mention what gaps you may have

(Team member you may lack)Mention advisors you may haveInclude CV in appendices


Organization Chart


Roles and Responsibilities

Roles or positions Responsibilities Qualifications Salary

Roles Responsibilities Qualifications Salary

CEO Manages Company Degree, MBA $2,000

CFO Manages Finances Degree, MBA $1,500

CIO Manages IT ND or Degree $1,500

MD Manages Department ND or MBA $1,200


Payroll/Personnel Cost

Month 1 2 3 4 5 6 7 8 9 10 11 12

CEO

CFO

CIO

MD

TAP

SCP

Total


Operations Strategy


Operation Strategy

What is your business model? How does your business make money?

How do you receive your payment? Cash or Credit/Accrual

What are your business activities? What do you do? Services or products?

What is the business/product cycle? When do you produce your products/service

What are the overhead costs? What are the monthly running costs?


Sales Forecast Table

Month 1 2 3 4 5 6 7 8 9 10 11 12 Total

UnitsSold

Sales Price

Cost Price

Total Sales

TotalCost

Gross Profit


How to base the Sales

By Supply/Capacity How much you can handle and when Services like restaurants or internet cafe– look at

capacity (number of chairs) Products – look at how much or when it can be

produced, stored, or how fast it can be reordered.

By Demand How much people often want to use your service or

buy your product, this can be derived from market research.

Services like restaurants or tailoring look at seasonal behavior of customers

Products look at customer’s use of products. E.g. addiction to cigarettes


Overhead Costs

Fixed Costs that are related to running the operations.

May be Unrelated to costs such as:- Cost of goods (COGs) Variable Marketing costs Payroll costs

Examples: Stationery Rental Utility Bills

Electricity, Water, Phone, Internet Access Maintenance Loan Repayments License Fees Insurance Taxes


Financial Analysis


Resources

Financial BooksAccounting for non accountants, accounting

for dummies, InternetCourses

LiveWIRE – BSOMEDC – Accounting CoursesBICPA-FTMS – certified accounting courses


Why do you need Financial Analysis?

To see that the business is feasible in terms of cash

To see that you are making moneySo you can plan your expenditures more

carefully


Financial Analysis

Break-even analysis Profit and LossCash Flow ForecastBalance Sheet


Break-even analysis

What is the purpose? To see how many units

need to be sold to make money.

What you need to know? Units Sold Sales per unit Cost per unit Fixed Costs

Note: this is for a single product,

for multiple products you may use average.

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

0 100 200 300

Units Sold 0 100 200 300Fixed Costs $2,400 $2,400 $2,400 $2,400 Unit Sales 0 2000 4000 6000Unit Cost 0 500 1000 1500Fixed Costs + Variable Cost $2,400 $2,900 $3,400 $3,900


Profit and Loss Forecast

Calculates the amount of money going in (from sales) and out (from operations cost)

Factors Income from Sales of Goods or other items Expenses from

Direct Cost of Goods Expenses , Controllable and Fixed Costs

Calculate Gross Profit and Gross Margin Net Profit


Profit and Loss Forecast Sample

1 2 3 4 5 6 7 8 9 10 11 12 Total

Gross Sales

Direct Cost of Goods

Gross Profit

Expenses

Nett Profit


Cash Flow forecast

Similar to Profit and Loss, But it looks at: Other factors of money going in or out other than

monthly business operations. In-flow – additional loans, owner’s capital, Out-flow – business taxes, assets purchase, renovations,

expansion, owner’s draw/dividends Nett-flow (profit or loss)

and accumulated cash (money in bank) Actual Money going in or out

Especially useful if you are buying/selling by using credit. Ensuring there is money in the bank.


Cash Flow forecast sample

Month 1 2 3 4 5 6 7 8 9 10 11 12 Total

In-Flow

Out-flowOverheadPayrollmarketing

Nett Flow

Accumulated Cash


Sample Cash-flow Chart

-10000

-5000

0

5000

10000

15000

1 2 3 4 5 6 7 8 10 11 12

Nett Flow Accumulated Cash


Balance Sheet

Assets Current Assets

Stocks, Cash, Accounts Receivable Fixed Assets

Equipment, Furniture, Land, Building, Vehicles Intangible Assets

Patents, Copyrights, Goodwill

Liabilities Current Liabilities

Accounts Payable, Taxes, Long-Term Liabilities

Mortgages, Contract Payments

Net Worth = Assets - Liabilities


Balance Sheet Sample

Assets $ Liabilities $

Current Assets Current Liabilities

Stocks and WIP 500 Accounts Payable 500

Cash 5,000 Taxes 200

Accounts Receivable 500 Long-Term Liabilities

Fixed Assets Bank Loan, Mortgages 10,000

Furniture 2,000 Contract payment 1,000

Equipment 5,000 Total Liabilities 11,700

Other Assets

Trademark 500

Total Assets 13,500 Net worth 1,800


Using IT


Using the IT to create a biz plan

Using Word Templates, styles and TOCs, Header and Footer,

Page number Inserting Graphics, Organization Chart, Tables

Using Excel Using Formulas and relative addresses, importing into word Creating Cash flow and Graphs

Using PowerPoint Slide Design, Animation Schemes, Footers and

Printing


Writing and Presentation Tips


Plan to Make Your Business Plan

Allocate the time you need to do certain parts of the Business PlanUse Calendar/Planner/Diary/JournalCreate a deadline for specific tasks

If you are doing in a group (highly recommended) allocate specific tasks for a specified person


Writing Tips

ClearConciseOrganizedWell Laid OutNaturalPositive

Well interpreted factsDo not jump to conclusionsShow SourcesProofreadMake it PerfectWell written executive summary


Presentation Tips

10-15 slides 10-15 minutes Keep it Simple Make it to the point Tell a Story Dress Professionally Practice

In front of mirror In front of someone


Tell a Story

Introduction (breaking the ice)Existing Problem/Pain/SituationSolution (Product/Service) your are

providingMarket Research and StrategyWho are involvedHow you can succeed


10 tips from David S. Rose

Do not look at the screen Do not read your speech Do not do a Live Demo Always use a Remote control Remember handouts are not your presentation Do not tell Jokes.. Ever Do not stroll or fidget Pace the presentation smoothly and evenly Check equipment, own laptop and projector Only the CEO give the money pitch


Quick Tips

Your idea doesn’t just make money, but helps people: Creates jobs, or provides a service, or provide a

solution, alleviates a pain/discomfort Its not just an idea, but a work in progress. You have the numbers to back you up. You have qualified people (employees or

partners) involved. Be passionate in your presentation


Your Mission

1. Start and Complete Your Business Plan!2. Choose a business Idea3. Plan to create biz plan4. Create a draft Biz plan or exec summary5. Design and implement market research6. Analyze Market Research7. Adapt Biz Plan Strategy to meet Market

Analysis


Thank You,

Good bye, and

Good luck!

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