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Sponsored by
Organized by
The Thailand International Development Cooperation Agency
The Mekong InstituteKhon Kaen in Thailand
Development of SME Clusters and Export Consortia 4 – 29 July 2011
Compiled by Dr. Ed Canela
Business Plans
For SME Clusters/ECs
Why a Business Plan?
• Strategic Guide. Where is the market? Big investment for Governments) and SMEs as investors.
• Lenders. Multilaterals, governments, etc.
• Investors SMEs relocating or expanding due to the presence of a SME cluster and export consortia.
Strategic Guide
• Where Do You Want To Go?• How Are You Going to Get There?• What Market Niches?• How Much is it Going to Cost?• Greatest Profit Opportunity?
Lender Expectations
• Good Business Track Record• Ability to Repay• Staying Power• Collateral
Investor Expectations
• Competitive Advantage• Huge Market• Strong Management Team• Strong Marketing and Sales Plan• Some Skin in the Game• Obscene Return• Exit Strategy
Entrepreneurs Start Businesses:
• To Capitalize on an Invention• To Pursue a Passion• To Be Their Own Boss• To Get Rich
---All Need an Exit Strategy
Exit Strategies
• Selling the Business• Transferring the Business to a Family Member• Taking the Company Public• Being Acquired by a Larger Company
Funding Sources:
• Savings (tax, land reserves, etc.)• Friends and Family (countries)• Financial Institutions / Banks (Multilaterals, commercial)
• Angel Investors• Venture Capital
Business Plan Content
• Executive Summary• Company Description• The SME Cluster/EC Description• Industry Overview• Market Analysis• Competitors
Business Plan Content
• Customers (SMEs, Foreign Investors, service institutions, etc.)
• Marketing and Sales Plans (How to attract the customers, incentives, information, innovation, services, etc.
• Development (Plans, buildings or plot allocation, development, programs, services to SMEs, etc.)
• Operations (look at the chain+services)• Management (administration, finance, database, security, etc.)
Business Plan Content
• Personnel• Financial Summary• Financials• Offering• Appendices
Executive Summary
• A mini-business plan in one or two pages• Highlights the most important points of your business plan
• It is NOT an introduction to the plan• It must grab your reader, and entice him/her to read further
Executive Summary
• Identify the company, its background, structure and location
• Describe what the company does, and the market it serves
• Describe the market potential for the company’s products and services, market trends, etc.
Executive Summary
• Outline the backgrounds and experience of the top management team
• Describe the funding required, the purposes for which it will be used, the collateral available (if for a lender), and the expected outcomes
The SME Cluster/EC Description
• Brief SME Cluster/EC Introduction– Mission-vision statement– Location, size, history– Market, products and services– Overview of company capabilities– Objectives
Products/Services
• Products / Services of the SME Clusters/EC– What will it do? What will it deliver to the SMEs?– Uniqueness– Competitive Advantage
• Technology– Brief description– Applications
• Commercialization Status– Brief overview
Industry Overview
• Set The Stage• Industry Definition and Description
– Major players within the industry– Factors driving dynamics– New products and developments
• Country Legislations & Policies Driving the Industry• Historical and Future Trends
Market Analysis
• Market Definition– Primary Market (Main SMEs)– Secondary Markets (Services to the SMEs relocating to the Cluster/ECs)
• Market Size and Trends– Current total revenues– Predicted annual growth rate
Competitors
• Direct Competitors (Similar or related Clusters)– Who are they?– Size and product breadth– Revenues and profitability– Strengths and weaknesses– Market shares
• Indirect Competitors (Other Clusters in the country)
Customers
• Customer Characteristics (Target SMEs)– Who are they? What are they doing now?– Why will they relocate/join the cluster?– Needs satisfied by the cluster?– How is the need currently filled?– What are the alternatives?– Who makes the decision to relocate/join?– Do they have business plans? When will they relocate/join?
Marketing and Sales Plans
• Statement of Opportunity• Marketing and Sales Objectives• Target Customers (SMEs)• Potential Customers (Others, who will relocate/Join)
– Prospects targeted– How prospects will be targeted and qualified
Marketing Strategies
• Product/Service Strategy (Areas available for SMEs, large, medium & small), services available
• Pricing Strategy How much• Distribution Strategy Real estate agents, etc.• Advertising and Promotion Strategy• Sales Strategy• Marketing and Sales Forecasts (Sales from rent and other services annually in US$)
Marketing and Sales Plans
• Marketing Programs– Direct Mail using a good brochure with designs– Trade Shows– Advertising– Internet– Publicity/Public Relations– Marketing Budget
• Pricing– Basis for targeted price point– Margins and profitability by volume levels
Marketing and Sales Plans
• Sales Plan– Sales force structure – (direct or reps)– Sales expectations/quotas– Margins given to intermediaries– Service and warranties– Sales Budget– Organizational chart indicating planned growth
Development
• R & D Plan– Objectives– Milestones and current status– Difficulties and risks– Staffing– R & D Budget and assumptions
Operations• Manufacturing/Production Plan
– Objectives– Facilities– Staffing– Subcontractors– Quality Control– Budget / Operating Expenses– Storage & Warehouse– Security– Logistics and Transports– Personnel training– Common services (reception, conference rooms, database, etc.)– Support services (utilities, repairs, maintenance, fire station, medicals,
etc.)
Management
• Company Organization• Management Team• Administrative Expenses
Management Team
• President• VP Finance• VP Sales• VP Marketing• VP Manufacturing• Board of Advisors
• SME Cluster Timetable
Personnel
• Human Resource Plan– Staffing Objectives– Organizational Structure– 3-5 year growth plan– Budget
Summary of Financials
• Financial Objectives– Time to Cash Flow Positive– Time to profitability
• Financial Assumptions• Capital Requirements• Exit Scenario
Financials
• Investment Plan• Pro-forma Cash Flow Projections• Pro-forma Profit & Loss Statements• Pro-forma Balance Sheet
Offering
• Investment Requirements• Pro-forma Valuation of Business• Offer
Appendices
• Resumes of Key Management• Patent Information• Customer List• Testimonials• Supplemental Financial Spreadsheets• References