The Business Plan and the Business Model Margarita Antonova Volunteer Telerik Academy academy.telerik.com Business System Analyst Telerik Corporation
2 Software product vs. SaaS The Business Plan Break-even Workshop 1: How do they work? The Business Model Types Workshop 2: Financial Plan
Defining the combination of product and services we are selling
Definition a single application or a group of applications built to be used by the client Key concept the client owns the product and usually needs to install it in order to take advantage of it 4
Key features: License & Support fee – grant permission of usage Life-cycle – common stages in the life of a product on the market: inception, market entry, promotion, growth, Product line – Product line – set of related systems that address a market segment, build from common assets allowing for reuse ( Product ecosystem – a group of products or products and services (hardware, software, support, etc.) 5
SaaS Definition – software as a service – a software delivery model where the client uses the benefits of the software without necessarily owning the software Key concepts: SaaS is in the Cloud Deployment is instant Typically accessed through a browser Hardware is outsources Technical support belongs to the Cloud, the client only need training Reduced IT costs 6
vs.
Short term planning for the success of your business
Definition 1 – Definition 1 – an idea of how we are getting the funds to produce: equipment, overhead, salaries, taxes, licenses, etc. and how we are getting the profits to break even Definition 2 – a list of business goals, the reasons they are achievable and a plan to achieve them Definition 3– [tell the bank] what you plan to do and how you plan to do it 9
Key concepts: Strategic – today I can do this, tomorrow I want to do that and here is how Short term – covers the next 3-5 years Can serve different purposes: Financial – not a financial document but expected by the investor Communication – use to display idea and goals to stakeholders Plausibility – evaluate the idea for the business Improvement – organize and understand the business in order to develop it Finality – not final, can be enhanced and further improved based on discussions, needs and goals 10
Structure: Executive Summary – state what you want to achieve Business Description – explain the industry and the key features of its markets including future possibilities Marketing Plan – supported with the market analysis: Identify the target market Explain the competitive environment Describe the product and its development 11
Structure: Operations Plan – describes: Organization of the company: departments and their roles Human Resources needed – training and outsourcing IT communication needed Risk analysis – identify potential hazards Procedures to handle risk – strategic, legal and financial Discuss business continuity 12
Structure: Financial Plan – current and/or future break down of the financial policies in the business Financing the business – current and future sources: investors, own capital, profit, etc. Financial forecast: Cash flows – source and amount of needed cash for obligations Income Statement – ability to obtain cash profit = revenue - cost Balance Sheet – annual summary of the financial situation Assets = Liabilities + Equity 13
Structure: Decision-making Criteria – having a business is ultimately a financial decision Break-even analysis when is BEP (break-even point) expected BEP is the point at which cost = revenue Net Present Value and the time value of money What is the current value of the future cashflows If negative or insufficient, is the business worth doing? ROI – return on investment for the creditors 14
What is the business model: How the company will create, deliver and establish value Should take into consideration Web 2.0 concepts – user generated contend, networking, collective intelligence, focus on experiences, etc. Not all business models are effective or profitable 15
Types of business models: Offline & online presence Advertising No middle-man Direct sales Franchise Freemium 16
Example: sbp sbp sbp Resources:
How much money is required to get your business started and generating revenue? Identify needed capital requirements by determining where your business stands today, and what is needed in order to move forward. Where do you get your money from? If you are in need of outside funding, what will be the sources and uses of funds requested. What needs to happen to break-even? Play around with financial projections and forecasts to determine the volume of sales needed to cover your expenses and to become profitable.
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Finish up the Financial Plan Write out the Operations Plan 20
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