Chapter 3 Business Plans

What is a Business Plan? A Comprehensive, Written Description of the Business of an Organisation Presents the Future Outlook and Potential for the Business of a Company Specifies Strategy and Action to Exploit Business

Why a Business Plan? Internal Needs - Comprehensive information and road map to the internal departments and staff of the business External Needs - To sell your business idea to the outsider Figures from the venture capital industry indicate that roughly 85% of all business plans are rejected almost at once, 15% are given serious consideration but only 5% reach the negotiating stage. Your target is that final 5%.

Why a Business Plan? Determining Financial Requirements and Means to Source Informing Lenders/Donors Informing Employees Planning and Sourcing Other Critical Resources Business Record

Determinants of Business Market and Expectations of End-users Competition Capital Knowledge Resources Regulations

Business Imperatives Vision: An Idealised View of Desirable Future A Clear, Concise and Compelling Statement that provides Direction and Guides Business Mission: An Enduring Statement of Organisational Purpose Values: Fundamental Beliefs of an Organisation as Reflected in its Behaviour and Actions

Business Defined Business of an Organisation is defined in its Vision, Mission and Values

Business Planning Process Internal Analysis (SWOT Analysis, Stakeholder Analysis) External Assessment (PESTLE Analysis, 5 Force Analysis, Demand Supply Analysis) Insights Future Industry Scenarios Pre-determined Forces Key Uncertainties Business Strategy Thrust Areas Functional Strategy Finance, IT, HR Projects & Action Plan Feasibility, NPV, IRR Business Plan Projected Financials

External Business Environment PESTLE Analysis Political Factors Economic Factors Social Factors Technological Factors Legal Factors Environmental Factors

External Business Environment 5 Forces Analysis for Your Business: Threat of New Entrants Threat of Substitute Products & Services Bargaining Power of Buyers Bargaining Power of Suppliers Intensity of Competitive Rivalry

Business Scenario Matrix Excellent Poor Low Key Stakeholder Support High Scenario – 2 Scenario – 3 Scenario – 1 Scenario – 4 Business Outlook

Developing Business Scenario Forecasts Base Case Scenario: Most Likely Situation Optimistic Scenario: All Positive Developments Materialise Worst Case Scenario: All Negative Developments Materialise

Business Strategy Formulation Identify All Business Segments Evaluation of Key Business Segments Specify Strategic Posture

Strategic Posture Alternatives Strategic PostureStrategic Focus Shaping the FutureCapitalising on your Business Strengths Adapting to the FutureChanging as per Market Dynamics Reserving the Right to PlayCarefully watching developments and taking a calculated decision to move or not to

Business Strategy Development Strategic PostureBusiness Strategy Shaping the FutureAssume Market Leadership through setting Standards and Creating Demand Adapting to the FutureCompete through Speed, Agility and Flexibility in Exploiting Business Opportunities Reserving the Right to PlayStay in the Game Avoid Premature commitment of Investments and Resources

Functional Strategies Development These are Subordinate to Main Business Strategy They Articulate Functional Direction Key Functional Strategies: - Business Development Strategy - Financial Management Strategy - Other Resources Development Strategy

Developing Action Plans Business Strategy should be translated into Projects for Implementation Suggestive Action Plan Projects: - Land Development - Infrastructure Development - Marketing - IT and Systems - HRD

How to write a Business Plan? Because you are selling your idea, services or goods, these questions must be asked first Who is my target customer? Banker, venture capitalist, private investor or a prospective family backer? What are my customers’ needs? Return on investment and eventual exit option for a venture capitalist, security for a banker, etc? What exactly am I selling? Equity, a business opportunity, a license? What do I want from my customer? Equity, loan (secured or unsecured), expertise or advice?

Business Plan Framework Your plan should encompass the following issues: 1. Summary. 2. Brief history 3. The product or service. 4. Markets and competitors. 5. Marketing plan. 6. Production and operations. 7. Management and is objectives. 8. Finance. 9. Risk, return and exit.

Business Plan Implementation Validate Action Plans Organise Action Plans Kick-offs Review and Monitor Implementation Initiate Mid-course Corrections Carry out Annual Appraisal Prepare Action Plans for the Following Year Repeat the Process

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