1. Business Plan Financials
Richard O’Callaghan

2. A Business Plan A business plan is a communication tool
A snapshot of your business at one point in time – constantly evolving!!!
What is it used for?
Raise funding
Part of a broader communication strategy towards investors and other stakeholders
The operational plan for your business.
Drawn up to show how the business will achieve success with the business
Can and will (if properly used) be your road map to success

3. A Business Plan Describes…
The business - What business are you in?
The markets - Where is the opportunity?
Industry forces - What are the competitive threats? What’s our competitive edge?
Who is the team to implement the Plan?
What resources are available for success?
How much capital is required?
What are the financial rewards to investors?

4. Typical Business Planning Model
Opportunity
Product/Service
Industry,
Buyer &
Competitor
Analyses
Why this business? Why now? Why you?
What are you going to provide and who wants to buy it?
Operating Plan
Marketing Plan
Cost Projections
Sales Projections
What will we be doing? What will it cost to produce your product or service?
Why buy from us? What will it cost to sell any given amount of your product or service?
Financial Plan
Profit AND Cash Projections
How will your business make money? How much? For how long? Risks?

5. Used for Funding What are you trying to do? Raise Angel funding?
Apply for a grant?
Applying for a loan?
Raising Venture Capital?

6. Gathering Information for the Business Plan

7. Before you start writing the plan itself
You must gather a significant amount of information on:
You
Your firm
Your product
Your finances
Your targets
Future potential

8. Business Planning is an Iterative Process…
Tell the story…
(Draft your narrative sections)
Run the numbers…
(Develop your Financial Plan)
Verify the story…
(Examine the narrative sections) 1 2 3

9. Convey to the Reader a Clear Picture
This is the market opportunity
This is my product
These are the key benefits: the value proposition
This is the evidence that substantiates the value proposition
And these are the people who will make it happen - and why

10. What is your Market?
Having understood your core proposition the reader wants a clear picture of your market in terms of …
market size
market segmentation and niches
actual and projected growth rates in target market
geographic breadth and variation
market context - relevant environmental, regulatory, technological, demographic/social changes

11. How do people make money in this market?
Basis of competition - price, differentiation, range, discount structure, etc.
Nature and number of substitutes (and “near substitutes”)
The ease or difficulty of gaining market entry
The margin opportunity - current and future
It is essential to demonstrate a real understanding of what makes the market “tick”, why it is an attractive market, and why it will remain so for some time

12. How will your Product or Service be Produced?
The operational part of the plan should set out ...
what is involved in producing the product or delivering the service
resources required to do this: labor, material, facilities, etc.
capital expenditure - amount and phasing
which activities will be controlled in-house (eg. design or assembly) and which will be sub-contracted (eg. packaging)
what it will take to gear up production post start-up
status of any agreements with suppliers

13. What are your Financial Projections?
This part of the plan should focus on ...
core assumptions behind the financial model
the link between these assumptions and your market data
key financial indicators - projected cash flow, maximum cash requirement, summary profit & loss statement, balance sheet
your expected base case and rationale for it
the potential downside (what happens if “the wheels fall off”) and upside (what happens if “it really takes off”)

14. Cost Behaviour
Cost €
Cost € Q Q
Fixed
Variable
Cost € Q
Semi-Variable

15. Fixed Costs

16. Variable Costs

17. Semi-Variable Costs

18. Estimating Income and Variable Costs
Units projected for sale
Units to be produced
Direct Materials
Direct Overheads
Direct Labour
Electricity
Telephone
Etc

19. How much Money do you Need?
Your summary financial projections will drive the funding requirement. For investors, the key issues are ...
how much money is needed
what it is need for: staff, premises, capital expenditures, research & development, market testing, and so on
when and in what stages it is required
the key milestones against which funds will be drawn down
the form in which the finance is required

20. Ability to make Repayments
The projected timetable for the business to achieve lift off
Target time to break even, generate positive cash and profit
Repayment projections, and proof how you can meet them
Valuations achieved by comparable businesses