This deck was prepared by Kanchan Kumar, Nandini Mansighka and presented by Nandini at the #TiEInstitute session on creating B Plans for early stage companies.
1. Business Plan for early stage companies
27-Apr-2013
TiE Institute Knowledge Series
TiE Institute Knowledge Series
2. Objective
Understand what/why/how of business-plan
Outline for our own business-plan
Not meant to help you pitch to the investor
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3. Agenda
Introduction : what & why of business-plan
Identifying the problem
What's your solution
Competitors and Differentiators
Estimating Market Size
Projecting Revenue
Estimating Expenses
Growth Strategies for 12/18 months
Present your business-plan
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4. Session Format
Each session 30 minutes including Q&A
Followed by 15 minutes for you to work on your B-plan
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5. What is a Business Plan?
What is it?
Like a road map for your road trip
A script of the movie
What is not?
Just a fancy spreadsheet with projection of revenue & numbers
A document to be prepared and left in cold storage
A document to be prepared when looking to raise funding
Remember : you would revise every ~3 months
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6. Why make a Business Plan?
Gives you a sense of direction and a baseline
Benchmark of planned route vs. diversions
BTW Diversions aren't necessarily a bad thing
Inculcates a sense of discipline
Bring your team on a common page
Makes it easy to communicate your ideas
Forces you to think thru
Prevents impulsive decisions
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8. Identify the problem & market
What is the problem you are trying to solve
Do you have personal experience of the problem
How big & common is the problem
Will someone pay for the solution?
Common pitfalls
Make a hammer and then look for a nail to hit
Gross generalizations
Every smart phone user is my customer
Every small company is my customer
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9. What's your solution
Segment the market & focus on one segment at a time
Avoid being everything to everybody
Design a product/service which focus on the pain point
of the identified segment
Hit the market early with the product & iterate faster
Understand minimum viable product
Can you communicate your product/service in one
simple sentence conveying the value
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10. Competition, Differentiators & G2M
Know your competition. There is nothing worthwhile which
doesn't have competition
Do not think only in terms of direct competition & similar
products
Remember : cell phone cam vs. point & shoot cam
Focus on differentiators – for your chosen market segment
Plan your go-to-market strategy keeping your target customer
in mind
Focus on communicating value of your product/service offers
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11. Estimating market size
Common pitfalls – gross generalizations, e.g.
Education is a $18bn market
There are 37mn smart phones in India
If I get 1% of market we'd have xxx Crores of turnover
Focus on specific numbers to arrive at market size
Who exactly is your target customer
In which geography
How many of those are willing & capable of paying
How much would they pay
Value of alternative product they are buying
In case of recurring purchase – how often do they buy
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12. Projecting revenue numbers
Be realistic & conservative
In the identified market & of the market size estimated :
Final figures are irrelevant, devil is in the assumptions.
Assumptions drive the projection – so write it down
Every time you learn about certain assumptions being right or wrong –
re-visit the numbers
How many prospects can you reach given your g2m strategy & given
your resource constraints
Understand the sales cycle & sales funnel
How many of these prospects would convert into sales
Now arrive at sales figures
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TiE Institute Knowledge Series
13. Key financial concepts
Key concepts Discussion terms
Revenue/ Sales Sales Unit / Quantity
Sales Price
Costs Fixed Costs
Variable Costs
Capital costs - expenditure
Profit Gross Profit
Profit before tax
Profit after tax
Cash Cash requirement
Cash burn
Working Capital
Cash generated by the business
14. Estimating expenses
Always over-estimate your expenses
How much money do you have? Work back-wards (particularly if you are
bootstrapping)
Write down every little expense head (including the salary that you need to draw)
Benchmark expenses of other similar companies, ask fellow startups,
research
Understand the customer acquisition cost, cost of delivery etc
Understand how every month your expenses will increase with increased
sales/deliveries/procurement/capacity etc
Understand Cash flow, how to stretch every rupee – negotiate for early
receipt from customer and late payments to vendors
Never hurts to run it thru people who have done it before
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15. Plan for 6-12-18 months
Your Product, market, revenue & expenses – everything would
change over a period of time
What took you from 0-10 customer is not what would take you
from 10-100 and so on...
Plan for 12-18 months rolling – but revisit the numbers every 3
months minimum, if not earlier
Make assumptions for hiring, attrition, competition, regulatory,
other risks
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16. Putting it all together
Present your business-plan
Ask audience to critique based on today's learnings
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