Al Fikra 2014 Business Plan Workshop

Al Fikra, Qatar's National Business
Plan Competition
Business Plan Workshop
January 2014
Prepared by Professor George White
and S. Thomas Emerson,
Distinguished Career Professor of
at Carnegie Mellon University Qatar
Business Plan Content
Executive Summary
The Problem & Opportunity
The Business Model
Underlying Magic
Marketing and Sales
Product Development & Deployment
Financial Projections
Current Status
Executive Summary
This document describes the creation and operation of the
company would like to create. Everyone knows that the
company doesn't yet exist, or if it does, it hasn't achieved the
form described in this document. This document describes
your wishes and your forecasts. It is your best estimate of
what you could create in the next few years.
Most businesses start out to serve an unmet need. You can express
that unmet need as and an opportunity or a problem. You must point
out that you have a business concept to serve these unmet needs with
new technology or in some other way to reduce costs or improve
quality over potential competitors.
Executive Summary should contain
• The problem/need/opportunity the company intends to address is
• The solution the company intends to deliver is ….
• Our mantra is (the purpose that motivates your employees).
• Our vision is (why the market needs your business)
• Our mission is (what benefits you deliver to your customers)
• Our customers will be …
• Our business model is …. (We will make money by…)
• Our competitive advantage:…. we have (knowhow, intellectual
property, etc. that our competitors do not …)
• What our product/service does:
• Typical usage examples are …
• Status: (We are currently just two people in a garage… but we soon will
be thousands of people on the Internet with global reach.)
Important Notes to keep in mind
The Business Model Canvas
• The business model is a description of how your company will make
money, and the business model canvas is a breakdown of the most
obvious factors that influence how your company will make money.
• You should go down the checklist below of 9 questions to show the
reader that you have considered these important factors. Try to
answer each question in less than 3 or 4 sentences. This list of 9
items is standardized and described in a textbook.
The 9 items for the Business Model Canvas
Key activities: List the things you expect to be your core competencies, things
you will do really well.
Cost structure: what or who controls your costs?
Key partners: which partners and suppliers do you need to rely on?
Revenue streams: what are customers really willing to pay for (recurring or per
Key resources: what resources/assets are essential for your business?
Channels: how does each customer segment want to be reached?
Customer relationships: what relationships are you establishing? Personal?
Automated? Acquisitive? Retentive?
Customer segments: which customers and users are you serving? What jobs do
they really want to get done?
Value propositions: what are you offering customers and suppliers?
Marketing and sales are two different operations, but often confused.
Marketing is the study of the characteristics of groups of potential
customers and mechanisms for reaching groups of customers. On the
other hand, “Sales” is the day-to-day mechanics of reaching out to
customers and actually selling product.
In this section you discuss the characteristics of the community of
buyers of your product. You discuss how many of them there are and
how much each is willing to pay you for your services. You also discuss
the mechanisms for four delivering your products or services and
estimate the costs of advertising and promotion.
Marketing Section must include
It is best to include two sub-sections in this part of the business plan:
– Economics of the business – How you make money, including
pricing, which is governed by the value perceived by the buyer
and competitive offerings, and cost for the seller, which together
determine the profit margin.
– Economics for the customer – Discuss return on investment the
customer receives.
Note that a good business transaction is good for both buyer and
seller, so both of the above should paint a positive picture.
You also discuss who will be involved in selling the product, how
much each salesperson will be paid, how much each salesperson
will earn. How much will be salary and how much will be
incentive-based percentages of sales. You discuss costs of
recruiting, training, maintaining and upgrading the staff involved
in selling. Discuss the method of payment (cash, credit/debit card)
and who handles the money.
• In this section you identify who could be a competitor in the
future. No one in their right mind will start a business that has an
existing business doing exactly what you propose to do, unless
you have really new strong proprietary technology and/or
enormous wealth. Startups usually don't have either of these, so
you don't want to enter a market where head-to-head
competition already exists. Let's presume you don't have
entrenched competitors.
• Even when you don't have entrenched competitors, it isn't
sufficient to say "no competitor exists". In this section you
describe who could become a competitor.
• So you want to identify companies that are in related businesses
that could migrate over into the area you propose to serve.
• “Operations” refers to the day-to-day mechanics of running your
business. You basically describe the flow of material, products
and services that go through your company on a daily basis. You
need to identify the principal activities and the people responsible
for delivering them.
• This section also includes any nonrecurring startup operations
required to launch your business. If it involves hardware, there
will be a design phase, a sourcing phase, and ongoing product
improvement operation, and a schedule for receiving completed
components from hardware vendors, and delivery to the point-ofsale or installation.
Financial Projections
• The financial section is the most challenging section for startup. Here
you have to be quantitatively accurate in estimating all the costs for
starting up the business as well as the ongoing cost of operation.
It's vital that the financial projections show that the company throws
off enough cash to pay back investors handsomely and/or expects to
go public in less than 5 years. Mergers and acquisitions are also a
respectable way of generating "liquidity" for investors. In any case,
you must mention the mechanism whereby investors will be repaid.
• It is practically essential to show graphically the change in headcount,
expenses and income for the first five years. Usually you would have
formal cash flow, P&L and balance sheet statements, PRESENTED
GRAPHICALLY in this section. (Put your spreadsheets in an appendix
to the business plan.)
Financial Projections (contd.)
• You should show yearly results for the first five years, and monthly
charts for the first year. In other words you need an excel
spreadsheets showing P&L with 13 columns (the first column for the
labels, followed by 12 columns for the 12 months). (You need to
print this in landscape mode, with the columns running horizontally.)
In addition you need a spreadsheet with six columns (the first
column for the labels, and the following five columns for years 1, 2,
3, 4 and 5.
• In addition you need line chart showing both income and expenses
for the first five years of operation.
• In addition, you need a projected distribution of ownership after the
first year of operation. In other words, how will the ownership in
your company be distributed between investors and employees and
founders after the first year of operation.
Management Team
• All startups should have a Board of Directors. Investors will have
seats on the Board. The Board will meet monthly for the first year,
quarterly for the second year, and eventually annually once the
company is up and running smoothly. The function of the board is
to appoint a CEO, to agree on the business plan of operations, and
to vote on the compensation of the senior executives in the
company. In a startup, most important thing is to state that you
understand the board needs to exist, that you anticipate recruiting
certain types of businessmen to board, how many board members
you'll have, what their compensation will be (usually it's nice to give
them a small number of stock options), and cover their expenses to
attend board meetings.
Management Team: Organization Chart
Org Chart
Board of Directors
VP Product
VP Operations
VP Marketing
VP Sales
The business plan should include short bios of the key players,
with full CVs in an appendix. It is important to show MOTIVATION
AND COMPETENCE, which are more important in a startup than
experience. Experience is VERY IMPORTANT in those recruited to
serve on the Board of Directors.
Current Status
• Here you simply state what the plans are for the current founders.
If you are students, when would you be available to actually join the
company full-time. If you don't plan to join the company full-time,
what role will you play. Beyond that, if the company is actually been
formed, state that. If you have created a website, state that and
show some pictures of your webpages.
How investors will receive payback and profit
This section usually focuses on the “liquidity event” in which a
company goes public and an equity investor can start trading their
stock. In other words, investors who gives the company money for
which they receive stock will at some point want to sell their stock.
Unfortunately, there is usually nobody who wants to buy the stock in a
startup “private” company. However, when a company is able to go “
public”, owners of the company shares can start selling their shares on
public exchanges. This is the first opportunity most investors get to
transform their shares back into cash. Therefore when asking for an
investment, a company needs to more or less promise to go public at
some point so the investor can get your money back. This section
needs to state that.
How investors will receive payback and profit
• However, if the company never gets big enough to go public,
investor will want to have other mechanisms to get payback plus
profit. This could be accomplished by my having the company pay
dividends to shareholders at some minimal rate that guarantees the
investor will receive all his money back plus profit. If this is the plan,
it must be stated so in this section.
• The third way of paying back investors is through “mergers and
acquisitions”. If the startup gets acquired by a publicly traded
company, the initial investor will receive shares in a publicly traded
company which means he can sell his shares and get his money
back. If this is the most likely payback mechanism, you need to
state this.
TEL: 40125000
FAX: 40125001
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