MG 298
Entrepreneurship
Business Plan
Contents and Preparation
Prof Parameshwar P. Iyer
Today
• Recap-Business Models & Class
Discussion
• Business Planning Basics
• Class discussion
• Readings for next class
Business Plan
• What is it?
• Do you really need one?
• How long is it useful i.e. how quickly does
it become obsolete?
• Who should prepare it?
• Which parts of it matter the most?
Business Plan Contents
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Executive Summary
Industry, Company and its Products
Market Research & Analysis
Economics of the business
Marketing Plan
Design and Development Plans
Manufacturing and Operations Plan
Management Team
Overall Schedule
Critical Risks, Problems and Assumptions
The Financial Plan
Proposed Company Offering
Appendices
1. Executive Summary
• Description of Business Concept and the
Business
• Target Market and Projections
• Competitive Advantages
• Costs
• Economics, Profitability, and Harvest Potential
• The Team
• The Offering
2. Industry, Company, Products or
Services
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The Industry
Company and Concept
Products and/or Services
Entry and Growth Strategy
3. Market Reseach and Analysis
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Customers
Market Size and Trends
Competition and Competitive Edges
Estimated Market Share and Sales
Ongoing Market Evaluation
Perspectives on Marketing
• Understanding your offering the way a
customer values it – not as an innovation,
but as a package of innovative services;
• Discerning which kinds of customers are
likely to yield the first sale; and which will
comprise the large, mainstream market;
• Learning what markets are trying to tell
you; and responding appropriately.
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
8
Marketing Philosophy
• The marketing concept provides an orientation
for conducting a business, a way of thinking, and
a basic approach to business problems.
• Marketing is .. The whole business seen from
the point of view of its final result, that is, from
the customer’s point of view.
• The principal task of the marketing function… is
not to be skillful in making the customer do what
suits the interests of the business as to be skillful
in conceiving and then making the business do
what suits the interests of the customer
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
9
Indicators of Customer and
Marketing Orientation
• What information do you collect about the exact
needs of your customers?
• Could you consider custom designing your
products or services for smaller groups of
customers? How?
• Are your employees specifically trained to
represent your company to customers? How?
• How do you convert unsatisfied customers to
satisfied customers? Do you have any strategy?
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
10
Technology as Service
• Transition from technology professional to
technology entrepreneur
• Replace the techno-centric view of the world
with one that is customer-oriented
• Technology is not just a tangible object, but
rather a package of valuable services
• Customers have little use for products as
objects; they have great use for services these
objects provide.
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
11
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
12
Five steps for assessing market
opportunities
• 1. Identify business environmental forces (economic,
legal, regulatory, technological)
• 2. Describe the industry and its outlook (type, size,
market segments, marketing practices)
• 3. Analyze key competitors (products, market
positioning, market practices (channels, pricing,
promotion, services), estimated market share
• 4. Create a target market profile (levels, generic needs,
product types, end-user focus, targeted customer
profiles, implications for opportunity
• 5. Set sales projections (formal/ intuitive approaches,
comparison of results)
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
13
Sources of information for Market
Opportunity Analysis (MOA)
• 1. Published sources: Periodicals,
newspapers, trade association reports,
information service reports, government
documents, company reports
• 2. Interviews with experts: Managers of
suppliers, trade companies, associations,
consultants, sales persons
• 3. Personal observation: Of customers,
competitors, environmental influences
• 4. Primary marketing research: focus groups,
concept tests, cross-sectional surveys,
longitudinal panels, experiments
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
14
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
15
4. Economics of the Business
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Gross and Operating Margins
Profit potential and Durability
Fixed, Variable and Semi-variable Costs
Months to breakeven
Months to reach positive cash flow
24 September MG
2007
(c)298
2007Entrepreneurship
Parameshwar P. Iyer
Indian Institute of Science
Shivram
V.
17
5. Marketing Plan
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Overall Marketing Strategy
Pricing
Sales Tactics
Service and Warranty Policies
Advertising and Promotion
Distribution
6. Design & Development Plans
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Development Status and Tasks
Difficulties and Risks
Product Improvement and New Products
Costs
Proprietary Issues
7. Manufacturing & Operations
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Operating Cycle
Geographical Location
Facilities and Improvements
Strategy and Plan
Regulatory and Legal Issues
8. Management Team
• Organization
• Key Management Personnel
• Management compensation and
Ownership
9. Overall Schedule
• Typical Project Plan with customary
artifacts
– Timeline
– Milestones
– Responsibilities
10. Critical Risks, Problems,
Assumptions
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Minor and major risk
Known problems and issues
Possible impact on plan
Implicit and explicit assumptions about any
aspect of the venture
• Dominant theme ---- Try to identity every
conceivable source of unexpected and
unpleasant surprises and change
11. Financial Plan
• Actual Income statements and Balance
Sheets (Historical as well)
• Pro-forma Income statements and
Balance Sheets
• Pro-forma Cash Flow Analysis
• Breakeven Chart and Calculation
• Cost Control
• Highlights
12. Proposed Company Offering
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Desired Financing
Offering
Capitalization
Use of Funds
Investor’s Return
13. Appendices
• Typically a lot of the supporting information
and data tends to be presented in
Appendices
– Detailed Financial Information
– Resumes
– Market Data
– Press Releases and Interviews
– News Clippings
Do Not…
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Have unnamed people in the plan
Make unsubstantiated statements
Use too much technical jargon
Spend resources on aesthetics/packaging
Swap execution time for writing time (an
ounce of visible implementation is worth
several pounds of theoretical planning)
• Bank on deal until money is in the bank
Internet Sources
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www.bplans.com
www.us.deloitte.com/growth
web.mit.edu/entforum/
www.businessplans.org
www.sba.gov/starting/indexbusplans.html
www2.inc.com/writing-a-business-plan/