Developing a Winning Business Plan

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Developing a Winning Business Plan

• Elikem Nutifafa Kuenyehia
• Legal Management Consultant
• Adjunct Lecturer, GIMPA

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Preliminaries Objectives

• Who?
• What?
• Why?
• Format
• Timing

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Objectives of this session

• To answer the question why bother with a
  business plan?
• To arm you with the ability to
• Write a business plan
• Critique a business plan
• To demonstrate that anyone can write a business
  plan
• To facilitate discussion on the elements of a
  business plan
• To answer questions you may have about business
  plans

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Agenda

• Recommended Business Plan Approach/Philosophy.
• Role of business plans.
• Elements of business plans.
• Wrap up
• Questions answers

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Recommended Business Plan Approach/Philosophy

• Must tell a STORY about
• The enterprise
• The management team
• The product or service
• Financing needs
• Strategies
• Financial non financial goals
• Must be balanced
• Must highlight both positive and negative

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Recommended Business Plan Approach/Philosophy
contd

• Must be a forward looking document
• Time frame of about three years
• Be clear, concise and well organised
• Easy to read and grasp key points
• Be simple to understand
• Provide realistic data to substantiate claims
• Relentless attention to detail

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Recommended Business Plan Approach/Philosophy
contd

• One size does not fit all
• Detail of info presented will vary depending on
• Whether plan to be used to solicit funds
• Whether existing business or start up
• Who is writing
• Prepare it yourself
• Its your venture
• Get help if necessary
• If you use someone else, be actively involved

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Role of a business plan

• Serve as a roadmap by charting future course for
  enterprise
• Translates vague notion of wanting to start a
  business into quantifiable targets and a plan for
  reaching those targets.
• Provide a yardstick for measuring actual
  performance.
• Make him/her proactive by revealing potential
  problems.

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Role of Business Plan contd

• Force in-depth understanding of industry and
  competition.
• Force him/her to consider upfront profitability
  of venture.
• Serve as a medium to attract both lenders and
  investors and
• Reduce the risk and uncertainty associated with
  launching a business venture
• Enhance chance of success

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Elements of a business Plan

• executive summary
• mission and/or vision statement
• business entity
• product or service
• management team
• market and competition
• marketing and sales
• risks and reward
• financial planning and financing

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Executive Summary

• Must provide overview of the entire business
  venture.
• Should be capable of being read alone.
• Must grab attention.
• Should be able to read in five minutes
• Should clearly communicate
• What business venture is
• What distinguishes business from competition

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Executive Summary contd

• Should clearly communicate
• Consumer pain (existing problem or opportunity
  gap).
• How relevant business will remove this pain
  (solve customer problem).
• Basic business model
• Should briefly describe
• Target market
• Management expertise
• Competitive advantage
• Financing requirement
• Cedi amounts required
• How funds will be utilised
• Possible return on investment
• Should be written after entire plan written

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Executive Summary Must Answer Following

• What is the business idea? In what way is it
  unique?
• Who are the target customers?
• What is the value for those customers?
• What opportunities and risks does one face?
• How much investment is necessary?
• What are the sales, cost and profit situations?
• What is the competitive environment like?

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Mission vs Vision Statement

• The mission statement
• defines the company purpose and
• defines the direction in which it will move
• The vision statement
• Sets a quantified target for the enterprise to
  achieve within a time frame

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The Business Entity Section

• Provides information on the background of the
  company or relevant entity behind the
• business venture. Details such as
• How entity organised
• Process involved in providing product or service
• How resources utilised

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The Business Entity Section contd

• Must answer the following questions
• What form of venture?
• When entity established and by whom?
• Details of shareholding/partnership structure.
• What skills and experience do they bring?
• What is their involvement in the venture?
• Start up or going concern?
• Total No. of employees
• Location of entity
• Plans to outsource etc

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Product Or Service

• if you do not know what the customer value is,
  the whole thing is a waste of time
• Essential premise of a business plan should be to
  address a current customer pain i.e. it should
  recognise a customer need and seek to address
  that need.
• Must seek to address the need in a way that is
  better than the competition

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Product Or Service

• Must make it crystal clear
• The detailed function the product or service
  fulfils
• The value the customer will gain from the product
  or service
• How the product/service differs from the
  competition (both direct and indirect).
• If relevant include details about product
  development, nature of technology etc
• But in plain simple language

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Management Team

• Most important section of the plan after
  executive summary.
• Success of venture will typically depend on
  ability of management team to execute.
• Must select competent team to execute
• Even sole proprietors will depend on wider team
• Must be balanced (technical, managerial, business)

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Management Team contd

• In choosing management team, need
• Common vision
• Complimentary skills, attributes and strengths
• Lean Team
• Resilience
• Ability to get along

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Management Team contd

• Section must answer following Qs
• Who are key members of management and what are
  their roles?
• What distinguishes them (education, professional
  success, standing etc)?
• What transferable experiences/abilities do they
  possess?
• What experiences/abilities are lacking?
• How will that gap be closed?
• How high is motivation of each person?

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Market Competition

• Must demonstrate that you have a thorough
  understanding of
• Needs of the customer.
• How competitors are meeting those needs.
• Requires understanding of
• Industry and industry dynamics.
• Market growth and drivers of that growth.
• Use external Data to back your claims

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Market Competition (contd)

• Amalgam of data sources
• Annual Budget
• Newspapers
• Statistics published by ISSER, Statistical
  service
• Census Data
• Internet
• Primary research
• Use reliable data sources and do a sense check

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Market Competition contd

• Should include info on
• Customer segmentation.
• Strengths and weaknesses of competitive set.
• Your competitive advantage vis-à-vis competitive
  set.
• Your positioning vis-à-vis competitive set

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Market Competition Contd

• Should answer questions such as
• How is the industry developing?
• What are the key success factors in the industry?
• What market volumes (value and amount) do you
  expect?
• What would influence growth?
• Who are target customer groups?
• What are the key buying factors influencing
  customers?
• Who are the major competitors?

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Marketing Sales

• Includes description of
• Target customers.
• Pricing.
• Distribution.
• Promotion Advertising strategies.
• Sales tactics.
• Project sales based on above reasonable
  assumptions.

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Marketing Sales contd

• Should clearly concisely articulate
• Core target customer group.
• Gatekeepers and ultimate customers.
• Size of core group.
• Include brief but rich profile of core customer
  to justify marketing and sales decisions made.

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Marketing Sales

• Must answer questions such as
• Who are the target customers? What do they look
  like?
• Size of pie? Size to be captured by you?
• What is the sales price and its justification?
• How will you draw attention of target to
  product/service?
• What advertising promotional devices?
• What distribution channels?
• What role do service maintenance play?

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Risk Reward

• Highlight risk and state the measures to counter
  these risks
• Important because business plan is about
  anticipated events given certain assumptions
• Risk section therefore address issue of what
  happens if key assumptions changes
• Address the rewards that investors can expect
  from the companys success
• State how investors will harvest their investment
• And include the exit strategy for potential
  investors

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Financial Planning Financing

• This section should
• Indicate the potential of the business venture
• Include exhibits of forecasted financial
  statements
• State the amount and nature of the money being
  sought
• Describe the uses that will be made of the
  capital raised
• State how additional funding will be obtained

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Financial Planning Financing contd

• Will include
• Actual income statements for existing business.
• Pro forma income statements for first three
  years. Based on assumptions.
• Pro forma balance sheet detailed anticipated
  assets and liabilities.
• Pro forma cash flow analysis projecting
  anticipated monthly cash flows.

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Conclusions

• A winning business plan
• Tells a story about how it will ease customer
  pain differently from the competition.
• Acts as a road map and proactive problem solving
  document.
• Is realistic and grounded in data.
• Is balanced (risks, strengths, weaknesses).
• Is written by the entrepreneur (or he should be
  actively involved in writing it).
• Depends on the people behind it to bring it to
  life.

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The End

• Questions?

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Follow Up Questions

• May email follow up questions to
• Elikem.Kuenyehia_at_kuenyehia.com