Developing a Winning Business Plan Elikem Nutifafa Kuenyehia

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Developing a Winning Business Plan Elikem Nutifafa Kuenyehia Legal & Management Consultant Adjunct Lecturer,

Developing a Winning Business Plan Elikem Nutifafa Kuenyehia Legal & Management Consultant Adjunct Lecturer, GIMPA

Preliminaries & Objectives • Who? • What? • Why? • Format • Timing

Preliminaries & Objectives • Who? • What? • Why? • Format • Timing

Objectives of this session • To answer the question ‘why bother with a business

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

Agenda • Recommended Business Plan Approach/Philosophy. • Role of business plans. • Elements of

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

Recommended Business Plan Approach/Philosophy • Must tell a STORY about: – The enterprise –

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

Recommended Business Plan Approach/Philosophy cont’d • Must be a forward looking document – Time

Recommended Business Plan Approach/Philosophy cont’d • 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

Recommended Business Plan Approach/Philosophy cont’d • One size does not fit all: – Detail

Recommended Business Plan Approach/Philosophy cont’d • 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

Role of a business plan • Serve as a roadmap by charting future course

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.

Role of Business Plan cont’d • Force in-depth understanding of industry and competition. •

Role of Business Plan cont’d • 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

Elements of a business Plan • • • executive summary mission and/or vision statement

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

Executive Summary • Must provide overview of the entire business venture. • Should be

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

Executive Summary cont’d • Should clearly communicate: – Consumer pain (existing problem or opportunity

Executive Summary cont’d • 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

Executive Summary Must Answer Following: • What is the business idea? In what way

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

Mission vs Vision Statement The mission statement: – defines the company purpose and –

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

The Business Entity Section • Provides information on the background of the company or

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

The Business Entity Section cont’d • Must answer the following questions: – What form

The Business Entity Section cont’d • 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

Product Or Service ‘if you do not know what the customer value is, the

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

Product Or Service • Must make it crystal clear: – The detailed function the

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

Management Team • Most important section of the plan after executive summary. • Success

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)

Management Team cont’d • In choosing management team, need: – Common vision – Complimentary

Management Team cont’d • In choosing management team, need: – Common vision – Complimentary skills, attributes and strengths – Lean Team – Resilience – Ability to get along

Management Team cont’d Section must answer following Qs: – Who are key members of

Management Team cont’d 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?

Market & Competition • Must demonstrate that you have a thorough understanding of: –

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

Market & Competition (cont’d) • Amalgam of data sources: – Annual Budget – Newspapers

Market & Competition (cont’d) • 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

Market & Competition cont’d • Should include info on: – Customer segmentation. – Strengths

Market & Competition cont’d • 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

Market & Competition Cont’d • Should answer questions such as: – How is the

Market & Competition Cont’d • 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?

Marketing & Sales • Includes description of: – Target customers. – Pricing. – Distribution.

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

Marketing & Sales cont’d • Should clearly & concisely articulate: – Core target customer

Marketing & Sales cont’d • 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.

Marketing & Sales • Must answer questions such as: – Who are the target

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

Risk & Reward • Highlight risk and state the measures to counter these risks

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 company’s success • State how investors will harvest their investment • And include the exit strategy for potential investors

Financial Planning & Financing This section should: • Indicate the potential of the business

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

Financial Planning & Financing cont’d • Will include: – Actual income statements for existing

Financial Planning & Financing cont’d • 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.

Conclusions • A winning business plan: – Tells a story about how it will

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.

The End Questions?

The End Questions?

Follow Up Questions May email follow up questions to: Elikem. Kuenyehia@kuenyehia. com

Follow Up Questions May email follow up questions to: Elikem. [email protected] com