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Mckinsey How To Write A Business Plan
Mckinsey How To Write A Business Plan
Imperial College
6 March 2001
This report is solely for the use of client personnel. No part of it may be circulated, quoted, or
reproduced for distribution outside the client organization without prior written approval from
McKinsey & Company. This material was used by McKinsey & Company during an oral
presentation; it is not a complete record of the discussion.
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Contents
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Contents
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Stages of a Start-up
Established
company
Start-up and
growth
Exit of
initial
Business investors
plan
preparation Financing
decision
Business
idea Interest of
generation investors
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Ideas
• Degree of innovation
• Scope
• Patent
Capital
• Availability/amount
• Needs/responsibilities
• Exists for investors
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Successful ideas
demonstrate how big
The key to success is CLEAR MARKET OF
the market is, the target
satisfied customers, not CUSTOMER ADEQUATE
customers and how the
a great product VALUE SIZE
product differs from the
competition
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• Microsoft • Netscape
Innovation
Existing industry New business system
Product/service
• Skilled trades • Dell
• Engineering offices
Convention
Convention Innovation
Business system
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Long
term
success
Market
researchers
MARKET
Tax RESEARCH
consultants
Patent TAX
lawyers
PATENTS
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• Young, growing
companies
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SUCCESS
Entrepreneurs
Inventors Finance
Team Team
members members
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Network support
Academics Entrepreneurs
Venture
Peers
capitalists
Other
Sponsors
start-ups
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Clear Objective
• Well structured • Accurate
• Standalone • Positive and critical
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Draft ‘Final’
Business business business
concept plan plan
1. Executive summary
2. Product or service
3. Management team
Importance
6. Business system and organisation
7. Implementation schedule
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• What is your business • What do you estimate • What are the results of
idea? In what way does it your financing needs to your detailed business
fulfil the criterion of be? planning?
uniqueness? • What are the sales, cost • What are your exact
• Who are your target and profit situations? financing needs?
customers? • What are the most • How will you delegate
• What is the value for those important milestones management tasks?
customers? along the way to your • How much production
• What market volume goal? capacity is necessary?
and growth rates do • What test customers have • How will the
you forecast? you approached/could implementation of your
• What competitive you approach? business idea be
environment do you face? • What distribution organised?
• What additional stages of channels will you use? • What are your next
development are needed? • What partnerships would concrete steps?
• How much investment is you like to enter into?
necessary (high level • What opportunities and
estimation)? risks do you face?
• What long term goals have • What is the picture on
you set? patents?
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Opportunities &
risks
Financial planning
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Product or service • Who are the founders/founder groups and what are their
qualifications, experience and past achievements
• How critical is the idea originator to the future success of the
Management team venture?
Market &
• How are the management responsibilities shared among the
team? (e.g., a table of team members with their position and
competition
key activities/responsibilities)
Marketing • What is the plan to reinforce management team in the future?
& sales (e.g., schedule of future management hiring and skills
required)
Business system
& organisation
Implementation
schedule
Opportunities &
risks
Financial planning
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Product or service
Management team • What is the potential market size for the product/service?
(e.g., calculation derived from number of target customers,
units sold, value of sales)
Market &
competition • What is the expected market growth and which major factors
influence that growth?
Marketing
& sales
• Who are the likely competitors? What do they offer?
• What are the strengths and weaknesses of competitors? What
Business system is your competitive positioning vis-à-vis competitors? (i.e, a
& organisation table of competitors and their ratings across key criteria – e.g.,
time to launch, technological capability, access to proprietary
Implementation technology, privileged relationship with suppliers and
schedule customers)
Opportunities &
risks
Financial planning
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Product or service
Management team
Market & • What are the specific plans to promote the product/service?
competition
• How will the product/service be distributed? Which partners
Marketing will be needed in the distribution channel?
& sales • What will be the pricing strategy? (e.g., how much will you
charge for different customer segments, quantities)
Business system
& organisation
Implementation
schedule
Opportunities &
risks
Financial planning
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Product or service
Marketing
• What skills will be required and what is the hiring plan?
(e.g., a table that shows total number of positions and the
& sales
functional description of positions, skills required for top 3
Business system positions in each department)
& organisation • What is the scope of the business? (i.e. what will be
performed internally and what will be outsourced?)
Implementation
schedule • Have strategic partnerships been identified? If yes, how will
these partners be secured? If no, what is the plan to get
Opportunities & partners?
risks
• Have key vendors been identified? If yes, how will these
vendors be secured? If no, what is the plan to get vendors?
Financial planning
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Product or service
Management team
Market &
competition
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Product or service
Management team
Market &
competition
Marketing
& sales
Business system • What are the best case and worst case scenarios for the 5-year
& organisation financial projections? What are the key assumptions on the
key parameters? (e.g., market shares, profit margin) – refer to
Implementation Appendix for example
schedule
• What does the sensitivity analysis show? (i.e., by varying key
Opportunities & assumptions in isolation)
risks
• What mitigating steps are planned in order to minimise risks?
Financial planning
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Product or service
Management team
Market &
competition • For the next 5 years (and at least 1 year beyond breakeven
point), what are the projections for
Marketing – Income statement (includes detailed revenue source as
& sales described in the business model)
– Cash flow statement
Business system – Company valuation, utilising
& organisation · Discounted cash flow analysis
· Revenue multiples
Implementation
– Balance sheet
schedule
• What are the key assumption used in the financial proforma?
Opportunities & (e.g., cost of capital, market share, margin)
risks
• What are the financial requirements for the business and what
sources of financing have been identified? (e.g., financial
Financial planning schedule with amount needed and possible financing sources)
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Contents
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GOOD
LUCK
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