Business Plans - Compilation Approaches

Consulting
Compilation approach for

Business Plans
Internal Project
Strictly private
and confidential
Draft
Contents
Contents 1
2
Applications of business plans
Compilation approach for executive summary section
3
9
3 Compilation approach for products & services section 14
4 Compilation approach for management team section 19
5 Compilation approach for market & competition section 24
6 Compilation approach for marketing & sales section 32
7 Compilation approach for business model section 38
8 Compilation approach for implementation plan section 44
9 Compilation approach for finance & valuation section 48
10 Compilation approach for opportunities & risks section 56
Compilation approach for Business Plans Strictly private and confidential

Draft 2
1 Applications of business plans Contents
Applications
of business
plans

Draft 3
Sorts of business plans
EXAMPLE
New
New Products New Industry
• New animal feeds • Mining industry
• New aqua feeds • Food retail industry
• New soybean meals • Farming industry
• New genetic corns • Etc.
• Etc.
Products
/ Services
Existing industries and New business models
businesses such as new revenue
structure, new vertical
integration system,
outsourcing system, etc
Existing
Existing New
Business Model
Source: Research and analysis

Draft 4
Applications of business plans
OVERVIEW
Typical applications Challenges in new

• For startup companies: venture projects
─ For venture capital • High uncertainty
investors concerning products, Start-up
─ Communication with business, timing, and businesses
business partners, cash requirement need
suppliers, etc • Limited data availability specifically
• For well-established due to freshness of tailored plan
companies: innovative products to match
─ Internal budget setting • Possible necessity of new venture
─ External financing external experts demands
─ Exiting • Lack of skills and time for
learning new things
• For investors:
─ Creating a new business

Draft 5
General compilation principles
Description
• Planning one business is an innovative and adaptive process that requires

Continued adaptation constant updates and adjustment works
Influencing with • Not the quantity of analyses, but the intelligibility and preciseness as a whole are
clearness of utmost essential
• No hype or general trend / factual statements. Quantify wherever possible and

Convincing by facts support arguments with concrete evidences
Comprehensible even • Those who request a business plan are not always experts who are familiar with
for non-experts technical terms or basic background of the industry
• Materials and analyses from different sections must be straightforward and deliver
Consistent and concise a coherent message throughout the business plan
• A clear, easy-to-follow structure is a courteousness to those dedicating their time

Visually captivating in reading the business plan

Draft 6
Progression stages of business plans
Maturity level of a
business investment
Stage 4
Financial
evaluation
Stage 3 • Enterprise
Venture / Investor- valuation
tailored BP • Due diligence
• Deal structuring
Stage 2 • Evaluation of
Standard business Management team
plan (BP) • Implementation
plan
Stage 1 • Marketing and • Financing options More stages are
Investment sales possible if further
description • Business model milestones are
• Opportunities and
• Products / services risks
reached
• Market size,
competition

Draft 7
Sections of a complete business plan
Executive Products & Management

summary services team
Market &
Marketing & Business
competition
sales model
landscape
Financial
Implementation Opportunities
performance
plan & risks
& valuation

Draft 8
2 Compilation approach for executive summary section Contents
Compilation
approach for
executive
summary
section

Draft 9
Executive summary - Content

OVERVIEW
• Provides a brief overview of the

business plan's most important
aspects
• Describes the business plan as clearly
and concisely as possible
• Attract consideration of decision
makers
Market &
Marketing & Business • Cap content at 5-10 minutes of reading
competition only
sales model
landscape
Financial • Quality of summary decides the

Implementation Opportunities first impression of investors
performance &
plan & risks
valuation toward a business plan

Draft 10
Executive summary – Critical questions
STEP 1
Description of business plan
• What is the business indication? How does it fulfill the condition of

distinctiveness?
Sample list of
• Who are the target customers?
most critical
• What is the value for those customers? questions which
• What market volume and growth rates are forecasted? can be raised by
• What competitive environment is prevalent? an investor
• What additional stages of development are needed?

• How much investment is necessary (estimative basis)?
• What long-term goals have been set?

Draft 11
Executive summary – Additional questions
STEP 2
Details of business plan
• How is evaluation of financing requirements

• What are the sales, cost, and profit scenarios? Sample list of
additional
• What are the critical milestones along the process of
questions which
reaching objectives?
can be raised by
• Which type of customers have been approached/ could an investor
have been approached?
• What distribution channels will be used?
• What partnerships are likely to happen?
• What opportunities and risks are encountered?
• What is the picture on intangible assets (if any)?

Draft 12
Executive summary – Case example

EXAMPLE
Overview
• Microgrids (MG) which are capable of operating in both grid-connected and / or

Products / services island mode
• Savings of xx% for powerplants operators via cost avoidance of peak demand
• Customers: Military energy program developers, eco / smart developers

Market size and • Market: xx of micro-grid projects currently in operation with xx Mw of capacity
competition • Major competitors: Duke Energy, Vattenfall, E.ON
• 2015: Investment of xxUSD is required
Marketing and sales • 2018: Sales reaches xxUSD (break-even point)
• 2020: Sales reaches xxUSD, profit of xxUSD
• Provide installation of an intelligent, self-healing system with redundant circuits
Business model for each customer
• Re-design local grid for resiliency (e.g., installed controls, moved lines)
• Greater government’s focus on energy sustainability and eco-development

Opportunities and risks • Nascent regulatory framework
• Low electricity tariffs

Draft 13
3 Compilation approach for products & services section Contents
Compilation
approach for
products &
services
section

Draft 14
Products and services – Content

OVERVIEW
• Describes the functions and

characteristics of the products
/services provided by the Company
• Define the benefits the customers will
gain from such products / services
• Explains current position and next
developmentstages of products
Market & /services
competition
sales model • Addresses patents issues (if any) and
landscape other matters related to intangible
assets (if any)
Financial • Products / services section

Implementation Opportunities serves to prove that customers'
performance &
plan & risks
valuation perspective can be accounted
by the business plan

Draft 15
Products and services – Critical questions
Description STEP 1
• What are the end customer groups will be targeted?

• What do the customers want? Sample list of
• What customer value does the products / services provide? most critical
• What is the nature of the products? How is it distinctive? questions which
can be raised by
• Any partnerships necessary to achieve full customer value? an investor
• What competitor products already exist or are under
development?
• What phase of development has the products or services
reached?
• Any patents or licenses?
• What further development stages are planned to take? What
milestones must be reached?

Draft 16
Products and services – Additional questions
STEP 2
Description
• Which kinds of products / services are designed? and for

which customer groups and applications? Sample list of
• What patents / licenses (if any) do the competitors have? additional
questions which
• What kind of customer supports will be offered?
can be raised by
• What product or service guarantees will be offered? an investor
• Compare the strengths and weaknesses of comparable
products / services with the Company’s
• What shares of sales are expected from each group of
products / services? supporting reasons?
• What is the additional earnings generated from promoting
the property rights or utilizing intangible assets (if any)

Draft 17
Products and services – Case example

EXAMPLE
Degree of fulfilled
Customer needs of pig meat products by the Company
• Fresh meats in wet market kioses are not stored in

Medium
room temperature for longer than 8 hours Potenital
• Processed meats in supermarket / convenient improvement of x%
Medium in product quality
stores are not stored for longer than 4 days
and x% in price
• Pig meats are produced and distributed within a competitiveness
High
close integrated model (Feed – Farm – Food)
• Pig herds are raised in large-scale industrial farms, High
with modern and sufficient facilities
• Pig herds are produced with a complete and up-to- Potenital
standard 4-level breeding system to preserve High
improvement of
genetic characteristics and superiority x% in breeding
productivity and
• Pig herds are supplied with industrial pig feeds,
High x% in disease
with no usage of forbidden ingredients
reduction
• In-house supply of animal vaccines and other
Low
health products

Draft 18
4 Compilation approach for management team section Contents
Compilation
approach for
management
team section

Draft 19
Management team – Content

OVERVIEW
• Summarize the organization /

management structure of the Company
summary services team • Summarize educational background
and professional experience of
Management team
• Describes how skill gaps (if any) can
be bridged in the future
Market &
Marketing & • Identify whethere management and
Business
competition technical expertises are available to
sales model
landscape operate the business
• Investors / Venture capitalist

Financial will only provide fundings if the
performance & target business is operated by
plan & risks
valuation a capable Management team

Draft 20
Management team – Critical questions
STEP 1
Description
• Who are the members of the Company’s Management team

and what differentiates them: education, work experience, Sample list of
success, reputation in the business world? most critical
questions which
• What experience or abilities are at disposal? Which can be
can be raised by
valuable for implementing the investor’s strategies and
an investor
establishing new businesses?
• What experience or capabilities are missing? How can such
gaps be bridged?
• What are the objectives of each Management’s member
towards the business? What is their motivation?

Draft 21
Management team – Experiences for venture business
VENTURE CASE
Example
Typical corporate …but corporate
experience may not suit experience is valuable if
Mr Do Tuan Anh, CEO
venture businesses… it includes: of Appota Vietnam
• Skills executed to achieve • Business planning • 10-year corporate
short-term earnings and responsibilities, such as: experience when
maintain an already stable ─ Headed an expansion beginning the first
and sustained growth startup in 2011
into new markets
• Skills at internal back- • Previous experience
─ Established new with several startup
office supports only products or divisions companies such as
• Well-established staff ─ Provided marketing Socbay, GSM, and
support which allows Appstorevn
strategies to cultivate a
extensive delegation new brand • Study and localized
• Investment planning an already successful
• Relevant industry business model of 91
facilitated by substantial experience, preferably Wireless
capital resources with technical skills

Draft 22
Management team – Case example

EXAMPLE
High Medium Skill Gap

Team members
Member A Member B Member C
Skills of Management’s team members
Technology
Finance
Project management
Hard Skill gaps
Accounting to be
factors
bridged
Marketing / sales with
Production additional
recruitme-
Human resources -nts
Relationship
Soft Social status
factors Communication
Negotiation

Draft 23
5 Compilation approach for market & competition section Contents
Compilation
approach for
market &
competition
section

Draft 24
Market and competition – Content

OVERVIEW
• Provides an in-depth analysis of

markets and competitors:
summary services team ─ Market size and growth
─ Market segmentation
─ Competition
─ Positioning of the Company’s
product vs competitors’
Market &
competition
sales model
landscape
• The market and competition

part serves to determine the
Financial profitability potential of the
performance & business
plan & risks
valuation

Draft 25
Market and competition – Critical questions
STEP 1
Description
• How is the industry evolving?

• What is the impact of possible innovation and technological Sample list of
advances? or the market is more labour-intensive? most critical
• How will the market be segmented? questions which
• What is the market size of each market segment, current and can be raised by
in the future (estimative basis)? an investor
• Who are main the customer groups of the market?
• What are the major competitors?
• How maintainable is the Company’s competitiveness?

Draft 26
Market and competition – Additional questions (1/2)
STEP 2
Description
• What market size (value and volume) can be projected for

the Company’s market segments over the next five years?
• What will drive growths in each market segment?
Sample list of
• What is the current and future profitability of each market additional
segment (estimative basis)? questions which
• What market shares does the Company hold in each can be raised by
market segment? What segments are being and will be an investor
targeted by the Company?
• Who are the Company’s reference customers
(credentials of a successful delivery of products or
services)?
• What are the key purchasing factors for customers?

Draft 27
Market and competition – Additional questions (2/2)
STEP 3
Description
• How intense is the competition? What strategies are

being adopted by competitors? Sample list of
• What are the barriers to market entry and how can they additional
be tackled? questions which
can be raised by
• What market share does the Compay’s competititors have
an investor
in the each market segment?
• How profitable are the Company’s competitors?
• What are the competitors' marketing strategies?
• What distribution channels do the competitors use?
• How will competitors react to the Company’s new moves?
How will the Company respond to such reaction?
• Profile the strengths and weaknesses of major
competitors

Draft 28
Market and competition – Case example (1/3)

EXAMPLE
Market size of X2C E-Commerce in SEA CAGR % Contribution of X2C E-Commerce to domestic retail
USD Million, By business model 2012 - 2015 % of retail value, By business model
Domestic
Indonesia
12,550.9 14% retail value
Thailand 2015, USD Bil
Vietnam 567 10% 6.0%
707
Singapore 11% Indonesia 138.6
1,012
Malaysia
51% 5.0%
Philippines 9,108.0 1,091
522 23% Singapore 23.1
761 1,714 4.0%
867
5,816.5 792
3.0%
424 1,428
4,286.7 672
801 74% Thailand 89.9
380 2.0%
525 523 7,460 Malaysia 41.8
736 1,114
317 Vietnam 84.9
4,738 1.0%
921 Philippines 69.4
2,282
1,409
0.0%
2012 2013 2014 2015 2012 2013 2014 2015

Draft 29

EXAMPLE
Pivot-to-Marketplace Strategy Private Branding Strategy
Lazada is Rocket Internet’s flagship brand in

SEA and has been posting fastest growths
among its peers. With a similar business “Lazada’s switch from an inventory-based online “Zalora’s strategy is to place private label at the
model to Amazon, Lazada both sells their retailers to a primarily “marketplace” business core of its product assortment. The Company
own inventory as well as allows third-party model, which now accounts for about 70% of believes that its brands and private labels will
merchants to sell their products on its monthly sales, was the most significant driver of continue to attract new customers, retain existing
websites. Meanwhile, Zalora is Asia Pacific’s revenue growth” ones, optimize customer loyalty”
leading online fashion retailer. The platform
offer a highly diverse mix of third-party brands Forbes Insights, 12 May 2015 Kinnevik Investment Report, February 2015
and differentiating private labels
Zalora’s key offerings Business’s reach 2013 Lazada’s key offerings

• Wide variety of localized Million 2015
• In-house payment system
products, inclusive of Lazada Zalora (helloPay) assures safety for e-
Muslimwear offered to Malaysia transactions and reduce costs
and Indonesia markets Total 9.7 2.7 for sellers
• Local distribution network and • In-house distribution service
Acti vecustomer s Acti vecustomer s
Transaction 1.0
0.8
private warehouses, with low (Lazadaexpress) provide
average delivery time of 2 days specialized logistic supports for
Total 11.6 5.2
• Wide variety of payment Customers
Total custom e
rs Total custom e
rs
merchants and buyers
0.9 1.3
methods, inclusive of COD • Award-winning mobile
• Pop-up shops for consumers to 17.7 6.7
application optimized for user
try on products before making Active Total t ransactions Total t ransactions v
ol ume
shopping experience
Customers
online purchases 1.3 2.0 • Customized experience offered
• Free returns and refunds within to returning customers, based
30 days upon purchases ❖ To comment about Malaysia Corporate Tax on historical browsing data

Draft 30

EXAMPLE
Profitability of agi-business companies across Asia GPM in 2015

%, Gross profit margin1 (GPM)
GPM in 2014
• Overall, compared with other
counterparts in Asia, Masan is
30%
generally boasting a superior
gross profit margins
25%
Masan GPM • In Thailand and India, the
2015 = 21% agri-business industry has
20% matured, which is evidenced
by their lowest profit margins
Avg GPM • Indonesia’s animal feed
15% 2015 = 13%
industry bears many
resemblances to Vietnam’s,
10% Avg GPM both in term of profitability
2014 = 12% level and the industry’s heavy
5% reliance on imported feed
ingredients except for corn
(95% locally produced)
0%
• Myanmar is new emerging
marketing with huge untapped
-5% potential for growth for animal
protein. Among researched
companies, Japfa Myanmar is
-10%
boasting highest gross profit
Indonesia India Myanmar Thailand China Taiwan Malaysia margin (24% in 2015)
Japfa Company Limited C.P Foods QL Bhd

Draft 31
6 Compilation approach for marketing & sales section Contents
Compilation
approach for
marketing &
sales section

Draft 32
Marketing and sales – Content

OVERVIEW
• Provide an overview of current and

future marketing and sales activities
(“4Ps" framework):
─ Product
─ Price
─ Place
─ Promotion
Market &
competition
sales model
landscape
• Marketing and sales part serves

to explain how the Company’s
Financial market share can be expanded
performance &
plan & risks
valuation

Draft 33
Marketing and sales – Critical questions
STEP 1
Description
• What are the final selling prices for products / services

(estimative)? What criteria are used to determine such final
selling prices? What is the (gross) profit margin per product Sample list of
(estimative basis)? most critical
questions which
• What sales volumes is targeted (estimative basis)? Provide can be raised by
detailed volume target at each market segment an investor
• What is the typical process of selling product / service. Which
customer groups contribute the most purchases?
• What is the customer segmentation criteria?

Draft 34
Marketing and sales – Additional questions
STEP 2
Description
• Which market segments will the Company make an entry?

What is the plan to turn such entry into a profitable Sample list of
business? additional
• How reference customers are won? questions which
can be raised by
• What is the cost of acquiring a customer (in term of capital
an investor
and time)?
• Which advertising resources will the Company use?
• Any other steps necessary to promote and sell products /
services? Establish a schedule with key milestones of
selling products / services

Draft 35
Marketing and sales – Quantifying the customer value
Dimensions of customer Determination of average selling price

value USD per product ILLUSTRATIVE
2.0 -1.0
Time
5.5
0.5
4.0
Cost Quality
Evaluate and quantify customer value

Reference Unique Premium Strong Final
for all 3 dimensions, in which:
price basing design quality and customer avearge
Demonstrate value clearly on existing features durability loyalty of selling price
Quantify wherever possible products existing
products

Draft 36
Marketing and sales – Determine target segment
ILLUSTRATIVE High Medium Low
Determine each Analyse Identify Determine

Selection of market
segment’s sales customer value competition per objectives and
segmentation
volume per segment segment growth strategy
Segment 1 Xx Tons Time? High xxxx
Segment 2 Xx Tons Cost? Medium xxxx
Segment 3 Xx Tons Quality? Low xxxx
• Clearly separate • Estimate the • Provide a clear • Assess major • Assess possible
and identify key sales volume understanding of competitors and evolution paths
target segments with concrete customer value intensity of of the market by
basing on supporting basis per segment substitution each segment
defined criteria and strong products
validation

Draft 37
7 Compilation approach for business model section Contents
Compilation
approach for
business
model
section

Draft 38
Business model – Content

OVERVIEW
• Which section of the value chain has

the presence of the Company
summary services team • Identify development orientation issues
• Assess necessary partnerships
• Makes “in-house or outsource"
decisions
Market &
competition
sales model
landscape
• Business model part serves to
describe how the Company is
delivering products / services
Financial and generating customer value
performance &
plan & risks
valuation

Draft 39
Business model – Critical questions
STEP 1
Description
• What is the business model for the Company’s products /

services?
• What activities does the Company want to conduct in-house? Sample list of
most critical
• Where will the Company concentrate its activities?
questions which
• What is the structure of the Company’s business units can be raised by
• What resources does the Company need to launch or create an investor
products / services?
• What is the demand of the Company’s business inputs (raw
materials, constituents of services)?
• What will be conducted in-house, what will be outsourced?
• Which partners does the Company work with? What are the
advantages of working together to each party?

Draft 40
Business model – Additional questions
STEP 2
Description
• Which geographical locations will the Company focus its

business?
• What production capacity for products and services are
Sample list of
at disposal or in plan?
additional
• How much will the production and delivery of the questions which
Company’s products / services cost? can be raised by
• What is the cost of adjusting production capacity in the an investor
short term?
• What measures ared planned for quality assurance?
• If a warehouse is necessary, how will the inventory be
organised?
• What is the policy for inventory level?
• How is the cost structure (fixed %, variable%, admin%)?

Draft 41
Business model – Matching of value chain
Presence of Masan Group along the value chain of animal protein…. ILLUSTRATIVE
Great-grand-parent & Grand-parent stock farm Upstream • With continuous

acquisitions of
Proconco, Anco, and
Vissan, Masan Group
Parent stock farm In which: has mounted a serious
challenge to long-time
With strong dominance of FDI
Commercial stock farms Masan’s
(Very small at ~100,000 pig heads and can only satisfy players such as CP,
Animal medicine presence Cargill and New Hope
around 10% of Masan’s production of processed meat)
in agri-business
Animal feed Contracted stock farms With weak industry
(11 factories, with 2.5 Masan’s
mil tons in capacity) Household husbandry presence • While Masan Group is
highly competitive in
feed and food
Without businesses, its
Masan’s farming component is
Slaughtering houses Processing factories
presence almost non-existent
• In order to fully be
integrated, more
investments must be
Large retailers Distributors Convenient Stores Export dedicated to the
(89 agents) (120) (703 units) (Sausages development of 4-
products to level farming system,
Laos and a model which CP
Wet markets Supermarkets Owned stores Vietnam boasts
(268 kioses) (223 units) (59 units) Cambodia)
Downstream significant strength

Draft 42
Business model – Revenue sources
ILLUSTRATIVE
Revenue sources Description Revenue
• E.g. , sales of breeding 35.1

Farming stocks such as sows, boars 32.4
• Sales of commercial stocks 6.5
5.3
• E.g. , sales of pig feed, 3.9 23.6

Animal feed 10.1
poultry feed, aqua feed 3.5
5.1
• E.g. , sales of fresh meats,
processed meats, frozen 21.8
Food retail 15.3
meats, chilled meats 12.9
• E.g. , trading of raw 3.2 2.1

Others meterials, distribution of 1.4
animal health products Southern Northern Central
Areas Areas Areas

Draft 43
8 Compilation approach for implementation plan section Contents
Compilation
approach for
implementation
plan section

Draft 44
Implementation plan – Content

OVERVIEW
• Details and describes key activities

and milestones for the development of
the business
• Details investment plans in both short-
and long-term
• Matches investment requirements with
major milestones
Market &
competition
sales model
landscape
• The implementation plan part

serves to provide the investor
with a clear timeline of
Financial business evolution
performance &
plan & risks
valuation

Draft 45
Implementation plan – Critical questions
STEP 1
Description
• What are the key milestones for the development of the

Company’s business, and when must they be reached?
• What is the plan to reach these objectives? Sample list of
most critical
• At which stages /milestones are bottlenecks expected?
questions which
• How many new recruitments will be required in each can be raised by
business units in next five years? What will this cost? an investor
• How much upfront initial capital invesntment is required to
achieve early sales?
• Detail the Company’s investment plan in short and long-term
• What further investments will be necessary upon the
achievement of each milestone?
• What is the annual depreciation for each investment (or the
remaining amount of Net Present Value)?

Draft 46
Implementation plan – Case example

ILLUSTRATIVE
Key success Responsible

Key activities H1-16 H2-16 H1-17 H2-17 …. 2025 factors department
• Activity 1 Timeline • Factor 1 • xxx

scale will be
• Activity 2 at decreasing • Factor 2 • xxx
level of detail
• Activity 3 • Factor 3 • xxx
…. Clearly demonstrate how
acitivities can be contigent
upon each other due to
possible bottlenecks
Key milestones that

transform the business
into the next stage
Further detail breakdown

of investment amount
Milestones Market entry New product xxxx into each type of expense
launched can be necessary…
Investments xx USD xx USD xx USD


Draft 47
9 Compilation approach for finance & valuation section Contents
Compilation
approach for
finance &
valuation
section

Draft 48
Financial performance & valuation – Content

OVERVIEW
• Provides estimative cash-flow

forecasts
summary services team • Provide estimative forecasts of profit
and loss statements
• Provide an overview of future balance
sheet structure
• Determine intrinsic value of the
Market & Company and its investment plan
competition
sales model
landscape
• The financial performance &

valuation part serves to
determine the intrinsic value of
Financial
Implementation Opportunities the Company, the investment
performance &
plan & risks plan and possible fund raising
valuation
requirements

Draft 49
Financial performance & valuation – Funding stages

OVERVIEW
In which:
= Key stage Description
Business plan • A written document that describes in detail how a business is going to achieve its goals
Pre-selection • Review of business plan and initiation of first contacts
Site visit & discussion • Physical check of the business’ facilities and assets; provide early feedbacks
Letter of intent • Outlines of the structure of a deal and serves as an “agreement to agree” between two parties
Further discussion • Negotiation and discussion of terms specified in the Letter of intent
Term sheet • A nonbinding agreement setting forth the basic terms and conditions of a funding deal
Due diligence • An investigation and evaluation of the market and the target company to confirm material facts
Contract negotiation • Discussion to formally agree on the funding contract and deal structure
Funding • Disbursements of funds to target business
Support & Control • Continued supports of finance, technical, relationship and applying control over the business
Exit • Selling the business to public, another company, or directly to the Management team

Draft 50
Financial performance & valuation – Sources of funding

OVERVIEW
Funding phases
Funding sources Seeding Start-up Expansion
Individual capitals
“Hot” borrowing1
Governement subsidies
Bank loans
Leases
Venture capital
Initial public offering
1. Borrowings from close parties such as famility, friends, etc

Draft 51
Financial performance & valuation – Critical questions
STEP 1
Description
• How will revenues, expenses and income evolve?

• How will cash flow grow? When will break-even happen
(when accumulated revenue equal initial investment made )? Sample list of
most critical
• What is the financing requirements, basing on liquidity
questions which
projection? How much cash is required in the best / medium /
can be raised by
worst case scenarios?
an investor
• What are the assumptions for financial projection?
• Which sources of capital are accessible to satisfy financing
requirements?
• What deals are being offered to potential investors (if any)?
• What ROI (return on investment) can investors expect?
• How will investors realize a profit (exit paths)?

Draft 52
Financial performance & valuation – Cash flow and profit

ILLUSTRATIVE
1. Cash flow from operating activities

2. Cash flow from financing activities As incomes and
Cash flow 3. Cash flow from investment activities Income
expense in the
statement Statement
Income Statement
Liquidity fund is are perpetually
CFO1 + CFF2 basically free cash booked regardless Incomes
-
CFI3
flow to the firm,
which can be
easily leveraged
of actual payments
and receipts, it is
critcal to determine
-
Expenses
when necessary the % acrrual
= earnings (a key =
indicator of profit
Liquidity quality) Profit
fund
Liquid capital is extremely
important to venture business
due to its nature of high cash
burn rate during early years

Draft 53
Financial performance & valuation – Balance sheet

ILLUSTRATIVE
Assets USD Mil Equity + liabilities USD Mil
Non-current assets xx Equity xx

Plants and equipments xx Chartered capital xx
Real estates xx Additional paid-in capital xx
Intangible assets xx Earnings brought forward xx
Other non-current assets xx Net profit xx
Current assets xx Liabilities xx

Cash xx Account payables xx
Account receivables xx Provisions xx
Inventories xx Long-term debts xx
Other current assets xx Other liabilities xx
Total assets xx = Total assets xx

Draft 54
Financial performance & valuation – Valuation methods

1. Cost of equity
2. Net present value ILLUSTRATIVE
3. Net debt, which equals: Market value of debts - cash
Valuation with DCF method Valuation with Comparable method

USD Mil 2015, P/E multiples
Year Foreign companies Local companies
15 16 17 18 19 19
4.6x
Free Terminal value Avg = 3.5 4.0x Avg = 2.7
cash 3.2x
flow to 3.0x
50 2.3x 2.5x
equity
Most
2 4 popular
methods
-3 Firm 1 Firm 2 Firm 3 Firm 4 Firm 5 Firm 6
-10
Ke1 16% 17% 17% 19% 19%

160 175
NPV2 -8.6 -2.2 1.2 2.0 21.0 135 145
Firm value = 125
Equity USD Mil
13.4 + + + + +
value
Debt3 6.5
Net X 2.5x 2.7x 2.9x 3.2x 3.5x
Firm profit4
19.9
value
4. Net profit of the Target company at time zero. Assumed to be USD50 Mil

Draft 55
10 Compilation approach for opportunities & risks section Contents
Compilation
approach for
opportunities
& risks
section

Draft 56
Opportunities & risks – Content

OVERVIEW
• Defines the business's specific

opportunities
summary services team • Defines the business's key challenges
• Evaluate and quantify risks (with
sensitivity analysis)
• Establish measures to counter most
potent risks
Market &
competition
sales model
landscape
• Due consideration of potential
risks increases the confidence
of investor in the deal
Financial
performance &
plan & risks
valuation

Draft 57
Opportunities & risks – Critical questions
STEP 1
Description
• What are the key risks (market, competition, technological

advance) prevalent?
Sample list of
• What are the measures to counter these risks? most critical
• What are the opportunities for business growth? questions which
• How will a capital expansion / reduction impact the business can be raised by
growth? an investor
• What is the financial projection for the next five years?
detail best and worst case scenarios?
• What are the reasons supporting such scenarios?
• What is the break-even point at different scenarios?

Draft 58
Opportunities & risks – Scenario projection

ILLUSTRATIVE
Scenario projection Time zero

Projection for 2016
USD Mil 2015 Year-end
Low Medium High
• Market is dominated • The number of small • Small local players, • Foreign players
by foreign players; local players will in an effort to retain develop even bigger
though, local players decrease as the market shares, use economies of scale
Scenarios of still have their own market looks to aggressive pricing and manages to
competition landscape smaller target consolidate strategies offer high quality
segments • Lesser supply drives • Pricing war drives products at lower
up selling prices down selling prices selling prices
15.0 13.3
Feed revenue 12.9 11.2
3.5 4.1 3.7
Farm revenue 5.3 3.1
5.1 5.2 4.5
Food revenue 4.3 5.6 4.4 3.6
2.2 2.0
Feed cost of sales 2.0 1.7
0.5 0.6 0.6
Farm cost of sales 0.5
1.0 1.0 1.0 0.9
Food cost of sales 0.5 0.6 0.5 0.4
10.9 12.8 11.3 9.5

Gross profit

Draft 54
Opportunities & risks – Sensitivity analysis

ILLUSTRATIVE
Cumulated free cash flows to equity (FCFE)
FCFE
USD Mil A new business of
venture is highly likely to Best-case
15.0 incur negative free cash scenario
flow during early year…
10.0 Base-case
Payback period scenario
5.0
Break-even threshold Worst-case
Funding needed
scenario
0.0
-5.0
-10.0
2016 2017 2018 2019 2020 Year

Draft 60

Business Plans - Compilation Approaches

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Business Plans - Compilation Approaches

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Consulting

Compilation approach for

Compilation approach for Business Plans Strictly private and confidential

Compilation approach for Business Plans Strictly private and confidential

Sorts of business plans

Compilation approach for Business Plans Strictly private and confidential

Applications of business plans

Typical applications Challenges in new

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

General compilation principles

• Planning one business is an innovative and adaptive process that requires

• No hype or general trend / factual statements. Quantify wherever possible and

• A clear, easy-to-follow structure is a courteousness to those dedicating their time

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Progression stages of business plans

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Sections of a complete business plan

Executive Products & Management

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Compilation approach for Business Plans Strictly private and confidential

Executive summary - Content

• Provides a brief overview of the

Financial • Quality of summary decides the

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Executive summary – Critical questions

• What is the business indication? How does it fulfill the condition of

• What additional stages of development are needed?

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Executive summary – Additional questions

• How is evaluation of financing requirements

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Executive summary – Case example

• Microgrids (MG) which are capable of operating in both grid-connected and / or

• Customers: Military energy program developers, eco / smart developers

• Greater government’s focus on energy sustainability and eco-development

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Compilation approach for Business Plans Strictly private and confidential

Products and services – Content

• Describes the functions and

Financial • Products / services section

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Products and services – Critical questions

• What are the end customer groups will be targeted?

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Products and services – Additional questions

• Which kinds of products / services are designed? and for

Source: Research and analysis

Compilation approach for Business Plans Strictly private and confidential

Products and services – Case example

• Fresh meats in wet market kioses are not stored in

Compilation approach for Business Plans Strictly private and confidential

Compilation approach for Business Plans Strictly private and confidential