Session 6: Business Plan and

Business Model

Business Plan
• A business plan is a document that explains a business opportunity, identifies the market
to be served and provides details about how the entrepreneurial organization plans to
pursue it

• Describes unique qualification of management team

• Resources required

• Forecast financial results

 Benefits of Business Plan
• Funding
• A deep reality check and blueprint
• Think across all the elements of business plan
• Capture your assumptions about value propositions, competitive differentiation, staffing, financials, etc.

• Advice
• Trusted outsiders review can help to identify missed opportunities, optimistic projections, and other
weaknesses
• Improve prospects with funders
• Reduce chances of operational failure

• Financial projections that can be used as an initial budget

• Actual results will prompt to take necessary actions against budgeted

How Business Plans are Changing

• Sense opportunity and security
• Profit

• Role of business plan

• Financials are no indicator of success
• Importance of customers
• Focus on people
• Business model
• Pitch deck
• Demos
 Key Elements
Contents
• Executive summary
• The opportunity
• The company and its offerings
• Business model and strategy
• The team
• Marketing plan
• Operating plan
• Financial plan
• Risks
• Harvesting plan

Appendix
• Resume of management team members
• Supporting market research
• Sales projections for initial products

Executive Summary
• Traditional
• 2-3 pages

• Newer approaches
• 100 -200 words
• Story-based to speak to reader’s emotions

• Pitch-deck
• What is your company and what problem your company is solving
• 2 minutes video elevator pitch
 The Opportunity
• Outline the problem, scope, and the market trends that may affect how this problem your
market will experience in coming years
• Introduce the solution

• XXX
• Latest figure about rampant obesity in US and Europe
• How obesity affects health, their quality of life, and cost of care for individuals, companies, and governments
• How many people are now following low sugar diet
• Effectiveness of low sugar diet
• Overall, consumer expenditure on health foods and weight control foods
• Factors that will drive market penetration
• Solution: Product innovation
• How much fund you are seeking?
• How the fund will be used in pursuing the opportunity

• “XXX is seeking $2.5 billion in funding to pursue this opportunity. The bulk of those funds……”

The Company and its Offerings

• Expand your proposed solutions to the identified problem

• XXX is a __ based corporation founded in 2022 with goal of serving individual to follow low-sugar diet. Its
experienced team has developed and tested several products with natural fiber and low sugar in breakfast
and snack foods.

• Products
• Product 1 (Wheat and barley breakfast)
• Product 2 (Yogurt)
• Product 3 (Oatmeal)

• Market test results (1-2 lines)

• Additional data should be provided in appendix
 Goals
• Plan to grow

• XXX has three goals:

• To broaden product line
• To expand market penetration through stores and through a private labeling agreement with one of the
major diet companies
• To expand the business to where it either becomes a dominant player in the healthy food niche or is
acquired by one of the giants in the packaged food industry

• Products are not yet marketed, then roll-out plan should be described
• Include snapshot of prototype
• If products are market ready, use high quality pictures
• If products are in small size, you can give as a sample

Business Model and Strategy

• How a venture creates and capture value
• Differentiation strategy
• How competitive advantage can be achieved?
• What are your costs?
• Where will your revenue come from?
• What makes your product or service or means of delivery different and more desirable –
in the eyes of consumers?
• How will that difference translate into a competitive advantage that will produce profits
and growing equity value?
• Consider, how your competitors may react to your success – what happens if they copy
your best-selling products? How will you maintain customers’ loyalty?
 Business Model
Key Partnership Key Activities Value Propositions Customer Customer Segments
Relatiaonships
• Business model canvas
• Value proposition
• Customer segments
• Channels
• Customer relationships
Key Resources Channels
• Revenue streams
• Key activities
• Key resources
• Key partner
• Cost structure
Cost Structures Revenue Streams

Business
Model
• Business model canvas
• Value proposition
• Newness CRED
• Performance
• Customization Simple, Easy, Accessible, and Convenient
• Design Hassle of handling multiple credit cards
• Brand Credit score
• Status Easy to use
• Price
• Risk reduction
• Accessibility
• Convenience
• Usability
 Business
Model CRED

• Customers
• Business model canvas • Wealthy, affluent, and trustworthy customers
• Customer segments • Brands who sell through Cred platform
• Different group of
people • Channel
• Niche customers • Website
• Channels • App
• Opening a store
• Using distributors • Customer relationship
• Online • In-app chat support
• Customer relationships • Facebook, Instagram, Twitter, and LinkedIn
• Personal assistance • Business managers – Partnerships with Brands
• Self-service
• Automated service
• Community platform

Business
Model CRED

• Revenue streams
• Business model canvas • Transaction fees
• Affiliate income
• Revenue streams
• Selling an item
Key activities
• Service fee
• Credit payment
• Subscription fee
• House rent
• Rental
• Education fees
• Advertisement
• Electricity
• Key activities • Mobile recharges
• A venture must do to • Redeem coin to buy product/offers
make business model
work
 Business
Model CRED

• Key resources
• Human capital
• Business model canvas
• Technological inputs
• Key resources • Financial resources
• Human
• Physical
Key partners
• Financial
• Intellectual • Tie-ups with over 2000 brands
• More than 34 banks
• Key partner • Investors
• Network of suppliers an
and partners Cost structure
• Marketing and communication
• Cost structure • IT software
• Fixed cost • Employee benefit expenses
• Variable cost • Operational expenses (Rent, etc.)
• Economies of scale
• Economies of scope

Ownership and the Team

• Who are the current owners and what percentage do they control?
• Have you issued any options, bonds, or warrants that could expand ownership?
• Which owners are involved in day-to-day working of the business?

• The Team
• A description of each of your team members
• Highlight key experiences of the team members
• Why are they the right individuals to accomplish the mission?

”Our leadership team is made up of __, ___, and __. Together, they bring exception technical, marketing,
and strategic expertise to our company.”

__ has fifteen years of experience of product domain with ___ industries, recently with__.

[Mention that appendix has detailed resumes]

 Ownership and the Team
• Key Questions
• Where are the founder and other key members from?
• Where did they go to school?
• Where have they worked – and for whom? What are their current roles?
• What have they accomplished professionally and personally in past?
• What is their reputation within the business community?
• What aspects of their experiences are directly relevant to the opportunity they are pursuing?
• What are the skills, abilities, and knowledge do they have?
• Who else needs to be on the team?
• Are they prepared to recruit high-quality people?
• How will they respond to adversity?
• How committed are they to this venture?
• What are their motivations?

Source: Sahlman, 1997

Ownership and the Team

• Table indicating key team members’ name, job roles, and salaries
• Organization chart can also be drawn

Team Member Position Salary

A CEO $
B VP Sales and Marketing $
C VP Operations $
D VP Strategy $
E VP Finances $
F Administrative assistant $
 Marketing Plan
• Who your customers or your primary market is – the type of customer you have to reach
to capture your full market potential
• Market size, i.e., number of potential customers and projected potential sales revenue
• Requirements of different customer segments – purchase convienence, rapid delivery,
customization, etc.
• Ways to effectively access each customer segment i.e., e-commerce, distributors, etc.
• Appropriate sales and promotion approaches, including social media campaigns, direct
mail, etc.
• Analysis of how your customer makes a purchase decision
• Acquisition cost per customer
• The strengths and weaknesses of competitors and how they are likely to react when the
company is entering into market

Operating Plan
• What supplier relationships do you have or envision?
• How much inventory will be required?
• Which all day-to-day operating tasks will be handled internally and which will be
outsourced?
Financial Plan Forecasted revenues by distributed channel

Distribution Channel 2023 2024 2025

Health food stores
• Balance sheet Supermarkets
• Income statement Private-label business

• Cash-flow statement Total forecasted revenues

• Sales and expenditure projections

Marketing expenses
Marketing expenses 2023 2024 2025
Sales commissions
Research
Promotion
Total marketing expenses

Risks
• Effect of unfavorable trends in the industry
• Design or manufacturing cost that have gone overestimates
• Difficulties of long lead times encountered when purchasing parts or materials
• Unplanned for new competition

• What ifs
• Competitors cuts in price
• Market projections are wrong
• Management team breaks up
 Harvesting Plan
• Management succession
• Investor exit strategies
• Outline a plan for a liquidity event—IPO or sale.
• Describe the plan for transition of leadership

Milestone Schedule Segment

• Product design and development
• Sales projections
• Production and operation scheduling
• Incorporation of the venture
• Completion of design and development
• Completion of prototypes
• Signing up distributors and dealers
 Updating Business Plan
• Financial changes
• Changes in the market
• Launch of new products or services
• New management team
• Reflect the new reality