Business Plan Basics-Vinod Manvi (Savoire faire oct 2010)

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Vinod Manvi Principal Consultant Savoir faire Management Services Pvt Ltd Evaluating Potential-Understanding Scale & Growth October 23, 2010

Road Map:

Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

Growth:

Growth Object of Growth Bigger,Larger,Stronger,Higher Smaller,Leaner,Flexible,Faster The impossibility of Freeze Frame Questions – Growth for Grow into

Growth:

Growth Metamorphosis When Where How much Outcome

Metamorphosis:

Metamorphosis When Is the time to grow now or later? Indian condition – demographic boom The Exponential Rule-doubling time Where Products Sectors

Metamorphosis:

Metamorphosis How much Volume Value Rate Outcome Financials Non-Financials

Key Points:

Key Points Purpose Vantage Point Be in the driver’s seat Desired Outcome

Road Map:

Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

Understanding Scale & Scope:

Understanding Scale & Scope Economy of Scale Economy of Scope

Understanding Scale:

Understanding Scale Economies of Scale Mass Production Lower transaction frequency Seeks to lower per unit cost Size matters Basics Designing of business Concept of “Sunk Cost”

Understanding Scope:

Understanding Scope Economies of Scope Increased Customisation Thrives on Flexibility High Product Proliferation Small is beautiful Basics Market/Customer oriented Limitations of volume

Considerations of Business Design:

Considerations of Business Design Timing Funding Resources

Road Map:

Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

Growth Strategies:

Growth Strategies The tasks of Strategic management Develop Strategic Vision and Business Mission Set Objective Prepare strategy to achieve objective Implement or Execute above strategy Evaluate Performance Revise all of the above whenever needed

Growth Strategies:

Growth Strategies Generic Strategies Cost Leadership Differentiation Focus Benchmarking Continuous Improvement

Growth Strategies:

Growth Strategies Moving beyond generic strategies Continuity of strategy Continual Innovation Choosing new battlefields

Moving Beyond Generics:

Moving Beyond Generics Continuity in Strategy Cost Leadership- Lowest cost to Best Value Alliances 360 degree integration Continual Innovation Definition of Ever changing Customer Value Transfer of Passion Speed

Moving Beyond Generics:

Moving Beyond Generics Choosing new battlefields Understanding hidden Value Creating “Blue Oceans”. Granularity of Customisation

Key Points:

Key Points The strategic management process Understanding and implement Generic strategies Go beyond the Generics Revise whenever needed

Road Map:

Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

Key functions:

Key functions Seek to serve Seek to operate Seek to earn Seek to manage

Key Functions:

Key Functions Seek to serve Seek to operate Seek to earn Seek to manage Customers Markets Sales After Sales Customer Support Operations Production Quaility of Output Delivery Managing Money Costing Working Capital Resource Planning Recruitment & Staffing Training and Development

Key Functions:

Key Functions Seek to serve Seek to operate Seek to earn Seek to manage MARKETING OPERATIONS FINANCE HUMAN RESOURCES

Key functions:

Key functions Marketing Marketing Plan Brand Building Sales Promotion Finance Funding Options Investment Mix Working Capital Management

Key functions:

Key functions Operations Systems thinking Ensuring Quality and Performance Managing Costs

Road Map:

Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

Sustainability:

Sustainability Clarity of thought Consistency in action Inequity in effort

Clarity of thought:

Clarity of thought Clarity of purpose of growth Clarity about implementability of the plan Built in scalability considerations of the plan Built in flexibility in the plan

Consistency in Action:

Consistency in Action Consistency in the thought processes Consistency in the key functions Consistency in monitoring of functions

Inequity in action:

Inequity in action Understanding the current and near future focus areas Adjusting the emphasis based on the current needs Having a plan B ready. Taking time off to reflect- and act swiftly whenever required.

Road Map:

Road Map Understand what growth means to us Understanding Scale/Scope Strategies for growth Key functions Achieving Sustainability What to do “now” ?

Key points for action:

Key points for action Articulate the purpose of growth Have some clarity of the kind of organisation that you wish to grow into Articulate what kind of economy that you wish to adopt Articulate broadly the kind of strategy for growth Have a vision of how and what your key functions will look like Make a business plan for growth

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Vinod Manvi Principal Consultant Savoir faire Management Services Pvt Ltd Starting Up – Creating a Business Plan June 19, 2010

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Stability Rigidity Flexibility Confusion

Road Map:

Road Map Understand the “Customer” of the Business Plan Egg or Hen – starting point for the business plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

Customer of the Business Plan:

Customer of the Business Plan Long Term Investor Lender Venture Capitalist/ Private Equity Customer Yourself Long Term Profit Earning Potential Scalability; Exit Will my money be safe? Intention of showing the Business Plan to the Customer?! Convincing yourself

Road Map:

Road Map Understand the “Customer” of the Business Plan Egg or Hen – starting point for the business plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

Balance Sheet Basics:

Balance Sheet Basics Money Required Fixed Assets Working Capital Money Funded Share Capital + Reserves Loaned Funds Net Worth Source of Funds Application of Funds Financing Investing

Egg or Hen?:

Egg or Hen? This is what I require…. ஃ this is the funding required ……. OR This is the funding available … ஃ this is what I’ll do with that fund

Sourcing options:

Sourcing options Venture Capital Seed Capital Angel Investor Private Equity Lender Boot Strap Long Term Managerial and Tech expertise High risk, High return Long term influence in the venture Friends and relatives Pre-revenue stage To attract the attention of the Venture Capital To get the business off the ground “At risk” investment of promoters More favourable terms than other type of investors For the person than the project Focus on helping the business succeed than huge profit for the future Not quoted on exchanges Revival, multiple investors Buy, Strip and Flip Building company from own finances

Road Map:

Road Map Understand the “Customer” of the Business Plan Egg or Hen – starting point for the business plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

Market or Capabilities:

Market or Capabilities Key factor/ Limiting Factor/ Constraint I know the size of the market I am going to address I know the amount I require to run my business to start with

Road Map:

Road Map Understand the “Customer” of the Business Plan Egg or Hen – starting point for the business plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

Assumptions:

Assumptions Ockham’s razor ( Pluralis non est ponenda sine neccesitate ) Explicit vs implicit assumptions Understand the domains of control and influence Info.Sources Growth Timing Controls Valid Assumption

Domains of Influence and control:

Beyond Influence & Control Within Sphere of Influence Domains of Influence and control Within Span of Control

Assumptions:

Assumptions Assumptions proving incorrect Mistrust the obvious Ockham’s razor ( Pluralis non est ponenda sine neccesitate ) Explicit vs implicit assumptions Understand the domains of control and influence Info.Sources Growth Timing Controls Valid Assumption

Road Map:

Road Map Understand the “Customer” of the Business Plan Egg or Hen – starting point for the business plan Where do I start? – Market or Capabilities Assumptions Tie-up the loose ends

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Purpose Process People Prosper

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Sales Plan Production Plan Cost Plan Projected Profit and Loss Account Investment Plan Debt/ Equity Plan Projected Balance Sheet Cash Flow Statement Milestone reporting Assumptions Charts/ Graphs and Pictures Critical Annexures

What makes a good plan?:

What makes a good plan? Simple Is it easy to understand and to act on? Does it communicate its contents easily and practically? Specific Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible and specific budgets? Simple Specific Realistic Complete Follow up Actions Results Plan Realistic Are the sales goals, expense budgets, and milestone dates realistic? Is the plan complete? Complete Does it include all the necessary elements?

Have a satisfied customer to have satisfied investor:

Have a satisfied customer to have satisfied investor Thank you vinod@sfccostmanagment.com www.sfccostmanagement.com +919867851919

Slide 52:

Enterprising India 2011 Enterprising India – MUMBAI February 2011