How to Build A Successful Business Plan for a Small Business

Speaker:

Omar Shawky

Why write a Business Plan

1. Because I have to…– Needed for financing

– Strategic partnering

– Attract key people/investors

– Organize my thoughts

Why write a Business Plan

2. Because I Need to Understand My Business– The Plan is the result of a planning process– People Don’t Plan to Fail; They Fail to Plan

• Who are my customers?• Why will they buy my product or service?• What will they pay?• How will I make and deliver/sell the service/product?• What resources (people, money, technology) do I need?• Can I make money / create value?• Do I have the right team on board?

The Right Ingredients

• A TEAM with Relevant Experience

• Market Size

• Idea

• Technology

• Competitive Advantage

• Reasonable Projections• Exit Strategy

Company Structure

Financials

Operations&

Production

Team

Idea

Market

Competitive Edge

MarketingStrategy

Business Plan

Business Planning Steps

1. Idea generation, Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

Business Planning Steps

1. Idea generation, Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

1. The Idea

• Innovative product or service

• Visualize a market gap – you can add value

• Imported idea

Vision

1st Objective

2nd Objective

3rd Objective

4th ObjectiveStrategy

Where do you want to go at the end ?

What is the road map and major mile

stones ?How will you reach

your objectives ?

Vision

Objectives

SMART

Specific MeasurableAchievableRelevant

Time-Bound

Mission:Stakeholders

Family

Work

Friends

Religion

Country

Community

Who are your stakeholders and what is your mission to each one of them ?

Mission:Stakeholders

Shareholders

Employees

Customers

Suppliers

Country

Community

Who are your stakeholders and what is your mission to each one of them ?

Business Planning Steps

1. Idea generation, Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

2 .Market Analysis• Market size

– How big is it NOW?

– Trends – how fast is it or will it grow?

• Market Players – Competitors– Competitive Advantage

– Estimated market shares

– Existing/planned products in the marketplace

• Is this the RIGHT TIME for my product? • Is there a GAP that I can fill?

How you capitalize on them

How you avoid them

How maximize them

How minimize their effects

Strengths

Weaknesses

Opportunities

Threats

Internal

External

SWOT AnalysisSWOT Analysis

Business Planning Steps

1. Idea generation, Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

• Who are my TARGET customers?

• Why would they buy my product?

• How much would they pay?

• What are the special features in my product?

• What is my competitive advantage

It is all about your EDGE

3 .Marketing Strategy

Marketing Plan Process

Marketing Research

Segmenting Positioning Targeting

Defining Target Market Needs, Wants, Demand

Product

VarietyQualityDesignFeaturesBrandPackagingSizeServicesWarrantyReturn

Price

Price ListDiscountsAllowancesPaymentsCredit

Promotion PromotionsAdvertising

Sales Force

Public relation

Direct marketing

Place

ChannelsCoverage

Location

InventoryTransport

Push / Pull

Marketing Mix 4 Ps

Business Planning Steps

1. Idea generation , Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

4. Production plan

• Technology

• Equipment

• Raw Material Sourcing

• Operation Plan and Capacity

Business Planning Steps

1. Idea generation , Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

5. Management Plans

• Getting the RIGHT Team on board

• Training

• Delegation

• Empowerment

Business Planning Steps

1. Idea generation , Vision, Mission, Objectives, Strategies

2. Market research and Analysis3. Marketing strategy4. Production planning5. Management and Organization6. Financial plan7. Company formulation

Financial Assessment

What Investors Need To Know :

1. Total Investment Required 2. Breakdown of Investments 3. Income Statement Projections 4. Cash Flow Statement Projections 5. Net Present Value (NPV) 6. Internal Rate of Return (IRR) 7. Breakeven Analysis 8. Payback Period

1. Total Investment Required

2. Breakdown of Investments

3. Income Statement Projections 1. Revenues Assumptions 2. Costs/Expenses Assumptions 3. Depreciation Assumptions 4. Interest Expenses Assumptions 5. Taxes

4. Cash Flow Projections1. Initial investment 2. Working Capital 3. Capital Expenditure (Capex) 4. Debt Assumptions

Financial Assumptions

Revenue: 100 100%

- Cost of Goods Sold (COGS): 60 60%

Gross Profit (Profit Margin) 4040%

Operating Expenses:

General & Administration 8 8%

Sales & Marketing 12 12%

- Total Operating Expenses 2020%

Earning Before Interest, Tax, Depreciation & Amortization (EBITDA)20 20%

- Depreciation & Amortization 5 5%

Earning Before Interest and Tax (EBIT) 15 15%

- Interest Expenses 55%

Net Income Before Tax 10 10%

-Taxes 22%

Net Income 8 8%

Income Statement

1- Cash Provided from Operations:

+ Net Income 8

+Depreciation & Amortization 5

-Increase in Receivables (1)

+Increase in Payables 4

Total Cash from Operations 16

2- Cash Provided from Investing:

-Capital Expenditure (3)

+Sale of equipment, land..etc 1

+Sale of stocks in portfolio 1

Total Cash from Investing (1)

3- Cash from Financing:-Repayment of debt (1)

+Sale of common stock 1

-Cash Dividends (5)

Total Cash from Financing (5)

Total Cash Flow Total Cash Flow 1010

Cash Flow Statement

5. Net Present Value (NPV)

6. Internal Rate of Return (IRR)

7. Break-even Analysis

8. Payback Period

Financial Measures

• Project 1: Y0 Y1 Y2 Y3 Y4 Y5 Investments -50,000

Net Cash In 10,000 15,000 20,000 25,000 30,000

Net Free Cash Flow -50,000 10,000 15,000 20,000 25,000 30,000

• Project 2: Y0 Y1 Y2 Y3 Y4 Y5 Investments -200,000

Net Cash In 20,000 30,000 50,000 70,000 100,000

Net Free Cash Flow -200,000 20,000 30,000 50,000 70,000 100,000

• Project 3: Y0 Y1 Y2 Y3 Y4 Y5 Investments -15,000

Net Cash In 3,000 10,000 15,000 20,000 25,000

Net Free Cash Flow -15,000 3,000 10,000 15,000 20,000 25,000

Feasibility Study Test

- Which Project 1, 2, or 3 is more Feasible?

- Cost of Capital Rate 18%

- What is the NPV and IRR for the Project ?

Feasibility Study Test

• Estimate Total Costs = Fixed Costs + Variable Costs • Estimate Av. Sales Price per Unit • Breakeven Point = Fixed Costs / (Av. Price – A. Variable Cost)

Project 1:Fixed Costs = 20,000 Variable Costs = 760Sales Price = 1,000

Breakeven = 20,000 / (1000-760) = 83 unit

Breakeven Analysis

Business Planning Steps

1. Idea generation

2. Market research and Analysis

3. Marketing strategy

4. Production planning

5. Management and Organization

6. Financial plan

7. Company formulation

7. The Company

• Name – logo - slogan

• Legal structure

• Location

Mission – Values - Objectives

Elements of the Business Plan

1. Executive Summary2. The opportunity, company, product/service, vision, mission &

objectives 3. Market research/analysis / SWOT Analysis4. Marketing plan5. Design and development plan6. Manufacturing and operations plan7. Management team8. Financial plan (Capital Required, Projections, Returns) 9. Action Plan

Finally: No Risk … No Gain

الجبال ” صعود يتعلم ال الحفر ومن بين الدهر أبد “يعش

“If we all did the things we are really capable of doing, we would literally astound ourselves”

Thomas Edison

Thank You &

May God Bless

Omar Shawky