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How to write a business

plan
Dr Chao Li
2013--- Associate professor
School of Nano-Science and Nano-
Engineering(Suzhou), Xi’An JiaoTong University,
China
2016-2017 Vice Director (Position on
secondment)
The Science & Technology Development Bureau,
XiangCheng Zone, Suzhou, China
2011-2013 Operation Director, A start-up
Company in Suzhou SIP
2009- 2011 Project Development Fellow
Yah, that is me, Science & Technology Bureau, the Administrative
10 years ago…… Committee of Suzhou National New & Hi-Tech
Industrial Development Zone, Suzhou, China
2007-2009 Postdoctoral Fellow
Institute of Life Science, Swansea University, UK
2006-2007 Postdoctoral Fellow
School of Biological Science, Biomedical and
Environmental Science, University of Hull
2002-2006 PhD in Biological Science
School of Biological Science,University of Hull,
UK
Characteristics of a successful business plan
Elements of business plan
Executive Summary
• I suggest that you make it no more than two
pages long.
• Include everything that you would cover in a five-
minute interview.
• Make it enthusiastic, professional, complete and
concise.
• If proposing for an investment, state clearly how
much you want, precisely how you are going to use
it, and how the money will make your business
more profitable, thereby ensuring repayment.
• Paragraph headings can be used if they identify
the purpose of each paragraph. (same as table
contents )
Product or service
• Who you are, what you try to sell, why and to
whom
• What are the features or functions of the
product/service?
• Who are the target customers?
• What value propositions does the product/service
provide to the customers? (e.g., tabulate
customers’ unfulfilled needs and ways the
product/service addresses those needs)
• What is the revenue model? (i.e., description of
revenue sources – advertising revenue,
transaction revenue, subscription revenue, flat-
fee vs. percentage-based)
Product or Service

• What is the development status of the product?


What remains to be done to convert the business
idea into a tangible product or service?
• Has this business model been proven elsewhere?
What are some successful examples?
• What is the plan to maintain the loyalty of
customers?
Product or Service
• What factors will give you competitive advantages
or disadvantages? Examples include level of
quality or unique or proprietary features.

• What are the cost, fee or commission structures


of your products or services?

• Don’t forget to include the current Patent


Status.
Management Team
• Who are the founders/founder groups and what
are their qualifications, experience and past
achievements
• Who will manage the business on a day-to-day
basis? What experience does that person bring to
the business? What special or distinctive
competencies? Is there a plan for continuation of
the business if this person is lost or incapacitated?
• What is the plan to reinforce management team in
the future? (e.g., schedule of future management
hiring and skills required)
Management Team

If your management team members are not very


experienced, list members of management
advisory board and their short resume/CV.

“ Invest in people, not ideas”

Eugene Kleiner, Venture Capitalist


Characteristics of a
Powerful Management Team
• Common vision – everybody wants to succeed
• Complementary attitudes and strengths(eg. Steve
Jobs and Stephen Wozniak)
• At least 3, but usually no more than 6 people
• Sticks together through thick and thin
• Staying power, even when there are setbacks
Market and Competition
• What is the potential market size for the
product/service? (e.g., calculation derived from
number of target customers, units sold, value of
sales)
• What is the expected market growth and which
major factors influence that growth?

• Marketing strategies according to the 4P


theories, namely Product, Price, Promotion and
Place. (The 5th P – People is the whole reason for
the services industry to be doing very well OR
even for improving the service experience in a
Product industry is because they all target
'People'.)
Market and Competition
• In your marketing plan, be as specific as possible;
give statistics, numbers, and sources.

• You can use the Competitive analysis table below


to compare your company with your two most
important competitors. The first column lists key
competitive factors. Since these vary from one
industry to another, you may want to customize
the list of factors.
Marketing and Sale
• What will be the pricing strategy?
• Does your pricing strategy fit with what was
revealed in your competitive analysis?
• Compare your prices with those of the
competition. Are they higher, lower, the same?
Why?
• How important is price as a competitive factor?
Do your intended customers really make their
purchase decisions mostly on price?
Marketing and Sale
• Promotion
• How will you get the word out to customers?
• Advertising: What media, why, and how often?
Why this mix and not some other?
• Have you identified low-cost methods to get the
most out of your promotional budget?
• Will you use methods other than paid advertising,
such as trade shows, catalogs, dealer incentives,
word of mouth (how will you stimulate it?), and
network of friends or professionals?
• Place
• Is your location important to your customers? If
yes, how?
Business System and
Organization
• What is the proposed organizational structure of
the company?
• How will this organizational structure help achieve
business goals?
• What skills will be required and what is the hiring
plan?(e.g., a table that shows total number of
positions and the functional description of
positions, skills required for top 3 positions in
each department)
Company structure
Business System and
Organization
• Have strategic partnerships been identified? If
yes, how will these partners be secured? If no,
what is the plan to get partners?
• Have key vendors been identified? If yes, how will
these vendors be secured? If no, what is the plan
to get vendors?
• A mission statement: Many companies have a
brief mission statement, usually in 30 words or
fewer, explaining their reason for being and their
guiding principles.
Business System and
Organization
• SWOT Analysis
• Strength: Cost, size, energy saving, eco-friendly,
robustness, future development…
• Weakness: Immature, suppliers…
• Opportunities: Political Opportunities, market
opportunities, co-operation opportunities.
• Threats: Competitors, Intellect Property,
supplier chain.
Implementation Schedule
• What is the detailed short term implementation
plan?
• – Who is responsible for each of the tasks?
• – What are major milestones?
• – What are interdependencies between tasks?
• What is the 5-year implementation plan?
• – Who is responsible for each of the tasks?
• – What are major milestones?
• What are possible long term options for the
business?
Opportunities and Risks
• Technical Risk
• New technology, Product quality, IP protection
problems
• Competition Risk
• What barriers to entry do you face in entering
this market with your new company?
• And of course, how will you overcome the
barriers?
• Management of Growth
• Marketing Risk
Financial Planning
• For the next 5 years (and at least 1 year beyond
breakeven point), what are the projections for
• – Income statement (includes detailed revenue
source as described in the business model)
• – Cash flow statement
• – Company valuation
• Discounted cash flow analysis
• Revenue multiples
• – Balance sheet
Income statement
Cash flow statment
Balance sheet
Financial Planning
A break-even analysis predicts the sales volume, at a
given price, required to recover total costs. In
other words, it’s the sales level that is the
dividing line between operating at a loss and
operating at a profit.
• Expressed as a formula, break-even is:
• Breakeven Sales=Fixed Costs
• Average sale price/unit- Variable Costs/unit
Criteria applied by
Investors
• Has the team already worked together?
• Do team members have relevant experience?
• Do the founders know their weaknesses and are
they willing to make up for them?
• Have the founders agreed on their future roles
and are ownership issues settled?
• Has the management team agreed on a common
goal, or are there underlying differences of
opinion?


tips for Business Plan
• Leave the summary until last to write
• Keep it brief, don’t make people take too long to
read
• Be realistic, be honestly and note the challenges
• Be visual, use graphs, charts, images
• Be creative, make you business plan stands out
Case study
Wholesale Juice
Business Plan
Table of Contents

1. Executive Summary

2. Company Description

3. Products

4. Market Analysis

5. Strategy and Implementation

6. Financial Analysis
1. Executive Summary
• Natural Juice has been a successful product brand in the
city of Shanghai for three years. The company‘s natural,
100% fruit juices has grown in sales by 15% each year and is
now available in over 100 store outlets in the greater
Shanghai area. Natural Juice will gross ¥4000,000 in sales
this year. This was generated from a initial investment of
¥1200,000.

• Natural Juice is planning to expand its operation to include


distribution to stores within the entire state. Owner
funding and internally generated cash flow will enable most
the expansion plan. The company will also secure a
¥700,000 short-term loan. Sales projections for the next
three years are based on current sales success with the
target customer base in Shanghai. Initial contacts have
been completed with retail outlets throughout the state and
the potential target markets have been identified.
1.1 Objectives
• Create a city-wide sales staff.

• Establish strong sales in the city by Year 2.

• Maintain tight control of cost and operation during expansion.


1.2 Mission
• Quality: Our fruit juices are the highest quality, most
nutritious food products...because we will accept nothing
less.

• Innovative: Our products have always been in the forefront


of the health and nutrition wave. Innovative products, state
of the art manufacturing, quality assurance and industry
expertise are the bases for our past and future successes.

• Integrity: Our customers depend on the quality of our juice


products. Our commitment to the highest standard is the
foundation of our customer's trust in Natural
Juice. Delivering freshly made juice to consumers depends
on extensive cooperation and mutual reliance between
supplier and retailer. We stand behind our product, our
service and our word.
2. Company Description
• Natural Juice has built a reputation on offering the most
delicious, nutritious, 100% natural juices with no artificial
flavors, colors or preservatives.

• Initially, the fruit drinks were sold at Shanghai's food court.


They proved to be so popular that the partnership pooled their
resources and began Natural Juice. Over the next three years,
Natural Juice's drinks, shakes, and smoothies have become one
of the city's most visible signs of a healthy life style.

• Natural Juice's operations have expanded dramatically over the


past three years. Currently, the company has a staff of ten in
production, delivery, and sales.
3. Products

• Fruit and vegetable juices

• Smoothies

• Super food drinks

• Fruit and vegetable shakes


4. Market Analysis

• Young professional, ages 25 – 45

• Average income of ¥50,000 a year

• Involved in athletic activity

• Shop in upscale health/natural food stores


5. Strategy and Implementation
• Marketing Strategy

• Natural Juice will introduce its products at 20% off regular


price during the first month. In addition, Natural Juice will
co-sponsor local athletic charitable events to raise the
visibility of the brand name.

• Sales Strategy

• The sales strategy is to build customer loyalty in the new


markets. Natural Juice will increase its sales force to focus
on the new markets.
6. Financial Analysis
• Break-even Analysis

• Projected Profit and Loss

• Projected Cash Flow

• Projected Balance Sheet

• Business Ratios
Pro Forma Balance Sheet
2002 2003 2004
Assets

Current Assets
Cash ¥182,717 ¥276,692 ¥397,216
Accounts Receivable ¥147,500 ¥173,529 ¥187,990
Inventory ¥33,000 ¥36,799 ¥42,734
Other Current Assets ¥29,000 ¥59,000 ¥99,000
Total Current Assets ¥392,217 ¥546,020 ¥726,940

Long-term Assets
Long-term Assets ¥74,000 ¥104,000 ¥134,000
Accumulated Depreciation ¥21,600 ¥31,200 ¥40,800
Total Long-term Assets ¥52,400 ¥72,800 ¥93,200

Total Assets ¥444,617 ¥618,820 ¥820,140


Thank you !