Business Plan Development

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We will provide you with a concise (but comprehensive), well-written, and implementable business plan (continued).

Project Approach—Business Plan Outline

Executive Summary

Concept and Opportunity (rationale for venture)– Background– Business Description– Situation Analysis and Business Rationale (Business drivers? Burning

platform?)– Future Plans

Strategy– Mission/Vision Statement

• Mission Statement• Company Vision• Strategic Objectives• Company Values

– Product/Service Description• Description of Products/Services• Advantages of Products/Services (Value Proposition)

– Industry Analysis• Industry Overview• Industry Trends and Growth Patterns• Market Structure

- Competitors (internal rivalry and barriers to entry)- Customers- Suppliers- Substitutes- Regulators- Technologies

– Marketing Plan• Competitive Positioning• Target Customers (customer description)• Target Market Trends and Growth Patterns• Market Size and Potential• Market Share Analysis• Pricing Strategy• Promotion• Packaging and Bundling Options• Branding Strategy

– Supporting Strategies• Regulatory Strategy• Exit Strategy (including assessment of risks and

major obstacles to success)


We will provide you with a concise (but comprehensive), well-written, and implementable business plan (continued).

Operating Model– Business Processes

• Core Processes• Support Processes

– People• Required Staffing (Human Resources Plan)• Hiring Plan• Training Plan• Compensation Scheme

– Infrastructure• Physical Facilities• Information Technology• Other Technology

– Organization• Corporate Governance (i.e., Board of Directors, Board of

Advisors)• Relationship to holding company and Subsidiary Companies• Structure (organization chart)• Roles and Responsibilities• Other Advisory Relationships*

– Key Business Partners and Alliances

Implementation Plan– Gantt Chart:

• Key Activities and Timing• Key Milestones• Assignment of Roles and Responsibilities• Resource Requirements• Critical Path

– Change Management Plan– Regulatory Plan– Communications Plan

Project Approach—Business Plan Outline

• Financial, Performance, and Risk Management Plan– Financial Plan

• Financial Summary• 3-5 Year Projected Financial Statements• Financial Assumptions • Financial Ratios (including ROI)• Funding Request/Terms of Investment• Sources and Uses of Funds*

– Performance Management Plan– Risk Management Plan

• Appendices– Detailed Product/Service Descriptions– Management Resumes– Business Location Site Information– Legal Documents– Other Important Data


• Market definition

• Market evaluation, consisting of:– Customer base description– Supplier overview– Competitor overview– Substitute overview– Regulator overview– Technology overview

• Summary of internal business context

• High level capabilities assessment

1. Situation Analysis:

The business plan will be developed from the interim deliverables for each of the project steps.

• Mission and strategic objectives

• Market, technology, and supporting strategies

2. Strategy Formulation:

• Process model (high level)

• Capabilities assessment

• Infrastructure and technology description

• Organization structure description

3. Operating Model Development:

• Activity and operations plan

• Supporting plans– Performance management– Risk management– Regulatory– Change management

4. Implementation Plan Development:

• Market economics

• Enterprise cost and revenue models

• Pro forma financial statements

• Business case:– Cost, revenue, and cash flow projections– Investment projections– Financial model explanations

5. Financial Evaluation:

Project Approach—Interim Deliverables


The project will follow a five-step process.

SituationAnalysis

StrategyFormulation

OperatingModel

Development

ImplementationPlan

Development

Key Questions

Project Approach—Project Overview

• What is the business opportunity

• How should the market be defined? Value chain?

• What will be the market demand?

• What are key characteristics of the market? Risks & opportunities? Trends?

• What is the competitive structure of the market?

• What are the customer segments and their characteristics?

• What are the economics of various technologies?

• What is the internal business context?

• What are XXX’s existing capabilities? Strengths & weaknesses?

• What are the primary strategic options? What potential XXX roles?

• What should be the geographic, product, and customer scope?

• What are the mission, vision, & objectives?

• What products/services should be offered (i.e. marketing mix)?

• What is the customer value proposition?

• What customers should be targeted?

• How should the products/services be marketed? Through what channels?

• What should be supporting strategies (e.g., regulatory)?

• What is the strategic migration path?

• What processes are critical to success and how will they be defined?

• How should the gateway business be organized?

• What will be the relationship with other XXX entities?

• What skills are required? What are the human resource requirements?

• How should capabilities be sourced? What key business partnerships/alliances need to be established?

• What are the technology requirements (core, supporting & enabling, and business)?

Financial Modeling• What key activities need to be

accomplished? Within what time frame? What is the critical path?

• How will performance be monitored?

• How will uncertainties be assessed and handled?

• How will change be managed?

• What messages need to be conveyed to stakeholders? How?

• How will relations with various regulatory bodies be handled?

• What is business case for proceeding?

• Product/service evaluation

• Market evaluation

• Summary of internal business context

• High-level capabilities assessment

• Economic analysis

• Detailed strategy:

– Mission & strategic objectives

– Market, technology & supporting strategies

• Operating model

– Process model

– Capabilities assessment

– Infrastructure description

– Organization structure

• Detailed costs/revenues

• Business plan, including financial pro formas

• Supporting plans:

– Performance

– Risk

– Regulatory

– Change

Main Deliverables


The project will span 6 weeks and will be characterized by overlapping steps and frequent, substantive communications.

Project Work Schedule

Overview

• Situation Analysis

• Strategy Formulation

• Operating Model Development

• Implementation Plan Development

• Financial Modeling

Communications Milestones

• Kick-off meeting

• Initial meeting with client

• Mid-point review with mentor

• Dress rehearsal

• Formal project report-out

Week1

Week2

Week3

Week4

Week5

Week6

Week1

Project Approach—Project Gantt Chart


The Situation Analysis answers the question of Why the client should enter the a certain market.

Project Approach—Situation Analysis

SituationAnalysis

External

Internal

Understand ClientBusiness Context

Assess Capabilities

Analyze Market

Define Market(Product Analysis)

Key Questions Outputs

• What are the most attractive products/services?– Market size and growth rate– Margins and trends– Competitive barriers– Success factors– Market drivers– Risks and uncertainties

• Characterization of market for products/services and product/service groupings (size, growth rates, estimated margins and change over time, etc.)

• Product/services focus areas for client

• What are the attractive customer segments?• What is the “power” of suppliers? What partners

might the client choose and what should be the nature of the relationships (preliminary)?

• What are the entry barriers? What is the competitive intensity?

• What products from other markets or new-to-the-world products will compete for this market?

• What is the impact of regulation on both the market and the client’s entry into that market?

• What is the impact of enabling and related technologies? What technological barriers exists?

• Recommended target segments• Preliminary supplier strategy and

business partner candidates• Potential positioning strategies• Possible market redefinition and product

mix adjustments• Potential regulatory strategies• Product line extension

recommendations

• What internal issues impact the client’s plans to enter the market?

• Do structural constraints (e.g., funding limits) exist? Political constraints?

• What other boundary conditions affect the project and the launch of this business?

• List of internal issues/constraints/ boundaries

• Description and rating of impact of internal issues/constraints/boundaries

• Modifications to project plan

• What are the client’s strengths and weaknesses?

• What is the magnitude and significance (weighting relative to other indicators) of each?

• High-level capability gap analysis (prioritized and quantified list of gaps)


Strategy Formulation answers the question of What the client should do.

Develop StrategicOptions

Model StrategicOptions and

Select Strategy

Define Missionand Objectives

Key Questions

• Where are the greatest threats and opportunities for the client?

• What are the client’s strengths and weaknesses?

• What are the key strategic dimensions?– Technology – Geography– Customer– Product– Marketing/delivery

fulfillment• What strategic dimensions or

strategic options can be immediately rejected? Which dimensions are synergistic?

• What are the key strategic assumptions?

• What are the least and most risky (but realistic) options? Moderate risk options?

• What option provides the greatest financial return?

• What variables most drive success?– Market penetration– Customer targets– Roll-out pace– Targeted competitive

segments– Partner/vendor selection

• What additional, non-quantified risk factors need to be considered? What is their impact? Does their consideration change the modeling outcomes?

• What roles will the client play? What segments of value chain will it focus upon?

• Why is our strategy unique? What is our value proposition?

• What are the advantages and benefits of our offering?

• What differences or characteristics will lead to success?

• What will the new company stand for, believe in and intend to achieve?

• What quantified targets should be set?

• What is our long-term vision?

Develop DetailedStrategy

Develop SupportingStrategies

• What products will be offered?

• What customer segments will be targeted? What are the associated value propositions?

• What will be the sales and marketing approach? Branding strategy?

• What is the entry strategy and pace of implementation? What channels will be used?

• What is our product positioning (e.g. pricing, bundling, etc.)?

• What business partnerships will be needed?

• What supporting strategies are needed (e.g. regulatory)?

Project Approach—Strategy Formulation

Methods

Outputs

• SWOT analysis

• Definition of key strategic dimensions

• Characterized strategic options for modeling (number: 3 – 5)

• NPV, IRR calculations• Risk analysis

• Tabular comparison of strategic options

• High level strategy

• Team analysis

• Mission, vision, and objectives

• Business concept definition• Market strategy options

• Team analysis

• Detailed strategic plan (includes technology plan)


Operating Model development answers the question of How the client should execute its strategy.

Operating Model

Infrastructure

Organization

People

Process

Key Questions Outputs

• What are the primary processes? Secondary processes?• How should the processes be defined? Inputs/outputs?

Steps? Cycle times? Key decision points? Costs? Interdependencies? Communications links?

• Should the process be outsourced?• What performance standards need to be set? How will

they be monitored and adjusted?• What organization model is implied? What

tools/technology are needed?

• Process implications analysis and recommendations

• What skills/capabilities are needed? How sourced?• What is required headcount and how does it change?• How will staff be hired, trained, motivated?• How will contractors be managed?• What are the associated technology needs?

• People implications analysis and recommendations

• What business infrastructure is required? Sourcing?• How will infrastructure be maintained/improved?• How are staffing requirements changed by infrastructure

investments? Organization structure?• How will employees be trained and supported to use

software, equipment, etc?• What refinements need to be made to core and enabling

technologies? What vendors should be targeted?

• Infrastructure implications analysis and recommendations

• What is the optimal organization structure? How will this structure need to be adjusted to accommodate growth in the next five years?

• What are the roles and responsibilities of key managers?• What linkages to the client’s other entities need to be

established? To other stakeholders• What are the associated HR and technology

requirements?• What is the optimal governance scheme?

• Organization implications analysis and recommendations

Project Approach—Operating Model Development


Implementation Plan Development answers questions of When and Who will implement the elements of the strategic plan and operating model.

Identify/PrioritizeActivities and

Define Constraints

Sequence Activities

Identify TransitionalIssues

Assign Resourcesand Responsibilities

DevelopSupporting Plans

Key Questions

• What actions should the client take to implement its strategy and associated operating model?

• Which activities have the highest priority?

• What issues or constraints are associated with each activity?

• What activities are on the critical path? What are the interdependencies? What lead times must be considered?

• What is the level of effort required to accomplish specific activities (time and FTEs)?

• What milestones must be reached?• What performance goals have been

established?• What are the risk factors and

transitional issues that must be considered?

• What are inputs and deliverables for various activities?

• Who is responsible/ accountable for each activity?

• What are the resources (human, technology, financial) required?

• What change barriers exist? How will they be managed?

• How will results be tracked and communicated?

• How will risks be managed?

Project Approach—Implementation Plan Development

Outputs

Methods

• Prioritized list of implementation activities

• Implementation issues discussion

• Team analysis • Team analysis

• Gantt chart• Issues discussion

• Team analysis

• Implementation plan (i.e. Gantt charts with activities, dates, critical path, resource requirements, and assigned responsibility)

• Supporting plans (as appropriate):– Performance– Risk– Regulatory– Communications– Change


Financial Modeling answers the question of How Much benefit the client should expect from its new venture.

Evaluate EconomicsModel Strategic

OptionsDetail Costs and

RevenuesCalculate Financial

Pro formas

• How do the economics compare across different technologies?

• How do costs break down across the value chain?

• How do our costs compare to substitutes?

• Do experience curve effects matter? Economics of scale? Economies of scope?

• Will our technology follow typical technology cost curves?

• How do the costs break down? Fixed costs? Variable costs? What are the lifecycle costs?

• Are all costs considered?• What penetration rates are

implied by the cost curves?• Where and among whom will

penetration be greatest?

• What is the optimal strategy for the client from a financial standpoint?

• What are the key financial variables? Key assumptions and underlying model logic?

• How do the strategic dimensions affect the financial variables?

• How sensitive are financial results to changes in assumptions or financial variables?

• What non-financial risks and benefits need to be considered? Does consideration change the option chosen?

• What are start-up costs? Capital investments?

• What are the specific costs associated with the chosen strategic option?

• What are the margins associated with particular products?

• What do “typical” customer sales look like?

• What are sales projections by product/bundle?

• What costs are other gateway players incurring?

• How will financial assumptions change over five years?

• What loading assumptions need to be made?

• What is ROI?• What investment levels are

required? When?• What is the COC? What are the

sources of funding?• What are the business’s

assets/liabilities?• What early financial assumptions

can be tightened?• How does the final

implementation plan affect the early project financial estimates? Are the assumptions accurate? Should they be adjusted?

• How do the financials compare to other gateway players?

Key Questions

Project Approach—Financial Modeling

Methods

Outputs

• Cost analysis• Cost mapping (across value

chain)• Application of technology curves• Break-even analysis

• Economic model• Value chain cost breakdown• Economic comparison across

gateway products• Cost curve analysis across time• Estimated market penetration

rates

• Top-down financial analysis::– Revenues– Earnings– Cash Flow– ROI: NPV, IRR

• Strategic options financial summaries

• Financial model, including explanation of logic and assumptions

• Bottom-up cost analysis• Bottom-up revenue analysis

• Enterprise cost model• Enterprise revenue model

• Financial analysis:– Revenues– Earnings– Cash Flow– ROI: NPV, IRR

• Financial Pro formas• Business case

Business Plan Development

Documents

Transcript of Business Plan Development