Virtual Enterprise: Developing a Business Plan Marcus Catsouphes and Nicholas Giglia October 17, 2008

Copyright © 2008 Deloitte Development LLC. All rights reserved. 1 Agenda Business Planning Overview Defining the Business Market Analysis SWOT Analysis Marketing Plan Operating Procedures Financial Analysis

Copyright © 2008 Deloitte Development LLC. All rights reserved. 2 Who Prepares a Business Plan? It is NOT necessarily a new business. Business plans can be prepared by: –Inventors/Entrepreneurs –Companies seeking start-up capital –Established companies with new initiatives. –Borrowers from a bank –Companies going public –A division within a larger business –Any business owner or manager

Copyright © 2008 Deloitte Development LLC. All rights reserved. 3 Why Prepare a Business Plan? Understand Business EnvironmentReach ConsensusGuide Decision-MakingFacilitate Control Evaluate Performance A good business plan connects the facts of the present with a vision of the future.

Copyright © 2008 Deloitte Development LLC. All rights reserved. 4 Business Plan Recipe The Problem Industry Overview Solution Value Proposition Why will people buy from you? Unique Selling Point Team Team makeup Qualifications Financials Financial projections Include funding requests here Business Model Operating procedures Company set-up SWOT Marketing Attracting and retaining customers

Copyright © 2008 Deloitte Development LLC. All rights reserved. 5 Finding Information Research in a business plan is crucial – but where can you find the information? Company Data Previous Plans Financial Statements Competitor Business Plans Government Reports Public Filings Trade Publications Online Sources

Copyright © 2008 Deloitte Development LLC. All rights reserved. 6 Elements of a Business Plan INTRODUCTORY Statement of PurposeObjective Company Description Personnel MARKET ANALYSIS MARKETING PLAN OPERATING PROCEDURES SWOT ANALYSIS FINANCIAL DATA PRESENTATION DISCUSSION OF RISKS FEASIBILITY WRITING SKILLS SUPPORTING DOCUMENTS 15% 8% 15% 8% 23% 8% Note: Percentages are rounded

Copyright © 2008 Deloitte Development LLC. All rights reserved. 7 Structure of a Business Plan Company Description (Products and Services) Strategic Objectives MARKET ANALYSIS SWOT ANALYSIS MARKETING PLAN OPERATING PROCEDURES FINANCIAL ANALYSIS Statement Of Purpose DISCUSSION OF RISKS

Copyright © 2008 Deloitte Development LLC. All rights reserved. 8 SHARED VALUES What type of organization do we seek to be? VISION What do we want the business to look like 5 years from now? STRATEGY How do we make profits and beat the competition? MISSION Why are we in business? Vision:An idealized view of an organization’s future state. Where or what an organization would like to be in the future. Mission: An enduring statement of purpose. An organizations reason for being. Describes what an organization does, who it does it for, and how it does it. Strategy:An expression of the manner in which the organization will achieve the goals necessary to accomplish its mission and fulfill its vision. Values:A set of commonly held fundamental beliefs that describe the type of behavior it will take to realize the organization’s vision. Intro – Defining the Business

Copyright © 2008 Deloitte Development LLC. All rights reserved. 9 Intro – Company Description Management Background Company History Stage of the Business –Pioneer, Growth, Mature Current-Year Initiatives –Internal Projects –Investments –Alliances or Joint Ventures

Copyright © 2008 Deloitte Development LLC. All rights reserved. 10 Market Analysis Industry Overview Market Segmentation Customer Profiles (vs. Company Offering) Market Size Remember the Budget… –Sales Potential –Pricing & Margin INDUSTRY OVERVIEW MARKET ANALYSIS MARKETING PROGRAM Analysis of market segments and customers will drive the marketing program … as well as the financial plan. MARKET SEGMENT CUSTOMER PROFILES MARKET SIZE & SHARE

Copyright © 2008 Deloitte Development LLC. All rights reserved. 11 Opportunities Elements of SWOT Analysis INTERNAL / FACTUAL EXTERNAL / POTENTIAL NEGATIVEPOSITIVE Threats Strengths Weaknesses

Copyright © 2008 Deloitte Development LLC. All rights reserved. 12 SWOT Analysis More Relevant for Existing Companies May Reflect Strategic Choices Generally Forward-Looking Provides Insight for Business Plan SWOT Analysis brings a strategic element to the planning process: how well can this company compete?

Copyright © 2008 Deloitte Development LLC. All rights reserved. 13 Company’s Response Primary Benefit of SWOT is Company’s Response Address Results of Each Quadrant –Actions to Exploit or Remedy –Explanation of Other Items Intended Future Action Explanation of Mitigating Factors –Time Horizon for Significant Items How does our SWOT compare with competitors? How will we manage risk?

Copyright © 2008 Deloitte Development LLC. All rights reserved. 14 Marketing Plan Advertising Brand Image Promotional Initiatives Sales Support Demand Management Remember the Budget… –Sales Impact (Indirect) –Cost Impact (Direct) The detailed customer understanding gained from market analysis helps to select the right marketing tools.

Copyright © 2008 Deloitte Development LLC. All rights reserved. 15 Marketing Plan (cont.) Marketing P’s: Product, Price, Placement, Promotion, Positioning –Product – Covered in Business Definition –Price – Explored in Segment Analysis Placement, Promotion & Positioning –Related to Distribution Channels –Seasonal or Continuous –Provides Customer with: Purchase Incentive Information

Copyright © 2008 Deloitte Development LLC. All rights reserved. 16 Operating Procedures Sourcing –Raw Materials, Finished Goods, Other Supplies (Maintenance, Administration) Production / Preparation –How? When? How Much? Sales and Marketing Process Distribution / Delivery –How? Where? How Fast? How Often? Channels? Customer Service and Quality Control Remember the Budget… What Will It Cost?

Copyright © 2008 Deloitte Development LLC. All rights reserved. 17 Financial Analysis Break-Even Analysis –Breakeven Point = Fixed Costs/(Unit Selling Price – Variable Costs) –Tells a business how many units it needs to sell to make a profit. It is not an indicator of demand Operating Budget –The projected cost of running your business –Tells a business the things on which it spends money, and the ways it makes money Cash Flow –Shows how and from where money flows into and out of a company –Shows how changes in the Balance Sheet and Income Statement affect cash –Shows how easily a company can pay its bills

Copyright © 2008 Deloitte Development LLC. All rights reserved. 18 Funding & Capital Structure Debt – amount of money borrowed by the firm (debtor) from a creditor, to be re-paid at a later date with interest (loans) Equity – the amount of funds contributed by the owners (stockholders) of the business, or trading a percentage of the business for a specific amount of money Capital Structure is how a firm finances its overall operations and growth by using different sources of funds (debt, equity) Composition of a firm’s liabilities Why It Matters: Tells you how much more $$$ you need to obtain to run your business!

Copyright © 2008 Deloitte Development LLC. All rights reserved. 19 Results of Financial Analysis Based on the financial analysis management may: –Decide whether to continue or discontinue certain aspects of their business –Make or purchase certain items for the manufacture of company products or delivering of services –Assist in negotiating with obtaining additional funding –Provide information that will assist management in making decisions for conducting their business Why It Matters: Ensures that you know what is going on with your business!

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