Business Plan Development

Presented By : Wissam N. Saleh

Presentation Outline
Purpose of a Business Plan
Executive Summery
Company Overview
Product of Service Plan
Market and Industry Analysis
Marketing Plan
Operations Plan
Risks
Financial Plan








Purpose of A business plan

Who Should Write ?

Why Write ?
What Are the Uses of a Plan ?
• Action Plan
• Road Map
• Fund Raising
• Sales Tool
Executive Summary I

Objective : Capture the reader’s interest .

The last section to be written .
The reader should be able to tell what your plan is all about .
Max of two pages.
 Executive Summary II
1. Concept Description
2. Opportunity
3. Product Service
4. Value Proposition
5. Marketing Strategy
6. Competitive Advantage
7. Management
8. Financial
9. Funding
Product or Service Plan
The reader is excited to hear about your operations, marketing and financial planning .
Sources of Information :
1. Technical Specifications and Drawings .
2. Prototype
3. Competitor Product/Service Matrix
4. Interviews
5. Surveys
6. SWOT Analysis
Business Model
Product/Service Plan II
Features :
Key Attributes
• Function , Speed, Taste, Cost Reduction, Stability ,
Reliability , Responsiveness ... Etc
Enhancements :
• Unique Process, Delivery Method, Location,
Packaging, Tech Support , Delivery , Warranty ,
Payment Terms .
 Product/Service Plan III
Product or Service Strategy :

What is the extend of the product/

service mix ?

What will be introduced initially ? 3

years ? Five years ?

Show your Evidence .

Milestones of Development .

Differentiation ( Bundling , Warranty ,

Packages , Price Matrix ... etc .
Product/Service Plan IV

Benefits to the Customer

Easier to use , delivery on time , used based on demand ,
quality , durability , appearance .
Are the customers aware of these benefits ?
Are they really benefits ?
Market and Industry Analysis

Objective : Prove that there is an Opportunity .

No passion , just data .
No mention of your business.
You should be able to Validate the need for your product/
service .
Market Analysis
How Large is your market ?
Large ?
Number of Products/
Services Or Customers
Growing ?
The Growth Rate
Segmentation ?
Trends and Opportunities?
Market Analysis II
Addressable Market
You can target various
sectors and various
segments .
Usually, Capturing the
entire market is hard .
Example : Consumer
Products .
Market Analysis III
Entry Point :
Based on your Segmentation , Choose your Entry Point .
However, Do they really need your Product/Service ?
Do They Understand the Benefits ?
What Future Segments Would Join ? Why ?
Market Analysis Process
 Industry Analysis I
Objective : Know you competitors and how they compete . Understand the nature of the market
Elements :
Industry Organization
What are the goods ? Where are they produced ?Supply Chain ?How do your competitors see
themselves ?
Competitive Environment
How do they compete ? Service ? Quality ? Price ? Technology ? Customer Support ?
Highly Competitive ? Price based ?
Profit Margins ? Net Profit Margins ?
How do they deal with new comers ?
Industry Analysis II
Barriers to Entry
Legal ?
Economy of Scale ?
Customer Loyalty ?
Agreements with Suppliers ?
Control of Distribution Channels ?
High Cost of Entry ?
Social Conventions ?
Industry Analysis III
Control
How much control do you have over : Prices , Costs , Channels of
Distribution , Buying your way in .
Competition
Direct
Indirect
Future
Financial Analysis

Objective : Project your Revenues and calculate key Ratios .

Method : Excel Modeling
Risk Management
Outline
Risk Concepts

Risk Management:

Risk identification

Risk Analysis (Qualitative and Quantitative)

Risk Response Planning

Risk Monitoring and Control

Risk Management Techniques

PERT, Mont Carlo Simulation, Decision Trees,...

Sample Applications
Concepts

Risk: The possibility of suffering loss (or harm) and the impact of that
loss on the involved party. Risk can be characterized in terms of its
Severity where:

Severity = Likelihood of Occurrence x Magnitude of the Impact.

Risk: Any event which is likely to affect (adversely) the ability of

project to achieve the defined objectives.
Concepts II

Risk: A measure of the probability and consequence of not achieving

a defined project goal (Kerzner 2001).

Risk=ƒ[Si,Pi,C] i=1,2,3,......

Si: is a scenario of events that lead to hazard exposure (unwanted change);

Pi: is the likelihood of scenario i; andCi: is the consequence of scenario.

Risk = ƒ [hazard, safeguard]


! Risk increases with hazard but decreases with safeguard.
 Concepts III

Opportunity: The possibility of realizing a favorable outcome and

the impact this outcome has on the involved party. Opportunity is
positive risk and can be identified and managed in a similar way.

Uncertainty: The gap between the information required to estimate an

outcome and the information already possessed by the decision maker.
 Concepts IV

Risk Analysis: The process of identifying risk factors and the

quantification of those factors (estimating likelihood and magnitude of
impacts).

Risk Mitigation: The process of developing a plan to respond or deal

with risk on a project.
 Why Risk Analysis ?

1. Minimize management by crisis

2. Minimize surprises and problems
3. Increase probability of project success
4. Better handling of true costs and schedules by properly estimating
contingencies...
 Risk Management
Definition: RM is the act or practice of dealing with risk. It is the process
by which risks to the project (e.g., to the scope, deliverables, schedule,
resources,...) are formally managed during the project.

Processes: RM includes planning for risk, identifying and analyzing risk,

developing risk handling options, and monitoring risks to determine how risks
have changed.

Goal: minimizing potential risks while maximizing potential opportunities and if

properly conducted, reducing not only the likelihood of an occurred event, but
also the magnitude of its impact.
 Characteristics of Risk

1. For risk to be an issue, the event and/or its outcome must be

associated with a certain degree of uncertainty (the possibility).
2. In practice it is virtually impossible to avoid all risks.
3. Risks can be reduced and sometimes transferred (e.g. through
contracts, financial agreements, allowances, insurance policies).
 Potential Risks and Knowledge Areas

Knowledge Area Potential risks

Poor definition of scope or work packages; incomplete definitions of quality
Scope requirements; inadequate scope control.

Errors in estimating time or resource availability; poor allocation and

Time management of float; early release of competitive product.

Estimating errors; inadequate productivity, cost, change, or contingency

Cost control; poor maintenance, security, purchasing,...etc.

Poor attitude toward quality; substandard; design / materials / workmanship;

Quality inadequate quality assurance program.

Carelessness in planning or communication; lack of consultation with key

Communication stakeholders.

Ignoring risk; unclear assignment of risk; poor insurance management.

Risk
 Process of Risk Management
Generally involves the following steps:
1. Risk Management Planning

2. Risk Identification

3. Risk Analysis :

Qualitative & Quantitative.

4. Risk Response Planning

5. Risk Monitoring and Control

 1- Risk Management Planning
Deciding how to approach, plan and execute the risk management activities for a project.

Output: Risk Management Plan


Describes how risk management will be structured and performed in the project. It includes:

Methodology.

Roles & responsibilities.

Budgeting.

Timing.

Risk categories .

Definition of risk Probability & impact.

Probability and impact matrix.

Revised stakeholders tolerance.

Reporting formats.

Tracking.
2- Risk Identification
Determining which risks might affect the project and determining their
characteristics.

Example :

Inflation Rate

Tax Increase

Technical Error

........
3- Qualitative Risk Analysis
Prioritizing risks for further analysis by assessing and combining their
probability of occurrence & impact.

Using Surveys to Classify the Risks Based on Their Severity .

What is Severity ? It is the Product of the Probability and The Impact

What is the Impact ?

Given in the Following Table :

S<=0.05 0.05<S<-0.1 0.1<S<= 0.3 0.3<S<=0.5 S>0.7

0% 2.5% 7.5% 15% 30%

3- Qualitative Risk Analysis II
Output :
 4- Quantitative Risk Analysis
Numerically analyzing the effect of identified risks on overall project objectives.

The objective is to get the numerical value of risk .

How ?

Through Surveys , Surveys quantify how probable the event is to occur and
what is the impact of its occurrence on the business .

Probability ?

Probability Distributions .

Simulate Answers .


Probability Distributions I
In probability and statistics, a probability distribution assigns
a probability to each of the possible outcomes of a random
experiment.
Examples : Random , Poisson , Kai ... Etc
Simulate Answers .

With computer packages ( Crystal Ball , now you can use the
answers of your surveys to fit a probability distribution and
simulate an unlimited amount of answers . Thus, Converging
to the true risk figure .
 4- Quantitative Risk Analysis
Based on Surveys Remember the Table ?

Exchange Rate
Estimated
Risks Cost
Probability Impact Severity Cost if Happens

If S<0.05 Then ) *
Estimated Cost

.............
Imports 100,000 0.3 0.3 Probability * Impact
OR ...... If
Statements
If S<0.05 Then ) *
Estimated Cost
Operations 500,000 0.2 0.1 Probability * Impact
OR ...... If
Statements
If S<0.05 Then ) *
Estimated Cost Total Additional Cost
Outputs 800,000 0.4 0.15 Probability * Impact
OR ...... If
Total Cost
Statements
% Additional
Quantitative Example - Crystal Ball
5- Risk Response Planning
Developing options and actions to enhance opportunities and reduce
threats.

Tools and Techniques :

Avoid : Change Scope

Transfer : Insurance , Warranties , Guarantees

Mitigate : using less complex process, conducting more tests or

choosing more stable suppliers

Acceptance .
6- Risk Monitoring and Control

Tracing identified risks, monitoring residual risks, identifying new

risks, executing risk response plans, and evaluating their
effectiveness throughout the project life.
Thank You