Exercise 3

The complete business plan

To be presented 06.02

Send the written business plan to us by 05.02

The business plan

According to ”Fra idé til ny virksomhet” the business plan should consist of: – Summary– The business idea– The management– The market plan– The business model and organization– The plan to carry it through– Financial plan– Risks

The business model and organization

• The business model– Describes the activities in a company that are

necessary to develop and deliver a product– Make or buy decisions. I.e. describes what

your company will do and not do to deliver a product.

– Can be a source of competitive advantage in itself

The business model and organization

R&D Production Distribution Marketing & sales

Service

Purchase Manufacturing AssemblyLogistics

The internal value chain

Customers

Suppliers

The business model and organization

R&D Production Distribution Marketing & sales

Service

Purchase Manufacturing AssemblyLogistics

The internal value chain

Customers

Suppliers

Make or buy?

Make or buy?Partnerships?

The business model and organization

• Determinants of make or buy can be:– Costs– Availability / Uncertainty– Strategic importance– Value added

• Partnerships– How and what for?

The business model and organization

Suppliers PC maker DistributorRetailers Resellers Integrators

Final customer

Suppliers Dell Final customer

Indirect value chain

Direct value chain

The business model and organization

CMs/OEMs

Repair & support companies

3rd party HW & SW suppliers

System integrators

Component suppliers

Customer

Distributors

Dell

Logistic companies

Physical flowsInformation flows

The value network

The business model and organization

• Organization– Describe what activities each group member

will have responsibility for– Describe needed additional competences

• E.g. industry specialists to the board• Additional personnel as the firm grows

R&D Production EconomicsMarketingHuman

resource

CEO

Board

The plan of action

• A plan that describes the activities needed to realize the product. Prepare a plan on 3-5 year horizon

• What are the important milestones• Be realistic

Q 1 2007 Q 2 2007 Q 3 2007 …

Development

Marketing

Production

Profitability / Financial plan

• Profitability / Financial plan– How much money do you need?

• Calculate your financial needs based on assumptions and estimations of your costs and revenues.

– 3-5 years• Monthly, quarterly or yearly? Depends on your

business, i.e. how fast you expect to go through the ”valley of death”

Financial plan1. Sales forecast

• Time frame• Assumptions about sales per customer, number of customers, growth

rate of sales• Calculation of the sales forecast

2. Costs forecast• Assumptions about the costs of doing business• Calculations of the costs associated with the projected sales

3. Income and cash flow forecast• Assumptions about the timing of cash receivables and payables• Calculation of the income and cash flow associated with the projected

sales and costs4. Balance sheet

• Assumptions of the value of cash and assets• Calculated based on the income and cash flows from step 3

Risks

• Identify the risks– E.g. in the firm, technology, the market …

• Describe how you will handle them

PEST- Political

- Economic

- Social

- Technological

Loss

Profit

0Time

T

Best case

Worst case

SWOT- Strengths

- Weaknesses

- Opportunities

- Threats

Sensitivity analysis

Exercise

• E-mail everything that is to be in the business plan, but with focus on:– The business model and organization– Action plan– Financial plan– Risk assessment

• Send it to us by the 5th

Sensitivity analysis

Loss

Profit

0Time

T

Best case

Worst case