XYZ COMPANY LIMITED

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Nov 12, 2013 (3 years and 8 months ago)

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XYZ COMPANY LIMITED









BUSINESS PLAN

Strictly Private & Confidential












XYZ Company Limited

The Old Manor House

Somewhere Down South

Avalon AV1 234B

Tel: 01234 567 890 Fax: 01234 567 891

E
-
mail: xyz@xyzcoltd.com




XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

2



Guidance No
te
s

for
IED
students



Just as each business is different, so is each business plan. Therefore, there is no single
exact format for a good business plan.


The following outline provides an overview of the issues that need to be covered in a
business plan,

but your plan should not be a carbon copy of it. Depending on the type of
business, some sections will n
eed more attention than others,

while some might be merged,
rearranged or even excluded.


Note that writing a business plan is not a linear process.
You will have to adapt and revise the
sections depending on the information you collect. It is important that the different elements
of your plan fit together coherently.


The major challenge in writing a business plan is selecting the information that ne
eds to be
included and skipping redundant information. For every table and every paragraph you
include, think carefully whether it contributes significantly to showing that your idea is a real
business opportunity.


If you provide a deluge of information,

the most crucial details will get lost in the ocean, and
the reader or potential investor may miss the most essential information.


Therefore, take the time to polish your business plan; it needs to be sharp and concise.



What to do for

a negative busi
ness case


If your
IED research
lead
s
you to believe that the project is not feasible, you will
need to
make a negative business case. In this
instance
, instead of writing as entrepreneur
s

(or
‘intrapreneur
s
’) about
launching

a new company, product line,
or business unit, you a
re
writing as consultants to a potential investor. This might be an external financial investor or a
company considering investing in an idea of its own.


To do this, firstly you should
use

the same
basic
format as for
a

business p
lan; in other
words, introduce the project and analyse the same areas such as market,
industry
/competition
, appropriability, business model possibities, financial projections
, risks
and so on
.


In addition, for a negative business case you
will

add a conc
luding
section

at the end,
drawing
together the information collected in the previuos sections to explain

why you would
not

recommend investing in this project or opportunity.



Format and Design


This template is very neutral

in design and appearance
. We

encourage you to add your own
branding and design ideas to make it original and specific to your
project and your
team.

XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

3

Executive Summary




The executive summary is the most important part of the business plan. Many people will only
read this. The summa
ry in itself will not secure an investor
;

however, it can lose them.


Quality
-

the quality of the summary must therefore be outstanding and you should pay
particular attention to it. Obtain critical feedback from others on your drafts.


Stand
-
alone
-

i
t is also used as a stand
-
alone document when introducing the project to
others so it must be able to capture interest and entice the reader to take the next step and
request more information
-

and secure a meeting.


Style


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䱥湧瑨t
-

i摥慬ly 潮e⁰ 来Ⱐ慮搠d敲瑡inly 琠t潲攠瑨on⁴睯 p慧敳⸠


䍯湴e湴n
-

i琠te敤s⁴漺




䥮Ir潤畣e⁴ e⁰牯 散琠t渠n敲ms ⁷桡琠tr敡 i琠ts⁣o湣敲湥搠睩t
hⰠ
瑨攠
opportunity
,
what
the
business
is trying to do, and list the key
individuals and advisors

involved



䑥Dcri扥⁴桥
stage

the project reached particularly in terms of the "readiness for market"
of its products, or product concepts, and outline any
inte
llectual property
, such as
patents, that may support the products



䡩杨li杨琠瑨t慩渠
market

characteristics, including size and growth, and specify the
market opportunity that you are addressing



S瑡t攠eh攠e敮瑲al
competitive advantages

of your products a
nd/or processes, how
distinct they are from the competition and in what way, and how these are important to
customers



S畭m慲楺e⁴ e j散瑩v敳 ⁴ 攠e潭灡ny⁩渠n桥⁳桯rt⁡ 搠lo湧⁴敲eⰠ,湤ⁱ a湴nfy 瑨敳攠
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strategies

you will use to achieve them
.




䥮Il畤攠eny
"evidence of success"

-

this may be trade reviews, analyst comments,
sales or partnership agreements, working prototypes, market testing, etc. which help to
make the project more tangible to the reader and raises

confidence in the project



䡩杨li杨琠慮y 桥rey⁩ssu敳⁴ 慴ash潵l搠d攠e潴od



S瑡t攠yo畲u
finance requirements and
your offer

to investors

-

i.e.
what stake in the
company is available for this (see Financial Structure), and the planned exit strategy fo
r
the investor
-

i.e. how the investor will realize their return from the project.




XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

4


Table of
Contents



Executive Summary

................................
................................
................................
...................

2

T
able of Contents

................................
................................
................................
......................

4

Introduction to the Business and its Management

................................
................................
....

5

Products and Services

................................
................................
................................
...............

6

The Market

................................
................................
................................
................................
.

8

Competitive Business Strategy

................................
................................
................................
..

9

Marketing Plan

................................
................................
................................
.........................

14

Sales and Distribution

................................
................................
................................
..............

15

Production Strategy and Structures
................................
................................
.........................

16

Financing Requirements and Deal Structure

................................
................................
..........

18

Key Financial Data and Financial Projections

................................
................................
.........

20

Appendix

................................
................................
................................
................................
..

22






Important Information: This document does not co
nstitute a public offer or prospectus or
invitation to the public. Only those who fall under the FSA definition of “High Net Worth
Individuals”, or “Sophisticated Investors” should review the plan. It will not be circulated to
more than 50 such individual
s. Investments in unquoted securities are highly speculative,
carrying high risk as well as the potential for high rewards. There is no ready market for the
realization of that investment, or its valuation, or the risks to which an investment is exposed.

The figures stated are purely illustrative and do not constitute a forecast. Before investing in
a project readers are strongly advised to verify all material facts and information for
themselves and seek advice from a person authorized under the Financ
ial Services Act.

XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

5


Introduction to the Business and its Management




Introduce the business and what it does / will do.


Describe concisely how the project came about and progressed to the present situation.
What is the specific opportunity being add
ressed?


Explain who is involved,
their

positions, what relevant experience and qualifications they
have. Include a one
-
paragraph biography on each (
and
full CV in the Appendix).



State what stage the business is at now. Highlight briefly the most salien
t features
and
consequent benefits
of the company’s products and services


t桥ir⁣潭灥瑩瑩v攠a摶a湴n来.


Explain any “evidence of success” you may have


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-
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will

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?



I

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c潮瑲i扵瑥tt漠o
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s
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s
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-

what you want to achieve. What are the company’

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Organisational Structure Chart (Double
-
Click to Edit)


Organisational Structure
Dicky Pickle
Non Exec Chairman
To Be Appointed
Non Exec Director
Bean Counters Ltd
Company Auditors
Slimy Lawyers Ltd
Company Lawyers
Gone West
Company Bankers
Finance Assistant
Fiance Assistant 1
Finance Assistant
Finance Assistant 2
Haveasmal Labudget
Finance Director
Ads R Us
Marketing Agency
Spin is Us
PR Agency
Sales R Us
Contract Sales Co
David Helpful
Marketing Co-ordinator
Slick Will
Sales & Marketing
Production Partner
Contract Production
Strategic Supplier
Strategic Supplier
Distribution Partner
Contract Distribution
Actually Doesthings
Production Co-ordinator
Do Thingswell
Production
Leading University
Research Partners
Clever Cloggs
R&D Director
Big Cheese
CEO

XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

6


Products and Services






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灬攠e敲es



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灲敳敮琿



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䱩s琠tny 潴o敲⁵ei煵攠e敡瑵t敳



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桮潬潧y爠摥sig渠n潮c数琠te桩湤⁴桥 灲潤畣琮



䥮Iell散t畡l⁰牯 敲ey


慲a⁡ny 灡瑥湴n爠瑲a摥m慲ks⁩湶olv敤爠 e煵ir敤?



Pric攠e湤 灲楣in朠g瑲慴agy


睨慴 灲楣攠睩ll y潵
r

灲潤畣瑳⁳敬l 慴aa湤 睨慴 is⁴ e⁰物ci湧
s瑲慴agy 扥桩湤⁴桩s⁤散isio渮n⁈ 眠摯敳⁴
is⁣潭灡r攠睩瑨triv慬s?



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h敮 y潵⁥ 灥c琠瑨tm⁴
r敡c栠h慲k整e⼠/敡r⁦r畩琮

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Example text, Medical Instruments:


The MelanoScanner


We have developed a medical instrument device for the detection of melanoma

(skin cancers): the
MelanoScanner, which has just been awarded the Queen’s prize for innovation.


The MelanoScanner detects potential melanoma by measuring tiny temperature
differences, caused by increased blood flow, between normal skin and a malignant
melanoma.


It is a small, hand held portable device, between 15 to 25 centimetres wide that looks
much like a hand held barcode reader as found connects, much like a mouse, to a
computer with the company’s simple diagnostic software.


Any computer can be

used and the programme is small in size.



The Need being Served


Melanoma is the most common form of cancer in the UK and the death toll from the disease is rapidly
rising even though it can be successfully and easily treated if detected early.


The M
elanoScanner allows for the first time for practical screening to be undertaken in a GP’s surgery to
a high degree of accuracy (over 95%) without the need to refer the patient to an expert dermatological
surgeon for screening


which is not practical as th
ey are scarce.




Pricing Strategy


XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

7

As there are no direct product comparisons we relied on same
-
type products to determine our pricing
strategy and policy.


GP’s have a number of instruments that they use and have been adopted almost universally by every
GP in the country and around the western world. These instruments typically range between £5,000
and £12,000 per unit and this has been shown to be an affordable price within their specific budget for
instruments.


In addition to this reference, we carrie
d out a basic telephone survey of 300 GPs to ask them directly if
they would buy such a product if available, and
whether they would be willing to pay in this price range
.
98% of our sample said they would buy it and had the resources currently to pay for

it


they were
willing to pay between £3,000 and £5,000 for it.


The price has therefore been set at £4,500 (excluding VAT) to ensure we do not forsake profit, and to
ensure that demand is a little slower so we can meet it. The price can easily be reduce
d if we needed
but not readily increased.




Production Costs and Gross Margins


Because the investment in our product is primarily in the technology, the physical cost of production is
actually very low.



Cost

% of Sales Price

Circuit board

35.00


Plastic Mouldings

5.00


CD with software

2.00


Packaging Materials

2.50


Assembly & Packing

1.00


Total Unit Production Cost

45.50

1%

Selling Price (ex VAT)

4,500.00

100%

Gross Margin per Unit

4,454.50

99%

Reseller Commission

45.00

1%

Margin afte
r Sales & Dist.

4,409.50

98%


The reseller will control Warehousing and distribution, and will meet these costs from their fixed price
per unit commission.



Intellectual Property Rights


Our MelanoScanner has been patented internationally and the patent
has been approved. The effective
filling date was July 2002.


The MelanoScanner trademark has been filed and granted as a community trademark in Europe, the
USA and Australia.


Research and development will continue as a major part of our business and we
have budgeted
accordingly in our financial plans
.

XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

8


The Market



This section should describe the market you will be operating in


来湥rally⁡湤⁳灥cific慬ly i渠
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瑡牧整i湧

慮搠
why
?




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O瑨trey慲a整ec桡r慣瑥物s瑩cs
Ⱐ,慲aic畬慲ay 瑨tse⁴ a琠tm灡c琠y潵r 灲潤畣琯t敲vic攠
潦f敲楮g
.



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灯瑥湴n慬⁣畳瑯t敲e

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m慲k整

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-
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c潭灡r敤⁡ ai湳t⁡ y

摥sk瑯t

(瑯t
-
dow温

re灯r瑳
.


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c桯潳攠
瑯⁡ 慬条m慴a⁴ em.



XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

9


Competitive Business Strategy

and Industry Analysis




Competitive
Business and Growth
Strategy

How is the company going to compete in the market? Will it compete on price, service,
quality, convenience, new features and benefits,
by targeting a very specific area of the
market (niche), etc? Is this difference really important to the target customer / buyer?

How do you envision upscaling from your first target segment(s) to additional ones?

To demonstrate that you have analysed your

competitive environment, you should show a
summary analysis using the Five Forces model and then a
Value Chain
:

1. Analysis of Industry Structure (Porter's Five Forces)



T桲敡琠hf⁎敷⁅n瑲慮瑳⁴漠o桥⁍慲a整e
-

w桡琠t漠w攠扥li敶e⁩s⁴ 攠e桲h慴a潦 眠wlayers

敮瑥物湧⁴桥慲a整e⁡牥⁴ 敲攠慮y⁢慲ai敲e⁴ 敮瑲y爠數i琠t畣栠hs l慲a攠e湶敳瑭e湴n整e.



T桲敡琠hf⁓畢s瑩t畴u Pro摵c瑳
-

瑨t⁴ r敡琠潦⁤ ff敲敮琠er潤畣瑳⁦illin朠gh攠e慭攠e敥d



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-

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s⁰ ic敳



Pow敲e潦⁳異灬i敲e
-

wh慴ais⁴ 攠扡r条ini湧⁰ 睥w ⁴ 攠e異pli敲e⁴ ⁴ 攠e畳i湥ss



剩v慬ry⁁m潮杳琠tis瑩n朠glay敲e
-

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-

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-

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A湡lysis


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a摤r敳s
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湥ss⁷ 瑨

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潴o敲

play敲e⁩渠n桥⁣桡i渮†

䥮fl畤攠eny 扡ck杲潵湤 i湦潲o慴a潮⁲敬eva湴nt漠oh攠ero摵c瑳爠 敲eic敳.



XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

10

Example:


This analysis of our competitive environment sets our competitive strategy in context.


Analysis of Industry Structure


Indu
stry Forces (External)



Forces driving
industry competition


ME
Porter
, 1980




POTENTIAL
ENTRANTS






Threat of new
entrants





SUPPLIERS

Bargaining

power of
suppliers

INDUSTRY
COMPETITORS


Rivalry amongst
existing firms




Bargaining
power of buyers

BUYERS



Threat of
substitute
products







SUSBSTITUTES








Power of Suppliers
: The power of our suppliers is weak as there are large numbers of
suppliers and intense competition amongst them


Threat of new entrants
: The barriers to entry into this sector are high and we have overcome
them through our patented technologies. Because of the modest profits characteristic in the
industry using old technologies, the threat of new entrants is low.


Power of buyers
: The power of buyers in this industry is very high. A relatively small numb
er
of customers control the market. However, because of our superior technology, we will be
able to mitigate against this power.


Threat of substitute products
: At present there is no known or likely prospect of products that
can substitute for existing
products in this market sector. The threat of substitutes is low.


Rivalry amongst existing firms
: The market is characterised by seven major players and
rivalry amongst them is strong. This has in recent times led to heavy price competition.



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11

Example:


Value Chain for mobile applications



Although lead user projects were presented as a specific and distinct business in the previous section,
Siruna’s long term strategy is to position itself as a technology provider for multichannel gateway
solutions (s
ee figure 6) to system integrators , corporate IT departments and mobile web application
developers.




Figure 6 : Value Chain Positioning



Downstream the value chain, more specific sector knowledge is required and co
-
location becomes an
important issue
in the business model: mobile internet is a global business but many factors that drive
the user adoption are regional. Therefore companies like Usable Net and Momac specialize in a small
number of sectors (airlines and universities or media companies) and

are active in a geographically
distinct market (UsableNet in the US, Momac in the Netherlands). Similar approaches are taken by
companies like Dynetic, MData, … Sector specificity however implies a high degree of customization in
each project and although

we specifically want to do some strategic lead user projects in order to further
optimize our platform to any specific client need, we want to avoid being dragged into a service oriented
business model.


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12

Market Segment One: Open Source market






Figur
e 7: Market Segment One


In Market Segment 1, Siruna addresses the technology customers that sell software or projects which
might require mobile extensions or mobile access to their data and applications. These can be
ERP
Vendors and Mobile workforce solu
tions
such as
InforSense, SAP or
Mobile Web Application
Builders
such as Usablenet, Mdata or
Content Management Systems
such as
Drupal or
System
integrators
like Accenture.


Within this market Siruna wants to focus on the installed base of open source soft
ware solutions that
require mobile extensions. In particular the leverage with open source software packages that also uses
a dual licensing strategy, presents an interesting business opportunity. Closed software vendors like
Oracle, Sybase and IBM offer p
artial mobile solutions to their customers. However the users of the open
source counterparts are largely an
unserved market

and would need to switch to a closed platform if
they want to support mobile applications. Siruna will target partnerships with the

top open source
players of infrastructure software in the different segments:




Databases: MySQL



Content Management Systems: Drupal



ERP systems: OpenBravo, TinyERP



Business Intelligence: Penthago



Middleware: jboss/SEAM




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13

Market Segment Two: Web Agencies






Figure 8: Market Segment Two


In market Segment Two, we address the web agents. Web agencies are fragmented all over Europe. In
Belgium only, there are 450 web agencies. The largest ones, One Agency and the Reference realize
each about 8 mio Euro ann
ualy. Extrapolated towards the European level, this means that there are
about 18000 web agencies in Europe of which the largest ones realise about 50 mio Euro of revenues
annually. Each of these websites face a growing demand for mobile websites and do no
t possess the
technical skills to mobilize websites. On top, they do not have the slack resources to host web sites.
Therefore, they need geographical proximity to customers



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14


Marketing Plan




This section should explain the major marketing activities t
hat the company plans to
undertake.

The document may well be directed towards broader strategy but even so should include
major budgets.



Wh慴ais⁴ 攠e潲攠o瑲慴敧y⁦潲om慲k整e湧 y潵r 灲潤畣瑳?



䡯w⁡牥 yo畲⁴慲g整ec畳瑯m敲s⁧ i湧 瑯tb攠e慤攠e睡w攠ef yo畲⁰
r潤畣瑳㼠W桡t敤i畭s
潦⁣omm畮ic慴a潮 睩ll 扥⁵ 敤⁴ ⁲敡c栠yo畲⁴慲来琠t潮sum敲e



Will⁴ 敲攠扥 慮y慲k整e湧⁥ f潲琠慩m敤⁡ ⁡ y in瑥牭e摩慲a敳 yo甠uay⁨ ve


s畣栠h
s

睨潬敳慬敲e?



Will yo甠uak攠e畢s瑡t瑩慬 us攠ef⁐删R灵扬ic⽰牥/s⁲敬慴i潮s)⁩渠yo畲慲ke
瑩湧⁥ f潲琠


慲攠
瑨t⁰牯摵c瑳ewsw潲瑨y ⁩s⁡ 潴o敲e湥ws⁳瑯ty⁢ in朠gr敡瑥t⁴ ⁳u灰潲琠瑨t 灲潤畣瑳㼠
Ec潲⁥o慭灬攠y潵r⁣潭灡ny l慵湣hin朠gn⁥ 畣慴a潮al 睥扳it攠eff敲楮朠gr敥⁡ vice⁴
c潮s畭敲e m慴a敲e⁴ 慴a桡v攠e⁲el慴io湳桩瀠wi瑨tyo畲⁰u潤畣琩




慴攠eo眠w畣栠h桩s will⁣os琠t湤 扲敡b⁤ w渠n桥⁣潳ts⁢ twe敮⁣慴敧潲i敳



䥮Ir潤畣e⁡ y 慧e湣i敳⁴ a琠睩ll 扥⁵ e搠do⁡ sis琠yo甠慮搠do湦irm⁴ 慴a瑨ey 桡v攠扥敮
慢l攠e漠灲潤畣攠e 灲慣瑩cal 慣瑩潮⁰ 慮 睩瑨⁴ e⁢ 摧e琠



E灬ai渠睨w琠yo甠數灥c琠瑨攠e慲k整e湧⁥
f潲琠瑯⁡c桩敶攠en搠do眠yo甠灬a渠no潮i瑯爠慮t
c潮瑲潬⁴桥 敦f潲琠瑯⁥湳畲攠i琠ts⁥ f散瑩ve





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15


Sales and Distribution




This section explains the strategy, structures and processes you will use to sell your product
to customers, and intermediaries, a
nd how you will physically deliver the product to them.



S瑡t攠e漠睨潭 y潵 慲攠y潵 s敬li湧 瑨t 灲潤畣瑳Ⱐ,瑡t攠e灥cific⁳敧m敮瑳 ⁴ 攠e慲k整



E灬ai渠桯眠慲攠yo甠uoin朠瑯tmak攠e桥⁰牯 畣琠tvaila扬攠瑯tc畳瑯t敲e
慮搠
s敬l⁴ 攠
灲潤畣琠t漠o慣栠hf⁴ 敳攠ee杭敮t



桯w⁡牥 yo甠u潩n朠g漠o慫攠e琠t潮ve湩敮琠慮d
慣c敳si扬攠e潲oyo畲⁣畳瑯t敲e⁴ ⁢ y y潵r 灲潤畣瑳
?




䑥Dcri扥⁴桥⁲整慩l敲⁡湤 i湴敲e敤i慲y慲杩渠n瑲畣瑵牥s⁦潲⁥慣栠h慬敳⁣桡湮el yo甠us攠
瑨牯畧栠h漠瑨t⁦in慬⁣潮s畭敲e


慮搠d潭灡r攠e桩s⁴漠物v慬s



䥦 yo甠u
敥d⁡ sal敳⁦潲o攬e睩ll yo甠摥v敬潰⁴桩s in
-
桯畳攠er⁨ ve yo甠i摥湴nfie搠d⁳慬敳
潲条oiz慴a潮 yo甠u慮⁣o湴n慣琠⼠灡rt湥r 睩瑨t



Wh敲攠eill yo畲⁰uo摵c瑳⁢攠w慲敨潵se搿⁈ow 睩ll yo畲⁰u潤畣瑳⁰hysic慬ly⁲敡c栠yo畲u
c畳瑯t敲s㼠Will yo甠um灬oy 愠睡w敨潵si湧⁡湤

摩s瑲ib畴uo渠n潭灡nyⰠ潲owill yo甠c潮瑲慣琠
睩瑨t瑨t Sal敳 &⁄ s瑲i扵tio渠n畴ui琠t桡琠潦f敲⁴桥e敮tir攠灡ck慧政



䥦 yo甠u漠o湴nr⁡ co湴牡n琠trr慮来m敮琠wit栠h慬敳… 摩stri扵ti潮, wh慴a慲攠瑨t 瑥牭s ⁴ 攠
慧r敥m敮琿tW桯⁷ill ow渠t桥⁳瑯tk㼠W桯⁷ill invoic攠
慮搠牥deiv攠e桥⁦畮摳?



Wh敮⁡ 搠dow 睩ll⁣畳瑯t敲⁩nvoicin朠ge⁤ 湥㼠



Wh慴as整el敭敮琠瑥rms⁡牥 潦f敲敤e




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16


Production Strategy and Structures




This section will explain what strategy you have adopted for production and describe the
structures that w
ill be involved and their state of readiness. The level of detail will depend on
the stage of your business.



E灬ai渠睨w琠yo畲⁰uo摵c瑩潮⁳瑲慴agy 睩ll 扥


will yo甠uuil搠d 灲潤畣ti潮⁰ 慮琬⁣潮瑲慣琠t
灲潤畣瑩潮 灬慮琬⁣o湴牡n琠t湴nr攠灲潤畣ti潮 tⰠIr

lice湳攠e桥⁴ c桮潬潧y?



䑥Dcri扥 睨敲攠灲潤畣ti潮 睩ll⁴ k攠el慣攠e湤 if⁣潮瑲ac瑩湧 潵琬t睨漠睩ll 畮d敲瑡e攠ehis.



䑥Dcri扥⁴桥⁰hysic慬 灲潤畣瑩潮⁰牯 敳s.



E灬ai渠慬l⁴桥⁣潳瑳 ⁰牯 畣瑩潮Ⱐ,瑡ti湧 瑨t⁣潳瑳 敡c栠h慪潲⁣om灯湥湴n⁴漠慲aive⁡
瑯tal

灲潤畣瑩潮⁣潳瑳⁰ r pr潤畣琠tni琮t



䥦 yo甠ure⁵ in朠y潵r ow渠pr潤畣瑩o渠n慣ilityⰠ,敳cri扥 睨慴⁴桥⁦i敤⁣潳瑳 ⁴ 攠e慣ility
睩ll⁢攠en搠diff敲敮瑩慴a⁴ es攠erom⁴ 攠e慲a慢l攠e潳瑳f⁰牯摵c瑩潮
攮e.慴ari慬s)⸠.



䥦 yo甠ure⁢ il摩湧⁡⁰ 慮琠tt慴a⁨o
w畣栠h慰i瑡l inv敳瑭敮琠ts⁲敱畩re搮



䑥Dcri扥⁡ny 煵慬ity 慳s畲慮u攠er潣e摵r敳 y潵 桡v攠i渠nl慣攮



State the production ‘lead
-
time’: how long it takes to make a product from scratch


i湣lu摩湧⁴桥⁴im攠e慫敮⁦rom牤敲楮朠gf⁡ y⁣潭灯湥湴nⰠI瑣⸠.



E灬ai
渠睨w琠
灯lici敳 yo甠h慶e⁴ 睡w摳⁳瑯tk⁨ l摩湧

慮搠d潭灯湥n琠牥潲d敲楮朠


瑨is⁩s
im灯r瑡t琠瑯 敮s畲攠uo湴n湵ity 潦⁳異灬y 扵琠慬s漠o漠o湳畲攠瑨u琠t瑯tk⁤ 敳 琠tonsum攠
瑯t畣栠h潲oi湧⁣a灩t慬


慮搠d桡琠t畦fici敮琠
睯wki湧
c慰i瑡l⁴漠o畮搠
inv敮t潲y
桡s⁢
敥渠
灬a湮e搠d潲⸠o



S瑡t攠wh慴ay潵r 灲潤畣ti潮 c慰慣ity 睩ll⁢ 㨠:o眠w慮y 灲潤畣瑳⁣慮 yo甠uak攬e灥r m潮瑨t
潲oye慲a





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17


Roadmap and milestones




This section

shows the timing and interrelationship of the major events necessary to
launch the venture and
realize its objectives
, and

is an
important

part of
your

business
plan.


In addition to being a planning aid, a well
conceived and presented
schedule


s
桯win朠
deadlines critical to a venture’s success


is
valu慢l攠
f潲

c潮vi湣i湧 灯瑥湴n慬 i湶敳t潲o
瑨慴

瑨攠m慮慧敭敮琠瑥tm is 慢l攠瑯t 灬慮 f潲ov敮tur攠杲潷瑨gi渠愠way t桡琠rec潧湩z敳
潢s瑡tl敳 慮搠di湩miz敳 inv敳瑯爠tisk⸠


pi湣攠瑨t tim攠瑯t 摯 瑨tn杳 瑥t摳 瑯t b攠畮摥r敳tim慴a搠i渠m潳琠扵si湥ss 灬慮sⰠi琠is
im灯r瑡t琠瑯t摥m潮s瑲慴a 瑨t琠y潵 h慶攠c潲o散瑬y
敳瑩m慴a搠瑨敳攠慭潵湴n i渠摥瑥rmi湩湧
瑨t sc桥摵l攮e
q桥 畮摥rlyi湧 c慳栠c潮v敲ei潮 慮搠o灥r慴a湧 cycl攠潦 瑨t 扵sin敳s will
灲潶i摥⁳潭攠ef⁴ 攠eey⁩湰畴u⁦潲⁴桥osc桥摵le⸠


䍲敡瑥tyo畲⁳c桥摵l攠慳⁦潬lows㨠




mr数慲攠愠m潮瑨
-

-
m潮瑨 sc桥摵l攠瑨t琠s桯ws
瑨攠瑩mi湧 潦 灲潤畣琠摥v敬潰m敮琬
m慲k整e灬慮ni湧I s慬敳 灲p杲慭

sⰠ灲潤畣瑩潮I 慮d 潰敲慴a潮sⰠ慮d 瑨慴a i湣lu摥s
s畦uici敮琠d整eil t漠s桯w th攠瑩mi湧 潦 瑨t 灲im慲y 瑡sks r敱畩r敤 瑯t 慣c潭灬is栠慮
慣瑩vity⸠




p桯眠潮 瑨t sc桥摵l攠t桥 摥慤li湥s 潲o
milest
ones

critical to the venture’s success,
s畣栠hs㨠

o

Incorporation of the venture.

o

Completion of design and development.

o

Completion of prototypes.

o

Obtaining sales representatives.

o

Obtaining product display at trade shows.

o

Signing of distributors and deal
ers.

o

Ordering of materials in production quantities.

o

Starting of production or operation.

o

Receipt of first orders.

o

Delivery on first sale.

o

Receiving the first payment on accounts receivable.




Show on the schedule the “ramp up” of the number of managem
敮琠灥rs潮湥lI 瑨t
湵m扥r 潦 灲潤畣瑩潮 慮d 潰敲慴a潮s p敲e潮湥lⰠ慮搠pl慮t 潲o 敱ui灭敮琠a湤 瑨tir
r敬慴i潮 瑯tt桥 摥v敬潰m敮琠tf⁴ 攠e畳i湥ss⸠




䑩sc畳s
i渠
来湥ral 瑨t 慣tiviti敳

慮搠risks

mos琠
lik敬y t漠c慵s攠sc桥摵l攠slip灡ge
I

瑨t

s瑥ts
瑨t琠 c慮

扥 瑡te
渠 瑯t c潲o散琠 s畣栠 sli灰慧敳Ⱐ 慮搠 瑨t im灡c琠 潦 sc桥摵le
slippages on the venture’s operation, especially its potential viability and capital
湥敤s⸠



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18


Financing Requirements and Deal Structure




This section should explain to investors:



䡯w畣栠m潮ey
y潵 e搠d漠數散畴u⁴桥 灬a渿†



Wh慴a摯 yo甠up散琠瑨攠eo畲u敳 ⁴ is潮ey⁴ 扥Ⱐ攮e⸠B畳i湥ss⁁n来lsⰠ,敮t畲攠
䍡灩瑡tis瑳Ⱐ,慮k⁆楮慮c攬 潲⁡i瑵牥t



S灥cifically⁨ow 睩ll⁴ 慴am潮ey⁢攠es敤?



Wh慴ais y潵r⁦in慮ci慬⁳慦整y慲杩渠nf yo畲⁰l慮s 潲⁦潲散
慳瑳⁡牥⁤ laye搿



Wh慴ais  f敲Ⱐe渠n敲es w湥rshi瀠⡳桡r敳)⁩渠n桥 com灡nyⰠ,潲⁴o攠e潮ey?† s′ ┠
or 40% of the company’s equity available for this investment?




䑥瑡ils⁢敨i湤 慮y⁢慮kin朠g慣ility 潲瑨敲⁦潲ms fi湡湣攠yo甠u灥c琠tif⁡ y).



Wh慴

摯 yo甠up散琠t湶敳瑯牳⁴ ⁲散敩v攠i渠n整er渠n潲⁴桥m⁲iski湧⁴ eir潮ey?



Ei琺th
ow 摯 y潵⁥ 灥c琠inv敳瑯牳⁴ ⁧ 琠瑨敩r inv敳瑭敮琠tn搠牥瑵d渠nn搠wh敮⸠Will⁴ is
扥⁴ ro畧栠h⁴牡摥⁳al攬e愠al潴oti潮,爠愠 慮慧敭敮琠tuy
-
潵琿



Example:


Finance Require
ment


There is financing requirement of £650,000, which will be sought from Business Angel Investors. The
equity offered will be 20%. The company has no loans or overdrafts and at this stage does not plan any.


In terms
of
financial structure, the shareho
lding structure of the company will be as follows:


Shareholders

Pre


Financing Stake

Post


Financing Stake

CEO (Founder)

50%

40%

Other Managers

25
%

20
%

Options

5%

4%

Current Investors

20%

16%

New Investors


20%

Total

100%

100%


The investment is

expected to qualify for full EIS relief for both individuals and VCT’s.


The investment will be used as follows:



Investment Area

Proportion

Amount

Marketing

30%

£

200,000

Working Capital (inc. contingency)

55%

£

350,000

Development

15%

£

100,000

Tot
al

100%

£

650,000


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19


Cash Projections


As we stated previously, the company anticipates its first sales to be achieved in 18 months time


though this could be sooner.


Forecast Cash Balance for the next three years (first year by month):


The

company wi
ll have a basic monthly cash
-
burn of £23,000 per month, equivalent to £280,000 per
year. The average cash burn before sales in year two is expected to rise to £35,000 per month


provided our milestones are achieved, otherwise cash consumption will be con
tained at year 1 levels.


Though we expect to achieve sales in 18 months, through controlling the cash burn in an event of a
delay the company could support a further
9
-
month delay without having to return for more funding.


Overleaf are illustrative proj
ections for the three years following financing.


Exit Route


These funds will be used to take the product to market, at which stage we could continue to supply at
lower levels without further funding or may decide to undertake a second round of financing
to expand
more aggressively.


Our planned exit route available through an AIM flotation in the 4
th

or 5
th

year.


It is expected that within five years the company will achieve sales in excess of £20,000,000 and to be
on a fast rising sales curve with the p
otential
for
substantially higher sales growth as other catalysts in
our product portfolio gradually reach the market
.

CASH BALANCE
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1
2
3
4
5
6
7
8
9
10
11
12
2003/4
2004/5
2005/6
First Twelve Months - Then First Three Years
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)

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20


Key Financial Data and Financial Projections




All potential investors will expect to see a set of financial statements and illustrati
ve
projections for the project
:




䍡C栠䙬o眠灲潪散瑩潮


q桩s⁩s⁡ s瑡t敭敮琠tf yo畲⁣慳栠h潳i瑩o渠n湤⁴桥⁳潵rc敳 慮搠
畳敳 ⁣慳栠h潩湧⁦潲w慲搮†䍡 栠h慮慧敭敮琠ts⁰牯扡bly 瑨t潳琠tm灯r瑡t琠ts灥c琠tf
fi湡湣ial慮慧敭敮琠ts⁴ 攠e潭灡ny⁢散潭敳⁥ 瑡tli
s桥搠慮d⁧牯ws⸠.䍥C瑡i渠gr潷t栠
灯lici敳⁣潮s畭攠e潲攠o慳栠h桡渠nhey 来湥r慴攬es漠oe瑡tl敤⁣慳h⁰牯 散瑩潮s⁡牥 vit慬.



Pr潦i琠t 䱯ss⁰牯 散瑩潮


this is a statement of the company’s trading activities.



B慬慮c攠Sh敥琠灲潪散瑩o渠


瑨ts⁩s 愠a瑡t敭敮琠tf⁴
e company’s assets and liabilities,
s瑡牴t湧 睩t栠hh攠e畲u敮琠灯si瑩o渮

te⁨ v攠e潵n搠dh慴ai湶敳瑯rsik攠e漠o敥⁡ 杲慰栠hf⁴ e⁣慳栠hal慮c攬 wit栠hh攠eirs琠ye慲a
敩g桴he渠n潮瑨t 愠a潮瑨ty⁢ sisⰠ瑯 ill畳瑲慴攠e漠瑨tm⁴ 慴ac慳栠m慮慧敭敮琠t慳⁢ e渠
c慲
敦畬ly 瑨t畧h琠tu琠tn搠dh攠牡瑥e慴awhic栠h桥 扵sin敳s⁣潮s畭敳 c慳栮

q桥⁰牯 散瑩潮s⁳桯畬搠de⁩渠n桥 way ⁦畬l⁳瑡瑥t敮瑳⁦潲⁴桥o湥x琠t桲敥hye慲aⰠIn搠d桥渠n潲o
桩g栠ho瑥ttial⁢畳in敳s敳⁡ ⁩n摩c慴io渠n桯uld⁢ 杩ve渠nf⁴ 攠桥a摬i湥⁦ig畲敳⁦潲⁲敶e湵敳

慮搠灲潦i琠t瀠瑯ta⁦畲瑨敲⁴睯wye慲a 琠


fiv攠ye慲a⁩渠n潴ol⸠⁔桩s will 灲潶id攠e湶敳瑯牳⁷ 瑨t
i湦潲o慴a潮 ⁴桥 灯瑥湴i慬⁵ sid攠ef⁴ e⁢ si湥ssⰠwhic栠hay 湯琠扥⁣l敡r⁦r潭⁴桥⁴ ree
-
ye慲a灲潪散瑩o渮

q桥⁳瑡t敭敮瑳⁳桯畬搠扥 慣com灡湩e搠dy
Notes to
the Accounts

covering the
assumptions under which the statements have been constructed, including:



T桥⁡ sum灴p潮s⁢ 桩湤⁴h攠e慬敳⁦潲散慳瑳Ⱐ,敲e慰s r敬慴a搠do慲k整es桡r攠er⁳慬敳⁰敲e
s瑯牥Ⱐt瑣⸠.W桡琠t潧ic⁨ s 扥敮⁵ 敤 瑯t慲aive⁡ ⁴桩s⁦i杵r攬⁡ ⁩
t w慳⁣l敡rly潴o灵ll敤
潵琠tf⁴ 攠eir?



Ass畭灴p潮s⁢ hin搠d潳瑳Ⱐ,湣lu摩湧⁴桥⁣潳瑳 ⁰牯 uc瑩潮Ⱐ潦fic敳Ⱐ,瑡tfi湧Ⱐ,瑣⸬.慮搠
桯w⁴桥s攠er攠e潮s瑲畣瑥t.



Any⁰ lici敳⁡摯灴敤Ⱐ,畣h 慳 ⁴桥⁤数r散i慴a潮 潦⁡ s整eⰠ瑨攠e畭扥r ⁤ ys⁣r敤i琠
杩v敮 瑯tcu
s瑯t敲eⰠ瑨攠e敲i潤 潦⁴ m攠e慫敮⁴ ⁰ y y潵r⁣r敤i瑯牳Ⱐ,瑣.



T桥⁤ 瑡tl⁢敨i湤⁡ y l潡渠潲瑨or 潶敲摲慦琠t慣iliti敳 慮搠數灥c瑥t⁩n瑥牥t琠牡t敳.



O瑨tr慪潲⁢畤来瑳Ⱐi湣lu摩n朠g慲k整e湧Ⱐ,敧慬⁦敥sⰠ慣c潵湴n湧⁦敥sⰠ,瑣⸠

T桥⁦i杵r敳⁳桯畬搠d敭潮s瑲慴a
瑯⁴ e⁩nv敳t潲⁴桡琠yo甠un摥rs瑡t搠dh攠e慪潲ofi湡湣i慬
im灬ic慴ao湳 yo畲⁢畳i湥ss⁰ 慮Ⱐ瑨tt⁴ e⁡ s畭灴p潮s⁡牥⁲敡so湡bl攬e慮搠dh慴 yo甠uave
湯琠t敥nv敲灴pmis瑩c.

䥴⁩s⁩m灯r瑡t琠瑯thig桬i杨t 睨慴⁣潮瑩n来湣y⁰la湳 yo甠桡v攠e渠nh攠eve湴n潦⁴ i湧s

湯琠
happening exactly as planned. Will the business fail if there is a month’s delay in the
timetable, or can it tolerate a year’s delay through careful adjustment and control?




Financial statements can be generated using
the IED Financial Plan Templa
te and
supporting content.


XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

21



Concluding argument

(only for a negative business case)


If you are making a negative business case, you need to add a concluding section explaining
your negative view.


Although you may have already stated in your execut
ive summary that you would not
recommend investing in the proposed business, in this section you should
justify

your opinion
by explaining how you all your
findings

in the previous sections have combined to lead you to
a negative conclusion.

XYZ Services Limited (double click to put in your own compa
ny
)

Private and Confidential.

22


Appendix


L
ist
h
ere
w
hat is Included in the Appendix which
f
ollows.


We suggest it should include:




Full director and key management CV’s



Full list of business advisors, including accountants



Copies of any intellectual property


trademarks, patents, designs



Copies o
f relevant letters / agreements indicating success


including any orders pending



Copies of any commissioned market research or other reports not published



Full illustrative financial projections



Audited accounts if business has been going for some time



Co
py of the shareholder agreement



Copies of any loan or other material agreements, including director loans



Sample sales & marketing material, including brochures and product diagrams