Business Plan & Startup Program

Federico Della Bella, MBA & TLC Engineer

Politecnico di Milano

A.Y. 2019/2020
 Business Plan & Startup Program

PLAN OF THE TRAIL

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 Business Plan - Index

Index

1. Tools for planning

2. Introduction: objectives, tools, targets of a business plan
3. Business Plan Chapters

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 1. TOOLS FOR PLANNING

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 How to forecast the future?

A normal day in the life of an employee: how predictable is it?

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 How to forecast the future?

Around the World in 80 Days: how predictable is it?

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 Business Plan - Introduction

Business Plan: tools to plan activities (different approaches)

Classic Tools New

Established Business Plan Lean Startup Method?

company

Type of
company

Startup Business Plan? Lean Startup Method

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 2. INTRODUCTION:
OBJECTIVES, TOOLS, TARGETS OF A BUSINESS PLAN

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 Business Plan - Introduction

Business Plan: what

A written document that describes in detail how a new

business is going to achieve its goals.

A business plan will lay out a written plan from a marketing,

financial and operational viewpoint.

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 Business Plan - Introduction

Business Plan: when

Established Company Startup

Launching a new project, new At launch
product, opening a new market, a
new branch, …

Business plan is not just to plan new activities, but to control the ongoing
business. It is not done once for all, but must be kept updated, to verify how
things have gone, and how far from forecast.

It is a difficult exercise, because it is both a program of future activities, and a

forecast of the future itself, about variables that no one can control (the market,
the customer’ preferences, future technology developments, etc.)

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 Business Plan - Introduction

Business Plan: who (targets)

• Decision makers
• Investors
• Shareholders
• Yourself
•…

Everyone who is responsible of an organization should create a business plan.

The business plan is a tool to understand the present, make hypothesis about the future,
plan the activities, coordinate people, and control costs and cash flows.
It is a document that must be presented to someone else, and thus should be easily
communicable

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 Business Plan - Introduction

Business Plan: why (objectives)

Planning Communication
• Evaluate an investment opportunity • Internal: team, boss
• Evaluate feasibility / profitability • External: shareholders, stakeholders,
• Find resources and funds investors, etc.
• Assess Risks and Opportunities
• Control

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 Business Plan - Data

Types and Sources of Data

When you add data, be sure to indicate what is the source of information.
Basically, you have three types of data:

1. Your historical data à if you have historical data, that’s the best!
2. Market data à cite the source
3. Your assumptions à if you don’t have data, motivate assumptions

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 3. BUSINESS PLAN CHAPTERS

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 Business Plan - Chapters

Executive Summary Synopsis of the whole plan

Introduction presentation of the entire company

Products & Services description of value proposition and main features
Strategic Plan analysis of competition, setting objectives, setting of plan of actions
Marketing Plan analysis of demand, positioning, marketing mix
Operating Plan day-by-day plan of activities, process, functions, staff, organization
Financial Plan economics (sales & costs), cash flows
Risk Analysis risk assessment

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 Business Plan - Chapters

The process is not linear: iteration!

Business Planning is not a linear but an iterative process:

every section can impact not only following ones but also
previous ones.

E.g.: drawing the financial plan, you can discover that the plan as
conceived is not sustainable; this can depend on the product itself, or on
strategic plan, marketing, plan, manufacturing and operational plan, etc.

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 Business Plan – Chapters

Iteration in business planning

Value Strategy
Proposition

Opportunity Marketing

Economics Operations

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 Business Plan - Chapters

All the sections are connected!

All the sections are linked together and the choices done in
one have consequences in the others.

Every section has an impact on other sections. A choice in

strategy impact production, organization, etc.

We can imagine that every section has premises and

consequences

E.g.: if you establish that your strategy to enter a new market is to offer a
niche product, this choice impacts production, positioning,
communication, distribution, pricing, etc.

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 Business Plan - Chapters

Corporate objectives and local goals

In the strategy section, the corporate objectives are introduced and
explained. They form the red line keeping together the whole plan.

On the other hand, every section has a local objective, coherent with
the global ones, but answering to specific questions or choices,
regarding, for examples decisions about manufacturing,
organization, communication, funding, etc.

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 Business Plan - Chapters

A comprehensive vision
Creating a business plan is complex activity, as it the objective to offer a
comprehensive vision of an entire business, project, or even an entire company.

The business planner has to collect and organize information from many
departments, and understand peculiarities and problems at different levels of a
business: from strategy to operation, from marketing to organization, from
financial projections to risk analysis.

Business planner should be also able to write down a story, organizing

information, and engaging the audience.

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 Business Plan - Chapters

A wide set of managerial tools

Every section, every area has its own characteristics and the
business planner should be aware of the existence and be
able to use main managerial tools in the different sections.

Tools are basically frameworks to organize data and

information and make comparison.

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 Business Plan - Chapters

Cover
Before analyzing the sections, consider to add some basic information on
the cover, to add reference and to keep track of your copies. Here below
an example.
Name of the company

Website (if relevant)

Title: business plan

Date & Place

Confidential

Nr. version & nr. of copy

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 Business Plan - Chapters

3. Business Plan Sections

Executive Summary

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 Business Plan – Executive Summary

Executive Summary
The Executive Summary is a synopsis of the whole business plan: it
contains fundamental information discussed deeper in each section.

It’s a way to give in few pages (2-3 maximum) an overview of the venture.
Interested readers will go deeper reading following sections.

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 Business Plan – Executive Summary

Executive Summary
The Executive Summary is a plan in miniature, it is not an introduction. It should
capture in no more than one or two pages most important points of the whole plan.
You have to encourage your audience to go ahead and read the whole document.
At the same time, it has to present honestly the business.

Information to include

• Objective
• Management Team (key people to make the business to succeed)
• Products or services (why are they special?)
• Business Model
• Market (what’s your niche? What are your unique factors?)
• Assets, strengths, competitive advantages, and competences
• Strategy to succeed
• Key Activities, Key Partners, Key Technologies
• Key Financial Data
• Funding required and their use

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 Business Plan – Introduction

3. Business Plan Sections

Chapter 1: Introduction

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 Business Plan – Introduction

Chapter 1: Introduction

The introduction enables the reader to learn fundamental information about

the type of company and its ownership, the level of advancement of the
project, including past results, the areas of business and main competitors.

For a startup, in the brief introduction, you should give information about the
product, the market, and the team.

Info to include

• Ownership and fiscal data

• Governance
• Results of the previous periods (year, semester, etc.)
• Products and markets
• Organizations, skills, and resources

This is the presentation of the company. After reading it, the reader should
have a clearer idea of what expect in the following sections.

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 Business Plan – Products and Services

3. Business Plan Sections

Chapter 2: Products & Services

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 Business Plan – Products & Services

Products & Services: description

In this section, the reader is introduced to the products and/or services offered by
the company. The description not only from a physical or technical point of view,
but in term of the value for the client.

• Value for Client (advantages for clients in adopting the solution)

• Physical / Technical Description (Features, Values for clients)

• Behavior (Usage, Disposal of products) / Customer Experience (Customer

Journey Maps)

• Product Positioning Map & Differentiation

• Cost
• Quality
• Features
• Values
• Service
• Image

• Level of Innovation & Product lifecycle stage

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 Business Plan – Products & Services

Value for Client

What are the advantages for Quincy Apparel’s
Customers in adopting the solution?

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 Business Plan – Products & Services

How do the clothes offered look? Describe and show pictures of

Description samples, collections, sizing scheme, materials. What are the main
features? Make the products tangible.

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 Business Plan – Products & Services

Technical Description
Describe a product with technical details (materials, components, structure, infrastructure, technology,
etc.). If possible, include pictures of final products, or technical draws, models, reproduction, pictures.
The goal is to be as tangible as possible. Describe in detail the technologies used, especially if they
create a differentiation. Highlight the existence of patents or other forms of intellectual property
protection (copyright, trademark, industrial secrets, etc.). Specify the phase of development (finished
product, prototype, MVP, phase in product lifecycle and rate of adoption, …)

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 Business Plan – Products & Services

Technical Description
(sketches, screenshots, pictures)

Eg.: ecommerce platform

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 Business Plan – Products & Services

Product Positioning Map

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 Business Plan – Products & Services

Differentiation (product features)

• Form, appearance • Durability

• Functions • Reliability

• Customization • Maintenance

• Performance quality • Style

• Conformance quality • Design (aesthetic, ergonomics)

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 Business Plan – Products & Services

Differentiation (services)

• Ordering ease • Training services

• Financing • Consulting services

• Delivery • Maintenance and repair

services
• Installation
• Return policy and ease

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 Business Plan – Products & Services

Product Lifecycle
Sales / Profits

Time

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 Business Plan – Products & Services

Product Lifecycle: attractiveness - example

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 Business Plan – Products & Services

Product Lifecycle: attractiveness - example

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 Business Plan – Products & Services

Innovation: Adoption

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 Business Plan – Products & Services

Products & Services: practical tips

• Be very detailed if you are a startup or if your product is totally new, or it

is a complex portfolio of products
• Start with one-paragraph summary, then repeat in more detail
• List all your products and services
• Highlight the importance of each of them
• Add pictures, sketches, diagrams, and any type of documents that can
substitute the physical contact
• If it is something that people must use, describe how does it work
(without getting too technical)

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 Business Plan - Products & Services

Example: digital platform

• Describe the platform: its purpose and its main functionalities

• Describe the technological infrastructure (database, systems in use,

style of the implementation, etc.)

• Define main components

• State clearly what you have already implemented and is online, what is
going to be published, what you are developing, and what are future
functionalities and improvements

• Include screenshot, sketches, etc.

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 Business Plan - Products & Services Quincy Apparel

Exercise 1 – Product Description

• Create a 3 members team

• Present Quincy Apparel Products and Services
• Do it through a slide presentation of 3 to 5 slides
• Include in particular:
• Value for customers
• Features & Technical description
• Differentiation
• Customers Behaviors & Usage
• Answer to the following questions: what are Quincy Products &
Services? What are the customers’ problems they resolve? What are
their main features? What is the behavior of customers?

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 Business Plan – Strategic Plan

3. Business Plan Sections

Chapter 3: Strategic Plan

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 Business Plan – Strategic Plan

Strategic Planning Steps

Situation Analysis

External Internal

Competitive Advantage

Activities Resources

Implementation

Execution Control

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 Business Plan – Strategic Plan

Situation Analysis

External Analysis Internal Analysis

The Social and Economic Context Values, Vision, Mission

The Structure of the Industry Competences and Resources

The Competition Processes and Activities

SWOT Analysis
Strengths Weaknesses

Opportunities Threats

The strategic analysis describes the environment and the characteristics of the company that
can influence the establishment of a long lasting competitive advantages

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 Business Plan – Strategic Plan

Situation Analysis: Tools

External Analysis Internal Analysis

P.E.S.T.L.E. Analysis Values, Vision, Mission

Porter’s 5 Forces Core Competences

Key Success Factors Porter’s Value Chain

SWOT Analysis
Strengths Weaknesses

Opportunities Threats

The strategic analysis describes the environment and the characteristics of the company that
can influence the establishment of a long lasting competitive advantages

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 Business Plan – Strategic Plan

2 Main Families of Competitive Advantages

Cost Advantage Differentiation Advantage

The company offers to clients The company realizes a

a value comparable to those superior value with similar
offered by competitors at a costs of competitors’.
similar price, but sustaining a
lower cost

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 Business Plan - Strategic Plan

Definition of Competitive Advantage

A company has a competitive advantage when they can realize and maintain in the
long time levels of profit higher than those of their competitors and typical of their
industry.

After Porter, we can recognize two basic types of competitive advantage:

• Cost advantage : the company offers to clients a value comparable to those

offered by competitors at a similar price, but sustaining a lower cost

• Differentiation advantage: the company realizes a superior value with similar

costs of competitors’

All the possible strategies can be linked to one of these two main macro-categories.
Strategic analysis should give information to identify the possible sources of
competitive advantage. The implemented strategy is the identification to what to do
and what not to do in order to achieve and maintain this advantage.

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 Business Plan - Strategic Plan

Sources of Competitive Advantage 1/2

• Strong R&D capabilities

• Access to IP (trade names, trade secrets, patent)
• Exclusive re-selling or distribution rights
• Ownership of capital equipment
• Superior product
• Superior customer support
• Low-cost production
• Other economies of scale
• Marketing skills related to specific customer types, market segments, channels, etc.

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 Business Plan - Strategic Plan

Sources of Competitive Advantage 2/2

• Access to working capital
• Other excellence in management
• Barriers to entry
• Economies of Scale à reduce average cost introducing a new unit of output
• Economies of Scope à reduce average cost introducing a new product
• Economies of Learning à becoming a true specialist
• Spare Production Capacity
• Localization
• Distribution Channels Access
• Other Factors (regulations: depressed area incentives, etc.)

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 Business Plan – Strategic Plan

Strategy Formulation
• Strategy is the creation of a unique and valuable position,
involving a different set of activities. Basically, it can derive
from three sources:

• serving few needs of many customers

• serving broad needs of few customers
• serving broad needs of many customers in a narrow market

• Strategy requires you to make trade-offs in competing: to

choose what not to do

• Strategy involves creating fit among company’s activities (the

ways in which the activities interact)
(What is Strategy - Michael Porter, HBR 20

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 Business Plan – Strategic Plan

Strategy formulation
1. Identify the main sources of competitive advantage
2. Describe the competitive advantage
3. Define the actions to exploit this advantage
4. Define SMART objectives
5. Measure expected results

The strategy offers the guidelines to develop the operating plan. It indicates
what to do and what not to do, it define the unique set of activities and
concatenation to reach the objectives. It doesn’t indicate what to do tomorrow.

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 Business Plan – Strategic Plan

7 Criteria to Evaluate a Strategy

1. ROI – Return on investment
2. Risk of loosing the investment
3. Ownership and control
4. Potential for growth
5. Stability of employment and earnings
6. Prestige
7. Social Responsibility

The strategy can be valued from different points of view that depend on
the corporate objectives and the market conditions.

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 Business Plan – Strategic Plan

Strategy – the core of the entire plan

The strategic plan is the core of the whole business plan. It is the starting
point to assess the competitive environment and to weight opportunities
and risk.

Through this analysis, a company define the value proposition and the
unique positioning, with the objective to set a competitive advantage.
In order to reach this competitive advantage, a strategy is defined, or the
unique interconnection of choices and activities (what to do and what not
to do) that make a company different from the other.

The strategy has a direct consequences on the activities and

organization, and thus on the operating plan, and on the financial plan.

The strategy is not defined once for all. It is common that something in
the operating or financial plans is considered as not feasible, and thus
there is the need to refine and update the strategy, then operations, etc.

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 Business Plan – Strategic Plan

Quincy Apparel Situation Analysis

• How to structure the Situation Analysis of Quincy?

• Which external and internal factors have to be considered?

• Which was the opportunity they wanted to take?

• What is the level of competition in the industry?

• Did they considered the KSF of the sector?

• What were the main threats and opportunities?

• What were the main strengths and weaknesses?

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 Business Plan – Strategic Plan

Quincy Apparel Competitive Advantage

• What are the sources of competitive advantages that the 2 founders

wanted to exploit?

• What were the basis of their competitive advantage?

• Are the competitive advantage sources realistic? Can be copied?

• Are there other potential competitive advantages to exploit?

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 Business Plan – Strategic Plan

Quincy Strategic Plan

• Describe in few lines the competitive strategy of Quincy Apparel?

• Which unique set of activities do they perform?

• Through which activities they exploited their competitive advantages?

• What are the alternatives they haven’t considered? What would you do
in their shoes?

• At the point we are at the end of the story, what are the alternative
strategies they can perform?

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 Business Plan – Strategic Plan

Quincy Strategy Evaluation

• Which criteria the founders used to evaluate their strategy?

• Which criteria would you use to evaluate Quincy Strategy?

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 Business Plan – Strategy Quincy Apparel

Exercise 2 – Quincy Apparel Strategy

• With your team

• Present Quincy Apparel Strategy
• Do it through a slide presentation of maximum 3 slides
• Include in particular:
• External & Internal Factors impacting the business
• Identify the sources of competitive advantage and the positioning
• Identify the unique set of activities that Quincy has to perform
• Define the metrics to measure performances
• Answer to the following questions: how to compete? What are the
competitive advantages? How to position the value proposition respect
with competitors

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 Business Plan – Marketing Plan

3. Business Plan Sections

Chapter 4: Marketing Plan

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 Business Plan – Marketing Plan

MARKETING PLAN
Marketing Situation Analysis

Demand Analysis Competition

Marketing Strategy

Objectives, STP Strategic decisions

Marketing Mix

4Ps 3Ps

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 Business Plan – Marketing Plan of Quincy Apparel

Situation Analysis: Analysis of the Demand

Questions to answer

Who are the customers? What are their needs

and desires? How do they decide what to
purchase? Who influence them? What is their
purchasing process? How do they use the
product? etc.
Techniques

• Identify the Need and the Desire that create the Demand

• Qualify the Demand: size the market demand

• Describe the Purchasing making process phases

• Describe the Roles of people involved into the Purchasing process:

• Describe the Customers using their main Characteristics

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 Business Plan – Marketing Plan

Situation Analysis: Analysis of the Competition

Questions to answer

Who compete in this market? What is the level of competition? What are the Key
Success Factors in this market? What is the value proposition of competitors?
How do competitors reach and engage customers? What are the benchmarks?

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 Business Plan – Marketing Plan

Situation Analysis: Analysis of the Competition

From the Strategy Analysis, you should have already identified:

• The macro-factors impacting the business (P.E.S.T.L.E.)

• The level of competition in the industry (5 Forces) and the KSF

Now you can:

• Identify direct competitors, broader competitors, indirect competitors

• Benchmark their performances, value proposition, positioning

• Benchmark their marketing mix (4P + 3P)

• Identify sectors’ best practices through comparable

• …

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 Business Plan – Marketing Plan – EXAMPLE

Example: Competitive Analysis of the

digital performances of some online banks
Brand
Che
Awareness Widiba Webank Ing Direct Fineco Unicredit Intesa
banca!

Website 860 K 1,01 M 5,19 M 150 K 1,45 M 18,5 M 13,7 M

Facebook 250 K 56 K 212 K 48 K 190 K 450 K 440 K

21 K 9,8 K 10,7 K 14,8 K 10,4 K 25,2 K 8,1 K

Twitter

LinkedIn 6,9 K 5,4 K - 35 K 29 K 138 K 168 K

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 Business Plan – Marketing Plan

Marketing Strategy as a series of decisions

Decision 1: Market and Product Development strategy
Decision 2: Business and Revenue Model strategy
Decision 3: Segmentation and Targeting
Decision 4: Positioning and Differentiation
Decision 5: Pricing strategy
Decision 6: Distribution strategy
Decision 7: Communication strategy
Decision 8: Customer Engagement strategy
Decision 9: Evaluation of performances: Metrics (KPI)

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 Business Plan – Marketing Plan

The Elements of the Marketing Mix

A cohesive and comprehensive marketing program

Product Price Comm. Mix

Features List price Advertising
Brand Name Discounts Personal Selling
Packaging Allowances Sales Promotion
Services Credit terms PR & Press
Warranty Payment period Direct Marketing

Distribution Service Media Mix

Outlets People TV, Radio, Web, SEO,
Channels Content, Billboards
Process Social Media, Mail. PR
Coverage Physical Evidence & Press, Blogs,
Transportation Programmatic Ads,
Stock Level native Ads, Mobile
Marketing, etc.

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 Business Plan – Marketing Plan of Quincy Apparel

Marketing Situation Analysis

of Quincy Apparel

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 Business Plan – Marketing Plan of Quincy Apparel

Marketing Strategy of Quincy Apparel

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 Business Plan – Marketing Plan of Quincy Apparel

Marketing Mix of Quincy Apparel

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 Business Plan – Marketing of Quincy Apparel

Exercise 3 – Quincy Apparel Marketing

• With your team
• Present Quincy Apparel Marketing Strategy and Tactics
• Do it through a slide presentation of 3 to 5 slides
• Include in particular:
• Analysis of Demand
• Competitive Analysis
• Main aspects of marketing strategies: Objectives, STP
• Marketing Mix (3+4 Ps and Media Mix)

• Answer to the questions: who are the customers, how to attract

customers, how to retain them, how to get value from them

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 Business Plan – Operating Plan

3. Business Plan Sections

Chapter 5: Operating Plan

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 Business Plan – Operating Plan

Processes

Activities Objectives

Organization

Skills, Resources Responsibilities, Staff

Implementation

Execution Control

The operating plan is the translation of the strategy into a plan of day-by-day activities: who
does this and that and how?

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 Business Plan – Operating Plan

STEP 1: PROCESSES

Processes
Activities Objectives

a. Break the project into the smallest possible components activities

b. Identify linkages and critical paths (critical path is the longest path)
c. Order the activities with the critical and higher risk ones scheduled as
early as possible and group them logically (e.g.: by function)
d. Set measurable objectives for each activity

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 Business Plan – Operating Plan

STEP 2: ORGANIZATION

Organization
Skills, Resources Responsibilities, Staff

a. List the types of skills and resources that you need to realize the
activities defined in step 1 and reach the defined objectives.
b. Identify lacking skills and resources and ways to get them on board.
c. Assign the people responsible of each functional area (e.g.: marketing,
production, sales, customer assistance, R&D, etc.)
d. Identify the staff (nr and type of FTE) per each functional area.
e. Define a method to organize the flow of decisions and activities.

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 Business Plan – Operating Plan

STEP 3: IMPLEMENTATION

Implementation
Execution Control

a. Design the program of the activities.

b. Execute the program.
c. Control the accomplishment of the program and the results obtained.

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 Business Plan – Operating Plan of Quincy Apparel

Operating Plan of Quincy Apparel

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 Business Plan – Operating Plan Quincy Apparel

Exercise 4 – Operation
• With your team
• Present Quincy Apparel Operations
• Do it through a slide presentation of 3 to 5 slides
• Include in particular:
• Description of main primary activities
• Description of main supporting activities
• Skills and competences to train
• Responsibilities and Teams
• Answer to the questions: what are the main activities that the company
has to realize? What are the main skills and resources they have to
train? What are the main functional areas? Who is responsible of the
different activities? How many FTEs the company need?
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 Business Plan – Financial Statements

3. Business Plan Sections

Chapter 6: Financial Statements

Pl
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 Business Plan – Financial Plan

Financial
Budget Periods
Statements

© The Fast Track to Intelligent Planning for Executives and Entrepreneurs - Sir Richard Stutely, FT-Pearsons, 3rd Edition, 2012

The Financial Plan consists into forecasting sales, operating costs, and
capital spending, drafting P&L, Balance Sheet, and Cash Flow
Statements, considering the past, the present, and the future of the
business.

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 Business Plan – Financial Plan

A simplified version for startups

STEP 1 STEP 2

Forecast Sales Draft P&L

Budget Estimate Cash

Operating Costs Burn Rate

Estimate Capital Identify Financial

Expenditure Needs

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 Business Plan – Strategy Quincy Apparel

Exercise 5 – Financial Plan

• With your team
• Present Quincy Apparel main economic and financial results
• Do it through a slide presentation of 1 to 3 slides
• Include in particular:
• Sales forecast method
• Cost budgeting & Capital Expenditure Evaluation
• Cash Burn Rate
• Financial need
• Answer to the questions: How to estimate sales? What are the main
costs to consider? What are the capital expenditures? What is the cash
burn rate? What is the financial need?

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 Business Plan – Risk Analysis

3. Business Plan Sections

Chapter 7: Risk Analysis

an
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 Business Plan - Risk Analysis

Methodologies

• Financial Ratios (Liquidity, Debt Burden, etc.)

• Break-even analysis
• What-if analysis
• Worst-case analysis
• NPV
• Distribution of observations (mean, standard deviation, skewness)

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 Business Plan – Strategy Quincy Apparel

Exercise for Final Presentation Quincy Apparel

• Groups of 3/4 people
• Creation of Investors Pitch and presentation during 14 December lesson
• Not more than 10 slides
• Content
• Problem – Solution
• Products & Services
• Business Model
• Team
• Market and Competitive Advantage
• Marketing Strategies and Levers
• Next Steps
• Financials (Sales, Costs, Financial Need)
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