MOE - Obtaining the Right Financing Part 2/2

Summary

This video script focuses on the importance of a business plan for entrepreneurs seeking funding. It outlines the components of a business plan, including executive summary, company description, market analysis, operations plan, and financial projections. The script emphasizes the plan's role in attracting investors, aligning management, and guiding business strategies. It also covers the advantages of having a business plan and how it can help startups and established companies secure funding and operate effectively.

Takeaways

• 📝 A business plan is a crucial document that outlines the objectives and strategies of a business.
• 💡 Writing a business plan is beneficial for both startups and established companies as it helps guide business decisions and attract funding.
• 👥 External audiences like business partners, venture capitalists, and financial institutions often require a business plan to consider investment or loans.
• 🤝 Internally, a business plan aligns the management team on strategies and goals.
• 📈 A comprehensive business plan includes sections like executive summary, company description, market analysis, operations plan, and financial projections.
• 🏢 The executive summary is a concise overview of the entire business plan and should be limited to one or two pages.
• 🛒 The market analysis section involves industry, customer, and competitor analysis to understand the business landscape.
• 🚀 Operations plan details how the business will run, including production processes, logistics, and customer service.
• 💼 Business strategies should focus on customer attraction and retention, sales, channel, pricing, and branding strategies.
• 💰 The source of funds section outlines where the business will get its money from, including personal savings, bank loans, and investors.
• 💹 Financial projections provide forecasts of the business's financial health, including balance sheets, income statements, and cash flow statements.

Q & A

What is the primary purpose of a business plan?

A business plan serves as a tool to support business owners and entrepreneurs in securing financial support and guiding the business towards achieving its objectives.

What are the two main learning objectives for the topic of business plans?

The two main learning objectives are to understand the value of writing a business plan and to be able to describe or explain the details of a business plan.

Who are the external audiences for a business plan?

External audiences for a business plan include business partners, venture capitalists, financial institutions such as government banks and commercial banks.

What is the role of a business plan for internal audiences?

For internal audiences, such as business partners or the management team, a business plan serves to keep everyone aligned on business strategies and objectives.

What should be included in the executive summary of a business plan?

The executive summary should succinctly summarize the business idea, information, and data of the business plan and should not exceed one or two pages.

What does the company description section of a business plan typically cover?

The company description section covers the history of the company, background, recent admission statements, profiles of the management team, business organization, ownership, legal status, and key success factors.

How should the products or services section of a business plan be approached?

This section should start by identifying the problems of the target customers and then explain how the products or services can solve these problems, including details on functions, features, and differentiations from competitors.

What are the three main components of market analysis in a business plan?

The three main components of market analysis are industry analysis, customer analysis, and competitor analysis.

Why is the operations process important in a business plan?

The operations process describes how the business will run and how products or services will be produced, including considerations for raw materials, production methods, logistics, and customer service.

What are the key elements of a business strategy section in a business plan?

The business strategy section should explain how the company will attract and retain customers, including selling strategies, channel strategies, pricing strategies, and branding strategies.

How should the source of funds section be detailed in a business plan?

The source of funds section should specify how the business will raise money, including self-funding, bank loans, business angels, venture capital, government agencies, and crowdfunding, and should detail the proportion from each source.

What does the business budget section of a business plan entail?

The business budget section outlines the spending plan for the business based on income and expenses, including fixed costs, variable costs, revenues, and projections for the business's financial performance.

What are the two types of financial statements included in a business plan?

The two types of financial statements are historical financial statements, which reflect past performance, and proforma financial statements, which project future performance.

Outlines

00:00

📈 Introduction to Business Plans

This paragraph introduces the concept of a business plan as a crucial tool for entrepreneurs seeking financial support. It emphasizes the importance of understanding the value of writing a business plan and being able to describe its details. The business plan is portrayed as a guide for business owners to achieve objectives and as a document that appeals to both internal and external audiences, such as business partners, venture capitalists, and financial institutions. The paragraph outlines the advantages of having a business plan and sets the stage for a detailed discussion of its components.

05:01

📝 Components of a Business Plan

Paragraph 2 delves into the components of a business plan, starting with the executive summary, which is a concise overview of the entire plan. It should be brief, typically not exceeding one or two pages, and placed at the beginning of the document. Following the executive summary is the company description, which provides an overview of the business, including its history, background, management team profiles, and legal status. The paragraph also discusses the necessity of explaining the business's products or services, addressing customer needs, and detailing how these offerings solve customer problems. Market analysis, including industry, customer, and competitor analysis, is highlighted as a critical part of understanding the business environment.

10:03

🛠️ Operations and Strategy

Paragraph 3 focuses on the operational aspects of a business plan, detailing how a business will run and its production processes. It covers the operations plan, which includes considerations for raw materials, production methods, delivery logistics, and customer service. The paragraph also addresses business strategies, such as sales, channel, pricing, and branding strategies, emphasizing the importance of understanding the target market and differentiating the business from competitors. Financial considerations are also introduced, including the sources of funds for a business startup.

15:06

💼 Business Budgeting

This paragraph discusses the financial planning aspect of a business plan, specifically the budget. It explains that a business budget is a spending plan based on projected income and expenses, and it helps in estimating available capital and predicting revenue. The budget is composed of fixed costs, which do not change with production or sales volume, and variable costs, which are directly associated with production levels and can fluctuate. The paragraph provides examples of both types of costs and advises on creating realistic financial estimates to avoid overestimation.

20:06

💹 Financial Projections

Paragraph 5 concludes the financial section of the business plan discussion by focusing on financial projections. It outlines the importance of forecasting the financial status of a business through financial statements, which include the balance sheet, income statement, and cash flow statement. The paragraph differentiates between historical financial statements, which reflect past performance, and proforma financial statements, which project future performance. It provides a detailed look at the components of each financial statement and how they contribute to the overall financial planning of a business.

25:08

🏁 Recap and Learning Objectives

The final paragraph serves as a recap, summarizing the key points discussed in the video script about business plans. It reiterates the importance of understanding what a business plan is, its advantages, and its components. The paragraph also reminds viewers of the learning objectives, encouraging them to ensure they have met all the goals set out in the video, such as comprehending the value of a business plan and being able to articulate its details.

Keywords

💡Business Plan

A business plan is a comprehensive document that outlines the objectives of a business and the strategies to achieve those objectives. It serves as a roadmap for the business owner or entrepreneur, guiding them on how to meet their business goals. In the video, the business plan is emphasized as a crucial tool for startups and established companies alike, helping them secure funding from various sources such as venture capitalists and banks.

💡Executive Summary

The executive summary is a brief section at the beginning of a business plan that summarizes the key points of the entire plan. It should be concise, typically not exceeding one or two pages, and aims to provide an overview of the business idea. In the script, it is mentioned that the executive summary should be the first section of the business plan, highlighting the business's mission and how it intends to achieve its objectives.

💡Company Description

The company description is a section of the business plan that provides an overview of the business, including its history, background, management team, and legal status. It is important for setting the context for the rest of the business plan. In the transcript, the company description is noted as a section where the entrepreneur explains the company's background and key success factors.

💡Products or Services

Products or services refer to the goods or services that a business offers to its customers. In the context of the video, the business plan should detail how the products or services solve the problems of the target customers. It is essential to describe the features, functions, and benefits of the offerings to demonstrate their value proposition.

💡Market Analysis

Market analysis is the process of examining the industry, customers, and competitors to understand the market landscape in which a business operates. The video script emphasizes the importance of industry analysis, customer analysis, and competitor analysis as part of the market analysis section of the business plan. This analysis helps the business owner to identify opportunities and threats in the market.

💡Operations Plan

The operations plan outlines how the business will run its day-to-day operations, including the production of goods or services, logistics, and customer service. In the transcript, the operations plan is described as a crucial part of the business plan that shows how the business will function, from sourcing raw materials to delivering finished goods and providing after-sales service.

💡Business Strategy

Business strategy refers to the methods a company uses to achieve its objectives, such as attracting and retaining customers. The video mentions that the strategy section should include selling strategies, channel strategies, pricing strategies, and branding strategies. These strategies guide the business on how to compete effectively in the market.

💡Sources of Funds

Sources of funds refer to the various ways a business can raise capital to finance its operations. The script mentions self-funding, bank loans, business angels, venture capital, government agencies, and crowdfunding as potential sources of funds. Understanding these sources is essential for a business plan as it outlines how the business will finance its activities.

💡Business Budget

A business budget is a financial plan that outlines the expected income and expenses of a business. It helps the business owner to manage cash flow and make informed financial decisions. The transcript describes the business budget as a spending plan that includes fixed costs, variable costs, and revenue projections, guiding the entrepreneur on how to allocate resources.

💡Financial Projections

Financial projections are estimates of a company's future financial performance, including balance sheets, income statements, and cash flow statements. These projections are based on forecasts and are crucial for planning and securing funding. The video script explains that financial projections help predict the financial health of the business for the next few years.

💡Target Customers

Target customers are the specific group of people a business aims to sell its products or services to. The video emphasizes the importance of defining and understanding the target customers' needs and preferences. This understanding is crucial for tailoring products or services to meet customer expectations and for developing effective marketing strategies.

Highlights

A business plan is a crucial tool for entrepreneurs seeking financial support.

The first objective is to understand the value of writing a business plan.

The second objective is to explain the details of a business plan.

Business plans are essential for both startups and established companies.

A business plan is used to attract funds from various sources like business partners and financial institutions.

It serves as a guide for the entrepreneur on how to achieve business objectives.

The business plan keeps the management team aligned with business strategies.

A good business plan includes an executive summary, company description, market analysis, and financial projections.

The executive summary should be concise, not exceeding one or two pages.

Company description should include history, background, and key success factors.

Products or services should be explained starting from the customer's problem.

Market analysis consists of industry, customer, and competitor analysis.

Operations plan details how the business will run and products will be produced.

Business strategies should include selling, channel, pricing, and branding strategies.

Sources of funds can be self-funding, bank loans, business angels, or crowdfunding.

A business budget outlines how money will be spent and helps predict revenue.

Fixed costs are expenses that do not change with production or sales volume.

Variable costs change based on the level of production or sales.

Financial projections include balance sheets, income statements, and cash flow statements.

Historical financial statements reflect past performance, while proforma statements project future performance.

Transcripts

[Music]

well good morning everyone today we will

discuss on the topic of a business plan

the business plan is one part of the

topics of source of fundings as I

mentioned in the previous topic of

social funding that business plan is the

kind of tool these two will support the

business owner the entrepreneur like you

guys for financial support we will

discuss the advantages of writing a

business plan here

well before our discussions I would like

you know the objective of these topics

after you completed these topics please

please please make sure that you need

all object tips of these topics the

first objective of this topic is that I

expect you guys understand the value of

writings a business plan

and the second learning objective of

this topic is that I expect you can

describe or I can explain the detail of

a business plan

here you are business plan well first of

all I would like to know what is your

business plan

you can notice here that from the slide

A business plan is the document that

explains the guy what and how

what is what are the objective of your

business

as well a business plan tell the

business owner how

how is right how you guide the

entrepreneur right as the business owner

can achieve or meet the objective of

your business

I suggest that both startups business

owner like you guy and a straw

company should have business plans

what are the advantages for writings

business plans

why the business owner right you guy

should write a business plan right A

business plan is an important document

that is used for board external and

internal audiences of the company who

are the external audience right the

external audience are

I can like give you four example

business partners right business and

those like a venture capitalist right

another external audience is like

financial institutions such as

Government Bank such as commercial Banks

the business plan is used to attract

funds or money from business partners

business angels Venture capitalists you

need to propose your business plan in

order to attract your partners the

business plan is the most important

supporting document when you apply for

loan from any banks

it means that bank will ask the guy as

the business owner submit your business

plan when you ask for Roan from the

banks

as the benefits to the internal

audiences who probably are your business

partner or the management team for

example

a business plan can serve to keep the

management team on the same page about

business strategies all the same targets

or object tips of the business at this

point you have the idea what is the

business plan and the advantages of the

business plan right we will discuss all

the combinations of a good business plan

after this here you are from this page a

good business plans should include the

basics business plan outline right

an executive summary

company descriptions products or service

or Business Solutions

might get analysis that complies of

Industry analysis customer analysis and

competitor analysis we continue the

business plan with business strategies

you can see here from this page

operations process such a funds business

budget and financial projections well we

will start with an executive summary

what is an executive summary

correct the executive summary is a kind

of report that ribs or summarized all

informations or data or business idea of

your business plan

rent of the executive summary should not

more than one or two patents right the

executive summary should be the first

sections of the business plan

inchon I repeat again that executive

summary is a summary of your business

plan right the executive summary should

be the first part of first sections of

your business plan right and the rent of

the executive summary should not more

than one or two pages

I give you here an example of the

executives summary of a business

the company descriptions should be

followed the executive summary what you

should mention or explain in these

sections I mean in the sections of

company descriptions a company

descriptions you know is an overview or

summary of a business

it is an important part of a business

plan that describes or explain the

history of the company the company

background recent admission statements

profiles of the management team and

business organizations

business ownership and legal status like

a business ownership for example are you

like those popular ship or are you like

a Partners or are you like a

corporations

as well you should explain the key

success factors right of your business

in the company description part

the next part of the business plan

should be the explanations of your yes

or drugs service or business platforms

you'll probably aligned or explain your

products or service or your business

platform here

from this part you should start this

part from the problem of your customer

as you can notice from this page right

you should start this part from the

problem of your customer

why the Target customer need to buy your

products need to use your service only

to apply for your business platform

you need to give the explanations that

how your products also based on your

business platform can solve the problems

of your Target customer you then

describe the detail of your products

also with or business platform such as

functions or features

you don't need to explain the

differentiations of your products or

your service or your business platform

compare with

your competitors at this point you are

crystal clear right what are your

products or service or business platform

right at this stage you need to consider

or analyze the market that include you

can see from this page industry analysis

followed by customer analysis then

competitive analysis

again I say again in the part of market

analysis you need to analyze three main

things that are industry analysis

customer analysis and competitor

analysis here industry analysis should

be the first part of the sessions market

analysis what informations should be in

the industry analysis

well you need to analyze and provide

informations of the total size of the

industry you expect to involve it you

need to analyze the segment of this

industry the growth layer of this

industry

and especially you need to specific

target market such as mass Market or

niche market

in part of the customer analysis

entrepreneur or the business owner like

you guy you need to Define who are your

Target customers

as the entrepreneur you need to Define

needs of your Target customer

you need to identify the preferences of

your Target customer

relative your products and services

again right I repeat again that the

business owner should analyze one one

you should analyze who are your Target

customer right two what are the needs

open point of your Target customer and

three what are the preferences of the

Target customers

finally we need to analyze the

competitor board dialects and indirect

competitor

you should do some research about the

products or service or business platform

of the competitors in terms of functions

features and price

here we will continue the operations

process or operations plan here

the operations plan here on this page

describe you how your business will be

run and how your products or service

will be produced

you can notice from the diagram on this

page that

the business owner showed concern about

the raw materials right that should be

used for Productions

how to produce the products

how you deliver the finished good to

your customer as the logistic process

for example via Curry Express Fresh

Express

Etc

and how you provide service to your

customer

like after sales services

and you probably like need to use the

information technology that we call it

for each process as you can notice from

this page

I gave you on this page that the idea

what is the Productions process

you need to think about the inputs right

that may be money any raw materials

label your knowledge or experience

right you transform the inputs as I

mentioned you transform the inputs with

some Chi of matching or technology right

you didn't get what you then get the

outputs as your finished goods here in

terms of the business strategies

business strategy should be the most

important part of the business plan

right this sections explain write these

sections describe how the company will

attracts and keep the customer and how

you intend to list your customer

in terms of selling strategy right you

can see here the first items selling

strategies

saying your business is their pet shop

the primary juicer is not the primary

buyer right for example you have a dog

the dog is the dude sir right but you

are the buyer

the selling strategy should focus on

what should focus on the buyer right not

the user right at this point you get my

idea

then in terms of the channel strategies

you need to describe the channel

strategy as well in the business plan

if this is a directional to customer or

through intermediaries for example the

buyer will buy your products from the

supermarkets or from the pet shop right

you need to think you need to consider

what is the channel strategies for your

business

right you need to consider where you

should sell your products right it

should be in the supermarket or should

be in the pet shop

in terms of the pricing strategy right

the pricing strategy that you need to do

some kind of the research on your

competitors

and the positionings of your products

and services

that your products or service can be

called like a premiums products or

discount products or parity products

comparing with products or service of

your competitors

well in terms of the breading strategies

building a brand is a very important for

any news business startup you know you

need to describe the company name

the name of your products also is dry

you need to specify functions of your

products or service line and social

benefit to your Target customer as well

well for the next part is the source of

funds since like you guys we have done

the detail of the source of funds from

the previous chapter right ideally fresh

the guide the main idea of the sources

of funds that come from here

self-funding or personal saving as you

can see from this page right bank loan

that may come from government Banks or

commercial Banks

also like you know that business angels

went to Capital list government agencies

and Cloud funding should be your source

of funds as well all mentions should be

sort of fun right for the new business

startup right the guy

you need to specify how you can raise

money for your business such as like I'm

saying that you less a hundred percent

of this money from your personal saving

or you list like a 50 percent of this

investment of the money from your saving

and another 50 percent from bank loan

at this point right you guys you have

the idea how you can rest money right

so what is the next correct you guide

next to the business budget the budgets

will tell you how you spend the money on

your business right this section should

include Revenue course related to the

business the course are like a fixed

cost and verbal cost well we start the

business budget with what is the

business budget things

correct the business budget is the

spending plan for your business based on

your income and expenses the business

plan identify your available capital or

money right the business plan estimate

your spending and the business plan also

help you guide predict Revenue actually

so you can see here on this page the

business budget should comprise of one

revenues

to thick cause and free the variable

cost

they will discuss the detail of each

component here on this page what are the

revenue revenues are the money that you

expect your business to make from the

sales of good and service right if your

business is new you can check the

revenue of similar business and use

those figure

to create some estimated Revenue numbers

but if your business is more than one

year old right you are experienced will

guide you in estimating these components

I mean in terms of Revenue

but whether your business is New or Old

right you know it is important it is

very important to like stay Lyricist to

avoid overestimate things here you are

in terms of the cost on this page what

are the fixed costs

the fixed costs differ to a course that

does not change with an increase or

decrease in the number of goods or

service produced or sold

I said that the fee cost will not change

with an increase or decrease in the cell

volume right for example Internet

payment right building rent it doesn't

matter how many items you produce you

need to pay for the internet every month

right

it doesn't matter you produce your

products or not you need to pay for the

internet right therefore internet is for

example your fake calls the other

figures include building rent employees

slowly Accounting Service mod cash

payment or insurance premiums here you

are the verbal course on this page

variable costs are cost directly

associated with Productions and

therefore change depending on business

output what does this mean this cost I

mean variable cost can increase or

decrease with less pack to Productions

level or sales I say that the variable

cost can increase or decrease right the

increasing or decreasing things of

variable costs are based on what based

on the volume of the Productions the

other variable cost includes for example

raw materials marketing expenses

commissions credit card fee

Etc

finally finally finished the last

sections of the business plan that is

financials projections

can projects or you can forecast the

financial status of your business from

financial statement on this page you can

see here the basics financial statement

are comprised of one balancing two

income statement three cash flow

statement right

okay in terms of the financial statement

right there are two types of financial

statement here on this page the

historical financial statement and

proforma financial statement okay well

what is the historical financial

statement the historical financial

statement reflects past performance and

usually prepare on a quarterly or annual

basics

you can notice that what I am saying the

historical Finance statements tell you

the past performance right on the

opposite side pro forma proforma

Furniture statement ah protections right

projections for future period based on

forecast and completed for more than two

or three years in the filters

you'll notice what I am saying the

performer the proforma I mean proforma

balanchi pro forma income statement and

proforma cash flow statement tell you

the future period 4 might be next three

or five years after this

guy on this page you can notice that the

main item of balance sheet should be

assets

that and equity

the total assets always equal debt and

equities what is the proforma balance

sheet you can notice here on this page

new projects or forecast assets you can

see here from your left hand side and

the debt and equity

on your right hand side for the next

three years

well on this pitch in terms of the

proforma income statement the income

statements start from what you can

notice here on this path the income

statement start from sales right

you can notice the sales forecast for

next three years from this pitch you

then subtract or deduct of rest that

sell which all kind of expenses for

example operating expense interest

expense tax expense right

finally at the bottom line you can see

here on this pad as the bottom line you

get the net income right for next three

year as proforma income statement well

on the large page you can forecast the

proforma cash flow statement for three

to five years as well

in terms of the cash flow statement

right you start from one you can notice

here that from your left hand side you

start from the as flow from operations

then we move to your right hand side

right you notice that

cash flow from investings and cash flow

from financings

we already completed the detail of

business plan

we already completed that what is the

business plan right the advantages of

business plan right and the component of

business plan

at this stage

you need to get back to the learning

objective of these topics and make sure

that you meet all objectives