#Business Planning 101: How To Prepare A Credible Business Plan

Over the past seven years, I have been involved in preparing business plans for clients across different industries ranging from Building & Construction, Agriculture, Media & Entertainment, Renewable Energy, Fashion and Education amongst others.

While I have grown to understand that  there are some, probably more critical fundamentals than a business plan, including an understanding of the customer needs/wants,  the company’s value proposition, the business case  and the business, I find that a business plan remains a minimum requirement for any entrepreneur, business or organization seeking to attract high level support, from investors, grantors and technical partners, among others.

A few days ago, I got a referral to a client who is interested in developing a business plan for His business initiative. Like many of my clients, they had significant knowledge, skill and/or experience in the relevant business industry. He needed my help in articulating and communicating the business idea   to His key customer and investor audiences.

Unlike most of my previous clients however, He wondered how the business plan could be made to appear more credible, as it related to who prepared it- in this case, me.

In response to His query over the phone, I gave Him a simple answer to His question which may be summarized thus:

• ·         Business planning is not a profession or professional endeavor like Accountant, Auditor, Builder or Lawyer (which I am)
• ·         Increasingly, everyone and anyone, who seeks to launch and/or attract investment for their business, is expected to be able to prepare a business plan.
• ·         The credibility of a business plan is in the research behind the business plan and the PLAN of the BUSINESS itself.

The more I thought about this though, I realized that while this concern was new in my experience, it was very likely a question many business owners were asking, even if they were not articulating.

I knew that my answer, while sufficient for my client, might not be for some others. Thus, even after our early morning conversation, I asked myself the question again; “What makes a Business Plan Credible?” Below are answers some of the answers I arrived at:

i.                     Business Feasibility:  A properly conducted feasibility is the official claim of credibility for any business venture that is still ventured upon after the conduct of an objective feasibility study.

ii.                   Business Model: A good Business plan should be a detailed interpretation of the Business Model; this covers the building blocks of the business including, customers, value  proposition, key resources, key partners,  sales channels, customer  relationships,  operational costs and revenue streams.

iii.                 Business Market:  A credible business plan shows an understanding of the market i.e. what is the size of the marker? Where are the opportunities? What are the challenges? What are the growth prospects? The answers to these market questions are critical to demonstrating credibility.

iv.                 Business Team: the most experienced venture capitalists invest in the team of people who are responsible for implementing the Business idea. It’s great to have a business visionary with a great idea and personality, but it’s even more critical to have a strong start up/ development team; i.e   what is their level of knowledge, skill and experience? What is their passion for the Business/industry? In this phase, it is critical to highlight the relevant achievements of the team.

v.                   Business Competition: Strategy is mainly relevant because of the existence of competition. Competition also includes substitute products; e.g Water as a substitute product for Coca Cola or and Public Transport as a Substitute for private cars; A credible business plan highlights a sound understanding of the Competition and how to gain competitive advantage over them; either through  your business  concentration, business costs reductions or my personal favorite, business differentiation.

vi.                 Business Risk: The risk analysis section of a Business plan, while often neglected, is one of the most critical components of the Business plan. It demonstrates that the Business owner is not overly but cautiously optimistic, is dealing with the plan realistically and would be better prepared to deal with challenges that may arise.

vii.               Business Assumptions: Assumptions are the bedrock and basis of interpretation for your business plan. According to personalmba.com “Critical Assumptions are facts or characteristics that must be true in the real world for your offering to be successful.” While assumptions apply to all the components of a Business plan; they are usually applied more to the financials. They usually cover things such as market size, market growth rate, interest rates, tax rates, depreciation e.t.c We can talk more about these later, but for now, as much as is possible, make your assumptions dependent on real market/industry research.

viii.             Business Financials: This is the core of the business as it relates to potential investors. It should at the very minimum capture    the Balance   Sheet (for existing businesses), Start-up requirements (Budget), Cashflow Analysis and Break-even analysis.

So, assuming you have, like my client, asked the question “How do I prepare a credible business plan?” do the above answers answer your question?

Please share your thoughts.

Photo Credits: Alexander Stein for pixabay.com 

#OP-ED: The Nigerian Creative Industries - Tackling The Challenges

In recent times there have been numerous reports about the relevance of the creative industries to the development of National economies.

It has been reported that world trade in creative goods and services is one of the fastest growing sectors of the global economy, doubling from 2002 to 2011, when it reached a record of US$ 624 billion. At the same time, developing countries averaged 12.1 per cent annual growth in the export of creative goods and services.

According to United Nations Development Programme (UNDP) Administrator, Helen Clark,  “The cultural and creative industries are important engines of economic growth. They generate jobs and income and contribute to individual and community well-being in both developed and developing economies”

In Africa, the creative industries have experienced immense growth in the past decade. An October  2013 Business Day article reported, Oby Ezekwesili, the former Minister of Education and former Vice President of the World Bank, Africa,  as valuing  Nigeria’s  creative industry potential at over N5 trillion with annual turn-over of over N500 billion- indicating that it could be a bigger asset than the country’s oil industry.

With all of the optimism being expressed, the potential of the creative economy is not without its challenges. In this post, I aim to highlight some options for tackling the challenges facing the creative industries; before that though, just in case you’re wondering “What, exactly are the creative industries?” and “Why are they important?”

OP-ED: Africa: Between Current Challenges And The Need For Educational Innovation

In previous write ups I have highlighted the importance of education to innovation. In this one, I intend to draw attention to the importance of innovation in education. This write up begins with the relationships between challenges and opportunities and how these can stimulate innovation.

Two major challenges which have hit Nigeria in recent times are the rise of insurgency and more recently the Ebola Virus Disease (EVD). In processing the immediate impacts of these, in terms of loss of lives and liberty, it is easy to lose sight of the impact it is having on other sections of the socio-economic polity. One sector being seriously impacted is Education.

#101 Series: Protecting Your Ideas: An Introduction to Non-Disclosure Agreements

One of the aims of this blog is to aid the understanding and creation of Intellectual Property (IP). Intellectual Property refers to creations of the mind that may be transformed into a functional, visual and/or artistic form for the benefit and enjoyment of others.  One of the key goals of Intellectual Property Law is the protection of ideas by the owner.

Ideas may be protected by various means; by copyrights in the case of a literary or artistic work, by a patent- if you are an inventor who has created a functional product, a trademark   for your logo, product or cartoon character, or by a registered design for the way   a product looks.

Regardless of what type of intellectual property you are protecting, there will be a need to share your ideas with some people such as investors, technical partners or promoters, before the product gets to the market.   At this stage, issues like confidentiality, non-circumvention and non-disclosure become important.

Many years ago, I submitted a proposal to a Finance Company in response to an open Request for Proposal (RFP).  The lady who received my proposal was really pleasant, and I was really hopeful.

After awaiting feedback for what I figured was too long a time, I decided to approach someone in the company who ought to know about the RFP. He came back to me saying he didn’t find my proposal in all the submissions. However, he saw a proposal which was almost identical to mine (as per the copy I showed him), and it had been submitted by a company the husband of the pleasant lady worked for.

OP ED: Nigeria's New National ID Card, What's A Nation's Identity Worth?

One of the high points of the news in Nigeria last week, was the announcement of the New National Identity Card launched by the federal Government, through the Nigerian Identity Management Commission.

The card allows handlers effect payments and other financial transactions, stores their biometric data  and also serves as a means of identification. The cards will be issued to Nigerians, 16 years and older, and are expected to serve as voting cards in the 2019 elections.

While it was flagged off by the president himself with a lot of fanfare and enthusiasm by its core sponsors and promoters, it was greeted with outrage

Op-Ed: On African Innovation: Where Do We Begin?

             

In the first installment of this series on African Innovation, I sought to establish the fact Africa was ripe for innovation, if necessity was the mother of invention,   and that African innovation, need not be high-tech. In the second part (read here), I asked the   question:  Can African Innovate? My preliminary answer : Africans Innovate, therefore Africa can innovate, IF…

The “IF” introduced a series of preconditions, which would be critical for driving relevant African Innovation. 

In this edition, I would like to address one of those pre-conditions by asking the question, where do we begin? 

In order to get “there” however, a little digression: a few days ago I read some refreshing news about two Nigerian female students who had won an Award in the Medicine and Health category, of the Intel International Science & Engineering Fair, in LA. They had found a solution for bad breath using walnuts. They actually came up with an hypotheses and tested it by conducting structured research into it leading to  an innovation that solves a problem which according to them is  faced by many of their peers.

They were secondary school students (Doregos Academy), just like the other young girls (Where are the guys?) the ones who powered a generator using urine.

This story was refreshing in and of itself, but it further served to reinforce my belief that African Innovation must begin with Africa’s Education.  We cannot change a people until we

Slideshare: Understanding Film And Intellectual Property

For those who missed it, below is a link to a presentation delivered by the Principal Partner Adelphi Consulting, Ese Oraka, at the Film Production Fund/Project Nollywood Act/LBS Entrepreneurial Development Service Capacity Building Workshop, Lagos, Nigeria. 



The Federal government launched Project ACT, a 3 billion naira film intervention fund managed by the Ministry of Finance and the Ministry of culture and tourism. A sub component of this fund is the Film Production Fund 700 million Naira film production fund with the aim of the allocating grants to production companies and independent producers who were at different stages of production.



Sometime in April, prequalified applicants for the fund- as part of the process- attended two day workshops organized in conjunction with Lagos Business School in Lagos, Kano and Abuja. They were expected to receive training on things that related to the business side of film production, and participants attended session’s on business modeling business planning and related stuff. 



For those who were not there or for those who were there and didn’t get the slides; click the link to view or download the presentation: http://ow.ly/AwjbZ 

OP- ED: On African Innovation - Can Africa Innovate? (Part 2)

In the first part of this series (If you missed it you can read it here), I tried to make a couple of points:

• If necessity was the mother of invention then Africa was ripe for innovation

• The current discourse and examples of African innovation appears to be skewered towards ICT and may be distracting from the need to innovate in more critical sectors

• Innovation, especially African Innovation, needs not be high-tech.

• If we develop a broad definition of innovation and not rely solely on the silicon valley version of it.

• If we pace ourselves and develop innovations organically, rather than leaping to building a satellite to launch into space. China has grown its innovation from being a  low-cost producer of manufactured goods for the rest of the world and is now seeking  to develop higher value-added products.

These thoughts would be recurring threads in the series, but for now, the question I am trying to answer is Can Africa Innovate? I had given examples of Africans who had innovated in both ICT and non-ICT related sectors,  African’s are innovative, it take a lot of innovation to live in many parts of Africa.  But can Africa innovate in the way and on the scale that globally innovative companies do?

While, researching this Article, I googled my question “Can Africa Innovate?” Scanning through the first thirty results, I couldn’t find one article asking the  question. I began to wonder if the question was moot for many, if  it was unnecessary i.e why even bother asking?

I decided to run a search with the question “Can China Innovate?” Within the first ten results, there where links to articles or reports either asking the same question or variations of it, and other results including “Why China Cant innovate” “Joe Biden Is Wrong- China Does Innovate” and “Chinese Can Innovate But China Cant.”

Would I be wrong if I assumed that no one was asking if Africa could innovate, because no one thought Africa could? I’m still thinking about it, but this is my preliminary answer:  Africans are innovative, thus Africa can innovate: 

We must introduce innovation, critical thinking and intellectual property into our school curriculum; and this does not necessarily need to disrupt the current process significantly. Our schools must move from teaching to learning, the students should be moved from focusing on passing exams to solving problems.

We need to educate Nigerian investors and venture capitalist on investing in innovative companies, it takes a different mindset, and investors in these parts tend to be scared of investing in untested models.

We need engineers. Not just engineers but engineers who understand creativity, design and business innovation - most of the innovative western companies were founded by engineers.

Government needs to play its role in protecting intellectual property and financing innovation hubs directly connected to research institutions and or industries where they are located.

I intend to address each of these issues with more detail in subsequent parts of the series, until then though, I’m putting the question to you: Can Africa Innovate? 

Do share your thoughts with us. Thanks and have a great week.

©Ese Oraka

Image credit: http://blogs-images.forbes.com/matthewdepaula/files/2014/06/8161674482_6afa443513_c.jpg

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Ese Oraka is a Lawyer and Business Designer. He has extensive knowledge and experience in IP and Business Law, Innovation Management and Business Model Design. He is a founding partner at Adelphi Consulting. You can find him on - Twitter: @eseoraka, Facebook: /ese.oraka.9, or email info@adelphionline.com