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1、Business Plan Tool Kit Contents What is a Business Plan Writing a Business Plan Business Plan sample (to be complemented later) 1 Definition of a business plan The role of a business plan in new business development process The significance of a business idea Developing a business idea Elements of a
2、 promising business idea Prioritizing a business idea Protecting your business idea What is a Business Plan 2 Definition of a business plan A business plan must have a detailed plan for the following eight factors ; 1) Product/ Service 2) Market and Competition 3) Marketing 4) Business System 5) Org
3、anization and HR 6) Opportunities and Risks 7) Implementation Schedule 8) Financial Planning What is a business plan Developing a business idea (idea which can make money) into a detailed plan that can be implemented3 Role of a business plan in new business development processNew business promotion
4、stageMethodologyInternal support organizationOnline Idea DBIntangible WorkshopBenchmarking/Megatrend AnalysisBusiness Plan CompetitionStage 1Stage 2Stage 3Idea GenerationBusiness plan write-upImplementation and growthIdea Generation Management TeamBusiness Plan Development TeamInvestment CommitteeVe
5、nture Team (TFT) What is a business planA business plan can be defined as the intermediary stage before a business idea can actually be implemented as a new business4 Significance of a business ideaThere are many different ways to generate a business idea. The following are recommendations to come u
6、p with well-organized business ideas-best if implemented at the same time Intangible Workshop : Hold workshops to generate ideas to facilitate company intangibles, as the significance of intangibles continue to grow under the new economy Benchmarking/Megatrend Analysis : Study megatrends of other in
7、dustries to generate ideas or conduct benchmarking analysis Online Idea DB : Make an idea DB online to enable review/posting of ideas as a way to help develop business ideas Business Plan Competition: Hold business plan competitions to generate business ideas What is a business plan No business idea
8、, no business plan No business plan, no businessA business idea is the start of a business establishment. You must have many creative ideas which can be transformed into a business in order to create valueDeveloping a business idea 5 Elements of a promising business idea1. The key to success in the
9、marketplace is satisfied customers, not great products. (ex) “Our new device can perform 200 operations per minute.” (X) “Our new device has 25% fewer parts.” (X) “Our new device will save the customer a quarter of the time.” (O)1. Make value propositions to the customer2. Present customers with uni
10、que values.Clear customer valueMarket of adequate sizeFeasibility and profitabilitySufficient degree of innovation1 12 24 43 3 What is a business plan Clear Customer Value Who will buy your product/service ? Why should the customer buy the product ? (What needs does your product fulfill that the com
11、petitor products cannot ?) What is most unique about your business idea ? Key Questions6 Does the market you plan to target with your products/services have adequate size (no precise analysis needed, statistics or estimates can be used) Know who your competitors are.Clear customer valueMarket of ade
12、quate sizeSufficient degree of innovation1 12 24 43 3 What is a business plan Market of adequate sizeFeasibility and profitability What is the market size ? Is the market growing ? What is your target market and market share ? Who are your competitors ? What are your strengths/weaknesses compare to
13、your competitors ?Key Questions7 A business idea should have the following four elements according to product/service type and business system -Must specify where innovation is taking placeNew product(Microsoft)New industry(Netscape)Existing industryNew business system(Dell)Business SystemConvention
14、 InnovationProduct/serviceConventionInnovationClear customer valueMarket of adequate sizeSufficient degree of innovation1 12 24 43 3Feasibility and profitability Sufficient degree of innovation What is a business plan How is your product/service innovative ? How is your business system innovative ?K
15、ey Questions8 Consider feasibility (legal constraints, time/resource limits, etc) Calculate overall profitability (simple cash flow, etc)Clear customer valueMarket of adequate sizeSufficient degree of innovation1 12 24 43 3Feasibility and profitability Feasibility and Profitability What is a busines
16、s plan What are the constraints in implementing your business idea ? Why are other people not implementing this kind of business idea ? What is the gross margin rate of your planned business ? How much investment is necessary ? How much is the variable cost ? Does the profit increase ? What is the o
17、verall cash flow ? Key Questions9 Prioritization of a business idea - In search of a killer idea A process to prioritize generated ideas Positioning of ideas on the below chart based on the potential market and its feasibility Killer Idea: An idea capable of creating a new market (ex. walkman, mobil
18、e phone, Dialpad, 45min. photograph printing, etc.)Seek solutions for obstacles in implementation Immediately launch business plan write-up Postpone Seek ways to expand market size FeasibilityLowHighMarket size (allow growth)LowHigh What is a business plan 10Protecting a business idea Ways of protec
19、ting a business idea Patenting : Patenting a business idea to ensure legal protection Confidentiality agreement : Maintaining a confidentiality agreement with related parties working on the business idea Quick implementation : Implementing your business plan as soon as possible What is a business pl
20、anInnovative ideas are the result of hard work and creative thinking. It is important to protect the idea sufficiently so that the idea is not exposed to other industriesThe best protection is to implement your business idea as quickly as possible so as to build an entry barrier 11 The need to write
21、 a business plan Elements of a good business plan Business plan structure Writing a business plan Summary Product/ Service Market and Competition Marketing Business System Organization and HR Opportunities and Risks Implementation Schedule Financial Planning12 The need to write a business plan “Writ
22、ing a business plan forces you into disciplined thinking, if you do an intellectually honest job. An idea may sound great, but when you put down all the details and numbers it may fall apart.” Writing a business plan The business plan was first used in the USA by start-up and venture companies as me
23、ans of acquiring funds from private investors and venture capitalists. Even major corporations rely on business plans to help them make internal investment decisions.1. Can systematically examine feasibility of the new business from various angles- Can provide solutions to problems and heighten effi
24、ciency of the new business with clear analysis of the situation Provides an invaluable tool for management and evaluation of the projectBenefits of writing a business plan13 Elements of a good business plan Clarity: Must clearly lay out the key points (strengths) of the business plan Objectivity: Mu
25、st be based on objective data Simplicity: Should be comprehensible by technical layman Consistency: Must have uniform visual layout and consistency in editing of the final version Well-defined, quantifiable customer value : Lowering the cost of delivering an existing value or creating a new value if
26、 this can be achieved at reasonable cost Innovative product/service : The product/service and/or business system must possess a high degree of innovation The possibility to protect/sustain the innovation A growing and/or large market : The target market should grow at a fast pace or should be a larg
27、e market A far-sighted analysis of the competition : Provide a complete and objective description of existing and potential future competitors A careful weighing of the risks and opportunities : Provide a realistic description of the risks involved in the business and plans to overcome them. Explain
28、 ways to make use of potential opportunities General principlesMain Contents Writing a business plan 14Check to see if your readers can read and comprehend the summary in five to ten minutes even if the person has no previous knowledge of your business concept or its technical or scientific basis Wr
29、iting a business plan SummaryThe summary should be able to deliver the most important aspects of the business plan to the decision-makersFocus on these four elements when writing your summary Clarity of the business idea Value the product/ service provides to the customer Market size and growth Retu
30、rn on investmentDescribe your business idea as clearly, compellingly, and concisely as you can15 Product/ serviceDevelopment status of the product/service Explain the stage of development your product/service has reached Identify technical/legal/consumer behavioral/partnership (need to partner with
31、other industries)/social and cultural constraints in delivering product or service to customers and provide solution measures“If you dont know what the customer value is, the whole thing is a waste of time.” Writing a business plan Clearly indicate how your product/service differs from those that ar
32、e now or will be on the marketCustomer Value The business plan doesnt make any sense if the product or service fails to provide better value to the customer compared to current market offerings Analyze the value the customer gains from your product/service Weigh the advantages and disadvantages of t
33、he new product/service from the customers perspective 16Check List (Product/service) Have you explained plans to retrieve the value delivered to the customer ? (how will you get your money back) Development status of the product/service Have you accurately explained the current stage of development
34、of your product/service ? Have you indicated what resources (time, personnel, funds) you require for each subsequent development ? Customer Value Is there a clear definition of what customer value your product/service provides ? Have you defined who you customers are and who are not ? Have you ident
35、ified why the customer buys your product/service ? (Have you explained what added value the customer receives compared to other products/services)Have you weighed the strengths/weaknesses of your product/service over comparable products/services from the customers perspective ? Have you conducted pi
36、lot tests or surveys to see if the product/service fulfills customer needs ? ( or tried other means to find out) Have you explained the technical barriers and solution measures ? Have you explained the institutional/legal constraints and ways to overcome them ? Have you explained the customary/consu
37、mer behavioral constraints and solutions ? Have you explained the cultural/social constraints and ways to overcome them ?YesNo Writing a business plan 17 Market and CompetitionMarket size and growth A rapid increase in the value of the company can be expected only if the market holds a great potenti
38、al The market size should be presented in figures i.e. number of customers, of unit sales, total sales Your expectations for market growth are critical ; show what factors will affect developments (e.g.technology, legislative initiatives) Forecasting market size and growthDefine factors influencing
39、market size and growthSet hypothesis on future developments Collect facts needed to verify hypothesis (past trends, expert opinions)Estimate market size and growth based on the proven hypothesis “If there is no competition, there is probably no market.” Writing a business plan18 Points to follow whe
40、n making an estimate Build on solid foundation : Rely on easily verifiable figures even though there may be many unknowns Think logically : An estimate should be a logical conclusion and should not have any leaps in logic or depend on unspecified assumptions Compare your sources : Check your facts w
41、ith other sources (interviews, statistics, expert opinions) to ensure objectiveness Be creative : Look for a substitute variable that relates to your need when a variable is unknown Check for plausibility : Check if each estimate makes sense Writing a business plan 19Market Segmentation - Segment th
42、e market and explain your target market - There are many ways to segment the market but the following three elements need to be present 1) Determine the number of customer in each market segment and their buying power (Measurability) 2) Identify customer behavioral pattern in each segment (Homogenou
43、s-within) 3) Use the same marketing strategy for customers within each segment Customer segmentation criteria for consumer goods markets Customer segmentation criteria for industrial goods markets Location : country, urban/rural (population density), climateDemographics : age, sex, income, professio
44、n, religion, education levelBehavior : Frequency of product purchase, product usage, brand loyalty, price sensitivity, purchasing variablesPsychological factors : Lifestyle (behavior, interest, opinion) Demographics : company size, industry, location Operations : technology employed (e.g., digital,
45、analog) Buying habits : centralized or decentralized purchasing, purchasing criteria Situational factor : urgency of need, order size Writing a business plan 20 CompetitionCompare key customer value, target customers, sales revenue, market share, cost positioning, product lines, and distribution cha
46、nnels of your company with those of your competitorsCompare strengths/weaknesses of your product with that of the competitorsConsider ways to maintain your competitive edgeCompare your intangible assets with those of the competitorsAnalyze your positioning strategy in the market with that of the com
47、petitors*Positioning : transferring the customers market position of the product/service to a position that the company wants to take (ex. Low quality producthigh quality product, baby products adult products)Maps for designing positioning strategy (samples)QualityLowHighPriceLowHighProduct lineLowH
48、ighDelivery time LowHighCredibilityLowHighConvenienceLowHigh Writing a business plan21 Have you explained factors crucial for success in your target market ? Competition Have you identified your competitors with comparable products/services ? Have you given an analysis of your potential competitors
49、? Market size and growth Have you explained the general trend of your target market ? Is there a rationale for present market size ? Is there a rationale for future market growth rate ? Market segmentation Have you defined the criteria for market segmentation and its rationale ? Have you compared th
50、e strengths and weaknesses of your major competitors with your own ? Have you compared your strategies with those of your competitors ? What is your competitive edge (especially intangible) over your competitors and have you explained if your competitive edge will be sustainable ? Have you given a r
51、ationale for characteristics of each market segment (profitability, size, growth rate) and their future prospects ? Is there a clear definition of the target customer and customer examples ? Have you determined the target market share for each market segment ? Writing a business plan Check List (Mar
52、ket and competition) YesNo22 MarketingPrice Determine the attainable price for your product/service and evaluate on willingness of customers to pay the asked price (new businesses often encounter problems because of the conventional wisdom that price is derived from cost)Quantify the customer value
53、of your product/service and define the price bracket. Verify and refine your assumptions through discussions with potential customersThe pricing strategy depends on your goal ; the choice can be either penetrating the market quickly by going with low price (Penetration Strategy) or generating the hi
54、ghest possible return from the outset (Skimming Strategy)Skimming strategyPenetration strategyA new product/service is positioned as better than previous options, so a higher price can be justified. You can also create a superior image of the product/serviceHigher prices generally lead to higher pro
55、fit margins, and allow the new company to finance its own growth Can set a new standard in the early stage (e.g. Netscape, Explorer) Can substantially lower fixed costs per unit if the fixed cost is high in the initial stage of the business Can prevent market entry by competitors“Marketing is far to
56、o important to be left to the marketing department.” Writing a business plan Marketing is a key element in a successful business launching. This requires a clear strategy for the so-called 4Ps (Product, Price, Place, Promotion) (For product, refer to the product/service section) 23Place How to deliv
57、er your product/service to the customer is a key marketing issue and requires consideration of various factorsThe main factors to consider are ; the number of potential customers, range of product/service, are the customers companies or individuals, where do they prefer to shop, does the product req
58、uire explanation, what is the price bracket, what is the frequency of purchase, what are the institutional/legal constraintsAnother significant marketing decision is whether your company will handle the distribution itself, or whether a specialized operation will handle it for you. Technological dev
59、elopments have greatly expanded the spectrum of distribution channels and the choices are as follows ; 1) Third-party Retailers : Products sold to the end customer via retailers2) Outside Agents : Specialized companies acting as agents for the distribution of products (dont acquire ownership rights)
60、 and charging commission for sales 3) Franchising : Franchisees paying license or franchise fees and selling the product/service (e.g. McDonalds, Seven-eleven)4) Wholesalers : A middle man specializing in re-sales to retailers5) Stores : Selling products directly to customers6) Own sales staff : Com
61、pany marketing employees in charge of direct sales 7) Direct Mail : Selling products by mail to customers8) Call Center : Inviting consumers to order products by telephone through advertising9) Internet : Using Internet as a marketing channel Writing a business plan 24PromotionAdvertising your produ
62、cts/services in order to attract customers attention, informing, persuading and inspiring confidence Promotion can be defined as marketing communication. Communication must explain the value of your product/service to your customers, and convince customers that your product meets their needs better
63、than competing or alternative solutions Ways to attract the customers attention 1) Classic Advertising : newspapers, magazines, TV, radio2) Direct Marketing : direct mail to select customers, telephone marketing, internet 3) PR (Public Relations) : articles in print media about your product, busines
64、s or the management4) Exhibitions 5) Customer Visits Be sure to focus on the people who make the purchasing decision or have the greatest influence on the purchasing decision Writing a business plan 25 Is the price of your product/service reasonable compared to current market offerings from the cust
65、omers point of view ? Promotion Have you analyzed who, within each customer group, ultimately makes the purchasing decision ? Have you identified ways to draw attention of your target groups to your product/service ? Price Have you specified what your price strategy is and reasons for adopting the s
66、trategy ? Does the price asked cover costs and ensure a fair return ? Place Have you explained the reasons for your choice of distribution channel ? Have you determined how much resources (time, investment) will be used to attract and maintain customers ? Have you described steps required for launch
67、ing your product/service in the market ? Have you specified the target sales volume for each distribution channel ? Have you explained the typical process of selling your product/service ? Have alternative distribution channels been compared and studied ? Writing a business plan Check List (Marketin
68、g) YesNo26R&DProductionMarketingSalesService Writing a business plan Business SystemA business system maps out the activities necessary to prepare and deliver a final product/service to the customerThree elements, namely the value chain, make-or-buy decisions and the need for partnership, must be co
69、nsidered within the business system Value ChainDescribes the entire process of product/service delivery to end-users (use charts to enhance understanding)Define the key value creating activities within the process e.g.) In the case where R&D and marketing are the key activities27Need for partnership
70、Determine whether it is necessary to forge a partnership for a part or whole of the business system Points to consider when making a partnership Win-Win situation: Determine whether both sides can gain a fair advantage from the relationship Need to disperse risks: Determine whether there is a need t
71、o avoid risks within certain parts of the business system (e.g. massive initial investment) Types of partnership Non-binding partnership: Both parties can end the partnership quickly and easily Close partnership: Can end the partnership only under agreement from both parties when there is a high deg
72、ree of interdependence Select field for partnership: Explain why there is a need for partnership in the select field Select partner company: Compare strengths/weaknesses of the partnerMake or Buy Define core skills for each process in the value chain Decide whether it is best to carry out the indivi
73、dual activities by yourself or whether outsourcing is a better option based on these criteria ; strategic significance, suitability, and availability If outsourcing is your choice, compare potential vendors or suppliers Writing a business plan 28 Has the key value creation factor in the value chain
74、been indicated ? Partnership Has the need for partnership been clearly explained ? Have you compared potential partners ? Value Chain Is the value chain fully explained ? Is the cost in each value chain objectively explained ? Make or Buy Have you specified which activities you want to handle yourse
75、lf and which should be carried out by third parties ? Have you compared possible ways to forge partnership ? Have you examined whether the partnership gives equal benefits to both sides ? Have you examined feasibility of your business from the viewpoint of strategic significance, suitability and ava
76、ilability ? Have you compared potential suppliers for outsourcing ? Check List (Business System) YesNo Writing a business plan 29OrganizationExplain organizational structure necessary for each stage of the business (show organizational chart)Maintain TFT format during the incubating stage of the bus
77、iness. Separate into an independent business unit once the operation is in full swing Describe missions and functions of each organizational unitHRDescribe skills and qualifications required of the team leaders and members Set up KPI for performance evaluation of team leaders and members Suggest way
78、s to reward outstanding team leaders and members Show required number of personnel according to each organizational unit/rank Writing a business plan Organization and HR30 Is there enough background for the organizational structure ? Have you selected KPI for performance evaluation of team leaders/m
79、embers ? Does the KPI match the missions and functions ? Have you presented an organizational chart according to each business stage ? Have you detailed functions and missions for each organizational unit ? HR Have you described the skills and qualifications required of each business unit leader ? H
80、ave you suggested ways to reward outstanding team leaders/members ? Is the organization structure suitable for speedy decision making ? Have you described the skills and qualifications required of each unit team member ? Have you indicated whether you will utilize your own or outside people as team
81、leaders/members, and given rationale for your choice ? Have the number of ranks been minimized as much as possible ? Writing a business plan Check List (Organization and HR) YesNo Organization 31Analyze the opportunities and risks involved in the new business and promote risk management and opportun
82、ity useRisk analysisAnalyze the fundamental risks related to the market, competition and technological development for the new business Quantitatively measure the impact on the risks Seek ways hedge or manage the risks Opportunities analysis Analyze additional opportunities related to the market, co
83、mpetition and technological development for the new business Quantitatively measure the value of the options Seek ways to enhance the value of the options“One of the greatest myths about entrepreneurs is that they are all risk seekers. All sane people want to avoid risk.” Writing a business plan Opp
84、ortunities and Risks32 Are the risks related to the market, competition and technological development quantitatively evaluated ? Risk analysis Are the risks in market, competition, and technological development related to the new business accurately defined ? Have you suggested ways to hedge the ris
85、ks ? Opportunity analysis Are the potential opportunities in market, competition and technological development related to the new business accurately defined ? Are the options related to the market, competition and technological development quantitatively evaluated ? Have you pointed out ways to hei
86、ghten the value of the options ? Writing a business plan Check List (Opportunities and risks) YesNo33Drawing up your implementation schedule 1) Gantt implementation schedule : Check major tasks on the Gantt chart2) Major milestones : Indicate events that should be defined as milestones3) Important c
87、onnections and interdependencies between the work assignment groupings Writing a business plan Implementation ScheduleA realistic five-year plan enables you to consider inter-related issues in promoting your project and above all, help you to avoid possible risks from attempting to reach your target
88、s with an overly optimistic planning 34Sample Gantt Chart Task200012345678910111220012002 2003DevelopmentSoftware developmentHardware Set-upTestMarketingEstablish customer relationshipAdvertisingRegional expansionOrganization/HRTFT organization/management Recruiting/trainingMilestoneNew product comp
89、letionLaunch advertisingBusan operations Kwangju operationsTaegu operationsSeoul operations Writing a business plan35 Are all major tasks included in the schedule ? Gantt chart implementation schedule Is the implementation schedule in the form of a Gantt chart ? Is the implementation schedule consis
90、tent with other sections (organization, personnel, financial planning) of the business plan ? Milestone Have all the major milestones been indicated ? Are the milestones consistent with the Gantt implementation schedule ? Is the schedule overly optimistic ? Interrelation and interdependency Is the o
91、rder of tasks logically laid out ? Is there a reasonable explanation for the interdependencies between tasks ? Writing a business plan Check List (Implementation schedule) YesNo36 Minimum required for financial planning1) Cash flow statement, income statement, balance sheet 2) Forecasts over five ye
92、ars, at least one year beyond the generation of positive cash flow 3) Detailed financial planning for the first two years (monthly or quarterly), thereafter annually 4) All figures must be based on reasonable assumptions (the basis for all assumptions must be provided in the business plan)5) Analysi
93、s of the economical efficiency (NPV, IRR, Payback period) and sensitivity analysis of major variable changes Writing a business plan Financial PlanningFinancial planning is a consolidation of all elements in the business plan and assists you in evaluating the profitability of your business Financial
94、 planning is used as a basic data for forecasting the amount of financing needed to set up a business “Planning substitutes chaos for mistakes.”37Income statement The income statement shows whether the business can generate profits. Businesses unable to yield long-term profits cannot continue to exi
95、st The provisions of the income statement are as below and sub-categorized according to the characteristics of the business (Businesses operating on internal funds without any external sources does not take the interest cost into consideration : unleveraged basis)A. RevenueB. CostGive rationale in t
96、he form of price x volumeCategorize into variable/fixed costs and give rationaleNotesYear 1 5C. Gross Profit (A-B)D. SG&AE. EBIDTA (C-D)F. DepreciationG. EBIT (E-F)H. TaxI. NOPLAT (G-H)Show gross profit rate (gross profit/revenue)Categorize into variable/fixed costs and SG&A/overhead and give ration
97、ale Should be consistent with investment plans in the cash flow statement, give rationale for manner and period of amortization Indicate tax rate Writing a business plan 38Cash Flow StatementThe cash flow statement shows the amount of invested capital and the cash that will be generated from busines
98、s operations The provisions of the cash flow statement are as below ; A. Operating cash flow A.1. After-tax sales profit A.2. Depreciation A.3. Decrease/(increase) in account receivables A.4. Increase in account payables/(decrease) A.5. Decrease/(increase) in inventory A.6. Decrease/(increase) in ot
99、her working capital B. Invested cash flowSame as NOPLAT in income statement Same as depreciation in income statement Give rationale in the form of daily revenue x A/P period Give rationale in the form of daily revenue x A/P period Give rationale in the form of daily revenue x inventory days Give rat
100、ionale in SG&A ratio Detailed annual investment (Categorize into assets/depreciation difference) should be put in a separate provision C. Net cash flow (A - B)D. Accumulative cash flow Writing a business plan NotesYear 1 539Balance SheetThe balance sheet shows changes in corporate assets on an annua
101、l basis The provisions of the balance sheet are as below ; (The balance sheet can be automatically calculated from the income statement and cash flow statement figures)A. Current assets A.1. Account receivables A.2. Inventories A.3. Other working capital Accumulative increase/decrease in account pay
102、ables on the cash flow statementAccumulative increase/decrease in inventories on the cash flow statement Accumulative other working capital on the cash flow statement C. Total assets (A+B)D. Current liabilities D.1. Account payables E. Equity E.1. Investment capital E.2. Accumulative after-tax opera
103、ting profitAccumulative invested cash flow on the cash flow statement Accumulative depreciation on the income statement Accumulative increase/decrease in account receivables on the cash flow statement Accumulative cash flow on the cash flow statement Accumulative EBITDA on the income statement Writi
104、ng a business plan NotesYear 1 5 F. Liabilities and equity (D + E)B. Non-current assets B.1. Investments B.2. Accumulated depreciation40Results of economics analysisIndicate economic profitability of the company by Net Present Value (NPV), Internal Rate of Return (IRR), and Payback period A typical
105、economics analysis is as below ;A. Net cash flow (from cash flow statement)Year 1Year 2Year 3Year 4Year 5PerpetuityTotalB. Accumulated net cash flow (from cash flow statement)C. Payback period : Point when accumulative net cash flow becomes a plusD. Perpetuity : EBITDA x Multiple (multiple reflectin
106、g business characteristics) E. Discount rate(i) : Cost of capital + (additional business risks) F. Present value index : G. NPV : (A x F + D x F)H. IRR : Discount rate when A + D = Zero 1/(1+i)1/(1+i)1/(1+i)41/(1+i)1/(1+i)51/(1+i)5 Writing a business plan Perpetuity : Continued value/remaining value
107、 when the business continues its operation after the forecasting period 41Sensitivity analysisSensitivity analysis looks at how changes in the key drivers of the business affects the economics and profitability, thereby evaluating the level of risk involved and identifying the risk factors Key drive
108、rs mainly used for sensitivity analysis are investment cost, price, sales volume, etc. Key DriverInvestment costPriceSales volumeCost of materialsSG&A-20%Mark changes in NPV and IRR -10%Base+10%+20%Mark changes in NPV and IRR Define potentials and solutions for each key driver Writing a business pla
109、n 42 In there an accurate basis for the assumptions ? Balance sheet Is the balance sheet easy to understand ? Is the balance sheet consistent with the income statement/cash flow ? Assumptions Can a third person draw up the income statement, cash flow statement and balance sheet based on the given as
110、sumptions ? Is there an explanation on whether the price covers the cost and guarantees a reasonable profit ? Income statement Is the income statement easy to understand ? Economics analysis and sensitivity analysis Is the economics analysis easy to understand ? Is the income statement categorized s
111、ufficiently ? Cash flow statement Is the cash flow statement easy to understand ? Is the perpetuity adequately evaluated ? Is the calculation accurate for NPV, IRR, and Payback Period ? Is the sensitivity analysis on the key drivers reasonable ? Is the cash flow statement categorized sufficiently ? Writing a business plan Check List (Financial planning) YesNo43
