Creating a business plan

7-11-2016

Delft
University of
Technology

Challenge the future

Why a business plan?

You write it to convince Mr. Jones to invest 5 mln USD in your
company
It is an efficient way to identify the potential of your company.
It combines many important elements (financial, opportunities,
approach/management style)

What should it contain

Company idea; who are you?
Market analysis; what are your options?
Strategy; how to best approach those options?
Free Cash Flow; what will it bring (quantified)?
NPV/IRR; Does it bring enough?
Financing; How to pay for it?
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Company idea; who are you?

High risk High profit vs low risk low profit
Long term relations or opportunity driven
Reliabilaty vs cost cutting
Trump vs Hillary

Market analysis; what are your

options?
Analyse the game market:
What kind of vessels are there?
What kind of cargo, where is that cargo?
What are the infrastructure limitations?
Where will your competitors be?
Where are the opportunities, are there any threats connected to them
(rich picture)?
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Strategy; how to best approach those

options?
Which opportunity is most aligned with your company idea?
Cargo
Region
Competition

What specific strategy will best serve it? (confrontation matrix)

Vessel size, age & Amount
Contract type
Approach to OPEX and CAPEX

Identify your company (SWOT) in line with Idea en Market

Analysis
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Rich Picture
Guidelines
A rich picture is an attempt to assemble everything that might be relevant to a
complex situation.
Fall back on words only where ideas fail you for a sketch that encapsulates your
meaning.
You should not seek to impose any style or structure on your picture.
Avoid thinking in systems terms.
Make sure that your picture includes not only the factual data about the situation,
but also the subjective information.
Look at the social roles that are regarded within the situation as meaningful by
those involved
Finally, include yourself in the picture.
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Inside

Outside
Strength

Oppertunity

3. Confrontation Matrix can be used to find 1. Market analysis will provide oppertunities
the possible strategies
for business
1. What strengths do I need to eliminate
1. Which Cargo?
the most important threats?
2. Which Region?
2. And which ones to benefit most from
3. What will be my share?
the oppertunities?
4. .
3. What strategies will provide these?
Weakness

Threat

4. Select the best strategy with the

confrontation matrix
1. What are downsides of my possible
strategies?
2. How do these relate to my
Oppertunities and Threats?
3. Which one will give the highest score in
the confrontation matrix?

2. Rich picture will provide threats to your

business
1. Size of the submarket?
2. Changes of competition?
3. Foregone opportunities?
4. .

Confrontation Matrix

Strength 1

Opportunity 1

Opportunity 2

++

++

--

Strength 2
Weakness 1
Weakness 2

--

Threat 1

Threat 2

---

Strategy
Opportunity 1
Strength 1

Opportunity 2

Threat 1

Threat 2

GROW

IMPROVE

DEFEND

ABANDON

Strength 2
Weakness 1
Weakness 2

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Free Cash Flow; what will it bring

(quantified)?
At this point you do not yet consider financing, only the project at
hand
What will be the initial investment?
What amount of money is expected to flow in (yearly)?
What will be spend (yearly)?
Estimate those and dont worry about inflation etc. yet.

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NPV/IRR; Does it bring enough?

Financing; How to pay for it?
Calculate the IRR?
Remember WACC =< IRR is a good project, but what is your
WACC?
Depends on your strategy (high risk, high reward or low risk, low
reward?)
Depends on your loan (for high rewards, you need large loans!)
But only when RoE > IRR > Interest

Loans are there to increase your return, not to fill gaps. If you
have money left, you can consider doing a second investment (and
a third, fourth etc).
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NPV/IRR; Does it bring enough?

Financing; How to pay for it?
If WACC =< IRR, calculate an NPV using your WACC for r
Use NPV to compare options
Select the best (ones).
Describe your final proposal

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Summary
IRR

Free
Cash
Flow
Analysis

NPV >
0?, WACC
<= IRR?

Mission

Market
Analysis

Strategy
Strategy

Loan
Strategy,
WACC

Confrontation
Matrix

SWOT

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Good luck
& Contact details

Contact details:
J.F.J. (Jeroen) Pruyn
J.Pruyn@tudelft.nl
T: +31 15 27 86840
Source: www.etsy.com/listing/62377530/keep-calm-and-sail-on-art-print-featured

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