Mr. Sumeet Mehta, MD and CEO, Paradigm Advisors conducted the Master Class – Series 1 on 'Business Plan Preparation' organized by MVIRDC World Trade Center Mumbai on July 17, 2020.
Mr. Mehta suggested that a Business Plan is the basis on which enterprises raise capital. It consists of identification of product, service to be produced, its Unique Selling Point (USP), marketing strategy and preparing a roadmap that provides direction for the future, among other things. It is used by investors to decide whether or not to invest in a particular project.

A business plan typically consists of contents such as the Title Page (including Name of the Company), an Executive Summary, Description of the Business (Industry / Sector), Idea behind the Business, Vision and Mission, Constitution / Nature of Entity, Date / Year of Incorporation (if existing) and Description of the Product / Service.

The idea behind starting a business usually entails addressing the gap in the market. This requires market analysis in the form of identifying competition in the market, market size and structure (large players, institutional buyers), growth in market size, key growth drivers (taxes, subsidies, rapid urbanization, socio-economic factors), market segmentation based on product and geography, suppliers, production process (whether it will reduce costs or improve quality), price trends of raw material and finished goods, regulations and policies (licensing, import controls), outlook of the market etc.

Talking of Michael Porter’s Five Force Model, Mr. Mehta said one needs to look at competition in the industry (product differentiation), potential of new entrants into the industry (entry barriers), power of suppliers, power of customers and threat of substitute products, continually while in business. He said one should also undertake a SWOT analysis to identify his / her strengths, weaknesses, opportunities and threats of entering the business.

Elaborating on the preparation of the business plan, he said it should highlight the USP of the business such as its production method, product quality and marketing - online or offline or mixed, B2B or B2C, marketing plan - digital presence in the form of website, Facebook, Twitter, Instagram, LinkedIn, YouTube, online directories and listings, and connection with payment gateways, online selling through websites like Amazon, Indiamart, Flipkart, Alibaba etc., raw material sourcing, special technology and supply chain management through distributors, franchises, key alliances etc.

Market Research needs to be undertaken regularly through surveys, selecting the right sample, designing appropriate questionnaires, periodical review of the product and market to evaluate whether the product is required and competitive in the market, and to understand the need for innovation and redesign of the product, repackaging or rebranding, changing market strategy etc. to make the product more competitive and / or relevant with the needs of the market.

The Business Plan should also emphasize on operations and management, technology used in production, key alliances and partnerships, exclusivity arrangements, long term contracts with customers, distribution arrangements, new supply chains and branding. Financial Data is required for funding the business plan, whether through equity investments (own equity, family and friends or investors), subsidies and grants from government or through debt (loans from banks or loans from family and friends).

The Cost Sheet contains direct expenses that go into manufacturing such as factory cost and selling and distribution expenses, that together make up final costs or cost of sales. Prime Cost is Variable Cost. The Business Plan should also highlight the Break Even Point and Staffing Plan. Ideally, a Business Plan should not exceed enumeration of expenses of more than three years.

Mr. Mehta further elaborated licenses required for starting a business include registration of the firm or company, Income Tax, PAN and TAN (where applicable), Shops and Establishments Act registration, MSME registration, Start-up India registration, EXIM registration, GST registration, Brand / Logo Trademark / Copyright registration and business-specific licenses.

Iterating the importance of Value Creation, Mr. Mehta suggested that businessman should identify their key operational performance indicators, focus on financial performance, focus on cash flows and not just profits, scale up to enjoy economies of scale, not compromise on key financial indicators and cash flows to scale up, create processes and systems and religiously adhere to the same, and continuously track competition and market trends.

This Master Class was attended by 220 Participants from various sectors.