Write Your Next Business Plan that Actually Matters

1. Introduction of Instructor: Hello everyone. Welcome to my skill share class on business plan. My name is Anthony. Very nice to meet you guys here. So let me give you a very brief introduction about myself. When I was 23, I started my own company, a study at Board Consulting Agencies. Its name is called Maybe in this class I will mention it from time to time about my experience, about what I learned through the process of building this company, which is now five years old. And ever since I started my own company, I've been in this entrepreneurship game. You know, meeting of founders, getting investment, expanding companies, and giving business advices to other fellows. And of course, I'm quite active on linking. I've been writing, share my thoughts, connecting with other founders online. So why not add me on linking, and maybe one day we will meet each other in real life. That being said, now you know me. Let's go and begin the course. 2. Course Overview: What is this course about? When I was designing this course, I always ask myself this question, What do I right now, this current Anthony, want to tell the previous Anthony, who is 23 years old, very ambitious, and wanted to start his own company. What kind of advices or what kind of less knowledges that the previous young Anthony should have known. With that in mind, he could have achieved even more. So this is how I'm going to structure this course. I hope that after this course, you will join me in other courses to learn more about entrepreneurships and running businesses. But to keep you guys focused on just one single topic and a single topic that is so important that you shouldn't miss when you try to study, when you try to do entrepreneurship, it's business plan. So this course, throughout all the lessons, we will talk about the different elements in the business plan and why business plan is important. We will talk about how to define our problem and solutions for businesses. We will talk about market opportunities, how to actually define and find your customers. We will talk about financial analysis. Of course, numbers and expectations are super, super important in a business. And we will talk about risk assessment, What kind of dangers we should have planned ahead, and what kind of measurements or actions against potential threats we have to keep in mind. And then we'll talk about business model. Business model is super important in terms of considering the whole aspects of a business. It's actually just like the skeleton or the backbone of the human body. You need to have a business plan in order to build all the different elements and make them work together. So it's not just enough to have a solution in mind and call it, okay, I'll start a business. You are not prepared if you haven't considered the whole business plan. And then at the end we'll talk about execution plan. What kind of a Northstar or a goal objective destination your start up of business to go, want to achieve in three years, in five years, or in ten years. How do you actually pinpoint the exact steps? And also set the short term goals so that you can achieve the long term goals. Last but not least, this course comes with an assignment. I will assign you to do a business plan of a business idea that you have in your mind and it's your turn to output the knowledge of what you have learned from this class. Let's go. 3. The Importance of a Business Plan: How Planning Can Save Costs: Before we begin looking at all the different elements of a business plan, let's talk about why is it so important? Why having a business plan in mind is so important? Why shouldn't I just go and talk with people and to sell my product? That's it, right? I need to just make money. No, because sooner or later, if you want your business to be sustainable and succeed and you want to deliver a constant message, you need to think and plan of time. You think ahead of time. What kind of business you're building, okay? What kind of life you want to have? What kind of impact you want your business to have on your customers, so that you don't be so responsive to different kind of requests or different kind of customers. You need to have a clear vision on what your business is, what your business wants, and what your business doesn't want. This is very important because once you get started, you will get exposed to so many different kind of, let's say customers wanting different kind of service from you. And is it, should you say yes or no because you haven't thought about it at all? Oh, let's say you're going to sell a consulting company just like my company study aboard agencies. What if people that you talk to, our customers come to you, potential customers come to you and ask, Oh no, I don't want to study aboard advisors, can you actually teach me math? I want to teach me English. I want to do a level exams. And this is important for, let's say for me to study aboard in the future then should you take it. But you haven't thought about it, right? You haven't thought about, oh actually this might be a good idea for upstream customers because those who take international exams, public exams, they will have likely, a higher likelihood or higher chance to study aboard, right? We should avoid all these kind of situation. Step back and think about, okay, what kind of business I want to do. What kind of different product or services I want to offer so that I can cover enough market space or the customer journey. So that I will be present and we will have a lot of interactions with the customers, right? And create some, maybe, stickiness, stuff like that. So planning is very, very important. So think about doing business or building a business. Building a start up. As playing chess, you have to have a whole overview of what kind of game you're playing. You have queen, you have pawns, you have kings, lots of different characters, you know in chess on your hands. Just like pokers as well. Playing poker, Okay. So I have this in my hand. What should I do to get the most out of it? Right? Let's say. Oh, maybe actually I have some connections with some teachers in the high school. Why, why not I talk to them, you know, have some meetings before I actually started business to know more about the actual needs. Maybe nobody wants to study abroad anymore. Everyone wants to study locally at home, at their hometown. In their hometown, so that they are closer with the parents, with the family. While they may be more interested in studying remotely, pursuing degree remotely, because now we are post covid and doing stuff online. So acceptable. Right. Even doing a degree online, having lectures online. So mainstream and it's not as bizarre or weird as in the old days. So why not have some conversations with the teachers that you may have known, right? If you want to start a education company, this is why my very first reason for having a business plan before you actually start. Now, the second point is, you know, it's very unlucky if your business idea doesn't work and you run out of business in just like three or four months, right? Oh, yeah, the idea doesn't work. Time to pack and leave. Couldn't make any money, couldn't achieve profitability or your original goals. That's very unlucky. Okay. That's it, game over. But what if you succeed or succeed even more than your expectations? Of course, you're happy. But what is the next step? Let's say you make a lot of money, you make extra than you have originally planned. There's a unexpectedly high demand and also customer loyalty on buying your services. Then what should you do with extra cash? You just spend it on whatever you want to buy. Maybe buy a house and rent it out and earn some passive income. Or what should you do? What should you do next? Should expand. Have you thought about it? Should expand to another Asia country, another European country, or like somewhere else. Or you should just just keep it like that. You don't want to expand if you haven't thought about it ahead of time. And when you are in that moment in that situation where you have to kind of make a decision, that will be too late. Because in that moment, there's a lot of things that require your immediate reactions or you just don't have time or space in your mind to have like a clear thinking at that point, everything seems so nice, seems so frantic. Maybe you are more likely or prompt to make some very bold and take some very high risky decision. What about it? Maybe you are like a fireworks. Everything went unexpectedly high, like, oh my god, everything is doing so well. And then all of a sudden, and then you made some very highly risky, very high risk investments, you lost everything, right? So what I'm trying to say here, my second reason of why business plan or planning ahead is so important, even in my own experience, is that it actually gets you prepared for a reason judgment. Because if you take the time to do the research, to think about it before jumping into the game, you have much more clarity of the whole game. Not just the business, but who you are, who you want to be, What kind of stuff more meaningful to you know? All these kind of stuff require a step back from the current situation to make a good judgment. And as a founder and probably CEO of your start up, you want to be the guy who has the best judgment right all the time of your business. You want to have clarity because nobody knows better than you who you want to do. If you don't know what exactly you want to do or with so many options, once you hit a certain point of sales, there are people coming at you all the time. You know, you do want some market expansion, right? Marketing calls, analysis. You want to expand this and that you will receive so much noises. How could you stay clear minded, right? You couldn't just shut down because maybe you got popular. What should you do next? Who should you say no to? Right? So this is like my second point is that thinking ahead of the problem, you may like sooner or later face it, we'll just give you much more benefits. And last one thing, write down your judgment. Write down the thinking process of identifying, let's say, oh, actually I don't care about all the extra cash that I will make. I actually enjoy more about personal freedom. Or you enjoy more about charity, you said. I go, okay, if I make five figures or if achieve certain kind of profit, I will actually donate this amount of money because blah, blah, blah. You know a lot of reasons you wrote, write it down. And in the future, maybe it's just like a year or two years. You know, things happen so quickly. Come back to your writings. You look back at the judgment that you did, let's say one or two years ago, and then okay, see, you will know what to do. Your writings will bring back the current self, maybe that is chaotic, unable to make a clear judgment back into let's say a clear minded guy, okay? Or a clear minded person. That's also why I personally, I like writing a lot. Because the thoughts that I have today, if I write them down and I come back later, then I'm open for my own criticisms. In the future, my future self can come back and look back at the writings, look back at the judgment and say, okay, I agree with him or I don't agree with this young Anthony. It just doesn't make sense. Very important, please take this business plan, doing this business plan very seriously if you really want to start a business. And also don't just skip through the steps, because down the road you will find a business plan. Usually it's like 30 pages long with tons of time and information that you have to consume. But at the same time, you don't want to overwork yourself so that you avoid staying in writing the business plan for like six months, one year, two years, without actually, you know, jumping into the game and actually working on it and making it happen. Because you can't just do analysis and planning, right? You have to take action. So when's the best time to take action? There's always a better time, right? So, best time is now. 4. Market Opportunity: Defining Your Customer: Now let's look at the core components of a business plan. A business plan, of course, talk about the base plan of your business idea. Also, before you found the business, you want to pinpoint the key components that you really want to consider and do some research on. Mainly, it's about problem solution, market opportunity, financial analysis, risks, business model and execution plan, actual actions. Let's begin to look at each of them. In the problem and solution section, you want to look into basically two questions. What is your company solving? What is the problem you're solving? What is the solution you're bringing to the table? To the customers so that they will feel like, oh wow, this is what I want. This is a solution that I want for my specific problem. When you're thinking about the problem, and solution is really about the core products or services that you're going to sell customers by your company. And you want to, not just like a solution or what I always wanted to say is to describe it as a hammer. You don't find nails, you know, with a hammer in your hand. But actually think from the customer side, what do they need? What is lacking? Is there like a gap between the existing solutions? Are you offering something that is entirely new or like ten times better than the existing solution? Here, the first thing is problem identification. You have to thoroughly research and understand the problem by your target customers or your target market. And this is very specific because let's say my example again, study at board consulting company. Honestly, the education system is very different between the education system in Asia and education system in the Western world. For example, education is free in Denmark, in the Nordic region, and as well as here in Germany. In Europe. Right? Education is not that free in Asia. Let's say in Japan, South Korea, Hong Kong, China, Taiwan. Often you have to pay certain amounts of tuition fees. And even like in the US, right, even the local students, they have to pay a lot education. Even though it's the same concept, right? Like oh, you go to school and then you take some exams and then you study in a university and get a degree. It may not have the same importance or urgencies playing the role regarding the markets. It is very important to pinpoint, not just like a customer profile, what kind of people you want to serve, but where are the right, this is super important when you're thinking about a problem. It has to be very specific. The more specific your problem, better. Now here is a solution. Next solution proposition is identifying a solution. Usually when you find a company, either you have a very good idea about something and you want to create a new generation of services, or you have some technologies in your mind, in your hand, in your possession. Maybe you're working in a research lab. And you know that this latest research or manufacturing technique, manufacturing the same product with ten times less of cost, this is your unique or unique strength, right? When you're identifying a solution, you have to present a clear and compelling solution that effectively address the identified problems, demonstrating the value and the market potential. Usually it's either this problem, there's no existing solution, you are the first one. Or this is a problem with tons of existing solutions, but nothing. They are inferior. They are crab compared to yours. This is very important to keep in mind. Of course, if you have a problem and solution and overlapping, right? Or when you consider both, you will find your USP, which is your unique selling point. Your unique selling point shows your solution how your solutions, as I said, differs, or sets your company apart from the competition. Because once you founded a company, boom, blah, blah, blah company, and then you have some kind of description, right? This description may not be unique, right? If people are searching something, let's say you're doing a cleaning company, they will search. For example, I'm living here in Munich, Munich lining come to my place. You have already tons of existing solutions or websites on the Google search results page that rank way higher than yours because you are just a new website you just created your own company. So it is very important to identify the unique selling points so that you can climb up the rank as time goes by. But keep in mind it won't happen overnight. But still you have to know why you are better, why people have to choose you and your competitors. Why not just do nothing and accept, you know, the reality here, the unique selling point. You have to emphasize the unique features and benefits to make it an attractive choice. Next we have Market Opportunity Assessment, which is, I would say, the second most important component of a business plan. You have to analyze the target market, the size, the potential growth, and the competitive landscape. To determine the viability and profitability of your business or your start ups, you have to basically think about this, Is this market big enough to not just have me in it to get like a piece of the pie, but also with tons of competitors. If it's super saturated, then you will have a hard time to take a step in and not get overwhelmed by all the competitors. Because if I'm a customer and I'm in the space of finding new solutions, all the existing solutions, they will have tons of advertisements established in 2000, established in 1916. And they have been growing and surviving for, I don't know, 20 years, 50 years. And you are just a new starter. You have no credibility. You have basically no testimonials from existing customers because you are new. What should you do? That's why if you pick a very saturated market with tons of competitors or very unhealthy battles, competitions within the existing companies or solutions, then you may say, okay, yeah, I would take a step back. Yeah. Maybe wouldn't survive unless you have tons of money. Honestly, that's why people, let's say in project management app, they raise usually tons of money. Software as a surface Si business, SAAS, they usually raise tons of money unless the solution is very unique and new. Because let's say project management app, tons of very good solutions already. And if you're trying to compete in this space, you need to raise tons of money, not in the R and D development, but in marketing to outcompete the people. Because you need to have even bigger branding power, marketing power, all sorts of advertisements to grab attentions of the potential customers who tell them, even though you are new, you are better than existing solutions or companies. When you're doing marketing opportunity assessment, first thing you have to do, market research is too saturated. There's like super unhealthy competition. And also you have to know your customer needs, preference trends, and also how your product is special within this market. Then the second thing, competitor analysis. Here we can dive in other lessons. Competitors and others. Is basically like when you consider buying a phone, all right, you want to buy an iphone, I don't know, Samsung, Motorola or nothing phone. You have to compare them like side by side, right? Basically this is how, well, I would not say how all the people make decisions or make their purchase decision. But when you are playing chess, when you're planning how you're going to roll your business, then it's better to think about, okay, what kind of competitors I'm having for let's say all the cleaning companies. They don't have immediate on site cleaning service. Let's say every existing solutions or competitors. They require certain time of booking next weekend or like two weeks later. But maybe you can find through the competitor analysis, you can find this waiting time. You can maybe shorten it to as much as 3 hours after paying you, you can find somebody to do an on site cleaning within 3 hours. Then it will be very competitive and it will be very unique just to you. Doing competitors analysis is like making a table with tons of different spec specification. Just like the smartphones, cameras, Ram, CPU maybe can use message or stuff like that. Then the last thing or the third component of a market opportunity assessment is to know the target audience. Basically what are their daily lives are. This is not like the market like oh, here it is, like a 10 billion market opportunity sitting in the Asia education market. It's not like that. It's more details, more personalized. What about actual target audience? What are their behaviors? What are their day to day life? So that you can create that languages or vocabularies that can connect with them once they see maybe your advertisement, maybe your social media account, maybe your website. But once they see it, they feel like, okay, this is for me. 5. Market Opportunity: Defining Your Customer: Okay. Now I want to talk about one thing that I am super, super enthusiastic about, market opportunity and how to define your customers. How do you actually find your customers? Before I begin, I want to start with a question. Do we actually need to define our customer? Do we need to find our customer? I'll give you 3 seconds to think about it story time, because the younger Anthony, when I was 23, I was so greedy. Let's say I wanted, of course, if I can serve everybody, that means there will be more revenue and everyone likes my business, that means I can make more money, right? Not true. Why does it actually make sense that by serving a small, unique set of customers, you actually will earn more? This is actually right, because in terms of marketing, the angle of marketing is conversion. You want to convert sales, you want to convert a stranger who doesn't know about your company and what your company doing into a customer that actually pays for your product and pay for your services. This whole marketing aspect of the business, I will always connect with sales. It's always marketing and sales, because after you do marketing, boom, boom, boom, all the fancy Instagram polls, Facebook, Youtube videos, whatnot, all the branding stuff. At the end of the day, you want people to come and pay you and say, hey, I want this right? I want what you're offering. So take my money and let me get your product or service, Okay? So why does it actually make sense to have to define the customer's set? Because everyone who pays for something wants to be feel like they're unique. It's only for them, they are buying this because this is made only for them. Let's say if there's an ad, okay, an advertisement saying that, oh, this smart watch is for this guy that is like dark hair, with glasses, Asian Authnticity, love wearing leather jacket. If I imagine there's an advertisement like that, and when I look at it, oh my God, that's me, that's me. Imagine me looking at the ad. I will feel such a strong connections, right? This is the power of marketing or presentation branding. You can connect with your customers without actually going in front of them in person. And tell the hi, I started my company, I founder and CEO of Company X, stuff like that. This is what, what kind of magic that marketing does. And you want to increase this bonding so that it stays in the customer minds. Now, in contrast, why doesn't it work if the customer or if the message is not specific enough? If it is not specific enough, or let's say that smart watch is just there saying, hey, this is a smart watch done. Who is the target customer? Who is like, it's not specific at all, right? It just looks like anybody could wear it. Instead of being very specific that I feel the connections. Yeah, I have that connection with the advertisement, with the post that this smartwatch is just for me and only me. Because let's say maybe I'm a sports enthusiast or I love tracking my sleep, you know. So this is actually for me because this is the selling point. They're very specific in improving that. I don't care about GPS connection, I don't care about notifications, let's say. I just care about sleep detections. And this advertisement is for me and this product is for me. Because they are as specific as they could, right? They are not listing all the different kind of functions or features, trying to, you know, fish all the people. Because that would be so overwhelming and that would be actually quite obvious, right? Like if there's an ad listing out, you know, no matter where you are or no matter what kind of students you are, we serve you. It won't work because it would be like, okay, this is for everybody. And if something is for everybody, then it's for nobody. It's just not specific enough. Who wants to pay money for something that is not specific enough? Let's say this is like a TV control, right? Who wants to pay it if this is not specific for my TV, right? Do I care about? Does it work with other brands? Other TV brands? I don't care. Want to have a TV control that is specific for my television in my home. This is very back to the psychology of human needs and also what is a transaction? What is a sales? We can go on that later, but let's go back to, you know, Okay. Now we all agree, right? Okay. We need to define the customers then what should we do? Let me tell you my story. When I started my study at Board Consulting Agencies, I didn't really have a set of unique customers that I said I only served them. Oh, you are not one of them. Sorry. You should find somebody else. Because I only served them. I didn't have it in, let's say the first one or two years. Yeah. Afterwards I learned it. I learned from my, you know, mistakes and experiences like, okay, actually if you just don't have like a specific customer set or customer criteria in your mind, and when you do like phone call, sales call, or when people come to your office, call your business phone and ask about it, they will be kind of suspicious, really. You do this and that, but you didn't actually, you mention it on your website, Okay. Yeah, yeah, yeah. You say yes to everything. That just makes you very, very scammy and not very credible. And actually, if you want to build trust, right, with the potential customers, you have to be transparent and honest. And being honest means you don't say yes to everything. You say yes to things that you think it's yes, right? And you say no to things that is no. And in the course of, let's say a 15 minutes phone call, it will be impossible to have like everything is a yes. You know, of course there's some disagreement or there's some which are absolutely fine, which won't drive people away. If you are specific enough, if you know what you're doing, if you know the company mission, saying no to certain kind of things or certain kind of questions won't drive people away unless your business is a people pleasing business, right? So everything is a yes. Otherwise, go back to my story, study aboard consulting agencies. In the beginning, I didn't have the specific customers in mind. Primary school students, Sure. But primary school students rarely go study aboard. Right. Because they are minors. They're under age, they need their parents with them. So that's weird. Right. But should I do some, you know, foster house or you know, the boarding school, stuff like that. I got distracted. I spent a lot of time to do that. And then I think no, no, no way. What was my original like, purpose? Right? Why did I actually want to start the company? It's because my experience study abroad in America, in California, in the US, in my college years, you know, like after 18. And I felt that all my experience when I was studying abroad changed my life. And I wanted to pass this positive impact influence to future generation students actually. Who's in my mind, it's not primary school students, it's not students in the kindergarten and not really like the year nine year 78. No, it's actually the high school students that are going to study aboard. It's the year 11, 12. This is what I learned. And if you are running the business in the beginning, it's just like you have limited time. Honestly, you're only you or plus your co founder team of two people. But you have to do so many stuff, right, like administrative stuff. And also you have to do marketing. You have to make connections with other collaborators. You also have to make sales. And if there are actually customers paying you, even though it's like one or two in the beginning, you're busy enough. Super busy. Super, super busy. If you don't know when to say no, like, oh sorry, this is not for you, then you will just keep getting some kind of, I wouldn't say low quality customers, but customers that was not meant to, you know, that you didn't actually mean to serve them. But because you are not clear on the customer set, the customer definitions that you say yes to everybody. Now these companies is offering services to so many different kind of customers and students is just weird and it won't take long for you to realize that, okay, actually I need to cut down my customer definitions or cut down the customer success or like subpopulations of customers. This is why having, defining the customers in the beginning is very important then down the road in my stories that my study aboard consulting agencies not only serve with people or students who actually study International level exams. Or you know, IB. Right? Because when they study this exam they actually already kind of decided. They wanted to preserve like an opportunity, right, to go and study aboard. But they are not sure yet because you have to kind of make a decision when you're in year ten whether you want to go or prepare for like international levels or IB exams, right? So they actually, you know, keep that door open. So I only serve these people. And what's more is that I serve people or students or customers, right? Or like parents, you know, that are actually studying in international schools because they actually have the capitals or financial abilities to support the students to study aboard. In the US, in the UK, Singapore, Australia, Canada, all these countries. Because international students usually pay a very, very high fees compared to the local students when they study abroad in the mentioned countries. After me defining, basically drawing all the boundaries of what kind of students, parents, potential customers that my company want to serve, then I become very, very clear and all my resources, all the writings on my website, it's directed to them, you know, it's directed to them if I want to serve people that want to study aboard, but without the financial ability or without, you know, the family support, then if I want to say to them I have to actually also take care of the financial part, then maybe my headline will be a scholarship or like, you know, financial student loan, stuff like that. Agencies, right, like specialize in this because that would be what they need. But then that would not be the customers that I want to serve, not what they need at all because they already doesn't have to worry about their financial. Here is like, as you can see, right in this lesson, there's just so many different kind of ways to go specific and I'm sorry, but you can only pick one. That's because it's a company, company, a legal entity, right, That can hire people. They can buy and sell things and also have an impact in the society. This is what I want you to take home with, is that finding customers is a must. You need to actually think about what kind of customers you want to sell to. Let's say now I'm living in Germany. I have an idea. I want you to start a tourism company, Just a small one. What kind of people I want to serve? What kind of languages do they speak? Like a short term stays, long term stays? Or people that usually travel around the world. What kind of customers that I want to serve? I still have to answer the questions. This is avoidable inevitable, especially in the beginning of starting a business because you don't have that in your mind. The company mission vision or the SEO description of your company website with a very short introduction or the description text on the Instagram account, it will not connect. It will sound very vague. It will sound to nobody actually, because you want everybody, that's the thing to keep in mind. 6. Financial Analysis: Numbers and Expectations: Okay, next, let's talk about financial analysis. Of course, a business is based on numbers and monies, right? And so having like a passion or the market, the customers, the solution, the problem that you're solving is not enough. You have to dig into the actual numbers. For example, profit. What is profit? Profit is revenue minus cost your company, or if your business, even at this point of writing a business plan, couldn't achieve the point of profitability, meaning that your business is not profitable at all by selling your services, the cost is actually higher than the revenue you're taking in. Then you have a negative profitability. This means that your business idea may not work because once you set up your company, this amount of service or products, you will not make any actual money at all, but you will lose money. This is important in the sense that at this point of doing business plan, we're doing financial analysis, we're crunching all the numbers we're considering, okay? How much can I spend maximum on marketing, on the cost of producing the product? And how much actually is the minimum revenue or price tag per unit, per product, per surface that I have to sell in order to hit the break even. And then if you go behind the break even, you earn profits. Financial analysis evaluates basically the financial health profitability and also the sustainability of your business. What does it mean by sustainability of a business? Here we are not talking about like environmental sustainability, although this is an important issue, We're talking about the sustainability of your business, Let's say, okay, you actually plan to lose money for the first 12 months, but because you only for the purpose that you want to capture more market share, you want to do a lot of advertisement hiring, maybe KOLs, people you know on Youtube, stuff like that, to build a brand of your company. So the first year will be a loss of profit, but then you plan to hit break even on the second year. What it means is that you are not expecting to earn any profit, okay? Not earn any money, but earn any profit. Because of course, you have to make revenue. It's just that the cost will be higher than the revenue, you will not achieve profit. But that's the first year. And then the second year you plan to maybe lower the cost. Or once your business is going, people are coming to your store, to your website regularly, then you can stop doing all the kind of, you know, burning money type of activity, right? So here and then of course What I want to also, you know, emphasize is that in the first year you may need to think about whole 12 months. How much money you need, that's called the runway, and how much money you will need to spend every month. That's like your burn rate, right? And if you don't have initial, you don't have initial enough capital to start with, then you have to raise investment. You have to go for investors, Maybe a business loan for a bank or any like government programs, grants, stuff like that. Because we will go to it later, but it takes quite a lot of time, I would say. Longer than you expect to actually achieve your first sales. And we will go and talk about why later. Financial analysis is important because it provides information on the project, okay? Project, estimated revenue costs, and also how much fund you will need to actually launch your business there. Actually, in financial analysis, three very main components. The first one is revenue projections. Based on what we did just in the previous lesson. The market, you're not going to capture 100% of your market on day one, okay? So let's say the market is like 5 million, all right? And you want to capture just like 5% okay, so like 50 k, right? So that's the goal, right? And you have to be realistic in revenue projections. You couldn't say like, okay, I will achieve 10% market share in the first 30 days. Very ambitious. I don't think things work like that. You have to be patient. Although you are an ambitious founder, so you have to give. In the first component, revenue projections, you have to know, based on the market size, market demand, you're going to capture maybe 5% 1% even in the first year. And then how you're going to price, you know, the product. Maybe if people buy more they can get some discount, you know, stuff like that. How will you see or expect the growth of the company of the sales, right? That's number one. Revenue projections and number two is cost analysis. Cost analysis basically identifies and analyze all the potential costs involved in running your business, including domain, okay? Website also operation costs such as office, if you want email, domain, website marketing, even advertisements. And of course, depends on your selling products or services. If you're, the cost is way lower because maybe you're just selling your time for product, for actual product, physical product, or even software product. You have to think about the cost per good sold which is Cox COGS cost of good sold like every product, every unit of the product you sell there of course cost come with it because you have to produce it. This is Cox. Then the third one is funding requirement. Knowing that you have to have some kind of revenues you want to project and hit it, and then you have some costs in your mind about your products or services. It's time to do funding requirements. You have to determine how much of a capital you want your business requires you to start with and also sustain your business for, let's say, 12 months, 18 months, two years. You can do whatever in your plan, but it has to make sense and explaining how it will be utilized and potential. And also you have to think about potential sources of funding. I just mentioned it. Government grants go to VC's, NGO, investors, bank loans, friends and families, stuff like that. Also I would say when I think about funding, it's not just about the money. Maybe you have noticed it already. Also time how entrepreneurship, right? Very exciting, right? This game is known to everyone that over 99% of starter fails and they couldn't make it to five years at all. Here, having this fact in your mind, you have to take this piece of information very seriously. Like how much time you allow yourself to play this risky game before calling it game over. Because from the statistics, over 99% of startups fail, You fall into the majority, right? You're like shooting in the dark, waiting for a miracle to happen. It is very, very realistic to think about, okay? Maybe I'll just try six months full time just like, you know, grind mode doing all the stuff. Because once you start your own company, you are your own boss, right? Why stop working for yourself, right? You have to maybe work a lot harder than, than your day job. Reaching out and be very courageous and brave, and set a time for yourself. Don't take entrepreneurship or like starting a business and say, okay, I have to make it happen. Otherwise, I don't know where I would do. I don't know where I would go or what I would do afterwards. No, don't do that. I would say in terms of thinking about funding, really think about how much time you want to spend on this game. And keep in mind that it's okay to say, okay, it's game over six months. I try it. No revenues, no sales. No people wants, it could be right. Doesn't matter, that's your six months lesson, right? And you can go back to your day job or whatever you're doing, or you have any other new ideas. Who knows. You can always come back to this entrepreneurship game, this funding like new businesses, you can always come back. Maybe this is not the right time, right, But you have your lessons learned maybe two years later when just like now, AI's very popular and commonly used and the barrier of the technologies is very low right now. That's a good timing's even like a better timing to start like a AI right, related business then four or five years ago. Four or five years ago, you need to hire people, you need to have your own data center, data bank, servers, stuff like that. So yeah, it's totally fine to take the loss at the moment and call it, yes, it's game over now, but not forever. I will come back. When it's like a mature time when you're doing financial analysis, it is important to see that numbers add up, okay? Will you achieve profitability? And how long, how many months would you want to spend in this entrepreneurship game? 7. Risk Assessment: Recognizing Potential Pitfalls: Now I want to talk about risk assessment, which is also an important component of a business plan. What a risk potential harms that will happen to your business and also impact your business. In the section of risk assessment, we usually examine and evaluate the potential risk challenges that your business may encounter. Providing strategies and contingency plans to mitigate, basically reduce adverse effects. But keep in mind, whenever we talk about risk, we are talking about potential risk. Long as it doesn't happen, it's not making an actual impact on your business, right? But why do we want to think about it and then plan ahead of time, The actions we will need to do when the risk happens, it's because of the impact, some certain kind of risk. They have so much of an impact on your business that if it actually happens and you don't have a plan or action in place, it will just wipe out your business. Gone. For example, if you are not doing obligations. Like legal obligations following the regulatory guidelines. Basically not doing any, let's say accounting records, you're not reporting texts. This will have a huge impact, right? So you have to, on day one, make sure you have a clean and organized book as in accounting. And you have to think about, okay, what is something in this industry, in your industry that is highly regulated, that you have to actually report to the law authority before you actually start any businesses or start any actions in those aspects. Impact is very important when we consider the risk, but the potential, like the possibility of this risk to happen, we actually have to consider as well. Let's say I'm going to rent an office here in Munich in Germany. What are some risks regarding renting an office like in person office That me and my employees can go every day and see each other. Well, there could be a huge impact on the office. Let's say the electricity is done, right, or the Wifi is done. Then we couldn't do any meetings with our clients or potential customers online. Let's say there will be an earthquake or like a volcano eruptions. The other potential risks that will basically have a huge impact on our in person office, But what is the possibility of actually having a volcano, eruptions or earthquake here in Munich? Very low. I think it's close to zero because first of all, there's no volcano around here and the Alps are far away. This may not be the, the most important risk. I'm not saying it's not the biggest risk, but it may not be the most important risk that I will consider and think about an action plan or evacuation plan in the first goal. Very important is that it is to acknowledge the two points that I just mentioned is the impact of the risk and the possibility of the risk that will actually happen with these two metrics, you can actually do like an XY graph and risk analysis. And then you can put all the different risk scenarios into different quadrants. And this is how you're going to do risk identification in the first step, which is identify and categorize potential risks and challenges that could impact your business. Ensuring comprehensive risk analysis, Then you identify like a list of different risks and then you do the assessment, which is here on the slide. It says likelihood. I will say yeah. It's the same as possibility, also the impact of each individual risk, you put them onto the different quadrants. And then based on this, you think about the risk mitigation, which is the action basically the action part of the action plan in this risk assessment section is that okay for the high impact, high likelihood risk, what should I do? All right. My action, what is my corresponding action or the plan that I'm going to do once this happened, so that you are always prepared when you're running the business. Let's say there will be a potential risk all the time. I think it's like medium to high likelihood and also low to medium impact on your business. Is that people copying your idea, right? You have to think about it. Why? Because once you think about it and you have a solution in mind or actually a rationale or an explanation to this situation, then when it happens, you won't panic. Just like in my own story, I started my study, a board consulting agencies for personalized studying aboard consulting. Personalized consulting, we have to know the students, we don't offer you just like generalized advice, but you can copy this right away you go, do a website. And just like personalized consulting, blah, blah, blah, It's the same as what I said and what my business does. And I couldn't sue you because you offer the same services as mine. Yeah, this is a risk, right? Like being copied by potential competitors is a risk that will have a medium to high likelihood that will happen. But will it actually impact my business back in my days? My story is that, yes, I do have competitors actually copy all the wordings, even lay out on the website. Long story short, they copy everything. But then my companies now, it's been like five years and they're gone. Don't worry about copycats. As long as you know why and you are passionate enough about your businesses, then it shouldn't matter very much. Because what I realize right now looking back is that people can copy what you do. That's guarantee, okay. That's totally possible and it will happen. You shouldn't hold anything against it. People can copy you, but they can't copy your passion or they can't copy who you are. You are passionate in giving advices to students. People can tell from your eyes, like you have this burning desire wanting to help them. You are doing what you like. People actually can tell. Don't be afraid of the potential copycats or competitors that you will face down the road. Be yourself. Stay passionate and really stay positive and ignore the copycats. 8. Business Model: The Instructor's Favorite: Now you've learned the several components of a business plan. Let's talk about the second, last one which is a business model. I hope right now at this point, you are not confuse business plan with business model, okay? They are not the same thing. Business plan is way bigger and business model is just a part of a business plan. First thing I want to talk about business model is that it outlines how your company will generate revenue and then how it create something that matters for the customers and then how you can achieve sustainable growth in the market. I would say business model is like an overview of all the financial analysis, all the market analysis, and also problem solutions, thinking, planning all in one place is business model and how do you do it and if you have never heard of it yet? Business Model Canvas. Okay, Business Model Canvas is like the framework. It's just a spreadsheet. You Google it, and I will maybe share an example here. You can use this business model canvas to define all the key elements such as customer segments, value propositions like the channels to get customers and also the channels to sell your product. That is super important regarding distribution and also revenue streams. Business model, I would say it's more like when you're doing financial analysis, you're thinking the numbers right here. Business on business model canvas, you can think about, okay, how many revenue streams do I have? Also like what kind of promotions or what are the key key marketing, say strategies or key contact that is, that are important for my business. It actually goes a little bit more to the action without like a good business model in your hand. You cannot go to the next section which is execution plan. Without what we mentioned, the financial analysis, market analysis and also identifying the problem solution. You couldn't do a convincing business model. You can see this is a like a logic flow that you have to do A and then B and then C because so that everything is coherent. It's like building a building. So the second part of business model is monetization strategies, like what is the most effective way for your business to make money? Is it through, you know, just selling one product? Take it done, or is it through a subscription model or Okay, it's like free. I have to have tons of users so that I can sell advertisement to these users. Then my users are not my customers, but those companies that want to place advertisement on my platform are my customers. Right? And also other revenue streams. So you have to really think about it before you really deciding which one is the best for your business. And then the third key components of business model is that you have to highlight your unique selling proposition and also key competitive advantages. As I said before, you set you apart from the competitors to attract customers like why you are better than the existing solution. You are new who should trust you, right? And what are some competing advantages, right, that set you apart from all the competitors that have been already in the target market? So you have to think about it and once you actually give all the key bullet points on the business model, you will have a very clear, like big pictures of what are the most important things for your business in terms of sales. How you actually can get money, how actually like you sell people, and then how you can stand maybe a little bit higher, stand out from the crowd of your competitors. 9. Execution Plan: Dream Big, Start Small: Okay, now let's talk about execution plan. Whenever I give business consulting advice to other start founders or businesses, one thing that I love the most is execution plan. Because here we're talking about the concrete action with the times and the deadline and the goal. Execution plan outlines the specific steps and milestones that require to turn your business plan into reality, guiding you to successful implementation. It's not enough to just talk about I have this problem, I have this solution. I will sell it as this amount of money I have all the customers in my mind identify already. I will set to this group of audience and I will talk with these people, stuff like that, et cetera, et cetera. Not enough because okay, then let's say now you have your business model canvas already. All fill out. Which one should you do first? Because you are a founder and assuming most of the people, they are solo founders. Once they started the company, they register the company. A lot of paperwork, administrative work, officially register as a business. That's already a lot of work, right? And then you have to not just think about easy business name, logo, maybe domain, right? And then build a website. Think about the color, how does it feel like your website should feel like for your audience? And then also actually you have to think about, okay, what kind of pricing tiers, what kind of product, what kind of services. That's not it, because let's say you build your website, Maybe you want to reach out to customers people won't like when they see like a website. When they come to a website. Oh, I've never heard of this company and they said they just opened, Right. Established like 2024. 2023, super new. Then they were just like, okay. And then you feel like at this point you'll feel like, oh my God, my website. Yeah, it's a website. Maybe it's more like a landing page. Should I do a blog? Should I do video? Should I do collaborations of people in this field or people that are related to the target audience? Right now you're thinking about promotions, stuff like that. Then at some point, you'll be like, in the beginning, I'm pretty sure you'll be chasing sales, right? It is chasing sales the most important things that you want to do. Because obviously if there's people buying your product or services, then it's like a vote, right? With money, they vote with money. Customers vote with money that they like your product. But what if it didn't happen, right? You will feel like, okay, your business, our business idea is not validated, right? It's not validated, it's not actually a knowledge by the customers or ten times better solutions or products. Actually nobody like it. All right? You will feel that urge to earn this validation in the beginning stage, it will very like prompting you to earn like a transaction to make a sales. But but is it that important in the first 15 days or 30 days or is it not? Because when you are doing the business plan or like business model or even financial analysis, you're estimating the revenues, right? Did you actually estimate that you will make certain amount of revenues in the first month? And is it an overestimate? Right, Because we talk about, you know, the runway and also the funding. You need the initial capital to kick start your business. So the early, let's say the beginning, two or three months, the time that you're going to use the start of funding. Use the initial capital to let you focus your business on something else. Instead of chasing sales, generating sales or anything that is important regarding the sales. All these questions, there's no one answers or like, okay, yeah, this is the right answers, everybody should follow. I'm just throwing out questions and I hope that you will think about it when you're writing the execution plan. So the first thing is to have all these questions and scenarios in your mind that foreseeing that you will face. Of course, congratulations. If you make tons of sales in the first month, congratulations. But what if not right? What should you do? And should you panic? Maybe if you have planned ahead that you will not make money in the first 30 days and you are totally fine because you have certain kind of initial capitals, then you won't be panic, right? You will just continue to build your business like step by step. So the first step of writing a good execution plan is to have strategic planning. You have to define your long term vision, mission goals. And also you have a plan. You achieve this long term vision mission and goals. All right, in my case, let's say for example, studying aboard consulting agencies. I define my long term vision is to help students to study aboard. And also like universities and careers. My whole target audience, as I said before, I focus on students year 11, 12, they're going to study aboard in university and they will build their own career. If I talk about this to kindergarten, that will be so out of sync your long term vision, who you want to be right now. Because I have identified the long term vision admission for my company, it's very easy to look at what is important. In my previous selection, I mentioned whether my company should talk about raising scholarships, helping students, applying scholarships, or like helping them to achieve financial abilities, stuff like that. But once I sorted this question out, I can focus on the long term vision admission. And what I did in the beginning is that in order to achieve long term vision admission, and with the fact that I, as founder of CU, I didn't work in Apple, Google, and Facebook or Quadco, all those big companies. So I should reach out to people that actually work in these companies, have this kind of industry expertise, and form a network of career consultants that are as passionate as me and want to give back to high school students who want to start, who want to launch their careers along their journey. Studying aboard this is very important to keep in mind. Now you can weigh clear vision and also like judgment of what are important in your action plan. Because execution plan is tons of and time and dead line, okay? But it's not as small as a project management plan. And then the second step of execution plan is operational implementation. So you have all those goals, mission. You have to translate it into steps, actionable steps. You have to think about who is responsible for it. You have to set deadlines and you have to monitor progress. I would say in my experience, personal experience of building a company, as well as giving business advices to start up and founders. I would say you better think about and actions that are doable, achievable in every three months, right? And set deadlines and then look back at it. Because it is so easy to get distracted attending this conference, that conference without knowing whether you should attend to this conference in the first place or you should you develop your product even more or, you know, reaching out for customers, stuff like that. So things go like super high speed once you register your business and you kind of let people know and then you kind of have a presence on social media. Let's say Instagram, you have making like tons of posts. You know, the number of posts keep increasing. Let's say every week you have a plan, stuff like that. And it is good to set deadlines for like every three months, let's say like maybe there's like some kind of government grants for startups and small businesses with a deadline like every November with your like 12 months plan, you should put like November or September, October, November. I should actually work on the applications of the government loans, all government grants, as well as for maybe marketing. I would say you need to reach certain kind of number of followers or impressions, or some organic reach to your website. And you have to monitor the progress. Because if you spent three months on working, let's say getting 100 followers or 500 followers, you spent three months 90 days and you couldn't achieve it. Then maybe what you have been doing is not that efficient for your product or for your target audience, then it's good. Three months is good like 90 days. 100 days is good for evaluating the progress and the effectiveness of your solution or implementations. I will say set a goal every 100 days, or 90 days every three months on all scope of your business revenue marketing as well as other business, administrative or accounting or even like hiring very important in operational implementation. And then the third point of execution plan is to really regularly, regularly evaluate and measure your business performance against the set objectives and make necessary adjustments and improvement as needed. Here at the end of the day, with execution plan in your hand or written out, then you should be very clear on, okay, I need to have website done. I need to have the podcast done. I need to have certain kind of like forwards or post on linking on Instagram. I need to have my company to be present in certain kind of, let's say conference or activities this I will achieve in three months. And then of course, this is like a goal, a deadline. And then you kind of reverse engineer, you work backwards and think about, okay, in order for my company logo to be present on certain kind of event or conferences, and I should have a list of events that are relevant to my business in the industry. And then, okay, then I have to find the key context. I have to e mail them. Or maybe it's even better if people within my network that actually know these people. So now you can have certain kind of goal. And then every week, every 35 days, you sit down, you look at what you did. You plan ahead of time of this kind of like three months deadline project. And then break it down into small tasks and achieve it. So this is how business plan plays a very important role. Even before you actually go to the government agencies and register as a business, okay? Spend the time to write the business plan. And also spend the time to think about, think about and do the research for each component that we cover in this course. Then at the end, for execution plan, you should actually actually set very realistic short term, three months deadline goals. And then break it down into small projects. With all the clarified, I hope you can launch your start up successfully.