How to write a bussiness plan
- 1. Writing the Business Plan Capital West Advisors
- 2. Whats the Business Objective? Long Term ISP business Growth and Sale National Agenda Leverage from other activities Risk protection
- 3. Business Planning Process Identify Market opportunity Identify Costs Model Tariffs Model Business Requirements
- 4. Market Identification Define Market segment size uptake competitive position market position
- 5. Identifying Costs capital costs recurrent costs marketing costs staff and administrative costs
- 6. Capital Costs equipment core routers capital cost depreciation at 30% p.a. access servers capital cost depreciation at 30%pa capital cost per access port charged to customer
- 7. Capital Costs service platforms ratio of service platforms to customer numbers depreciation at 30% pa staff equipment fixed capital cost per staff member can be converted to recurrent via capital depreciation at a rate of 30% pa
- 8. Recurrent Costs equipment housing costs equipment location costs lease line costs telco leases radio equipment costs can be converted to recurrent cost of ownership at 20% depreciation of capital value
- 9. Marketing costs advertising staff publications, seminars, other marketing activities Total can be considered as a connection cost per client
- 10. Staff and Administrative costs technical support staff usually fixed number staff churn cost (30%) support desk staff usually incremental off the customer base administrative staff usually fixed number Other administrative costs billing costs debt risk factor
- 11. Lets put this together for a medium sized national ISP Cost Totals Cost proportions Scaling overheads as a percentage of capacity costs generation of the business model via marginal cost examination
- 12. Costs Leased Line costs - recurrent expenditure
- 16. Marginal Cost Calculate staff and equipment costs as a fixed overhead on the traffic volume - this allows the business to generate working capital to expand
- 17. Capital Investment cost The enterprise will require initial capital investment which must generate positive earnings, which must be factored into the model
- 18. Retail Pricing Model Use a 64K access line as the basic unit of connection Assume an average line loading of business usage average line occupancy of 20% Determine retail pricing from marginal cost at average line occupancy Flat Rate pricing
- 20. Risk Reduction Reduce risk of over exposure by using ‘high’ and ‘low’ volume tariff steps
- 22. Additional Services Offer services at a variety of access speeds Use differential tariffs to encourage reselling Use a flater tariffs to strength direct retail position
- 24. Dial Access Transmission is a minor cost for dial access Also must factor in: modem capital cost and limited service life phone support with large after hours component marketing cost customer churn rate target market capture level (competitive price sensivity)
- 25. Dial Access
- 26. The Business Challenge How to manage exponential GROWTH
- 27. The Business Plan Establish tariff position Estimate Market size for the service Calculate Revenue Calculate service provision costs Revenue - costs = bottom line
- 28. Estimate Demand
- 30. Scale the Network Estimate communications capacity to service the client base
- 31. Estimate Costs Factor in service provision costs
- 32. The Bottom Line Am I winning or losing at this tariff and market level?