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Entrepreneur Profile: SabryCorp makes inroads in Nanotechnology
Mohamed Abdel-Motalleb, Chairman of SabryCorp
by Christopher Le Coq/Daily News Egypt August 30, 2010
CAIRO: The Egyptian nanotechnology market is high risk, but is only matched by its business opportunities, Mohamed Abdel-Mottaleb, chairman of SabryCorp, told Daily News Egypt in an interview.
Seeing Egypt lag behind in the nanotechnology race, Abdel-Mottaleb saw an opportunity to bring it up to speed, he explained.
Nanotechnology struck the entrepreneur as fascinating back in 1997, when he was busy completing a PhD degree. At the time, his advisor introduced him to nanoscience, a field still very much in its infancy, but one with unprecedented ramifications for altering science for generations to come.
Fast forward to 2006, Abdel-Mottaleb was working as a senior assistant at the University of Chemnitz in Germany, when he decided that there was an opportunity to be seized by developing the field in the region, he explained.
That same year, he moved to Cairo to establish SabryCorp, the first nanotechnology consulting firm in both the Middle East and Africa, with an initial start-up fund of LE 50,000. Today, he said, the company’s revenues range between LE 1 million and LE 10 million per year — typical for an SME in Egypt.
When the firm launched, Abdel-Mottaleb was originally the founder and CEO, but switched to the position of chairman to undertake the newly created position as director for the Nanotechnology Research Center at Nile University in Cairo, the first in the region.
During a discussion with the university administration, he was asked what he would like most to have; he replied, a program focusing on nanotechnology.
The university requested that the ‘nano-enterpreneur’ construct a nanotechnology Master’s degree program entirely from scratch, which will be the first in the Middle East or Africa once it opens its doors.
As it happens, the program received its first intake this past summer, and this week Abdel-Mottaleb is reviewing the first set of 150 applicants, of which only 30 will be accepted to participate in the program, which will offer opportunities for scholarships and paid research assistant positions.
The far-sighted objective of the program, he says, is to “have a serious impact on the Egyptian economy.”
A Road Map
Although focusing a fair portion of his time to being director of the Nile University nanotechnology program, Abdel-Mottaleb moonlights for his start-up firm.
Indeed, he supports the firm’s focus on the core of its clients: major organizations, such as Saudi Aramco and the Ministry of Trade and Industry, as well as smaller businesses.
For larger organizations, the firm offers “road maps” that are long-term in focus, as Abdel-Mottaleb describes it, indicating which areas in industry would be the most suitable to pursue, advice with regards to procuring equipment, and how to measure the success of their long-term goals.
On the other hand, the firm also provides advice and support to smaller businesses that are seeking to capitalize on a short-term opportunity, assess the market and products as well as providers and content. His firm provides a return on investment analysis as well.
Even though the firm is relatively young, Abdel-Mottaleb said that SabryCorp is already going to expand with two new offices by 2015, which will most likely be located in the Gulf.
SabryCorp is currently raising LE 500,000 in capital, but the figure will reach $1 million once expansion is in full swing.
Bridging the ‘nanodivide’
Abdel-Mottaleb acknowledges that there is a disparity between the nanotechnological prowess of developing countries — such as Egypt on the one hand — and developed countries, most notably the United States and China and others like Germany and Japan, a situation scientists have coined the “nanodivide.”
To help close the gap, in 2005, his firm organized an international conference, attracting nanotechnology scientists from an array of backgrounds.
Foreign scientists’ initial reaction to the invitation, Abdel-Mottaleb noted, was one of bewilderment, as they retorted, “Why come to Egypt?”
Nonetheless, as the chairman explained, the scientists were pleasantly surprised to meet some “brilliant” local scientists, which in turn changed their opinion of the potential for developing nanotechnology in the region.
For his part, Abdel-Mottaleb believes that having brought such prominent scientists from both the west and developing countries together under one umbrella is imperative for demonstrating to the west that the region is serious about contributing to the field. It also created a platform through which scientists can intermingle and hopefully share innovative ideas that will permeate throughout the region.
Abdel-Mottaleb feels that destitution of coordination in the field of nanotechnology in the region is holding back its potential, and as a result, the objective of the conferences is to tackle this challenge.
To this end, the firm has already organized a conference in Cairo in 2011, Abdel-Mottaleb said.
Each conference so far has focused on the role of nanotechnology in specific sectors, including construction materials, water and energies such as oil and gas.
Much credit should be paid to the firm for stamping the Middle East and Africa on the nanotechnology map, but serious work is still needed.
Indeed, as the chairman highlighted, besides his firm, there are only three to four other nanotechnology firms operating in Egypt, one of which is attempting to produce applications for medicine and engineering, while the rest are only in the distribution game.
Thus, Abdel-Mottaleb concludes: “The market is wide open and has huge potential.”
Abdel-Mottaleb commented that he and his colleagues want to communicate knowledge of both the benefits and the potential risks of nanotechnology through information campaigns at high schools to the younger generation.
As he notes, they are “the future decision-makers,” and they will one day likely have an impact on the sector.
To this end, the firm developed a non-profit initiative called In2nano.
He explained that the program, which derived 37 percent of the €52,000 in funding from the government, with the remainder supplied by SabryCorp, targets students between 14-18 years old.
Abdel-Mottaleb explained in detail two moments that he defined as the “best” of his career.
He recounted a time when lecturing at a local high school in which two students, as the principle of the institution later told Abdel-Mottaleb, objected to attending, as they were utterly uninterested in the topic.
Despite the students’ protests, the principle forced them to hear what Abdel-Mottaleb had to say.
After his lecture the two students, to the both men’s surprise, were asking questions regarding how they could enter the field immediately, for instance, by doing an internship.
The second highlight of his career occurred while conducting a video podcast, which was beamed out to 54 centers in Egypt, when a young girl of about 13 posed a question to which the chairman could only respond using concepts found in quantum chemistry — a masterful feat for such a youngster, he said.
In his opinion, the two anecdotes are testimony of the promise that young Egyptians embody for being able to contribute to nanotechnology, a field that, in the chairman’s words, will one day “revolutionize” society.
This is an article that appeared earlier this year in ‘Interactive Age’, a peer journal for executives in the videogame industry. Ahmed Metwally is an Endeavor Entrepreneur, and CEO of Timeline Interactive – Egypt’s first videogame company, based out of Nasr City.
When I tell people that I work with Timeline Interactive, a gaming company in Egypt. people usually stare. The brave ones would comment politely that they did not know of a gaming industry in Egypt or the Middle East for that matter. What I tell them is that they are both right and wrong.
The challenges are quite real for those interested in developing games in the Middle East, a region with few hardcore gamers, zero publishers, reluctant investors and no industry specific education program. However, we have certainly done it and we are seeing a strong trend that leads us to believe that we are part of a rising industry in the region.
Very few investors and entrepreneurs in the Middle East are eager to rake the initiative and become part of such a new ecosystem. Nevertheless, as Gene William Mauch once said, “you can’t lead anyone else further than you have gone yourself.” And we are pleased to be on the forefront of this new regional market.
In a new market, as with all startups, getting funding is no easy task. However, we did it by taking advantage of our strong team’s history. Mostafa Hafez, our co-founder and technical director, originally co-founded Artificial Studios, a US-Egyptian video game development studio. Mostafa brought in Mohamed Samir, our co-founder and technical lead, to help him build Reality, a gaming engine that Epic games acquired in zoos. After the acquisition, Artificial Studios Egypt split and became Timeline Interactive. The team then caught the attention of the Technology Development Fund and EFG-Hermes, a leading investment firm, which invested in the company to help take it to the next stage.
Early on, we had to make a decision on whether to target the Middle East market specifically or to target the global market as a whole. So, we had to ask the obvious question: how many garners are there in Egypt or the Middle East and what are they like? The exact numbers have never been officially measured, but research shows that there are just as many gamers in Egypt as anywhere else in the world. The only difference, however, is that the majority of Egyptians and Middle Easterners tend to be casual gamers with a focus on PC games, and an unyielding preference for multiplayer soccer games. Once they’ve played a good soccer match, they may shift to their second preference, strategy games. The story is a bit different for consoles like PlayStation3 and Xbox36o. Even with three hundred million people and thousands of PS3s being sold every year, the Middle East is still considered a virgin market, albeit with huge potential. And in today’s global village, the Middle Eastern consumers, like any others, are always looking for well known AAA titles. Everyone wants to play the big blockbusters that everyone else is playing.
Since our early strategy was to develop action games for consoles such as PS3 and Xbox36o, it was becoming obvious that building a game that solely targets the Middle East as a region would be a very risky endeavor. Therefore, we opted to target the global market as a whole. This lead to the release of CellFactor: Psychokinetic Wars in June 2009, a downloadable multi-player First-Person Shooter (FPS), on the PS3 and Xbox360 to a worldwide audience. This experience has cemented our vision to develop games that would release worldwide. This does not preclude us of course from looking for concepts that draw from our culture. We are quite confident that a video game which leverages some aspects of the Arabian culture while maintaining a worldwide appeal would have a stronger chance of success regionally and globally. The success of Ubisoft’s Prince of Persia series would certainly reinforce this.
Apart from the business challenges, we have also faced organizational ones. There are many talented resources in a country of 80 million people and tuition free universities that graduate 5,000 computer science and computer engineering students every year. Yet, hiring the right resources for Timeline has not been an easy task. One of the first issues that we encounter is the lack of professional experience. With this industry being almost non-existent in the Middle East, finding people with the required experience and skills to participate in the development of a video game title can be rather difficult. At Timeline, we have built a six month mentorship program that walks new qualified resources through the different aspects of video game development and immerses them in the experience. Three months into the program, new Timeliners begin assisting their mentors with their deliverables. Six months in, they are fully productive and are tasked as full junior resources on projects. Once the Egyptian talent is fostered, the outcome is a diversity of unique and impressive creativity and artistic talent. Working against the well established stereotype, our aim at Timeline is not to simply compete on cost, which tends to be the main competitive advantage of any overseas outfit. Instead, our goal is to continuously compete on creativity and innovation. Being very cost effective never hurts though! So we are constantly working on building the right diverse team that can grow to compete on a global scale.
Another challenge is our geographical location. It is difficult to meet in person on a regular basis with publishers. Therefore, we always make it a priority to focus on our communication and coordination with the publisher’s team to overcome that psychological barrier associated with working with remote teams. However, being located in Egypt does have 115 advantages. Egypt is centrally positioned when dealing with teams from around the world. For example, while working on CellFactor with Immersion and Ubisoft, we managed 12 teams working on the title around the world. Being located in Egypt was optimal as we could easily communicate with Ubisoft’s testing teams in India & Europe early in the day and have our regular status meetings with the producers in San Francisco by the end of the day.
In our experience we find that development of video games in Egypt has been an interesting, yet challenging endeavor. With the numerous challenges we face along the way developing a video game title in Egypt success becomes quite an exemplary achievement.
The Middle East is still considered a virgin market.
As we continue to strive for more we look forward to introduce diversity into the video game arena. Due to Egypt’s unique geographic location and varying topology, various cultures exist today: in the North, you have a Mediterranean marine centered culture, in the South, an African Nubian one, in the dessert, an Arabian Nomadic one, while a farming one exists on the banks of the Nile. This offers us a very rich palette to draw from.
Apart from the abundance of mythological tales, historic events and modem stories from Nobel Prize winning authors that we can weave into future titles, we are leveraging unique art forms inspired by Pharaonic, ancient and modern Islamic into new art concepts. Egypt has always been known for its innovation in the movie and the music industries in the Middle East. At Timeline we plan to build on that, and remain the regional pioneers in the video game industry. We will always focus on using our local resources to penetrate the international market. We believe that the Middle East market will follow suit on its own.
We’ve come to the last part in our series of articles on entrepreneurship. Do let us know if there are particular topics you thought were missing, or suggestions for new articles. Thanks Eric, for your contributions!
When it comes to larger investment amounts for equity stakes, funding usually comes from professional third parties. You’re no longer pitching an idea; more likely your company has achieved some early milestones, will have its first customers and generally displays good prospects for traction. You will need to approach these investors in a highly professional manner.
Be very selective who you bring in as a shareholder and on what terms. Control does not come with your job title, but with your share of the company. Once you have lost majority ownership you may no longer recognise the company you started.
If you are looking for seed financing, or early investment, you may want to find and angel. Angel investors are wealthy individuals looking to diversify their investment portfolios (and also have some fun) by investing in startups. Angels often specialize in verticals they are familiar with. Angel funds are clubs of angels who like to invest together. Angel investors get an equity share in your company for their money, or, as is increasingly common, will loan you the cash as convertible debt. In this structure, interest accumulates and only when the next round of funding puts a firm valuation on your company will the principal and accrued interest be converted in equity. This saves you from valuing in too early a stage when value is still very hard to determine.
Strategic angels are people or companies working in your domain or industry. Not only will they provide the cash –as above- they will also come with expertise, contacts and legitimacy to your young company.
Venture Capitalists are investment firms that specialize in taking stakes in youngish companies. Most VC’s tend to specialize in specific verticals such as nano- or bio-tech. VC’s offer larger investments and tend to operate in a more formal manner. Do not underestimate the time involved with paperwork and due diligence once you get involved with a VC. The good thing is that VC’s are much easier to find than angels.
Investors are people who invest in people, so get to know them before you need them. Relationships matter a great deal and take a long time to develop, so you’d better start early. Get involved in the local entrepreneur and venture capital community and get known. Use social networks like LinkedIn to leverage and grow your personal network and connections. Blog extensively in your area of expertise and establish yourself as domain expert.
At the same time, do your research on angels and investors. Find out what they invest in, at what stage and how much. Build connections with such investors and again, offer your help with suggestions for ventures that may be of interest to them. Learn as much as you can about their personal backgrounds and talk to companies they have invested in. If you are going to work with an investor shareholder for 5 years or longer, you really want to know what kind of person you’re dealing with. Get to know them before you need them.
You will of course never approach any investor before you have completed your detailed business plan. I do not mean just the written document with elaborate spreadsheets, but the entire thinking and research process that must precede a new business. No single investor is like any other and no pitch is ever a copy of a previous one. Make your plan and your presentation appropriate to your audience, your stage of company development and of course to your objective.
Be ready to pitch a lot, all the time. Refine your pitch, listen and improve. Ask for help from mentors, accountants and lawyers, not to forget seasoned entrepreneurs.
Never stop the fund raising process, build your network with investors and become known as a knowledgeable and serious player in your industry. When you need the investment, you do not want to start from scratch.
When it comes to larger investment amounts for equity stakes, funding usually comes from professional third parties. You’re no longer pitching an idea; more likely your company has achieved some early milestones, will have its first customers and generally displays good prospects for traction. You will need to approach these investors in a highly professional manner.
Be very selective who you bring in as a shareholder and on what terms. Control does not come with your job title, but with your share of the company. Once you have lost majority ownership you may no longer recognise the company you started.
If you are looking for seed financing, or early investment, you may want to find and angel. Angel investors are wealthy individuals looking to diversify their investment portfolios (and also have some fun) by investing in startups. Angels often specialize in verticals they are familiar with. Angel funds are clubs of angels who like to invest together. Angel investors get an equity share in your company for their money, or, as is increasingly common, will loan you the cash as convertible debt. In this structure, interest accumulates and only when the next round of funding puts a firm valuation on your company will the principal and accrued interest be converted in equity. This saves you from valuing in too early a stage when value is still very hard to determine.Strategic angels are people or companies working in your domain or industry. Not only will they provide the cash –as above- they will also come with expertise, contacts and legitimacy to your young company.
Venture Capitalists are investment firms that specialize in taking stakes in youngish companies. Most VC’s tend to specialize in specific verticals such as nano- or bio-tech. VC’s offer larger investments and tend to operate in a more formal manner. Do not underestimate the time involved with paperwork and due diligence once you get involved with a VC. The good thing is that VC’s are much easier to find than angels.
Investors are people who invest in people, so get to know them before you need them. Relationships matter a great deal and take a long time to develop, so you’d better start early. Get involved in the local entrepreneur and venture capital community and get known. Use social networks like LinkedIn to leverage and grow your personal network and connections. Blog extensively in your area of expertise and establish yourself as domain expert.
At the same time, do your research on angels and investors. Find out what they invest in, at what stage and how much. Build connections with such investors and again, offer your help with suggestions for ventures that may be of interest to them. Learn as much as you can about their personal backgrounds and talk to companies they have invested in. If you are going to work with an investor shareholder for 5 years or longer, you really want to know what kind of person you’re dealing with. Get to know them before you need them.
You will of course never approach any investor before you have completed your detailed business plan. I do not mean just the written document with elaborate spreadsheets, but the entire thinking and research process that must precede a new business. No single investor is like any other and no pitch is ever a copy of a previous one. Make your plan and your presentation appropriate to your audience, your stage of company development and of course to your objective.
Be ready to pitch a lot, all the time. Refine your pitch, listen and improve. Ask for help from mentors, accountants and lawyers, not to forget seasoned entrepreneurs.Never stop the fund raising process, build your network with investors and become known as a knowledgeable and serious player in your industry. When you need the investment, you do not want to start from scratch.
Below is the first part of the final post in our series of articles dealing with the various aspects of being an entrepreneur. This series has been authored by Eric Zoetmulder, one of Endeavor’s VentureCorps Mentors.
Pitching for funding is the ultimate sales job. If you cannot sell or effectively and passionately communicate your ideas, you will find raising funds very hard. But, it is not rocket science and I hope that with the practical do’s and don’t’s in this article, you will achieve some success.
Pitching for funding is not so much about your business; as it is about you. If the investor trusts you and your acumen for business, he will trust you to have a good plan and execute it well. Whatever you say or show in your presentation to potential investors, make them understand that with you, they are getting somebody with integrity, passion, experience, realism, commitment, knowledge & skills, leadership, and coachability.
Once they’re sold on YOU, they’ll want to hear your idea – not the other way around.
Here are a few good rules of thumb to remember;
- Keep your ego in check. Avoid giving the impression that you’re going to do it all by yourself, that you know it all. Be as frank and open about your weaknesses as you are about your strengths and relevant credentials. Loners are high risk investments.
- Highlight the combined strengths of your team. Show how you have brought together a well rounded team and that you are still working to fill gaps with more good people.
- Explain the business idea, but focus on how you are going to make it work. Talk about execution and your roll-out plan, show milestones and quantifiable goals.
- Never mind the product technology, show customer benefits first; how you are solving a problem, a pain in the market. Explain the opportunity and why customers will pay for your product.
- Whoever you approach for funding, never forget that their return has to come from your customers. In your business plan and presentations to investors, focus on real people, not on market size.
- Display realism in your projections. Show how you are going to make money, keep your feet on the ground doing your numbers, but do not harp on your conservative approach.
- Focus; avoid being all over the place. A business plan with multiple customer segments, each with different products is sure to scare investors away.
Before we go and pursue investors, let’s have a look and see how much and what kind of money you need to finance your venture and at what it will cost you.
You need capital, investment money, to buy equipment, pay salaries and generally keep the ship afloat till operations yield positive cash flows. Obviously, you will want to keep all expenses in that period to the minimum, starting with your own salary, if you pay yourself at all in this early stage. Use your business plan and financial projections to work out what “cash burn” you will go through till revenue tops product cost and overheads. Depending on the nature of your business and the “burn time”, you may want to go for a single funding round or pitch for a new round of funding each time you reach a significant development milestone. As each round will take at least 6 months and requires a significant amount of your time, you will want to give this a good think.
Money can come from many sources and at a significantly different cost. A quick overview:
- Most new and young businesses are financed by the founding owners who may put all their personal wealth on the line. Careful here! Maxing credit cards comes with so much ancillary stress that you may no longer be fit to run the business.
- Commercial bank loans for new business or expansion are usually available only to those who have the creditworthiness and existing cash flow to service repayments, so forget about those as new businesses typically do not qualify.
- A strategy commonly used is bootstrapping, or keeping expenses to a minimum, and re-investing profits back into your business. There is a lot to say for bootstrapping; without new shareholders there is no equity dilution and you keep full control. However, lack of capital may keep you on the ground level forever. But, being able to show later investors that you achieved one or more milestones while bootstrapping is a super way to advertise your commitment.
- The most common source of start-up finance is “love money”, whereby family and friends chip in to help you get off the ground. Very often this comes in the form of a “soft” loan (one that you pay back only if you can) and without equity commitments. In many countries, this form of finance is four times as big as the entire Venture Capital sector.
- My preferred way of financing a business is with customer money. See if you can sell an early release of your product or talk b2b customers into making pre-payments.
To be continued
And we’re back! Bringing to you, fresh from our summer holiday, the eight post in our series of articles exploring the various aspects of being an entrepreneur. The articles are written by Eric Zoetmulder, a Commercial Lawyer, Management Consultant and VentureCorps Mentor with Endeavor Egypt. He can be contacted at eric@ocorco.com
Few words in entrepreneurship are less understood and more abused than “Business Plan”. Sure, your kernel of an idea that may become your business is a plan. So is that hefty document with all the fancy spreadsheets projecting million dollar sales well into the future.
A true business plan is a process, a continuum of thinking through everything that makes or breaks your business. A process that you start with that first business kernel and that really never stops. 
To do that well and impose a rigorous discipline in thinking, you’d best write it all down in detail. When you need to explain your plans, all you have to do is lift those parts that are relevant to your new partner, investor, new customer or first employee and make a professional and appropriate presentation.
Creating a business plan helps you evaluate the market for your product and size up the competition, to identify your business’ strengths and weaknesses, to figure out how much money you’ll need and gives you clear direction. Just remember that no business plan is ever finished, so be ready to tweak and re-write, all the time.
A good business plan answers important questions; What’s a reasonable expectation for sales, expenses, cash flow? What are your most important strengths and weaknesses, and opportunities and threats? What’s your key target market focus? Your ideal buyer?
What are the key metrics for your business?
Research the facts and write the plan yourself; the exercise is worth much more than the actual plan. Do not waste any money on software packages that claim to help you write a better plan. Your business is unique and no standard approach will replace the need for a through and through understanding of how you are going to make money. That goes just as well for a social impact venture, where you have the additional goal to make a difference. Even there, the first objective of a business is to survive to realise its social goal. Let’s have a look at some of the elements that you will find in any good business plan.
Are you solving a market pain or do you promote a solution looking for a problem? This is the most important issue in your plan and one that deserves a careful answer. Survey your target market and find out, relevant to your product, what issues or problems do consumers experience, why they have not yet filled the need, if they have tried to look for a solution and what that ideal solution should look like. Will they buy it or, if not, why?
What is your USP, your Unique Selling Proposition, what makes your product or service unique? What competitive advantage do you have over the competition? Can you price competitively and still have a good profit margin? Are you ready for the market or if you are in the development stage, what is the rollout stage or timeline to bring the product to market?
Spend lots of effort on your competition. Find out if and why they struggle or do well and every other detail you can lay your hands on. Compare each competitor with yourself and with the others. Is there room for another player in this market? Will you beat them, and if so, how?
Show that you know your market and that you have selected market segments which are most suitable for your new product and to make your venture profitable.
Describe expected demand for your product, the market share you expect to capture and who these customers are likely to be. Explain how growth of the market will affect your product sales. Use public data to show the size of your market and estimate expected revenue. Investors like their entrepreneurs to entirely understand their markets, so show you know your way around. However, small niche markets are usually not attractive to external investors.
Your business model sets out the key elements of how you plan to make money with your product. Outline who pays who and in what role in the process. Pay attention to credit terms as these effect your cashflow, different currencies as these can cut in your margins. The simplified value chain for an import – retail model is shown on the right.
Explain your cost structure and show how different production or sales volumes change your costs as economies of scale begin to have their impact.
Many business plans assume that sales happen by themselves once you launch your product. The reality is very different and you’ll want to make and describe a detailed go2market strategy. Like the big strategic picture, your go2market is a continuum, where you take your product to the market, review customer reactions, revise both product and strategy, go back to the market and so on.
Design your go2market with the well known 4P’s (now 7P’s) of the marketing mix in mind and take your time for each P as shown on the right.
Once you’ve identified how you will approach the market, design metrics to determine how you will track the effectiveness of the methods you selected.
All these good plans will not go far without a strong team of people to make them work. Investors know this all too well and it is not surprising that they will pay lots of attention to you and your partners. You will want to show how you have built a qualified team with your co-founders, employees, advisers and professional consultants, covering not just technical product development and manufacturing, but sales and marketing, finance and accounting, IP protection, an international dimension and so on. Do not simply attach a stack of resumes, but write a brief summary for each individual, outlining how they contribute to the team and the business.
But just bringing people together does not make a team, you should also invest time in building coherence and collaboration. You can be sure that investors will want to see clear indications that they are investing in a team where the right people talk together effectively to generate high performance outcomes; loners are bad investment risks!
Make a detailed timeline with deadlines and goals. Show how you intend to progress from the initial business idea to a product and from there to a market rollout. Indicate how key events join in a critical path that determines the overall duration of the project. A detailed timeplan (a Gantt chart is a very effective way to visualise the plan) helps identify dependencies; where one event is a condition for another event, and is also a good starting point for your financial projections.
Financial projections make an important part of the business plan, but do not confuse plans with reality. Similarly, an over-detailed approach gives you numbers that are probably precisely wrong, while vaguely right will do. Financial projections are an exercise in crystal ball gazing.
What is important is to differentiate between margins and cashflows and to make a realistic estimate of your working capital needs and cash burn (the amount of cash you need till revenues have grown to a level where they can sustain your regular overheads).
If yours is a new business, with no history, projecting 3 years ahead is about the best you can do. Be very conservative in your revenue expectations and consult your go2market plan; very few businesses grow from nil to hundreds of millions in just a few years.
Be honest and realistic with your financial projections. Investors and lenders are looking for realistic projections. Don’t underestimate their knowledge of your business or industry. You can lose credibility quickly by presenting unrealistic financial projections. Use layman’s terms when explaining your product or service. If the reader doesn’t understand what you are saying, there is little chance they will get involved with your business.
Analyse all the risks your venture may be subject to, likely and unlikely, and explain their potential impact and how you intend to avoid or mitigate these risks. I don’t know what investors like less; “oh, that won’t happen to us” or “we really don’t have any competition”. In a new venture, nothing is guaranteed, your technology, market acceptance, the quality of your team. As the saying goes; “stuff happens”. Better be safe than sorry.
The final and most important part of your business plan is execution. Showing that you are capable of taking the plan from the drawing board to the street and start making money. This is where the disciplined planning of a detailed business plan will pay off. Focused with a real product on on a real market, resources and facilities in place; all you need to do is push the “go” button.
To help you get going with a professional business plan, download the attached template; “Crafting your Business Plan- Guideline“.
