How Does the Business
Work?
The Business Plan and the Business Model
Margarita Antonova
Business System Analyst
Telerik Corporation
Volunteer Trainer @ Telerik Academy
academy.telerik.com
Table of Contents
 Software product vs. SaaS
 The Business Plan
 Break-even
 Workshop 1: How do they work?
 The Business Model
 Types
 Workshop
2: Financial Plan
2
Packaging Software
Defining the combination of product and services
we are selling
Software Products

Definition
a single application or a group of applications built to
be used by the client

Key concept
the client owns the product and usually needs to install
it in order to take advantage of it
4
Software Products

Key features:
 License & Support fee – grant permission of usage
 Life-cycle – common stages in the life of a product on the
market: inception, market entry, promotion, growth,
 Product line – set of related systems that address a market
segment, build from common assets allowing for reuse
(http://www.sei.cmu.edu)
 Product ecosystem – a group of products or products and
services (hardware, software, support, etc.)
5
Software Service

SaaS Definition – software as a service – a software
delivery model where the client uses the benefits of the
software without necessarily owning the software

Key concepts:
 SaaS is in the Cloud
 Deployment is instant
 Typically accessed through a browser
 Hardware is outsources
 Technical support belongs to the Cloud, the client only need
training
 Reduced IT costs
6
Workshop 1: How are they
organized to make money?
vs.
Business Plan
Short term planning for the success of your
business
Business Plan

Definition 1 – an idea of how we are getting the funds
to produce: equipment, overhead, salaries, taxes,
licenses, etc. and how we are getting the profits to
break even

Definition 2 – a list of business goals, the reasons they
are achievable and a plan to achieve them

Definition 3– [tell the bank] what you plan to do and
how you plan to do it
9
Business Plan

Key concepts:
 Strategic – today I can do this, tomorrow I want to do that
and here is how
 Short term – covers the next 3-5 years
 Can serve different purposes:
 Financial – not a financial document but expected by the investor
 Communication – use to display idea and goals to stakeholders
 Plausibility – evaluate the idea for the business
 Improvement – organize and understand the business in order to
develop it
 Finality – not final, can be enhanced and further improved based on
discussions, needs and goals
10
Business Plan

Structure:
 Executive Summary – state what you want to achieve
 Business Description – explain the industry and the key
features of its markets including future possibilities
 Marketing Plan – supported with the market analysis:
 Identify the target market
 Explain the competitive environment
 Describe the product and its development
11
Business Plan

Structure:
 Operations Plan – describes:
 Organization of the company: departments and their roles
 Human Resources needed – training and outsourcing
 IT communication needed
 Risk analysis – identify potential hazards
 Procedures to handle risk – strategic, legal and financial
 Discuss business continuity
12
Business Plan

Structure:
 Financial Plan – current and/or future break down of the
financial policies in the business
 Financing the business – current and future sources:
investors, own capital, profit, etc.
 Financial forecast:
 Cash flows – source and amount of needed cash for
obligations
 Income Statement – ability to obtain cash
 profit = revenue - cost
 Balance Sheet – annual summary of the financial situation
 Assets = Liabilities + Equity
13
Business Plan

Structure:
 Decision-making Criteria – having a business is
ultimately a financial decision
 Break-even analysis
 when is BEP (break-even point) expected
 BEP is the point at which cost = revenue
 Net Present Value and the time value of money
 What is the current value of the future cashflows
 If negative or insufficient, is the business worth doing?
 ROI – return on investment for the creditors
14
Business Plan

What is the business model:
 How the company will create, deliver and establish
value
 Should take into consideration Web 2.0 concepts – user
generated contend, networking, collective intelligence,
focus on experiences, etc.
 Not all business models are effective or profitable
15
Business Plan

Types of business models:
 Offline & online presence
 Advertising
 No middle-man
 Direct sales
 Franchise
 Freemium
16
Business Plan

Example:
 http://www.entrepreneur.com/landing/216013#pas_
sbp

Resources:
 http://www.bplans.com/
 http://www.entrepreneur.com/businessplan
17
Workshop 2: Financial Plan
How much money is required to get your business started and
generating revenue?
• Identify needed capital requirements by determining where
your business stands today, and what is needed in order to
move forward.
Where do you get your money from?
•
If you are in need of outside funding, what will be the sources and
uses of funds requested.
What needs to happen to break-even?
• Play around with financial projections and forecasts to
determine the volume of sales needed to cover your
expenses and to become profitable.
Software Company
Typical Structure
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Homework Assignment
 Finish up the Financial Plan
 Write out the Operations Plan
20
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