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Business planning for entrepreneurs
 

Business planning for entrepreneurs

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Having a well thought out strategy and business plan can be the difference between success and failure for any start-up. Make sure you don't fly blind into the dark abyss of failure. Do your ...

Having a well thought out strategy and business plan can be the difference between success and failure for any start-up. Make sure you don't fly blind into the dark abyss of failure. Do your homework and start your business right. Even if you're beyond the start-up stage, you need a plan.

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  • Probably going to be a lot of lectureTry to make it interactive as wellPlease ask questions
  • Corporate distinction between strategic planning and operating/business planLoss of AlignmentWhen I use the term Business Plan I’m referring to your business in its entirety
  • If I worked with you on a plan, we would identify areas that were most important and focus on thoseYour approach will be determined its your : Education Breadth of experience Lever of that experience The nature of your business
  • Dave Adams Story Planning oriented business. A boss that thought planning was useless. Point is that large and small businesses alike are run without a explicit plan . Implicit plan is that the company will respond reactively to the world around it. The Tail Wagging The DogBeing here today puts you well on your way to being in the one-third that survive and hopefully flourish.
  • Most people starting a business have: Never run a business before . Do not have any breadth of experience. No idea what they’re getting themselves into.Very powerful learning experience.
  • Painting a room example
  • Al Rankin, Michael Porter and the Monitor Group Change in chair anti intelligent Philistines won – lost the processAl Rankin became president Very bright and very wealthy – he didn’t relate well to many of the other senior execsBrought on Michael Porter and The Monitor Group Change in chairman Infidels were powered Anti-intellectual campaign rivaling Mao’s cultural revolution=Not important that he lost Porter, we lost a process New chairman proclaimed we didn’t need a book to tell us how to run our businessPhilistines had triumphed and were taking no prisoners I left for Salt Lake CityNot for profit with 414 page fill in the blank manualPeople that have participated in my planning groups have encouraged me to design planning software.
  • In Biznik, there are people that tell you this is a waste of time, just follow your passions. They are empowering you to be idiots.I encourage you to carefully check the profiles of people on Biznik before you take them seriously.
  • I’ve worked with people that spent twice as much time making distinctions between Mission and Vision than thinking about their plan. Don’t do that. Anybody that wants to make a big deal about definitions is doing so because they don’t have a lot of practical experience, knowledge and business sense to contribute in any other way. Definitions come out of books, any fool can lecture you on definitions.Mission and vision should specify the value being delivered.Save the “soft stuff” for valuesBuzz words Green Paradigm QualityConspiracy theories
  • Vorad Selecting the wrong market can create problems with economics scaleDiesel Dog Switching cost associated with timing of agreement expirations Creative Start-ups Access to distribution problemsVacon – Finnish VFD Company Over came barriers by reputation
  • Durant Highly profitable mechanical counters replaced by low margin electronic counters90% of “Blue Ocean” is here
  • High bargaining power Axle vs. brakes and transmissionsLow bargaining power unique personal skills
  • High bargaining power DrivesPower Electronics, IGBTs Very expensive Important to the buyer Lack of substitutes Need very high volume to be of interestLow bargaining power IDL precision Machine shop Buys aluminum commodity
  • High rivalry Pacific Printing Very large number of competitors and customers Slow growth Incremental steps in capacity through acquisition of equipment Very focused competitors Lack of differentiation and switching cost Versus AK Defensive Avionics for the BI Bomber Government control; security / competition
  • Cambria Corporation Capitalized on new rule & regulations on gas stations to sell gas and water detection sensors.Democracy Live Election districts mandated to supply voter information pamphlets. Increase accessibility of voting information to people with disabilities. Reduced the cost, increased accessibility and made the process more environmentally sensitive by replacing the pamphlet with an online data base.
  • Ancora Financial Got out of the cabinet making business at the height of the real estate boom Didn’t sell, just liquidated Got into the financial services business as it was about to crash
  • Environmentally conscious – Democracy LiveSources of energy – VeijoKarpinnenDomestic jobs – Large corporations not advertising the number of jobs they’ve moved to low cost countries anymore.
  • Blockbuster Substitute products Quality expectations Distribution
  • You need a competitive intelligence system A file to put notes when you learn about the marketAssumptions Steve Hardis – killer assumptions
  • Choose who you want to fight, where you want to fight and for what.As an entrepreneur you do not want to step on the wrong toes and be subject to retaliation.By the way, contrary to what you hear in Biznik, bring in business does involve competition.
  • To answer this, you need to know who your customer is Distribution Channel end userKenway Not software, hardware installed baseEntreoreneurs Personalized service Just one of you Is it sustainable?
  • Sensors Product breadth
  • Two startups that I have invested in have leveraged the current downturn into new market opportunities. Fair Tax Assessment has identified the weakness in the real estate market as problem for homeowners in making sure that the valuation of their homes is fair for tax assessment purposes. The lack of home sales has created difficulties in establishing the fair market value of homes. This company provides alternative valuation methods to compare to the assessed value of a home in order for a homeowner to contest the assessment if there is a disparity.  Another sees the budget crisis in state and local government as an opportunity to replace costly printed paper voter guides with an online resource. This not only saves local governments money in not having to print the guides, it also saves trees, provides enhanced information in the form of text and videos and is more accessible for people with disabilities.A client of mine is an attorney that had previously focused his practice on the support of mortgage brokers. You may have read something recently that the industry had had a bit of a hard time at it lately. He needed to find a new way to support himself and his exes.  He now runs a mortgage loan renegotiation business that is going gang busters. Opportunities abound if you are constantly looking for ways to apply your skills to current market needs.
  • AIL End of the Cold War Stealth TechnologyPacific Printing Online media & advertisingKenway Union rules
  • Minneapolis MeetingWeb site developer Calling to create web sites for Christian churches Faced with choice of expanding market or not starting the business Chose not to start the business
  • Have to remain true to your strategy, tendency to chase time opportunity du jour
  • Anti Cancer DrugGaming Software
  • Painting example
  • Closed Loop Process Don’t keep repeating the same mistakes When you do something, there are expected results If you do it Something doesn’t happen Do you do the same thing again or figure out what went wrong
  • Remember the 440 page form
  • Richard Mooney’s locked drawerEconomy can get you down, are you doing the right things

Business planning for entrepreneurs Business planning for entrepreneurs Presentation Transcript

  • Meadow Creek MarketingBUSINESS PLANS ELEGANT ANDSIMPLEMeadow Creek Marketing © 2012 1
  • Objectives  Convince you of the need for a Business Plan - The time you spend on your business plan is the best investment you will ever make  Describe a Process for creating a Business Plan - Having a process is the important thing - Quality of the thought process is the deciding factor  Discuss how to use and maintain your plan - It only has value if you use itMeadow Creek Marketing © 2012 2
  • What is a Business PlanWe’ll talk about specifics laterYour Business Plan is everything  Strategic Plan  Operating Plan  Marketing Plan  Sales Plan  Manufacturing Plan etc.Unless you look at them as one, you lose:  Continuity and Focus Meadow Creek Marketing © 2012 3
  • Presentation FocusSolo-preneurs & Very Small Businesses  Not really much different from large businesses - Process is the same - Needs are the same - Some of the issues will be different - Scale is different  Use examples from both small and large businesses - Applicability - Entertainment valueInteractive  Ask questions & make comments Meadow Creek Marketing © 2012 4
  • Reality CheckAs far as process, I will present all the things you would do in a perfect world  You will not do all of them  Couple of things completely  Many things halfwayMy hope is that you at least think about everything else Again, it’s the thought that counts Meadow Creek Marketing © 2012 5
  • Why Have a Business Plan?Startup Failure Rate 80% 70% 60% 50% 40% 30% 20% One-third will never turn a profit! 10% 0% Start Year 2 Year 4 Year 6 Year 8 Year 10 Failing to plan is planning to fail Meadow Creek Marketing © 2012 6
  • Have You Thought it Through?Dan McComb, Biznik founder, says the average solo-preneur puts $25,000 into their businessMost entrepreneurs probably put in everything they have and then lose it  Going into business is complicated  Putting your plan down on paper forces you to think  Putting it down on paper makes gaps more obvious It’s Worth the Effort! Meadow Creek Marketing © 2012 7
  • What’s in the Plan?Mission/Vision/Values What are you trying to do?Strategic Rationale Why will it work?Road Map How do you get there?Allocation of Resources Can you do it?Metrics What is success? Basic stuff, why would you put everything at risk without it? Meadow Creek Marketing © 2012 8
  • Creating a Business PlanPick a process, any processThe thought process is what countsNot a fill in the blank create a Business Plan for the sake of having a Business Plan exercise It’s the thought that counts! Meadow Creek Marketing © 2012 9
  • Knowledge is PowerIn the case of business, it is the Power to Make an Intelligent DecisionKnowledge of your market, competitors, suppliers, customers and all those that influence you will empower youIt will allow you to make better assumptions on all the things you do not know Never stop learning about your business. Meadow Creek Marketing © 2012 10
  • Mission Vision ValuesSWOT IndustryAnalysis Analysis Planning Process Competitor External Analysis Analysis Meadow Creek Marketing © 2012 11
  • Getting StartedMission – internal view of what you want to be when you grow upVision – external view of how you want to be perceived at the end of the dayValues – distinguishing ideals of your company They exist either explicitly or implicitly Meadow Creek Marketing © 2012 12
  • Mission Vision ValuesSWOT IndustryAnalysis Analysis Planning Process Competitor External Analysis Analysis Meadow Creek Marketing © 2012 13
  • Industry Analysis Potential entrants Substitutes Buyers Suppliers Competitors Understand the space you’re dealing in Meadow Creek Marketing © 2012 14
  • Potential EntrantsBarriers to entry Scale economies Product differentiation Capital requirements Switching cost Access to distribution Other cost disadvantages i.e. proprietary products, location, experience, etc. Passion will not solve a barrier problem Meadow Creek Marketing © 2012 15
  • SubstitutesBusiness is all about satisfying a real or perceived need of a consumerWhat other ways can a consumer satisfy their need for your product or service?Greatest concern  Improving price/performance  Produced by higher profit industries Be aware of where you are on the product life cycle Meadow Creek Marketing © 2012 16
  • Buyers/CustomersBargaining Power  Is the product a significant % of buyer product’s cost  Undifferentiated  Low switching cost  Low profits  Threat of backward integration  Product not important to overall quality  Informed buyer Everyone is looking for dumb people with money Meadow Creek Marketing © 2012 17
  • SuppliersBargaining power of suppliers  Lack of substitutes  Industry not important to supplier  Product is important to the buyer  Differentiated product  High switching cost  Threat of forward integration In a product business, this can make or break you Meadow Creek Marketing © 2012 18
  • CompetitorsRivalry among existing competitors - 4 factorsOther factors:  Number of competitors vs. buyers/diverse competitors  Industry growth  High fixed cost/large steps in capacity  High strategic stakes/exit barriers  Lack of differentiation and/or switching costKey factors of competitive success Don’t jump into a feeding frenzy Meadow Creek Marketing © 2012 19
  • Mission Vision ValuesSWOT IndustryAnalysis Analysis Planning Process Competitor External Analysis Analysis Meadow Creek Marketing © 2012 20
  • External AnalysisPEST Analysis  Political, regulatory, certifications, etc.  Economic  Social  Technical Aptly named, but they can be more than a pest Meadow Creek Marketing © 2012 21
  • PoliticalComing from the government, these are absolutesThey are also very hard to get your arms aroundChanges in laws and regulations can have a brutal impact on small businesses – unintended consequences All big changes bring opportunity to those that figure out ways around them Meadow Creek Marketing © 2012 22
  • EconomicLook at economic data that drives your market  What are the historical ranges?  Where are you in the cycle?What does the consensus forecast look like?Your own financial plan should reflect the economy as a whole There’s room for a entrepreneur even in down markets Meadow Creek Marketing © 2012 23
  • SocialWhat is important to society today?  Environmentally Conscious  Domestic Security  Sources of energy  Domestic jobs  Health care Be aware of the societal expectations Meadow Creek Marketing © 2012 24
  • TechnicalBig influence on:  Substitute products  Distribution  Sales & Marketing  Quality expectations  Standards  Every aspect of business Change is the only constant Meadow Creek Marketing © 2012 25
  • Sources of InformationIf you haven’t already decided that there is far too much to know, you’re a better man than IGood sources:  Trade association  Industry groups  Chambers of commerce  GovernmentYou have to make a lot of assumptions Be aware when you are making critical assumptions Meadow Creek Marketing © 2012 26
  • Mission Vision ValuesSWOT IndustryAnalysis Analysis Planning Process Competitor External Analysis Analysis Meadow Creek Marketing © 2012 27
  • Competitor AnalysisCapabilities and limitations of current and potential competitorsWhere are they positioned in the marketWhich competitors are rivalsHow are they positioned to respond to external factors Knowing your competition can teach you a lot Meadow Creek Marketing © 2012 28
  • Small Business ShortcutIdentify a successful competitor that represents a model you can emulateResearch the hell out of themCopy what they are doing from top to bottomRemainder of your analysis is to figure out if it can be done and how Imitation is the highest form of flattery Meadow Creek Marketing © 2012 29
  • Mission Vision ValuesSWOT IndustryAnalysis Analysis Planning Process Competitor External Analysis Analysis Meadow Creek Marketing © 2012 30
  • SWOT AnalysisInternal • Attributes of organization Strengths Weaknesses • Competitive AnalysisExternal • Attributes of environment Opportunities Threats • PEST Analysis Meadow Creek Marketing © 2012 31
  • StrengthsStrengths relative to the competition  Relevant to the market  Capitalize on them to succeed  Defend them and build upon themAs a solo-preneur you may not have any  What strength does your vision assume  Make it a top priority to develop Identify & validate your key strengths Meadow Creek Marketing © 2012 32
  • WeaknessesWeaknesses relative to the competition  Relevant to the market  Strategy should minimize their impact  Compensate for them and/or correct themAs a solo-preneur you have many  Prioritize them  Focus on a couple Identify and validate your weaknesses Meadow Creek Marketing © 2012 33
  • OpportunitiesEnvironmental changes that play to your relative strengths  Your strategy should maximize the impact of anticipated change  Don’t bet the farm on an anticipated change Real opportunities for break throughs Meadow Creek Marketing © 2012 34
  • ThreatsEnvironmental changes that:  Diminish your strengths  Extenuate your weaknesses  Negatively impact the market as a whole Watch these closely Meadow Creek Marketing © 2012 35
  • Mission Vision ValuesSWOT IndustryAnalysis Analysis Planning Process Competitor External Analysis Analysis Meadow Creek Marketing © 2012 36
  • Reevaluate Your MissionRevised assessment of your relative positionViability of your original Mission/Vision  Alignment with your company’s: Strengths and weaknesses Internal values  Alignment with the environment you do business in: Industry opportunities and threats Societal expectations Modify your Mission/Vision/Values Meadow Creek Marketing © 2012 37
  • Business StrategyGeneric Strategies Cost Leadership Product Differentiation Focus Meadow Creek Marketing © 2012 38
  • Critical Success FactorsPlanning can seem like process of information overload and infinite required actionsIdentify 3-5 Critical Success Factors  Must happens for you plan to succeed  If there are more, reevaluate again Stay within your managerial/time limits Be realistic about the time you have for “Strategic Issues” Meadow Creek Marketing © 2012 39
  • Goal Setting My fortune last week Meadow Creek Marketing © 2012 40
  • RealityContrary to what you might have heard, simply releasing your passion will get you into as much trouble in business as it has in your personal life.  The odds are against you  Being smarter than the next person will put them in your favor Business is serious stuff Meadow Creek Marketing © 2012 41
  • Strategic Goals AvailableFinancial Resources Operating Plan Time & Goals Money Action Plan Meadow Creek Marketing © 2012 42
  • Action PlanMilestones - EventsDeliverables - Tangible accomplishmentsTiming - When is it going to happenResources - Requirements to get the job doneBudgets - How much will you make & how much did it cost Meadow Creek Marketing © 2012 43
  • Plan, Do, Check, ActAssess the Action need for Plan change Act Plan Did you Achieve Check Do Executethe results the Plan Meadow Creek Marketing © 2012 44
  • Putting it on PaperI’ve seen wonderful examples of a company’s mission and the strategic analysis placed on a single page – hard to doVolume is not importantEnough to clearly convey your thought processMost of a plan might be schedules of action plans and financialsMuch depends on how you plan to use it Meadow Creek Marketing © 2012 45
  • CritiqueCurrent Plan Strategic Analysis Reassessment Peer Review Meadow Creek Marketing © 2012 46
  • Using Your PlanGuidance versus Obsession Periodic Review Check Points ReevaluationSharing If you don’t have employees, share your passion with someoneSelf Assurance Give it a once over whenever you’re feeling unsure Meadow Creek Marketing © 2012 47
  • Critical ReviewIn the corporate world, you get input from: Board of Directors Your manager Your peers Your staff ConsultantsIn the entrepreneurial world, you get input from? Meadow Creek Marketing © 2012 48
  • Feedback & SupportDevelop a support system Industry specific group Fellow business owners Experts in various fields Customers Suppliers Meadow Creek Marketing © 2012 49
  • Meadow CreekConsulting  Plan preparation  Plan review  Issue resolution  Peer Group Meetings  Plan Development Workshops  Plan Development GroupsMarketing Support ServicesOffices & Conference Rooms in Issaquah, WA Meadow Creek Marketing © 2012 50
  • Program Description InvestmentPlan Preparation Onsite visit $1,000 payable in 4 2 hour kick-off installments 4 reviews – 1 hr. each Entrepreneurs Only! 2 hour finalizationPlan Review Review & feedback $250 Two 1 hour follow-up meetings Entrepreneurs Only!Issue Resolution Designated project $125 per hourBoard Meetings Monthly meeting $100 per month up to 5 peers / 2-3 hoursPlan Development Large group session on business $50Workshops strategy & planning 2 hoursPlan Development Small Group Plan Preparation & $75 per meetingGroups Review Sessions up to 2-4 participants/2 -hours Meadow Creek Marketing © 2012 51