The Written Business Plan Jjp


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The Written Business Plan Jjp

  1. 1. Strategic Planning for Your Business<br />Heather Clark Reynolds<br />Hoosier Heartland Small Business Development Center, Purdue University<br />
  2. 2. Hoosier Heartland Small Business Development Center..who are we?<br />
  3. 3. Agenda<br />Elements of a Business Plan<br />Strategic Planning<br />PEST<br />SWOT<br />Porter’s Competitive Analysis<br />Balanced Scorecard<br />Implementation<br />
  4. 4. The WRITTEN Business Plan<br />Why do I need a written plan?<br />What’s it good for?<br />Guiding Tool – keeps you from wandering<br />Specify your product or service<br />Clearly identify the business model<br />Define the Organizational Structure & Functions<br />
  5. 5. Guiding Tool<br /><ul><li>Needed by lenders for loan applications
  6. 6. Keeps you focused on primary goals
  7. 7. Baseline to refer back to when things don’t go your way</li></li></ul><li>Executive Summary<br />Demonstrates your understanding of the business and industry<br />Predict and address concerns that a potential investor might have<br />Include highlights of how and when the business will pay back investors<br />Should not be longer than 2 pages<br />Usually written last<br />Most banks/investors will not look past the executive summary if it does not grab their attention<br />
  8. 8. Clearly Define your Product/Service<br />Can you tell me in 30 seconds or less what it is that you do? 2 minutes?<br />What processes do you have in place to serve your customer from beginning to end?<br />How many categories of product/service do you have?<br />How many categories of customers do you have?<br />
  9. 9. Exercise 1<br />What does your business do?<br />What makes you the best candidate to manage this business?<br />What is the number one reason you think this business will succeed?<br />What makes this company a good risk?<br />
  10. 10. Description of the Business<br />Provide background information about the industry<br />Compare your business to others in the community as well as nationwide<br />Narrate the history of your business<br />Talk about the impact it has on your community<br />Describe how your business is different than everyone else<br />
  11. 11. Identify the Business Model<br />A business model is a term used to describe a profit-producing system that has an important degree of independence from the other systems within an enterprise. The term is widely used for a broad range of informal and formal descriptions of the purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. <br />Mom & Pop shop running paper ledger and cash register with no computerized functions<br />Sole Proprietor working from home & computer or on the internet<br />Retail organization with Store Manager, separate company headquarters with office staff, and future store openings coming<br />Light Manufacturing operation with a handful of employees<br />
  12. 12. Organizational Structure & Functions<br />One man band<br />President/CEO with department heads who hire/fire, make budgets, set goals, etc.<br />Owner with a few employees who are under direct control<br />Receptionist<br />Production<br />Management<br />Marketing<br />Sales<br />Accounting/ Bookkeeping<br />Purchasing<br />Shipping & Receiving<br />Accts Payable & Receivable<br />Collections<br />Maintenance<br />IT – Website & Computers<br />HR<br />
  13. 13. Which Entity am I?<br />Sole Proprietor<br />S-corp<br />LLC<br />Check Patents & registrations @<br />
  14. 14. What are you selling?<br />Products<br />Retail<br />Commercial<br />Internet<br />B2B<br />Services<br />Consulting<br />Individual<br />Commercial<br />B2B<br />Internet Based<br />
  15. 15. Company and Product Overview<br />Include a history of sales and profits<br />Be honest about challenges you have faced and the strategies you used to overcome them<br />Demonstrate your knowledge of the industry<br />Show that you have talked with distributors, competitors, etc<br />Articulate the features and benefits of your product/service<br />
  16. 16. Exercise 2<br />What type of business are you planning?<br />What products or services will you sell?<br />What makes your product/service unique?<br />Name 3 features that your product/service will offer customers.<br />What is the growth potential of your company?<br />How did you come up with the business idea?<br />Who are your competitors?<br />
  17. 17. Market Analysis<br />National Trends<br />National Statistics<br />Economic Conditions<br />
  18. 18. Research<br />Dunn and Bradstreet<br />ESRI Market Research<br />Internet<br />Surveys<br />Trade shows/industry think tanks<br />
  19. 19. Target Market<br />Ideal Client<br />What do they look like?<br />Demographic<br />Geographic<br />Local, Regional, National<br />
  20. 20. Where do my customers get their information?<br />The Greatest Generation<br />Baby Boomers<br />Gen X<br />Gen Y<br />Millenials<br />Internet<br />Podcasts<br />YouTube<br />Newspaper<br />TV<br />Radio<br />Direct Mail<br />Friends<br />Referrals<br />Word of Mouth<br />
  21. 21. Market Analysis<br />Demonstrate your understanding of the industry<br />Indentify and address business risks<br />Include a detailed description of your target customer<br />Identify all direct and indirect competitors<br />Discuss your market position relative to competitors<br />
  22. 22. Exercise 3<br />Who are your top 4 competitors?<br />Rank those competitors<br />List 3 tops strengths<br />List 3 worst weaknesses<br />List 5 traits that identify your customers<br />
  23. 23. Marketing Plan<br />Market Strategy<br />Sales and Distribution<br />Pricing<br />Advertising<br />Promotion<br />Public Awareness<br />
  24. 24. Sales Strategy<br />How am I going to contact prospects?<br />Word of mouth<br />Internet<br />Direct Mail<br />Marketing & Advertising<br />Newspaper, Radio, TV<br />Website<br />Direct Mail<br />How much to spend?<br />% of sales, $$ amount, whatever I can afford<br />
  25. 25. Marketing and Sales Plan<br />Consider the position of your product/service in the markeplace<br />Define a price based on the customer and the market<br />Complete a selling plan to offer the product<br />Describe the distribution channels you will use to sell the product or service<br />Include a complete budget<br />
  26. 26. Exercise 4<br />What is the price of your product?<br />Name 3 advertising avenues you are going to use.<br />Give an example of a promotional strategy you are going to use, and explain why you picked that example<br />
  27. 27. Operations Plan<br />Product Design and Development<br />Why that design?<br />Time frames of research<br />Manufacturing<br />Explain the steps to be used in producing<br />Flow chart is great<br />Outline the requirements and cost<br />Delivery of Service<br />Advantages/disadvantages of location<br />What type of staff will you have?<br />
  28. 28. Exercise 5<br />In one sentence, describe what steps are required to produce your product/service<br />What type of building/equipment do you need?<br />Who will be your suppliers?<br />How many staff are you going to hire?<br />
  29. 29. Management & Manpower<br />Who’s responsible for what? <br />Me, Myself, & I or Key Employees<br />Job descriptions – managing expectations<br />Processes or systems<br />Pay schedule<br />
  30. 30. Management Team<br />Make sure your team has the skills required to run the business WELL<br />Select a board of directors with experience<br />Include a detailed action plan to meet staffing requirements<br />Make strategic alliances to compliment members’ skill sets<br />
  31. 31. Exercise 6<br />Who will manage your business? What makes them the best candidate and what are their qualifications?<br />How many employees will you need?<br />What will they do?<br />What consultants or specialists do you need and how will you use them?<br />Who is your attorney, CPA, banker, business coach?<br />
  32. 32. Critical Risks<br />Take the wind out of their sails!!<br />Show that you know the potential problems<br />The greatest fear is the unknown<br />What is your plan if a problem arises?<br />
  33. 33. Exercise 7<br />What is one problem that could arise in your business?<br />How likely is that problem to occur?<br />How do you plan to manage that problem?<br />
  34. 34. Financial Aspects<br />Most scrutinized section of the plan<br />Financial forecasts<br />Balance sheets<br />Income statements<br />Profit and loss <br />Budget<br />
  35. 35. Will I make money?<br />Start up costs<br />Break Even Analysis<br />Cover all costs – fixed & variable<br />Assume income<br />Double expenses & cut income in half<br />Know Your Numbers <br />Daily<br />Weekly<br />Monthly<br />
  36. 36. Funding Sources<br />Cash on Hand<br />Friends & Family<br />Loans/Lines of Credit<br />Credit Cards<br />Cash flow<br />
  37. 37. Exercise 8<br />What is your total estimated business income for the first year? Monthly? <br />What will it cost you to open the business?<br />What will your personal financial needs be?<br />What sales volume will you need to make in order to make a profit?<br />What are your potential funding sources?<br />
  38. 38. Milestone Schedule<br />&quot;A goal properly set is halfway reached.&quot; – Abraham Lincoln<br />&quot;You have to know what you want to get it.&quot; - Gertrude Stein <br />
  39. 39. Milestones<br />Draft a check list of things to do including meetings with attorneys, CPA’s, advisors<br />Make a list of your goals for 6 months, 1 year and 5 years<br />Make sure your forecasted sales match your goals<br />Be as date specific as possible<br />
  40. 40. Exercise 9<br />List the top 5 financial goals you want your company to reach in one year<br />List the names of all persons you need to meet with and the deadline<br />
  41. 41. Strategic Planning<br />Use the business plan as a starting point<br />Helps you have something to measure against<br />Keeps you on track<br />
  42. 42. Strategic Planning<br />Develop or Modify your last business plan in order to guide and manage growth<br />Manage your priorities, assign responsibilities and track your progress<br />Make sure responsibilities, activity deadlines and budgets are specific<br />Develop a mission statement<br />
  43. 43. Exercise 10<br />What business are we in? Could we be in? Should we be in?<br />What are the basic customer/client/user needs or problems we exist to fill?<br />In what ways do we want to respond to these needs/problems?<br />Who should be our principle clients/customers?<br />What makes us distinctive?<br />What philosophical issues, values and priorities are/should be important to our organization’s future?<br />What is likely to be different about our business 3 -5 years from now?<br />
  44. 44. PEST Analysis<br />Political<br />Economic<br />Social<br />Technological<br />A tool for understanding market growth or decline<br />Determines the position, direction and potential for your business<br />Focuses on external forces<br />
  45. 45. SWOT Analysis<br />Strengths<br />Weaknesses<br />Opportunities<br />Threats<br />Tool for understanding and decision making<br />Measures a business unit, a proposition or idea<br />Focuses on human resources, accounting/financial, marketing, operations<br />
  46. 46. Why use PEST and SWOT?<br />If you develop strategies, you can avoid and minimize problems and capitalize on opportunities<br />PEST helps you measure the market<br />SWOT helps you determine external forces affect your business and evaluates internal conditions<br />
  47. 47. Porter Analysis<br />Assessing your competitors <br />Five Forces<br />Existing competitive rivalry between suppliers<br />Threat of new market entrants<br />Bargaining power of buyers<br />Power of suppliers<br />Threat of substitute products (including technology change)<br />
  48. 48. Exercise 11 <br />Who are your major competitors in the market?<br />What are they doing right/wrong?<br />How easy is it for new, competing businesses to enter your market?<br />Are you able to negotiate prices from suppliers?<br />How easy is it for customers to move their business to another competitor?<br />What new competitive threats concern you?<br />
  49. 49. Balanced Scorecard<br />“A strategic planning and management system used to align business activities to the vision statement of an organization”<br />
  50. 50. How does it work?<br />Translates the vague hopes of the company’s vision/mission statement into the practicalities of managing the business at every level<br />You must know the following:<br />Mission statement<br />Strategic plan/vision<br />Financial status of the organization<br />Operational structure and organization of company<br />Level of expertise of employees<br />Customer satisfaction level<br />
  51. 51. 4 perspectives of Balanced Scorecard<br />Finance<br />Internal Business Process<br />Learning & Growth (human focus)<br />Customer<br />The metrics must be<br />Specific<br />Measurable<br />Achievable<br />Realistic<br />Timely<br />
  52. 52. What does it look like?<br />
  53. 53. Benefits of Implementation<br />Improved processes<br />Motivated/educated employees<br />Enhanced information systems<br />Monitored progress<br />Greater customer satisfaction<br />Increased financial usage<br />
  54. 54. How to implement the Balanced Scorecard<br />What (who) are your company’s strengths?<br />Look to the PEST and SWOT analysis<br />Porter Analysis<br />What (who) are your company’s weaknesses?<br />What do you see as your company’s strategic issue(s)?<br />
  55. 55. Formulating Strategies<br />Pick a strategic issue and ask the following:<br />What are the practical alternatives, dreams or visions you might pursue to address this strategic issue:<br />What are the barriers (real and imagined) to realizing these alternatives, dreams or visions?<br />What are the major proposals to pursue or overcome these alternatives, dreams or visions?<br />What actions MUST be taken within the next year to implement these strategies?<br />
  56. 56. Action Steps<br />For each major action/step to be taken, complete the following:<br />Action Step # 1<br />Person Responsible<br /> Date of Completion<br /> Indicator / measure of success<br />
  57. 57. Tips for Success<br />ACCOUNTABILITY<br />Baby steps<br />How do you eat an elephant?<br />
  58. 58. Questions?<br />