Business planning for entrepreneurs
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Transcript of Business planning for entrepreneurs
Meadow Creek Marketing © 2012 1
BUSINESS PLANS ELEGANT AND SIMPLE
Meadow Creek Marketing
2
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 it
Meadow Creek Marketing © 2012
Meadow Creek Marketing © 2012 3
What is a Business Plan
We’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 4
Presentation Focus
Solo-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 value
Interactive Ask questions & make comments
Meadow Creek Marketing © 2012 5
Reality Check
As 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 halfway
My hope is that you at least think about everything else
Again, it’s the thought that counts
Meadow Creek Marketing © 2012 6
Why Have a Business Plan?
Startup Failure Rate
Start Year 2 Year 4 Year 6 Year 8 Year 10
0%
10%
20%
30%
40%
50%
60%
70%
80%
One-third will never turn a profit!
Failing to plan is planning to fail
Meadow Creek Marketing © 2012 7
Have You Thought it Through?
Dan McComb, Biznik founder, says the average solo-preneur puts $25,000 into their business
Most 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 8
What’s in the Plan?
Mission/Vision/Values
Strategic Rationale
Road Map
Allocation of Resources
Metrics
What are you trying to do?
Why will it work?
How do you get there?
Can you do it?
What is success?
Basic stuff, why would you put everythingat risk without it?
Meadow Creek Marketing © 2012 9
Creating a Business Plan
Pick a process, any process
The thought process is what counts
Not 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 10
Knowledge is Power
In the case of business, it is the Power to Make an Intelligent Decision
Knowledge of your market, competitors, suppliers, customers and all those that influence you will empower you
It 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 11
MissionVisionValues
Industry Analysis
External Analysis
Competitor Analysis
SWOTAnalysis
Planning
Process
Meadow Creek Marketing © 2012 12
Getting Started
Mission – internal view of what you want to be when you grow up
Vision – external view of how you want to be perceived at the end of the day
Values – distinguishing ideals of your company
They exist either explicitly or implicitly
Meadow Creek Marketing © 2012 13
MissionVisionValues
Industry Analysis
External Analysis
Competitor Analysis
SWOTAnalysis
Planning
Process
Meadow Creek Marketing © 2012 14
Industry Analysis
Potential entrants Substitutes Buyers Suppliers Competitors
Understand the space you’re dealing in
Meadow Creek Marketing © 2012 15
Potential Entrants
Barriers 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 16
Substitutes
Business is all about satisfying a real or perceived need of a consumer
What 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 17
Buyers/Customers
Bargaining 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 18
Suppliers
Bargaining 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 19
Competitors
Rivalry among existing competitors - 4 factors
Other 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 cost
Key factors of competitive success
Don’t jump into a feeding frenzy
Meadow Creek Marketing © 2012 20
MissionVisionValues
Industry Analysis
External Analysis
Competitor Analysis
SWOTAnalysis
Planning
Process
Meadow Creek Marketing © 2012 21
External Analysis
PEST Analysis
Political, regulatory, certifications, etc.
Economic
Social
Technical
Aptly named, but they can be more than a pest
Meadow Creek Marketing © 2012 22
Political
Coming from the government, these are absolutes
They are also very hard to get your arms around
Changes 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 23
Economic
Look 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 24
Social
What 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 25
Technical
Big influence on: Substitute products
Distribution
Sales & Marketing
Quality expectations
Standards
Every aspect of business
Change is the only constant
Meadow Creek Marketing © 2012 26
Sources of Information
If you haven’t already decided that there is far too much to know, you’re a better man than I
Good sources: Trade association Industry groups Chambers of commerce Government
You have to make a lot of assumptions
Be aware when you are making critical assumptions
Meadow Creek Marketing © 2012 27
MissionVisionValues
Industry Analysis
External Analysis
Competitor Analysis
SWOTAnalysis
Planning
Process
Meadow Creek Marketing © 2012 28
Competitor Analysis
Capabilities and limitations of current and potential competitors
Where are they positioned in the market
Which competitors are rivals
How are they positioned to respond to external factors
Knowing your competition can teach you a lot
Meadow Creek Marketing © 2012 29
Small Business Shortcut
Identify a successful competitor that represents a model you can emulate
Research the hell out of them
Copy what they are doing from top to bottom
Remainder 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 30
MissionVisionValues
Industry Analysis
External Analysis
Competitor Analysis
SWOTAnalysis
Planning
Process
Meadow Creek Marketing © 2012 31
SWOT Analysis
• Attributes of organization
• Competitive Analysis
Inte
rnal
• Attributes of environment
• PEST Analysis
Exte
rnal
Strengths Weaknesses
Opportunities Threats
Meadow Creek Marketing © 2012 32
Strengths
Strengths relative to the competition Relevant to the market Capitalize on them to succeed Defend them and build upon them
As 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 33
Weaknesses
Weaknesses relative to the competition Relevant to the market Strategy should minimize their impact Compensate for them and/or correct
them
As a solo-preneur you have many Prioritize them Focus on a couple
Identify and validate your weaknesses
Meadow Creek Marketing © 2012 34
Opportunities
Environmental 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 35
Threats
Environmental changes that: Diminish your strengths Extenuate your weaknesses Negatively impact the market as a whole
Watch these closely
Meadow Creek Marketing © 2012 36
MissionVisionValues
Industry Analysis
External Analysis
Competitor Analysis
SWOTAnalysis
Planning
Process
Meadow Creek Marketing © 2012 37
Reevaluate Your Mission
Revised assessment of your relative position
Viability 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 38
Business Strategy
Generic Strategies Cost Leadership Product Differentiation Focus
Meadow Creek Marketing © 2012 39
Critical Success Factors
Planning can seem like process of information overload and infinite required actions
Identify 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 40
Goal Setting
My fortune last week
Meadow Creek Marketing © 2012 41
Reality
Contrary 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 42
Available Resources
Time & Money
Strategic Goals
Operating Goals
Action Plan
Financial Plan
Meadow Creek Marketing © 2012 43
Action Plan
Milestones - Events
Deliverables - Tangible accomplishments
Timing - When is it going to happen
Resources - Requirements to get the job done
Budgets - How much will you make & how much did it cost
Meadow Creek Marketing © 2012 44
Plan, Do, Check, Act
Plan
DoCheck
Act
ActionPlan
Executethe Plan
Did youAchieve
the results
Assess theneed forchange
Meadow Creek Marketing © 2012 45
Putting it on Paper
I’ve seen wonderful examples of a company’s mission and the strategic analysis placed on a single page – hard to do
Volume is not important
Enough to clearly convey your thought process
Most of a plan might be schedules of action plans and financials
Much depends on how you plan to use it
Meadow Creek Marketing © 2012 46
Critique
Current Plan
Strategic Analysis
Reassessment
Peer Review
Meadow Creek Marketing © 2012 47
Using Your Plan
Guidance 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 48
Critical Review
In the corporate world, you get input from: Board of Directors Your manager Your peers Your staff Consultants
In the entrepreneurial world, you get input from?
Meadow Creek Marketing © 2012 49
Feedback & Support
Develop a support system Industry specific group Fellow business owners Experts in various fields Customers Suppliers
Meadow Creek Marketing © 2012 50
Meadow Creek
Consulting Plan preparation
Plan review
Issue resolution
Peer Group Meetings
Plan Development Workshops
Plan Development Groups
Marketing Support Services
Offices & Conference Rooms in Issaquah, WA
Meadow Creek Marketing © 2012 51
Program Description Investment
Plan Preparation
Onsite visit2 hour kick-off4 reviews – 1 hr. each2 hour finalization
$1,000 payable in 4 installmentsEntrepreneurs Only!
Plan Review Review & feedback Two 1 hour follow-up meetings
$250Entrepreneurs Only!
Issue Resolution
Designated project $125 per hour
Board Meetings
Monthly meeting up to 5 peers / 2-3 hours
$100 per month
Plan Development Workshops
Large group session on business strategy & planning2 hours
$50
Plan Development Groups
Small Group Plan Preparation & Review Sessions up to 2-4 participants/2 -hours
$75 per meeting