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


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


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


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


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


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!


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?


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!


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.


MissionVisionValues

Industry Analysis

External Analysis

Competitor Analysis

SWOTAnalysis

Planning

Process


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


MissionVisionValues

Industry Analysis

External Analysis

Competitor Analysis

SWOTAnalysis

Planning

Process


Industry Analysis

Potential entrants Substitutes Buyers Suppliers Competitors

Understand the space you’re dealing in


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


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


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


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


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


MissionVisionValues

Industry Analysis

External Analysis

Competitor Analysis

SWOTAnalysis

Planning

Process


External Analysis

PEST Analysis

Political, regulatory, certifications, etc.

Economic

Social

Technical

Aptly named, but they can be more than a pest


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


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


Social

What is important to society today?

Environmentally Conscious

Domestic Security

Sources of energy

Domestic jobs

Health care

Be aware of the societal expectations


Technical

Big influence on: Substitute products

Distribution

Sales & Marketing

Quality expectations

Standards

Every aspect of business

Change is the only constant


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


MissionVisionValues

Industry Analysis

External Analysis

Competitor Analysis

SWOTAnalysis

Planning

Process


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


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


MissionVisionValues

Industry Analysis

External Analysis

Competitor Analysis

SWOTAnalysis

Planning

Process


SWOT Analysis

• Attributes of organization

• Competitive Analysis

Inte

rnal

• Attributes of environment

• PEST Analysis

Exte

rnal

Strengths Weaknesses

Opportunities Threats


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


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


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


Threats

Environmental changes that: Diminish your strengths Extenuate your weaknesses Negatively impact the market as a whole

Watch these closely


MissionVisionValues

Industry Analysis

External Analysis

Competitor Analysis

SWOTAnalysis

Planning

Process


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


Business Strategy

Generic Strategies Cost Leadership Product Differentiation Focus


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”


Goal Setting

My fortune last week


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


Available Resources

Time & Money

Strategic Goals

Operating Goals

Action Plan

Financial Plan


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


Plan, Do, Check, Act

Plan

DoCheck

Act

ActionPlan

Executethe Plan

Did youAchieve

the results

Assess theneed forchange


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


Critique

Current Plan

Strategic Analysis

Reassessment

Peer Review


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


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?


Feedback & Support

Develop a support system Industry specific group Fellow business owners Experts in various fields Customers Suppliers


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


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