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This presentation was given by Art Helmstetter at a Dayton Chamber of Commerce sponsored workshop to help small businesses learn how to develop a strategic plan for their business. For information or assistance contact www.b2bplanner.com
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Small Business Strategy Development Process
UnderstandAnalyze
Decide Act
Understand AnalyzeDecide
Act
Art Helmstetter “Large and Small Business”
Managing Director, B2B Planner Ltd. Small Business Development
Director Global Planning and Marketing Quaker Chemical Corporation Strategic Planning
Business Management 25 consecutive years achieving profit goals
Started up four businesses Two start ups survive today Grew two other businesses from 0 to over $25 MM
Education MBA, BS & MS Engineering,
“If you don't know where you are going, any road will get you there.”
Lewis Carrol, Alice in Wonderland
“I can't change the direction of the wind, but I can adjust my sails to reach my destination.”
Jimmy Dean
Strategy Development Agenda
• The case for strategy development.• Why small businesses don’t plan.• Need to respond to a rapidly changing world• A planning model for today• Key Elements of Planning
– Internal Factors– External Factors– SWOT Analysis
• Planning Tools and Templates• The Simple Steps Model
The Brutal Facts
1. Nothing you do will 100% guarantee success
2. Planning can greatly improve your chance of success
3. Not planning WILL greatly increase your chance of failure
This is confirmed by the large number of companies without business plans that fail within 5 years
Definition of Strategy Development
A business’s process of • defining its strategy and direction,• and making decisions on allocating its
resources including its capital and people.
Keep It Simple by answering three questions:• "What do we do?"• "For whom do we do it?"• "How do we beat the competition?”
CreatesA Focal Point
to Grow Your Business
Strategic Planning
We Live in a “Hyper”World
• Hyper-competitive market– Global competition– Excess capacity in the US
• Hyper-Speed of Change– Accelerating technology development– Digital speed of operation
• Hyper-Uncertainty– Changing economy– Changing government intervention
Why Businesses Don’tDo A Strategic Plan?
No one makes you “Too expensive” Takes too much time Can’t get the information Don’t know how Doesn’t work Is not fun
What’s Your Reason?
Planning Is NOT a Do It Yourself Process
• You don’t do it often• You need a process• It takes time• You need perspective
and objectivity• It takes research
Who Can Help?
• Advisory Committee • Trained Staff Member • SCORE Mentor• Sole Practitioner • Large Consultant
But YOU must OWN the process!
A Plan Is the Conclusion of Strategy Development
Strategic ThinkingWhat Might Happen Options
Strategic Decision Making What Will We Do
Strategic PlanningHow Will We Do It
Decisions
Business Plan
Strategic Plan Business Plan Budget
Serial Planning Model For Stable Conditions
Alternate Business Planning Models
Customer Behavior
External Factors
Business Plan and Budget
Internal Capabilities
Strategic Thinking and Analysis
Both models use similar elements and analyses, but the process is very different.
Alternate Business Planning Models
Dynamic Planning Model for Changing Conditions
Customer Behavior
External Factors
Business Plan and Budget
Internal Capabilities
Strategic Thinking and Analysis
Both models use similar elements and analyses, but the process is very different.
Alternate Business Planning Models
Dynamic Planning Model for Changing Conditions
Vision
Mission
MarketResearch
SWOT
Segmentation
Analysis
Elements of StrategyFormulation
• Market Size• Growth Potential• Customer Needs and Wants
Buyer Behavior Preferences
• Competitive Intelligence
Traditional Market Research
Focus on your “addressable” microcosm
Focus on YOUR customersWhat do your customers really buy from you? Buyer Behavior PreferencesFind the common characteristicsCan you sell your customers different things?Who do your customers compete with?
Can you sell to them?
Focus on YOUR competitors
Simplified Market Research
Customers:Who Buys from You
Where Does Your business
come from?
Demography
Geography
Consumers
Businesses
Repeat Buyers
Occasional Buyers
Customers: Segmentation
Use common elements to select products and marketing
Identify underserved, high value groupsIncome Career or Industry Current Product Use
Use a segmentation dimensionIndustrial Commercial Consumer
Dividing the market into groups Product they use How they use product When and where used
Simplified Competitor Research
Focus on YOUR marketGoogle ‘emVisit their websiteSearch in directory listings
Yellow pages digital and print.Google and Yahoo localAngie’s List
Check out their reviewsTalk to their customers, employees, suppliers and competitors
BUT ALWAYS BE ETHICAL!
Supply or Value Chain
Determine your position in the value chainHow far are you from the final user
Produce Raw
Material
Make Parts
Assemble Product
Sell Product
Service Product
Five Forces of Competitive Intensity
CompetitiveRivalry
New Entrants
Buyer Power
ProductTechnology
Supplier Power
Focus Your Actions Based on your SWOT
StrengthsManufacturingInnovationMarketing/sales
OpportunitiesNew MarketsNew ApplicationNew Technology
WeaknessesCostMarketing/salesStaff skills
ThreatsCompetitionEconomyNew Technology
Internal External
Barr
iers
Posi
tives
Focus Your SWOT on the “Make or Break” Issues
Focus Your Actions Based on your SWOT
Confront Avoid
Exploit Search
Internal FactorsStrengths Weaknesses
Exte
rnal
Fac
tors
Opp
ortu
nitie
s
Thr
eats
Actions To Grow
• Increase reach in existing • Find new markets
Market Expansion
• New business w/customers • New products
Product Expansion
• Products• Application• Processes
Innovation
Actions to Improve Performance/Efficiency
• Credit Policy• PricingFinancial
• Capital investment• Improve processesOperations
• ERP systems• Web based sales, marketingIT
• Rewards & recognition• Capability buildingHR
FOCUS on 1-2 Goals
Goal 1: Strategy 1: Implement the Timeline: Team ________________________________________________________________
________________________________________________________________ Action Items:
_________________________________________________________________________________________________________ Timeline: _________________________________________________________________________________________________________ Timeline:
TASK WHO BY WHEN
Resources needed ________________________________________________________________________________________________________________________________________________________ Enabling factors/barriers ________________________________________________________________________________________________________________________________________________________
RESULTS: ________________________________________________________________________________________________________________________________________________________________________________________________
1. Executive Summary
2. Goals
3. Objectives
4. Strategies
5. Action items
6. Outcomes/Results
7. Time Lines
8. Champions
32
Eight Strategic Measures to Monitor and Update
• LACK OF STRATEGIC FOCUS
33
Why Strategies Fail
• LACK OF STRATEGIC FOCUS
• Inaccurate or biased intelligence gathering
• Failure to identify weaknesses and threats
• The strategy is a poor fit between the external environment and an organizations' resources
• Overly optimistic about resources and abilities
• Inadequate support of others
• Lack of discipline to follow the plan
• Not making timely adjustments when needed
34
Why Strategies Fail
Focus on the Future
• Commit to writing a strategy and plan.• Use a proven process, and • An experienced person to facilitate the process.
• Meet with that person monthly to follow up on the strategy and plan
Now Go for a Ride
Steer
Pedal
Balance
Look Ahead
Thank You!
Understand AnalyzeDecide
Act
Focus Your Strategy With SCORE’s Simple Steps
Stability
MaturityRapid
ExpansionInitial
GrowthStart-up
Yesterday’s Paradigm Slow Pace (Years) Many Opportunities Subtle Impact Specialization (Isolation) Agriculture Based Economy Product Based Economy Services Based Economy
DeclineSurvival
WorksheetCurrent Situation (Position)
Current SituationTraditional Model
Today’s Paradigm Hectic Pace (Months) Few Opportunities Volatile Impact Diversification (Collaboration) Experienced Based Society
Current SituationEmerging Model
OffenseCompete
GrowExpansion
StrategicShaping
DevelopmentStart-upDefense
DeclineSurvival
RecoveryTacticalShaped
Welcome to the Experience Driven Economy
Experience Loyal Consumers(Unprecedented Consumer Mix)Digital Customers(Connected, Online and Influenced)Interactive Communications(Not Just One-way Advertising)Customer Relationships(Not Just a Sale)Hectic Pace(Immediate not prolonged) Limited Opportunities(To Succeed or Fail)Volatile Impact(Business Outcomes)Diversification(Not specialization)Collaboration(Not isolation)
ExperienceDriven
Economy
Enterprise500 Above
Corporation126-500
Company26-125
Business6-25
Entrepreneur1-5
VerticalMarketGroup
HospitalHealthcare
NAICS Classification Code:www.census.gov/epcd/www/naics.html
VerticalBusinessSegment
Doctor’sOffice
Small Business Size, Scope and Type of Business
Business Change CyclesAt each of these levels, businesses go through significant transition in
several key areas.
Employees Organization
Investment RevenuesCash flow ExpensesOfferings Facilities
Resources Systems
Processes
NationalRegional
VirtualGlobal
LocalNeighborhood
Current SituationDevelopment – Start Up
Simple Steps to Starting a Business Establish a viable for-profit business or non-profit organization
Need (Pending motive)
Desire (Feasibility)
Ability (Qualification)
Timing (Opportunity)
Action (Start-up)
Step 1: Awareness (Concept/Interest)
Step 2: Awareness (Personal Qualification)
Step 3: Evaluation (Business Feasibility)
Step 4: Commitment (Decision/Funding)
Step 5: Implementation (Preparation/Launch)
Simple Steps to Starting a Business - Start-up Track
WorksheetBusiness DevelopmentDecision Process
Advantage SCORE . . .Integrated Business Performance Solutions
Simple Steps Workshop Series Integrated or Segmented Track
Scheduled (Open) Workshops Combined Track
Aligned Mentoring Business Start-up Coaching
SCORE Resources (Network)
WorksheetQualification andFeasibility Guide
Shaped by Marketplace
Disrupted by Industry
Majority and Laggards
Declining or Survival
Involuntary Disruption
Current SituationRecovery – Tactical
Simple Steps to Business RecoveryNeed to move the business out of the current situation
Simple Steps to RecoveryDefense Track- Tactical
Step 1: Awareness (External Perspectives)
Step 2: Discovery (Internal Insights)
Step 3: Evaluation (Sustainable Business Model) Isolate Challenges
Step 4: Commitment (Solution Recommendations) Prioritize Initiatives
Step 5: Implementation (Execute and Management)
Step 6: Measurement (Measure Results and Repeat)
Advantage SCORE . . .Integrated Business Performance Solutions
Simple Steps Workshop Series Integrated or Segmented Track
Scheduled (Open) Workshops Combined Track
Aligned Mentoring Business Recovery Coaching
SCORE Resources (Network)
WorksheetBusiness Recovery
Simple Steps to Business ExpansionWant to move the business to the next level
Current SituationVoluntary Transition
Shaping Marketplace
Disrupting Industry
Innovators/Early Adaptors
Competing Aggressively
Steady Growth
Voluntary Evolution
Simple Steps to ExpansionOffense - Strategic
Step 1: Awareness (External Perspectives)
Step 2: Discovery (Internal Insights)
Step 3: Evaluation (Sustainable Business Model) Isolate Challenges
Step 4: Commitment (Solution Recommendations) Prioritize Initiatives
Step 5: Implementation (Execute and Management)
Step 6: Measurement (Measure Results and Repeat)
Advantage SCORE . . . Integrated Business Performance Solutions
Simple Steps Workshop Series Integrated or Segmented Track
Scheduled (Open) Workshops Combined Track
Aligned Mentoring Business Expansion Coaching
SCORE Resources (Network)
WorksheetBusiness Transition
DevelopmentStart-up TrackEntrepreneur (BP) DNALeadership Priorities (Balance)Start-up Leadership AlignmentDevelopment Process (5 Steps)Development Challenges Start-up Problems Start-up Needs Start-up OpportunitiesBuild Business Model Business Performance Priorities Business Operations Priorities Foundation (Scheduled) InitiativesEvaluate External ForcesResource IdentificationDevelopment Funding Sources
DefenseRecovery TrackBusiness Operations DNALeadership Balance (Priorities)Recovery Leadership AlignmentRecovery Process (6 Steps)Survival Challenges Survival Problems Recovery Needs
Fix Business Model Business Performance Priorities Business Operations PrioritiesTactical (Immediate) InitiativesManage External ForcesResource AllocationRecovery Funding Sources
OffenseExpansion TrackBusiness Performance DNALeadership Balance (Priorities)Transition Leadership AlignmentTransition Process (6 Steps)Growth Challenges Competitive Needs Growth Opportunities
Expand Business Model Business Performance Priorities Business Operations PrioritiesStrategic (Planned) InitiativesLeverage External ForcesResource CommitmentExpansion Funding Sources
Common Concepts – Different Execution
Targeted Marketplace (Geographic Segment)The Demand Side
Targeted Marketplace (Geographic Segment)The Demand Side
Leadership (Stake Holder) DNALeadership Allocation (Self) or Balance (Team
Leadership Lifecycle Alignment
A Sustainable Organization ModelExternal versus Internal Balance
Targeted ConsumerCommunities
(Customer Segments)
Stakeholders - Community,
Media and Other Communities
BusinessPerformanceStrategiesFront-office
BusinessOperationsStrategiesBack-office
The Supply SideSupply Chain
Partner, AllianceProfessionalCommunities
The Supply SideSupply Chain
Partner, AllianceProfessionalCommunities
Society(Consumers)
Economy(Money)
Innovation(Technology)
Marketplace(Commerce)
Events(Environment)
Policy(Standards)
External Forcesof Business
Change
Today’s volatile business climate is a lot like a tennis match, challenges come at you pretty fast. Whether you are winning, losing or just starting out in business, SCORE can help you match point and win.
Regardless of business size, scope, type, or current situation, seasoned SCORE professionals leverage integrated solutions with years of life/work experience to give you an “advantage” in today’s challenging business environment.
Advantage SCORE . . .From Challenges to Solutions
VolatileBusinessClimate
The fastest tennis serve on record for menis 156MPH and 139MPH for women