Copyright © 2004, The Pennsylvania State University. All rights reserved. Penn State is committed to affirmative action, equal opportunity, and the diversity

Copyright © 2004, The Pennsylvania State University. All rights reserved. Penn State is committed to affirmative action, equal opportunity, and the diversity of its workforce.

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Planning for Business Success

Tom Ford, Lynn Kime & Jeffrey Hyde

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Take Home Points

• Planning is essential,

not difficult

• The process is easily understood

• Put it in writing

• Be consistent with family plans

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Success Is Difficult to Achieve!

5 Attempt

1Succeeds

New Business

3Attempt

1Succeeds

New Food Product

Only a 20% success rate Only a 33% success rate

Adapted from: http://www.msue.msu.edu/valueadded/ and the “Why Business Go Under” Handout from the PSU SBDC

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Think About Vacation…

There are thousands of possible destinations

Hawaii

Europe

Asia

Florida

California

Myrtle Beach

Cooperstown

New York City

Colorado

Mexico

Africa

Hometown

Chicago

Canada

Las Vegas

Alaska

The Poconos

The Caribbean

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There are thousands of possible destinations

Hawaii

Europe

Asia

Florida

California

Myrtle Beach

Cooperstown

New York City

Colorado

Mexico

Africa

Hometown

Chicago

Canada

Las Vegas

Alaska

The Poconos

The Caribbean

How Do You Choose?

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Think about what you really want to accomplish

Fun for the

whole family!

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Think about the “resources” you have at hand…

• Money

• Time

• Knowledge

• New child?

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Think about “outside” things that may affect decision

• Gas Prices

• Terror Threats

• Airline Price Wars

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Think more specifically about what you want to accomplish…

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Based on this information, you choose Florida as your destination

Hawaii

Europe

Asia

Florida

California

Myrtle Beach

Cooperstown

New York City

Colorado

Mexico

Africa

Hometown

Chicago

Canada

Las Vegas

Alaska

The Poconos

The Caribbean

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Think about what you must do to get there…

• How to travel?

• Where to stay?

• How to get around?

• Where to shop?

• Where to see baseball?

• Where to fish and water-ski?

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Assign tasks to family members…

• Dad: plane tickets,rental car, and rooms

• Mom: “Antique Row”• Kids: Internet research

– Seminole Lake– Disney World– Tampa Bay Devil Rays

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Evaluate your trip…

• Would you go back to Florida?

• Would you take the same airline, stay at the same hotel, rent from the same car company?

• Would you try a different shopping location?

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Use all of the info as you make future vacation plans!

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The process just described is identical to the business

planning process!

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Define your Mission

This family stressed FUN ontheir vacation.

A business’s mission may stress type of business, shared values, and desired outcomes, such as profit growth.

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Assess Your Situation

Look “inside” at your resources.

Are there strengths to build on?

Are there weaknesses that must be addressed?

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Look “outside” at your environment.

Are there opportunities to pursue?

Are there threats that maypose risks?

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Assessment of strengths, weaknesses, opportunities, and threats known as “SWOT Analysis.”

Strengths and weaknesses refer to factors within the business

Opportunities and threats refer to factors outside the business

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Set Objectives and Goals

Objectives Goals

1. Spend 2 days at Disney World

2. Take in Devil Rays game

3. Spend a day shopping at “Antique Row”

4. Spend a day on Seminole Lake

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Set Objectives and Goals

Objectives are general statements, without associated timeframe

“We will increase our sales.”

Goals are more specific, with a timeframe and measurable target.

“We will grow produce sales to restaurants by 25% in 2005.”

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Choose Strategies and Tactics

Possible Strategies

Travel – Air, Car, Bus, Hitch hiking

Accommodations – Camping, hotel, motel

Getting around – Own car, taxi, rental car

Shopping – MANY

Baseball – Orlando Sun Rays, Tampa Bay Devil Rays, Sarasota Red Sox, Tampa Yankees, Brevard County Manatees…

Fishing and Skiing – MANY

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Chosen Strategies

Travel – Air

Accommodations – Hotel

Getting around – Rental Car

Shopping – “Antique Row”

Baseball – Tampa Bay Devil Rays

Fishing and Skiing – Seminole Lake

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Tactics help to achieve strategies

Tactics have name(s) assigned

Can’t simply declare, “We’re going to fly to Florida!”

1. Who will choose airline, buy tickets… and when?

2. Who will hold tickets safely?

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Evaluate Outcome

Don’t make the same mistake more than once!

Do the good stuff again!

Apply what you learned to other, non-Florida vacations

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Process in a Nutshell

• PLAN – prepare for future

• ACT – do your plan

• RESULTS – based on actions

• RECORD – make note of results

• ANALYZE – compare plan to results

• EVALUATE – need changes?

• GO TO PLAN – start again

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Vacation Versus Business

• Both require research

• Both require input from family and other

stakeholders (other management)

• Both require monitoring in case of detours

or roadblocks

• Both help you do better!

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PUT IT IN WRITING

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Why Write It Down?

Lenders like to see them in writing!

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Why Write It Down?

Communicate with potential partners

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Why Write It Down?

Consultants or other experts may benefit from reading it

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Parts of Written Plan

• Title Page

• Table of Contents

• Executive Summary

• Mission Statement

• Objectives and Goals

• Background Information

• Organizational Matters

• Marketing and Financial Plans

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The Executive Summary

• 1-2 page synopsis of entire plan

• Last piece written

• Describes business and industry

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The Executive Summary

• Includes most important pieces of objectives, goals, strategies, and tactics

• Provides financial highlights

• Is most frequently read section

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The Mission StatementStone Barn Farm Mission Statement

Our mission is to operate a dairy farm that will provide:1. Financial success through the marketing of high quality milk.2. A high standard of living for our family and a comfortable retirement

for family farm participants.3. A rural family living environment with ample time for recreation and

personal growth for all involved.4. Opportunities for family member involvement and advancement in

the farm business.5. Recognition for accomplishment.

The farm should be comfortable to work around, be labor efficient, provide a happy work environment, and express a high degree of pride.

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The Mission Statement

• Stone Barn Farm’s is longer than ideal

• State most important goals, shared values, products sold

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Background Information

• Business’s history

• Industry’s history, trends, and expectations

• Time-consuming piece; requires research

• Gain information from many sources

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Organizational Matters

• Business structure

• Management team

• Risk management strategies

• Use outside help– Lawyer– Accountant– Insurance broker– Extension educator

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Marketing Plan

• Must match production plan

• Include marketing research

• Include marketing challenges– Production– Distribution– Consistency

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Financial Plan

1. Explain record keeping system

2. Actual and projectedA. Balance sheets

B. Income statement

C. Cash flow statement

3. Assumptions used

4. Contingency plans

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SPECIAL NOTE

Is Yours A Family Business?

Get input from entire family throughout process

Let family review written plan draft

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SPECIAL NOTE

Is Yours A Family Business?

Don’t sacrifice family for business!

Be sure business plan is consistent with family plans

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Help Is Available

Get help – both inside and outside the firm

Business consultants

Accountants

Employees

Family members

Input suppliers

County extension educatorsFinancial advisors

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Help Is Available

Business planning software

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Help Is Available

Ask your county extension educator for more information on this comprehensive business planning program

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Take Home Points

• Planning is essential,

not difficult

• The process is easily understood

• Put it in writing

• Be consistent with family plans

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Disclaimer

Information in this presentation is intended to be educational in nature. No specific advice is intended. For legal, financial, or other counseling, please see a professional specializing in your needed field of expertise.

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Thank You!

Questions?

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Copyright © 2004, The Pennsylvania State University. All rights reserved. Penn State is committed to affirmative action, equal opportunity, and the diversity