1. Strategic Planning for Your Business Heather Clark Reynolds Hoosier Heartland Small Business Development Center, Purdue University

2. Hoosier Heartland Small Business Development Center..who are we?

3. Agenda Elements of a Business Plan Strategic Planning PEST SWOT Porter’s Competitive Analysis Balanced Scorecard Implementation

4. The WRITTEN Business Plan Why do I need a written plan? What’s it good for? Guiding Tool – keeps you from wandering Specify your product or service Clearly identify the business model Define the Organizational Structure & Functions

6. Keeps you focused on primary goals

8. Clearly Define your Product/Service Can you tell me in 30 seconds or less what it is that you do? 2 minutes? What processes do you have in place to serve your customer from beginning to end? How many categories of product/service do you have? How many categories of customers do you have?

9. Exercise 1 What does your business do? What makes you the best candidate to manage this business? What is the number one reason you think this business will succeed? What makes this company a good risk?

10. Description of the Business Provide background information about the industry Compare your business to others in the community as well as nationwide Narrate the history of your business Talk about the impact it has on your community Describe how your business is different than everyone else

11. Identify the Business Model 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. Mom & Pop shop running paper ledger and cash register with no computerized functions Sole Proprietor working from home & computer or on the internet Retail organization with Store Manager, separate company headquarters with office staff, and future store openings coming Light Manufacturing operation with a handful of employees

12. Organizational Structure & Functions One man band President/CEO with department heads who hire/fire, make budgets, set goals, etc. Owner with a few employees who are under direct control Receptionist Production Management Marketing Sales Accounting/ Bookkeeping Purchasing Shipping & Receiving Accts Payable & Receivable Collections Maintenance IT – Website & Computers HR

13. Which Entity am I? Sole Proprietor S-corp LLC Check Patents & registrations @ www.uspto.gov

14. What are you selling? Products Retail Commercial Internet B2B Services Consulting Individual Commercial B2B Internet Based

15. Company and Product Overview Include a history of sales and profits Be honest about challenges you have faced and the strategies you used to overcome them Demonstrate your knowledge of the industry Show that you have talked with distributors, competitors, etc Articulate the features and benefits of your product/service

16. Exercise 2 What type of business are you planning? What products or services will you sell? What makes your product/service unique? Name 3 features that your product/service will offer customers. What is the growth potential of your company? How did you come up with the business idea? Who are your competitors?

17. Market Analysis National Trends National Statistics Economic Conditions

18. Research Dunn and Bradstreet ESRI Market Research Internet Surveys Trade shows/industry think tanks

19. Target Market Ideal Client What do they look like? Demographic Geographic Local, Regional, National

20. Where do my customers get their information? The Greatest Generation Baby Boomers Gen X Gen Y Millenials Internet Podcasts YouTube Newspaper TV Radio Direct Mail Friends Referrals Word of Mouth

21. Market Analysis Demonstrate your understanding of the industry Indentify and address business risks Include a detailed description of your target customer Identify all direct and indirect competitors Discuss your market position relative to competitors

22. Exercise 3 Who are your top 4 competitors? Rank those competitors List 3 tops strengths List 3 worst weaknesses List 5 traits that identify your customers

23. Marketing Plan Market Strategy Sales and Distribution Pricing Advertising Promotion Public Awareness

24. Sales Strategy How am I going to contact prospects? Word of mouth Internet Direct Mail Marketing & Advertising Newspaper, Radio, TV Website Direct Mail How much to spend? % of sales, $$ amount, whatever I can afford

25. Marketing and Sales Plan Consider the position of your product/service in the markeplace Define a price based on the customer and the market Complete a selling plan to offer the product Describe the distribution channels you will use to sell the product or service Include a complete budget

26. Exercise 4 What is the price of your product? Name 3 advertising avenues you are going to use. Give an example of a promotional strategy you are going to use, and explain why you picked that example

27. Operations Plan Product Design and Development Why that design? Time frames of research Manufacturing Explain the steps to be used in producing Flow chart is great Outline the requirements and cost Delivery of Service Advantages/disadvantages of location What type of staff will you have?

28. Exercise 5 In one sentence, describe what steps are required to produce your product/service What type of building/equipment do you need? Who will be your suppliers? How many staff are you going to hire?

29. Management & Manpower Who’s responsible for what? Me, Myself, & I or Key Employees Job descriptions – managing expectations Processes or systems Pay schedule

30. Management Team Make sure your team has the skills required to run the business WELL Select a board of directors with experience Include a detailed action plan to meet staffing requirements Make strategic alliances to compliment members’ skill sets

31. Exercise 6 Who will manage your business? What makes them the best candidate and what are their qualifications? How many employees will you need? What will they do? What consultants or specialists do you need and how will you use them? Who is your attorney, CPA, banker, business coach?

32. Critical Risks Take the wind out of their sails!! Show that you know the potential problems The greatest fear is the unknown What is your plan if a problem arises?

33. Exercise 7 What is one problem that could arise in your business? How likely is that problem to occur? How do you plan to manage that problem?

34. Financial Aspects Most scrutinized section of the plan Financial forecasts Balance sheets Income statements Profit and loss Budget

35. Will I make money? Start up costs Break Even Analysis Cover all costs – fixed & variable Assume income Double expenses & cut income in half Know Your Numbers Daily Weekly Monthly

36. Funding Sources Cash on Hand Friends & Family Loans/Lines of Credit Credit Cards Cash flow

37. Exercise 8 What is your total estimated business income for the first year? Monthly? What will it cost you to open the business? What will your personal financial needs be? What sales volume will you need to make in order to make a profit? What are your potential funding sources?

38. Milestone Schedule "A goal properly set is halfway reached." – Abraham Lincoln "You have to know what you want to get it." - Gertrude Stein

39. Milestones Draft a check list of things to do including meetings with attorneys, CPA’s, advisors Make a list of your goals for 6 months, 1 year and 5 years Make sure your forecasted sales match your goals Be as date specific as possible

40. Exercise 9 List the top 5 financial goals you want your company to reach in one year List the names of all persons you need to meet with and the deadline

41. Strategic Planning Use the business plan as a starting point Helps you have something to measure against Keeps you on track

42. Strategic Planning Develop or Modify your last business plan in order to guide and manage growth Manage your priorities, assign responsibilities and track your progress Make sure responsibilities, activity deadlines and budgets are specific Develop a mission statement

43. Exercise 10 What business are we in? Could we be in? Should we be in? What are the basic customer/client/user needs or problems we exist to fill? In what ways do we want to respond to these needs/problems? Who should be our principle clients/customers? What makes us distinctive? What philosophical issues, values and priorities are/should be important to our organization’s future? What is likely to be different about our business 3 -5 years from now?

44. PEST Analysis Political Economic Social Technological A tool for understanding market growth or decline Determines the position, direction and potential for your business Focuses on external forces

45. SWOT Analysis Strengths Weaknesses Opportunities Threats Tool for understanding and decision making Measures a business unit, a proposition or idea Focuses on human resources, accounting/financial, marketing, operations

46. Why use PEST and SWOT? If you develop strategies, you can avoid and minimize problems and capitalize on opportunities PEST helps you measure the market SWOT helps you determine external forces affect your business and evaluates internal conditions

47. Porter Analysis Assessing your competitors Five Forces Existing competitive rivalry between suppliers Threat of new market entrants Bargaining power of buyers Power of suppliers Threat of substitute products (including technology change)

48. Exercise 11 Who are your major competitors in the market? What are they doing right/wrong? How easy is it for new, competing businesses to enter your market? Are you able to negotiate prices from suppliers? How easy is it for customers to move their business to another competitor? What new competitive threats concern you?

49. Balanced Scorecard “A strategic planning and management system used to align business activities to the vision statement of an organization”

50. How does it work? Translates the vague hopes of the company’s vision/mission statement into the practicalities of managing the business at every level You must know the following: Mission statement Strategic plan/vision Financial status of the organization Operational structure and organization of company Level of expertise of employees Customer satisfaction level

51. 4 perspectives of Balanced Scorecard Finance Internal Business Process Learning & Growth (human focus) Customer The metrics must be Specific Measurable Achievable Realistic Timely

52. What does it look like?

53. Benefits of Implementation Improved processes Motivated/educated employees Enhanced information systems Monitored progress Greater customer satisfaction Increased financial usage

54. How to implement the Balanced Scorecard What (who) are your company’s strengths? Look to the PEST and SWOT analysis Porter Analysis What (who) are your company’s weaknesses? What do you see as your company’s strategic issue(s)?

55. Formulating Strategies Pick a strategic issue and ask the following: What are the practical alternatives, dreams or visions you might pursue to address this strategic issue: What are the barriers (real and imagined) to realizing these alternatives, dreams or visions? What are the major proposals to pursue or overcome these alternatives, dreams or visions? What actions MUST be taken within the next year to implement these strategies?

56. Action Steps For each major action/step to be taken, complete the following: Action Step # 1 Person Responsible Date of Completion Indicator / measure of success

57. Tips for Success ACCOUNTABILITY Baby steps How do you eat an elephant?

58. Questions?