Presentation on theme: "PLANNING FOR BUSINESS SUCCESS"— Presentation transcript:
1 PLANNING FOR BUSINESS SUCCESS Temple UniversityInnovation & Entrepreneurship InstitutePresented by Amy Michelle Yom, Associate Director of IEI
2 THE BUSINESS PLAN & FREQUENTLY ASKED QUESTIONS What is a Business Plan?What is the purpose of a business plan?Who needs a business plan?Are there disadvantages to a business plan?How does one create a successful business plan?
3 WHAT IS A BUSINESS PLAN? A roadmap for success Future oriented: What you WILL do, how you WILL do itAll business plans should addressBusiness concept (product service description, business structure, how you will take the concept to market, industry trends, etc.)Marketplace (competition, customers, purchasing behaviors, sales cycles, value prop, positioning, etc.)Financial (income and cash flow statements, break even analysis, balance sheet, financial ratios, funding needs, etc.)
4 WHY DEVELOP A BUSINESS PLAN? A well developed plan provides:Focus to the entrepreneurVision to management team, potential funders, suppliers and other stakeholdersOrganizes ideas and examines feasibilityIncreases the chances of successHelps attract key employeesMaximizes chance of successHelps avoid and eliminate wasteThe business needs funding!Entrepreneur without business plan
5 A GOOD BUSINESS PLAN… Formalizes goals and intentions Communicates value to stakeholdersPlans for financial support and stabilityIdentifies target marketsEffectively allocates resources and timeCreates a timeline to achieve the company’s main goals
6 Plan Your Work… Then Work Your Plan ALWAYS REMEMBER TO…Plan Your Work… Then Work Your Plan
7 WHO NEEDS A BUSINESS PLAN? Anyone running or thinking about running a businessEntrepreneurs with solid business ideasAny current successful businessStart-up companiesCompanies seeking financial backingBusinesses in both pre-launch and post-launch stagesBusinesses going through periods of intense change and/or stress
8 ARE THERE DISADVANTAGES TO A BUSINESS PLAN? Inflexibility – Sticking to the plan no matter what, even when it’s failing or market or industry conditions changeDiscouragement – There are so many unknown aspects of a business, some find it difficult to write a solid plan or “guesstimate”Tunnel Vision – A narrow plan may result in overlooking beneficial opportunitiesTime Consuming – Takes time away from business operations, customer meetings, etc.
9 DO IT RIGHT…According to a Belmont University survey, “many plans fail because those involved do not spend the time or energy, or have the expertise, necessary to make the plan comprehensive enough to have true value.”
10 CREATING A SUCCESSFUL BUSINESS PLAN Successful business plans include:Executive SummaryCompany Mission/ObjectivesCompany OverviewProduct/Service DescriptionManagement TeamThe Marketplace
11 CREATING A SUCCESSFUL BUSINESS PLAN (cont.) Sales and Marketing StrategyCompetitionBusiness RisksImplementation PlanCapital Requirements/Use of FundingFinancial Projections and PlanSupporting Exhibits
12 MISSION STATEMENT Consists of three parts: Business operationsCustomers and target marketsValue propositionStates the purpose for existenceAddresses goals and priorities of the firm
13 MISSION STATEMENTSAll successful businesses, for profit, not for profit and social innovation ventures, must have a solid mission statementThe mission statement should convey the company’s purpose clearly to customersCreate a tone and “voice” that is consistent with the company’s culture (Exxon vs. Nike)
14 MISSION STATEMENTS Some examples: Google: to organize the world’s information and make it universally accessibleeBay: to provide a global trading platform where practically anyone can trade practically anythingDell: to be the most successful computer company in the world at delivering the best customer experience in markets we serve
15 MCDONALD’S MISSION STATEMENT "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
16 TEMPLE UNIVERSITY’S MISSION STATEMENT “Temple University is a national center of excellence in teachingand research with an international presence.”(http://www.temple.edu/about/mission.htm)
17 $ AND THE BUSINESS PLAN Angels and venture capitalists demand it No bank will loan you money without onePrerequisite to apply for government grants
18 MONEY AND THE BUSINESS PLAN Don’t borrow family money and don’t ask for their advice – if at all possibleNetwork with other business owners in similar industries – where did their funding come from?Become highly informed of traditional and nontraditional funding sources
19 THINKING AHEAD… FROM IDEA TO PLAN Thinking ahead includes identifying the end goal of the companyWill the business:Develop technology, then sell or license it?Grow business, then sell or merge?Grow business into mega corporation, go public?Grow business, and continue to operate it?
21 THE SWOT ANALYSIS The SWOT Analysis Should… Examine your business and its performance relative to competitors and prospectsBe undertaken at the start of any business or marketing planning processLook at internal strengths and weaknesses and external threats and opportunities
22 SWOT – INTERNAL CONSIDERATIONS The internal review should outline your business position relative to your industryCritical factors:Management team/Human resourcesBusiness structureFinancial positionProducts/Innovation/R&DSales and marketingProductivity
23 SWOT – EXTERNAL CONSIDERATIONS The external review should address the “Big Picture Level” and “The Industry Level.”Big Picture LevelEconomic trendsPoliticalSociety/environmental/ consumerInternationalIndustry LevelCompetitionTechnologyDemand patternsSupply and suppliersIndustrial relationsSkills
24 “People don’t plan to fail. BUSINESS FAILURE“People don’t plan to fail.They fail to plan.”
25 FAILURE STATISTICS99.9% of all US businesses are “small businesses” (< 500 employees, < $500K sales)0.1% or 17,000 businesses are “large businesses”Small business failures have increased every year since As noted by Small biz loan, failure rates grew from 2.4 percent in 2004 to 11.9 percent in (Almost 12%)(www.strategicmarketsegmentation.com)
26 THE TOP TEN REASONS FOR BUSINESS FAILURE #10 – Over expansion # 9 – Poor capital structure # 8 – Failure to control the controllable costs # 7 – Failure to prepare for volatility of uncontrollable costs # 6 – Add new products or divisions that reduce the profitable ones* Waller/Lansden, Nashville, TN
27 THE TOP TEN REASONS FOR BUSINESS FAILURE # 5 – Poor internal controls and execution# 4 – Poorly designed business model# 3 – Reliance on critical financing that dries up#2 – Failure to adapt to a changing market, and . . .* Waller/Lansden, Nashville, TN
28 THE #1 REASON FOR BUSINESS FAILURE IS… Management in complete denial!According to Dun & Bradstreet, 88.7% of business failures are due to management mistakes.
29 MORE REASONS FOR FAILURE Dun & Bradstreet also claim that business failure results fromLack of market awarenessEntrepreneur falls in love with productLack of financial responsibility and awarenessLack of clear focusInsufficient capitalOptimistic/realistic/pessimistic
30 IMPROVING CHANCES OF SUCCESS Development of a business planCurrent and accurate profile of the competitionCurrent and accurate profile of the target customerGo into business for the right reasonsHire the right peopleObtaining accurate financial information in a timely manner
31 Additional Resources (Available in A 503g, IEI Resource Center) Write a Business Plan… In no Time Frank F. FioreBusiness Plan in a Day Rhonda AbramsPreparing Effective Business Plans Bruce R. BarringerThe Ernst & Young Business Plan GuideBrian R. Ford, Jay M. Bornstein, Patrick T. Pruitt
32 ONLINE RESOURCES Entrepreneur.com – gr8 tutorials Small Business Administration: sba.gov/smallbusinessplannerBplans.com – all kinds of goodiesbusinessplans.org – MOOT Corp b-plan competition & b-plan samplesmyownbusiness.org
33 IEI BUSINESS PLAN RESOURCES Ten workshops per semesterResource CenterCoaching and counseling on all aspects of new venture creationExecutives and Entrepreneur in residenceIEI staffMentors: industry, subject matter and discipline experts
34 BE YOUR OWN BOSS BOWLInfo sessions in November and January, plans due in MarchFree book, Write a Business Plan in No Time by Frank FioreBYOBB template keyed to bookFormal one-on-one mentoring program with GPSEGScoring sheet showing emphasis on various aspects of the plan