Beginning a Business Plan Jeffrey Hyde The Pennsylvania State University Penn State is committed to affirmative action and the diversity of its workforce

Importance of Process & Product Process  Forces big-picture perspective  Leads to common mission Product (written plan)  Communicate internally  Communicate externally (lenders & potential partners)

The Business Planning Cycle Planning Process Take Action Get Results Measure & Record ResultsCompare Actual vs. Plan Explain Deviation Integrate Changes

The Business Planning Cycle Planning Process Take Action Get Results Measure & Record ResultsCompare Actual vs. Plan Explain Deviation Integrate Changes Mission Situation Objectives & Goals Strategies & Tactics

Defining Your Mission Your mission reflects the reason you’re in business Your mission statement may reflect: Your chosen type of business Your shared values Desired outcomes (e.g., profit, lifestyle)

Defining Your Mission Jeff Hyde’s Professional Mission To provide timely education and research results to farm managers, increasing their knowledge and skills; thus strengthening 1. farm profitability and sustainability 2. agricultural viability in PA 3. farm families

Defining Your Mission What’s your mission? 1. What business are you in? 2. What values characterize you and your business? (e.g., local foods, work environment, environmental concerns, trust, integrity, hard work, profit)

Situation Analysis Industry analysis Market analysis Competitive analysis SWOT analysis

Situation Analysis Industry analysis Market analysis Competitive analysis SWOT analysis Who are the industry players? Input suppliers Growers Processors Wholesalers Retailers What are the industry trends?

Situation Analysis Industry analysis Market analysis Competitive analysis SWOT analysis Who and where are your customers? What do they need? What is their purchasing behavior? How can you reach them?

Situation Analysis Industry analysis Market analysis Competitive analysis SWOT analysis Who are your competitors? What are they like? What products do they have? How have they grown?

Situation Analysis Industry analysis Market analysis Competitive analysis SWOT analysis Strengths and Weaknesses are internal to the business Opportunities and Threats are external to the business SWOT should be easy after performing the other analyses

Group Activity Let’s perform an OT analysis What opportunities and threats do you see in the cheese-making business?

Where are you in the process? You have defined your reason for being in business – Mission… You know where you’re starting from – Situation Analysis… Now, define your destination(s) – Objectives & Goals

Objectives & Goals What’s the difference? Objectives: General statement describing intended directions; long-term or indefinite Goals: Specific directions describing measurable targets; short-term with deadline

Objectives & Goals An Example… During your SWOT Analysis, you identified opportunities to sell items that you do not yet produce. Objective To expand your product line Goals 1.To develop 3 gift basket packages by October 15, To begin selling Colby and Pepper Jack cheeses by October 15, 2006

Objectives & Goals Activity 1. Develop one objective for your business 2. Define at least one goal to support your objective

One More Step… You know… …why you are in business – mission …your starting point – situation analysis …where you want to go – objective and goals The last step is deciding how to get to your destination(s)

Strategies & Tactics Strategies describe the overall plan for achieving objectives and goals Tactics specifically detail how to implement strategies

Strategies & Tactics An Example… Objective To expand your product line Goals 1.To develop 3 gift basket packages by October 15, To begin selling Colby and Pepper Jack cheeses by October 15, 2006 Let’s focus on Goal 1 What are some possible strategies?

Strategies & Tactics Strategy 1: Do everything yourself  Make baskets  Add basket liner  Add cheese, crackers, jelly…  Seal the basket

Strategies & Tactics Strategy 2: Outsource everything  Send cheese to contractor  Presto! A basket is sent to the customer

Strategies & Tactics Strategy 3: Joint venture  A partner firm provides baskets  Another provides jellies  Another provides crackers  You provide everything else

Strategies & Tactics Which strategy is right?

Strategies & Tactics Tactics simply correlate tasks, names, and timelines TaskAssigned toDeadline Hire gift basket designerPeytonMar. 1 Contract with basket makerdesignerMay 1 Contract with jelly companyEdgerrinApr. 15 Contract with cracker companyMarvinApr. 15

The Planning Cycle Revisited Planning Process Take Action Get Results Measure & Record ResultsCompare Actual vs. Plan Explain Deviation Integrate Changes Mission Situation Objectives & Goals Strategies & Tactics

Business Planning Skills & Tools Information Gathering  Record keeping  Research Information Processing  Enterprise & cash flow budgets  Financial statements and ratios

Beginning a Business Plan Jeffrey Hyde The Pennsylvania State University Penn State is committed to affirmative action and the diversity of its workforce