1. Copyright Strategic Outlooks 2007-2013 Surprise Chamber of Commerce On Business Planning

2. Copyright Strategic Outlooks 2007-2013 Planning – A Three Phase Approach Strategy Understanding the Landscape Developing Scenarios' to Leverage the Business Environment Creating a path to execute Operations Objectives Critical Success Factors SMART – (Specific, Measurable, Attainable, Relevant, Timely) Organization Responsible Reliable Learning & Enthusiastic

3. Copyright Strategic Outlooks 2007-2013 From Vision to Objective VISION With Scenarios you created a VISION of your business and how you see it fit into the moving environment without regard to internal barriers. It is now time to add the reality of limited resources to create an operating plan!

4. Copyright Strategic Outlooks 2007-2013 Testing Your Strategy Analysis Expanding or Shrinking Market or Economy? Market or Product Position – Can it be changed in a timely fashion? Will we get the production from expanded staff/facilities/territories? How much do we believe in our ability to manage change?

5. Copyright Strategic Outlooks 2007-2013 Barriers or Opportunities? The analysis starts with a mindset!

6. Copyright Strategic Outlooks 2007-2013 Creating an Operating Plan Step by Step translation of a Strategic Plan into specific Operational Objectives. How do we bolster our strengths? How do we cover our weaknesses? What did we see as opportunities? How real are the threats? Threats and Opportunities are revealed from the Forces Analysis Strengths & Weaknesses are provided by Resources Assessment.

7. Copyright Strategic Outlooks 2007-2013 Creating The Objectives For Each Department List Current Operation List Planned Vision Create a Difference List Both Add & Delete Remaining List becomes planning task list Attempt to apply the SMART principles to each list Specific Measurable Attainable Realistic Timely

8. Copyright Strategic Outlooks 2007-2013 Objective Content Exactly What is the Result? – SPECIFIC How do we know we are achieving it? – MEASURABLE Can we do it with the resources given/planned – ATTAINABLE What are the barriers? Can we overcome them? – REALISTIC When do we think this objective can be achieved? - TIMELY Objective Strategy Resource Tactics

9. Copyright Strategic Outlooks 2007-2013 Critical Success Factors The Objective List is the Key to easily identifying the essential Critical Success Factors ! Identify 2 to 5 factors for each department/initiative. The remaining objective although important become subordinate to the Critical Criteria. A What we Need to Do ! B How were going to Do It! C How were going to Measure It ! Initiatives

10. Copyright Strategic Outlooks 2007-2013 Ladder of Critical Success Factors Guidelines Must fit into span of control Must carry responsibility Must be Critical to Mission Company Department Group Individual

11. Copyright Strategic Outlooks 2007-2013 Creating a Model Why a Model? A model provides a dynamic way to produce costs,budget and an expected financial result from your initiatives. What does the Model Consist of? Excel Workbook Assumptions /Fixed Costs Products/Services Personnel Inventory Capital Equipment Financing Marketing Sales General & Administrative Income Statement Income Statement Cash Flow Cash Flow Balance Sheet Balance Sheet Ratios Ratios

12. Copyright Strategic Outlooks 2007-2013 Beginning Model Result This will not be a pretty picture!

13. Copyright Strategic Outlooks 2007-2013 Finding Adjustments Raise the Water or Lower the Rocks

14. Copyright Strategic Outlooks 2007-2013 Raising the Water Value Proposition Marketing Approach Value Approach Examining ASP (average sale price) ATP (average ticket price) Value Added Add-Ons Pricing Product Portfolio Margin Analysis

15. Copyright Strategic Outlooks 2007-2013 Marketing Approach Basic Principles Who is the Customer? What are the attributes? Why would they buy from you? Differentiation Convenience Service Price How can I reach them? Advertising Web Presence & Links Inbound/outbound reach Social Media - References

16. Copyright Strategic Outlooks 2007-2013 Marketing Approach Communications Tiers Repurchase Reference/ Satisfaction Purchase DrivenImpulse Preference PersonalComparative Awareness BrandingValue Post SustainingImmediate 30% 20% 30% 50%

17. Copyright Strategic Outlooks 2007-2013 Modeling Marketing Efforts Raising the Water Marketing has distinct measures ! Cost per Lead or Cost per Sale Lead to Qualified Lead Closing Ratios Number of calls to close % of close to qualified lead. If you know these ratios then it is easy to plan a marketing campaign and project sales results.

18. Copyright Strategic Outlooks 2007-2013 Model Calculations for Marketing Sheet Example – Assumptions: Reach = 20,000 Awareness = 20,000 x 30% or 6,000 Preference = 6,000 x 20% or 1,200 Purchase = 1,200 x 30% or 300 Average Sale Price = $100 x 300 = $30,000 Cost of Insertion = $6,000 Cost of Goods = 50% or $15,000 Change in Gross Sales less Marketing Cost = $9,000

19. Copyright Strategic Outlooks 2007-2013 Model Results Projected Income Projected Cash Flow Projected Balance Sheet Projected Ratios Most Important

20. Copyright Strategic Outlooks 2007-2013 Lowering the Rocks Review Variable Expenses Adjust Timing (Hiring, Expanding, Marketing, etc) Analyze Cost of Sales Analyze Cost of Goods/Services Review Professional Fees Review Fixed Costs Facilities Staffing General Expenses

21. Copyright Strategic Outlooks 2007-2013 Cash You can have good profit and run out of cash! Receivables are slower than growth. Inventory purchases exceed receipts. Tax payments are out of cycle with business cycle. It is almost always a function of time!

22. Copyright Strategic Outlooks 2007-2013 Model Allows for Solution Analysis Look Both Ways – Lower the Rocks Raise the Water Raising the Water Increase Sales Increase Margins Increase Access Banking–LOC Banking-Term Equity Sale Lowering the Rocks Examine Expenses Reduce Inventory Reduce Marketing Defer Capital Investment Reduce Staff

23. Copyright Strategic Outlooks 2007-2013 CEO OperationsSalesMarketingFinanceAdministration Producing the Operating Plan Model provides the budget! The initiatives provide the objectives! The Objectives provide the timeline! The Objectives & Timeline provide to targets to manage to! At every level in the company!

24. Copyright Strategic Outlooks 2007-2013 Thank You Next Month – Creating an Organizational Plan Questions? Dick Jensen www.StrategicOutlooks.com

25. Copyright Strategic Outlooks 2007-2013 Model Components Assumptions: Fixed Costs & Ratios Rent (Cost/Sq Ft) Sq Ft. – Space Allocations etc) Banks, beginning balances & debts AR/AP Periods Credit Card Fees Ratios Products/Services Cost Sale Price Personnel Positions Exempt/nonexempt Wage mo. or hourly Benefits yes/no Month of hire Benefit Calculations Health/other Inventory Purchases Less Sales(From Sales) Finance Borrowing Capital Equipment Purchases Depreciation Marketing Channels Expense per Channel Expected Result from expense Awareness Preference Purchase Sales Units by Channel/Region/Product Sales in $ Cost of Goods Sold Seasonal Adjustment Chart AR/AP Collections Period Bad Debt Payment Period General & Administrative Labor (From Personnel) Withholding Taxes Benefits General Expenses Rent Utilities Travel & Entertainment Professional Fees Banking Fees Other Expenses