Crafting Business/ Strategic Plan

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Business plan- summary of entrepreneur's proposed business venture/ operational/ financial details/ marketing opportunities and strategies/ managers skills and abilities. Builds on the foundation of idea assessment/ feasibility analysis/ business model

• goal to guide entrepreneurs as they launch their business/ acquire necessary financing to launch

• systematic/ realistic evaluation of chances for success/ determine risks/ no substitute/ no shortcut

• serves to provide a battery of tools (mission statement/ goals/ objectives/ budgets/ financial forecasts/ target markets/ entry strategies) helps subject their ideas to reality before launch/ lead successfully in early startup

• serves to attract lenders/ investors must prove they can be paid back

• comparing results against targeted performance/ attracting capital

To get financing, the business plan must pass three tests with potential lender/ investors

• Reality Test: proving the existence of a market. Focusing on attractiveness/ market niches/ potential customers/ degree of competition/ similar factors. (Proves strong demand for this idea)

• Competitive Test: evaluates the company position to key competitors. Comparable value proposition (Proves quality/ skill/ experience of the management team- what other resources can give company a competitive edge)

• Value Test: business must prove that they offer high probability of repayment/ attractive rate of return

Elements of a business plan

• Title page and table of contents (names/ logo/ contact info/ page numbers)

• executive summary (entire business concept/ different traits from competition/ requested financing)

  • written version of elevator pitch- down to the essential elements to communicate in two minutes

  • Framework: Content (purpose)/ Benefit (advant)/ Target/ Differentiation/ Clincher (memorable)

• Mission/ vision statement: direction in which the company will move

• Description of product line: customer use/ diagrams to show technical side/ product life cycle position/ patents

  • Feature- descriptive fact about product/ benefit- what the customer gains from product benefits are the core of the value proposition of business model

• Business/ industry profile: overview of market segment they will target (key trends/ market size/ developments/ relative economic and competitive strength)

• Competitor analysis: how to position effectively for key competitors/ how well they serve the target area

• Market entry strategy: how to attract customers and gain competitive edge/ value proposition sets apart from other firms

• Marketing strategy: proving a profitable market exists by showing customer interest/ documenting market claims/ target market/ advertising and promo/ market size and trends/ location/ pricing/ distribution

• Entreps/ managers resumes (experience)/ plan of operation/ Pro Forma (Projected) financial statements

• Loan/ investment proposal (purpose/ amount/ plans for repayment/ exit strategy)

What lenders look for in a business plan- capital/ capacity/ collateral/ character/ conditions

Building a strategic plan: Intellectual capital company's competitive advantage that consists of human/ structural/ customer capital

• Human- talents/ creativity/ skills/ abilities of companies workforce

• Structural- knowledge/ experience (processes/ software/ patents/ copyright)

• Customer- established customer base/ positive reputation/ ongoing relationships/ goodwill built over time

Building competitive advantage: value proposition that sets small businesses apart from competitors/ superior position within market

• Entrepreneurs should examine five aspects to define company's competitive advantage (products they sell/ service they provide/ pricing they offer/ way they sell/ value to which they are committed)

• Core competencies- uniquely developed company capabilities in key areas to vault past competitors (superior quality/ customer service/ innovation/ team building/ flexibility/ responsiveness)

  • become nucleus in competitive advantage/ enduring over time

Strategic Management Process

1. Develop a clear vision and translate it into a meaningful mission statement Vision provides direction/ determines decisions/ inspires people/ overcomes obstacles Mission statement- enduring declaration of company purpose of business/ direction to move forth
   

2. Assess the company's strengths and weaknesses Strengths- positive internal factors that the company can accomplish objectives Weaknesses- negative internal factors that hinder the accomplishments objectives Prepare a balance sheet of strengths (skills/ knowledge/ resource) vs. weaknesses (limitations)
   

3. Scan the environment for significant opportunities/ threats facing the business Opportunities- positive external options that company can exploit to accomplish objectives Threats- negative external forces that hinder company from accomplishing objectives These external forces have an impact on the behavior of the market/ competitors/ customers
   

4. Identify the key factors for success in the business Key success factors (performance indicators) determine company's ability to compete successfully Many advantages based on cost factors/ manufacturing cost per unit/ development cost per unit
   

5. Analyze the competition Avoiding surprises/ identify new competitors/ improve reaction time/ anticipate strategic moves Direct competitors- offers same product/ customers compare as they shop Significant competitors- offers some of same product/ somewhat different but similar key areas Indirect competitors- offers same/ similar products in certain areas/ seldom overlapping Competitive profile matrix- evaluate company against competitors using key factors for that segment
   

6. Create company goals and objectives Goals- broad/ long-term business accomplishments (general or abstract) Objectives- more specific targets of performance (profitability/ productivity/ growth) specific/ measurable/ action commitments/ assignable/ realistic/ challenging/ timely
   

7. Formulate strategic options and select appropriate strategies Strategy- roadmap of the actions an entrepreneur draws up to fulfill company objectives/ to reach them 3 Three strategic options- cost leadership/ differentiation/ focus Cost Leadership Strategy- company strives to be the lowest producer over competitors Differentiation Strategy- company seeks to build customers loyalty by positioning products differently Focus Strategy- company selects one or more market segment/ identifies customers special needs/ wants/ interests and approaches them with a good designed to excel in meeting needs Tools more affordable/ better access to niche market (web)/ search tools- easy customers strategies build on differences among segments/ more prevalent/ becoming dumbbell shaped strategy depends on creating value by being lowest cost producer/ different product Worth targeting niches must be profitable/ reachable with market media/ sustainable
   

8. Translate strategic plans into action plans Executing the strategy with purpose/ scope (area/ contribution (related projects)/ requests/ timing
   

9. Establish accurate controls controlling the strategy: keeping them on schedule and tracking them by key performance indicators of the operational data (financial/ production/ sales/ inventory/ quality/ customer service/ satisfaction) balanced scorecards- set of multidimensional measurements are unique to a company/ incorporate financial/ operational measures to give managers a quick comprehensive picture of performance

perspective: financial (shareholders)/ customer (opinion)/ internal business (excels at)/ innovation and learning (continue to improve/ create value) corporate citizenship (responsibility to society/ environment /community/ external shareholders)