business planning brian okane

© 2004 Oak Tree Press — South East Enterprise Platform Programme Slide 1

Business Planning

BRIAN O'KANE

© 2004 Oak Tree Press — South East Enterprise Platform Programme Slide 2

THE HARSH REALITY

• 50% of start-ups fail

• Poor business planning

• “Write a business plan”

• Emphasis on writing, not on thinking

• THINK, THINK, THINK !

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PROCESS vs OUTPUT

• PROCESS separate from OUTPUT

• PROCESS = Thinking, researching, testing, planning

• OUTPUT = Business plan document

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BUSINESS PLANNING PROCESS

Think Plan Do

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STRATEGY

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MISCONCEPTIONS

• Strategy is for big companies only

• You need an MBA to do Strategy

• There's no point planning, since things change

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Unsuccessful strategy 1

• All fogged up

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Unsuccessful strategy 2

• Sunday driver

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Unsuccessful strategy 3

• Rose-tinted spectacles

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Unsuccessful strategy 4

• If we make it, they'll buy it!

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Unsuccessful strategy 5

• Blind leap of faith

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Unsuccessful strategy 6

• Juggling too many things at once

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STRATEGY

• Imagining

• Planning

• Deciding

• Taking control

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STRATEGY

• Where do you want to go?• Where are you now?• How do you get there?

• Focus usually on HOW? – More important questions: WHAT? WHY?

• Strategic box

• Business plan – THINK, not WRITE

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STRATEGIC BOX

• Values• Passion• Vision• Mission• Positioning• Resourcing

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OTP STRATEGY

• Passion– Our passion is enterprise. Thinking about it.

Writing about it. Talking about it. Doing it. Helping with it. Making it happen.

• Vision– OTP will be known worldwide as the best in

developing successful methodologies and resources for entrepreneurs, MSMEs and enterprise support organisations.

• Mission– Helping entrepreneurs to achieve their

potential.

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Vision

• WHAT ?

• WHY ?

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Vision 2

• I want to own and run a uniquely personalised career advice service, which really understands people’s difficulties in choosing a career and works with them to find their best fit in the job market. I want this service to have a 99% first-time success rate in matching people to the right careers (not just the next job), as measured by the people themselves. I want this service to be available not just locally but, in time, nationally and even globally, at a price that everyone can afford.

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Vision 3

• Challenges:– Personalised service. – Really understanding people.– Finding the best fit in the job market.– 99% first-time success rate.– Matching people to the right career, not just

jobs.– Success rate measured by customers.– National – even global – distribution.– Affordable price.

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Vision

• Must:– Link to Values & Passion– Link with future trends– Set a challenge– Motivate– Take the long view

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Mission

• Vision: Where you want to be

• Mission: How you bring people there with you

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Positioning

• Vision: Where you want to be

• Positioning: Where market thinks you are

– VW Phaeton– Stg£43k – £68k– €65k - €103k

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Branding

• Something that makes people pay more for your product, even though it's the same as a competitor's

– VW Sharan– €38,820

– SEAT Alhambra– €33,600

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Targets

• Vision: Where you want to be

• Targets: Goals that are closer to home– What do you want to achieve next year? – Next month? – In the next three or five years? – Where will you be on your road to achieving

your Vision at a particular point in time?

• Your targets are the milestones that make clear and communicate your Vision.

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FORMALITIES

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Formalities

• Legal structure

• Bank account(s)

• Exposure to liabilities & loss

• Licences

• Intellectual property rights

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MARKETING

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MARKETING

• Satisfying needs .. profitably

• Elements:• Customers• Competition• Image• 4 Ps (product) / 3 Ps (service)• Marketing plan• Sales forecast

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MARKET RESEARCH

• Keep it practical

• Sources of information

• What do you want to know?

• Do it yourself

• Core of your business (plan)

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MARKETING

• 4 Ps (PRODUCT)- Product- Place- Price- Promotion

• 3Ps (SERVICE)– Physical presence– Perception– People

• All linked

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SALES FORECASTS

• Evidence– Get forward orders!

• Be realistic

• Ultimate purpose of marketing is SALES

• Link sales forecasts to your promotion activities

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MARKETING

SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES, SALES

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MARKETING

Understand your customers' needs

Set targets

Combine all elements of the marketing mix

Link to finances / cashflow

Get hard evidence where possible

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PROCESS &PEOPLE

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BUSINESS PROCESS

• 4 elements:– Buy– Make– Sell– Manage / Infrastructure

• Visualise your process

• Resource implications– Space– Equipment– Staff

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PEOPLE

• Analysis of skill levels– Now– Future need

• Key staff– Retention

• Part of resourcing of strategy

• Management capabilities

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PEOPLE

• Human capital more important than financial

• Knowledge base• Organisational structure• Passion / unity / commitment• Entepreneur as manager• Which areas are critical?• Job descriptions• Cost• Formalities• Outsourcing

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MANAGEMENT

• Delegation• Communication• Formalities• Ongoing development• Retention• Reward• Develop policy/systems• Review skills levels

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BUSINESS PLANS

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BUSINESS PLAN BENEFITS

• The road map or guide to the future– Not written in stone, but a plan nonetheless

• Establish objectives, prioritize, specify steps

• Cash flow is not profits and is not intuitive– It is, however, critical to success

• Communicate– Banks, investors, partners, family

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CRITICAL QUESTIONS

– Who are you?– What is your product?– Who will buy your product? – Why do they buy your product?– What price will your customers pay?– How many will they buy at this price?– How many can you make?– How much does each unit of product cost you

to make?– How much investment do you need to get

started?– Have you a viable business?

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PROCESS & OUTPUT

Exec Sum

Intro Project Outline

Ownership

Mkt'g Production

Finance & Funding

App'x

My product

I am

Start-up investment

Viable business ?

My customers:

Are / Will buy / Will pay

I can make

It costs to make

In summary

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WRITING A BUSINESS PLAN

• Assemble information from your research

• Use template / software

• Start in the middle

• Reflect your plans in the financials

• Write for the audience

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INTRO / EXEC. SUMMARY

• Brief / concise / relevant• Tailored to audience• Key messages – emphasise achievements• What do you want from the reader?• Ooomph!

• Last part to be written• CRITICAL

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TAILORING BUSINESS PLANS

• Different plans for different audiences– Level of detail– Level of confidentiality– Nature of relationship with reader

• Why do YOU want the person to read the BP?

• Why do THEY want to read the BP (if at all)?

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BUSINESS PLAN ISSUES

• Raise your sights!

• Marketing – where will the sales come from?

• Financials – realism/sensitivity?

• Text / Evidence / Numbers

• SHOW ME THE MONEY !!

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• Questions / queries:

brian.okane@oaktreepress.com

www.startingabusinessinireland.com