Transcript Beginning a Business Plan

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
Integrate Changes
Explain Deviation
Compare Actual vs. Plan
Take Action
Get Results
Measure & Record Results
The Business Planning Cycle
Planning Process
Integrate Changes
Explain Deviation
Take Action
Mission
Situation
Objectives & Goals
Strategies & Tactics
Compare Actual vs. Plan
Get Results
Measure & Record Results
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.
2.
What business are you in?
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
Who are your competitors?
What are they like?

Market analysis

Competitive analysis

SWOT analysis
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…
Objective
During your SWOT Analysis, you identified
opportunities to sell items
that you do not yet produce.
To expand your
product line
Goals
1. To develop 3 gift basket packages by
October 15, 2006
2. To begin selling Colby and Pepper Jack
cheeses by October 15, 2006
Objectives & Goals
Activity
1.
2.
Develop one objective for your business
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, 2006
2. 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
Task
Hire gift basket designer
Assigned to Deadline
Peyton
Mar. 1
Contract with basket maker
designer
May 1
Contract with jelly company
Edgerrin
Apr. 15
Contract with cracker company Marvin
Apr. 15
The Planning Cycle Revisited
Planning Process
Integrate Changes
Explain Deviation
Take Action
Mission
Situation
Objectives & Goals
Strategies & Tactics
Compare Actual vs. Plan
Get Results
Measure & Record Results
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