Planning for
Business Success
Tom Ford, Lynn Kime & Jeffrey Hyde
Copyright © 2004, The Pennsylvania State University. All rights reserved.
Penn State is committed to affirmative action, equal opportunity, and the diversity of its workforce.
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Take Home Points
• Planning is essential,
not difficult
• The process is easily understood
• Put it in writing
• Be consistent with family plans
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Success Is Difficult to Achieve!
New Business
New Food Product
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Attempt
5
Attempt
1
Succeeds
Only a 20% success rate
1
Succeeds
Only a 33% success rate
Adapted from: http://www.msue.msu.edu/valueadded/ and the “Why Business Go Under” Handout from the PSU SBDC
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Think About Vacation…
There are thousands of possible
destinations
Alaska
Hawaii
Europe
The Caribbean
Myrtle Beach
Florida
Cooperstown
New York City
Chicago
Las Vegas
California
The Poconos
Colorado
Hometown
Mexico
Africa
Asia
Canada
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Think About Vacation…
There are thousands of possible
destinations
The Caribbean
Alaska
Hawaii
Myrtle Beach
Florida
Europe
Cooperstown
How Do
You Choose?
New York City
Chicago
Las Vegas
California
The Poconos
Colorado
Hometown
Mexico
Africa
Asia
Canada
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Think About Vacation…
Think about what you really want to
accomplish
Fun for the
whole family!
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Think About Vacation…
Think about the “resources” you have at
hand…
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•
•
•
Money
Time
Knowledge
New child?
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Think About Vacation…
Think about “outside” things that may affect
decision
• Gas Prices
• Terror Threats
• Airline Price Wars
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Think About Vacation…
Think more specifically about what you want
to accomplish…
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Think About Vacation…
Based on this information, you choose
Florida as your destination
The Caribbean
Alaska
Hawaii
Europe
Myrtle Beach
Florida
Cooperstown
New York City
Chicago
Las Vegas
California
The Poconos
Colorado
Hometown
Mexico
Africa
Asia
Canada
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Think About Vacation…
Think about what you must do to get there…
•
•
•
•
•
•
How to travel?
Where to stay?
How to get around?
Where to shop?
Where to see baseball?
Where to fish and water-ski?
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Think About Vacation…
Assign tasks to family members…
• Dad: plane tickets,
rental car, and rooms
• Mom: “Antique Row”
• Kids: Internet research 
– Seminole Lake
– Disney World
– Tampa Bay Devil Rays
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Think About Vacation…
Evaluate your trip…
• Would you go back to
Florida?
• Would you take the same
airline, stay at the same
hotel, rent from the same car
company?
• Would you try a different
shopping location?
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Think About Vacation…
Use all of the info as you make future
vacation plans!
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The process just described is
identical to the business
planning process!
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Define your Mission
This family stressed
FUN on
their vacation.
A business’s mission
may stress type of
business, shared
values, and desired
outcomes, such as profit
growth.
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Assess Your Situation
Look “inside” at your
resources.
Are there strengths to
build on?
Are there weaknesses that
must be addressed?
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Assess Your Situation
Look “outside” at your
environment.
Are there opportunities to
pursue?
Are there threats that may
pose risks?
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Assess Your Situation
Assessment of strengths, weaknesses, opportunities, and
threats known as “SWOT Analysis.”
Strengths and weaknesses refer to factors within the
business
Opportunities and threats refer to factors outside the
business
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Set Objectives and Goals
Objectives
Goals
1. Spend 2 days at Disney
World
2. Take in Devil Rays game
3. Spend a day shopping
at “Antique Row”
4. Spend a day on
Seminole Lake
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Set Objectives and Goals
Objectives are general
statements, without
associated timeframe
“We will increase our sales.”
Goals are more specific,
with a timeframe and
measurable target.
“We will grow produce sales
to restaurants by 25% in
2005.”
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Choose Strategies and Tactics
Possible Strategies
Travel – Air, Car, Bus, Hitch hiking
Accommodations – Camping, hotel, motel
Getting around – Own car, taxi, rental car
Shopping – MANY
Baseball – Orlando Sun Rays, Tampa Bay
Devil Rays, Sarasota Red Sox, Tampa
Yankees, Brevard County Manatees…
Fishing and Skiing – MANY
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Choose Strategies and Tactics
Chosen Strategies
Travel – Air
Accommodations – Hotel
Getting around – Rental Car
Shopping – “Antique Row”
Baseball – Tampa Bay Devil Rays
Fishing and Skiing – Seminole Lake
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Choose Strategies and Tactics
Tactics help to achieve strategies
Tactics have name(s) assigned
Can’t simply declare, “We’re
going to fly to Florida!”
1. Who will choose airline,
buy tickets… and when?
2. Who will hold tickets
safely?
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Evaluate Outcome
Don’t make the same
mistake more than once!
Do the good stuff again!
Apply what you learned to
other, non-Florida vacations
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Process in a Nutshell
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•
•
•
•
PLAN – prepare for future
ACT – do your plan
RESULTS – based on actions
RECORD – make note of results
ANALYZE – compare plan to results
EVALUATE – need changes?
GO TO PLAN – start again
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Vacation Versus Business
• Both require research
• Both require input from family and other
stakeholders (other management)
• Both require monitoring in case of detours
or roadblocks
• Both help you do better!
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PUT IT IN WRITING
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Why Write It Down?
Lenders like to see them in writing!
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Why Write It Down?
Communicate with potential partners
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Why Write It Down?
Consultants or other experts may benefit
from reading it
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Parts of Written Plan
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Title Page
Table of Contents
Executive Summary
Mission Statement
Objectives and Goals
Background Information
Organizational Matters
Marketing and Financial Plans
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The Executive Summary
• 1-2 page synopsis of entire plan
• Last piece written
• Describes business and industry
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The Executive Summary
• Includes most important pieces of
objectives, goals, strategies, and tactics
• Provides financial highlights
• Is most frequently read section
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The Mission Statement
Stone Barn Farm Mission Statement
Our mission is to operate a dairy farm that will provide:
1. Financial success through the marketing of high quality milk.
2. A high standard of living for our family and a comfortable retirement
for family farm participants.
3. A rural family living environment with ample time for recreation and
personal growth for all involved.
4. Opportunities for family member involvement and advancement in
the farm business.
5. Recognition for accomplishment.
The farm should be comfortable to work around, be labor efficient,
provide a happy work environment, and express a high degree of
pride.
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The Mission Statement
• Stone Barn Farm’s is longer than ideal
• State most important goals, shared values,
products sold
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Background Information
• Business’s history
• Industry’s history,
trends, and expectations
• Time-consuming piece;
requires research
• Gain information from
many sources
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Organizational Matters
• Business structure
• Management team
• Risk management
strategies
• Use outside help
– Lawyer
– Accountant
– Insurance broker
– Extension educator
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Marketing Plan
• Must match production
plan
• Include marketing
research
• Include marketing
challenges
– Production
– Distribution
– Consistency
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Financial Plan
1. Explain record keeping system
2. Actual and projected
A. Balance sheets
B. Income statement
C. Cash flow statement
3. Assumptions used
4. Contingency plans
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SPECIAL NOTE
Is Yours A Family
Business?
Get input from entire
family throughout
process
Let family review
written plan draft
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SPECIAL NOTE
Is Yours A Family
Business?
Don’t sacrifice family
for business!
Be sure business
plan is consistent
with family plans
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Help Is Available
Get help – both inside and outside the firm
Business consultants
Accountants
Employees
Family members
Input suppliers
Financial advisors
County extension educators
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Help Is Available
Business planning
software
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Help Is Available
Ask your county extension
educator for more information
on this comprehensive
business planning program
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Take Home Points
• Planning is essential,
not difficult
• The process is easily understood
• Put it in writing
• Be consistent with family plans
46
Disclaimer
Information in this presentation is intended to be
educational in nature. No specific advice is intended.
For legal, financial, or other counseling, please see a
professional specializing in your needed field of
expertise.
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Thank You!
Questions?
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