PLANNING FOR BUSINESS SUCCESS
Temple University
Innovation & Entrepreneurship Institute
Presented by Amy Michelle Yom, Associate Director of IEI
THE BUSINESS PLAN &
FREQUENTLY ASKED QUESTIONS
• What is a Business Plan?
• What is the purpose of a
business plan?
• Who needs a business plan?
• Are there disadvantages to a
business plan?
• How does one create a
successful business plan?
WHAT IS A BUSINESS PLAN?
• A roadmap for success
– Future oriented: What you WILL do, how
you WILL do it
• All business plans should address
– Business concept (product service
description, business structure, how you
will take the concept to market, industry
trends, etc.)
– Marketplace (competition, customers,
purchasing behaviors, sales cycles, value
prop, positioning, etc.)
– Financial (income and cash flow
statements, break even analysis, balance
sheet, financial ratios, funding needs, etc.)
WHY DEVELOP A
BUSINESS PLAN?
• A well developed plan provides:
– Focus to the entrepreneur
– Vision to management team, potential
funders, suppliers and other stakeholders
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Organizes ideas and examines feasibility
Increases the chances of success
Helps attract key employees
Maximizes chance of success
Helps avoid and eliminate waste
The business needs funding!
Entrepreneur without
business plan
A GOOD BUSINESS PLAN…
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Formalizes goals and intentions
Communicates value to stakeholders
Plans for financial support and stability
Identifies target markets
Effectively allocates resources and time
Creates a timeline to achieve the
company’s main goals
ALWAYS REMEMBER TO…
Plan Your Work…
Then Work Your Plan
WHO NEEDS A BUSINESS PLAN?
• Anyone running or thinking about running
a business
• Entrepreneurs with solid business ideas
• Any current successful business
• Start-up companies
• Companies seeking financial backing
• Businesses in both pre-launch and postlaunch stages
• Businesses going through periods of
intense change and/or stress
ARE THERE DISADVANTAGES
TO A BUSINESS PLAN?
• Inflexibility – Sticking to the plan no matter
what, even when it’s failing or market or
industry conditions change
• Discouragement – There are so many
unknown aspects of a business, some find it
difficult to write a solid plan or “guesstimate”
• Tunnel Vision – A narrow plan may result in
overlooking beneficial opportunities
• Time Consuming – Takes time away from
business operations, customer meetings, etc.
DO IT RIGHT…
According to a Belmont
University survey, “many
plans fail because those
involved do not spend the
time or energy, or have the
expertise, necessary to make
the plan comprehensive
enough to have true value.”
CREATING A SUCCESSFUL
BUSINESS PLAN
• Successful business plans include:
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Executive Summary
Company Mission/Objectives
Company Overview
Product/Service Description
Management Team
The Marketplace
CREATING A SUCCESSFUL
BUSINESS PLAN (cont.)
– Sales and Marketing Strategy
– Competition
– Business Risks
– Implementation Plan
– Capital Requirements/Use of Funding
– Financial Projections and Plan
– Supporting Exhibits
MISSION STATEMENT
• Consists of three parts:
– Business operations
– Customers and target markets
– Value proposition
• States the purpose for existence
• Addresses goals and priorities of the firm
MISSION STATEMENTS
• All successful businesses, for profit, not for
profit and social innovation ventures, must
have a solid mission statement
• The mission statement should convey the
company’s purpose clearly to customers
• Create a tone and “voice” that is consistent
with the company’s culture (Exxon vs. Nike)
MISSION STATEMENTS
• Some examples:
– Google: to organize the world’s information
and make it universally accessible
– eBay: to provide a global trading platform
where practically anyone can trade
practically anything
– Dell: to be the most successful computer
company in the world at delivering the best
customer experience in markets we serve
MCDONALD’S MISSION STATEMENT
• "McDonald's vision is to be the world's
best quick service restaurant experience.
Being the best means providing
outstanding quality, service, cleanliness,
and value, so that we make every
customer in every restaurant smile."
TEMPLE UNIVERSITY’S
MISSION STATEMENT
“Temple University is a
national center of
excellence in teaching
and research with an
international presence.”
(http://www.temple.edu/about/mission.htm)
$ AND THE BUSINESS PLAN
• Angels and venture capitalists
demand it
• No bank will loan you money
without one
• Prerequisite to apply for
government grants
MONEY AND THE BUSINESS PLAN
• Don’t borrow family money and don’t ask for
their advice – if at all possible
• Network with other business owners in
similar industries – where did their funding
come from?
• Become highly informed of traditional and
nontraditional funding sources
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THINKING AHEAD…
FROM IDEA TO PLAN
• Thinking ahead includes identifying the end
goal of the company
• Will the business:
– Develop technology, then sell or license it?
– Grow business, then sell or merge?
– Grow business into mega corporation, go
public?
– Grow business, and continue to operate it?
THE SWOT ANALYSIS
Strength
Weakness
Opportunity
Threat
THE SWOT ANALYSIS
The SWOT Analysis Should…
• Examine your business and its performance relative to
competitors and prospects
• Be undertaken at the start of any business or marketing
planning process
• Look at internal strengths and weaknesses and external
threats and opportunities
SWOT – INTERNAL CONSIDERATIONS
• The internal review should outline your business position
relative to your industry
• Critical factors:
• Management team/Human resources
• Business structure
• Financial position
• Products/Innovation/R&D
• Sales and marketing
• Productivity
SWOT – EXTERNAL CONSIDERATIONS
• The external review should address the “Big
Picture Level” and “The Industry Level.”
Big Picture Level
• Economic trends
• Political
• Society/environmental/
consumer
• International
Industry Level
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Competition
Technology
Demand patterns
Supply and suppliers
Industrial relations
Skills
BUSINESS FAILURE
“People don’t plan to fail.
They fail to plan.”
FAILURE STATISTICS
• 99.9% of all US businesses are “small
businesses” (< 500 employees, < $500K
sales)
• 0.1% or 17,000 businesses are “large
businesses”
• Small business failures have increased every
year since 2004. As noted by Small biz loan,
failure rates grew from 2.4 percent in 2004
to 11.9 percent in 2008. (Almost 12%)
(www.strategicmarketsegmentation.com)
THE TOP TEN REASONS FOR
BUSINESS FAILURE
#10 – Over expansion
# 9 – Poor capital structure
# 8 – Failure to control the
controllable costs
# 7 – Failure to prepare for volatility
of uncontrollable costs
# 6 – Add new products or divisions
that reduce the profitable ones
* Waller/Lansden, Nashville, TN
THE TOP TEN REASONS FOR
BUSINESS FAILURE
# 5 – Poor internal controls and
execution
# 4 – Poorly designed business model
# 3 – Reliance on critical financing that
dries up
#2 – Failure to adapt to a changing
market, and . . .
* Waller/Lansden, Nashville, TN
THE #1 REASON FOR
BUSINESS FAILURE IS…
Management in complete denial!
MORE REASONS FOR FAILURE
• Dun & Bradstreet also claim that business failure
results from
• Lack of market awareness
• Entrepreneur falls in love with product
• Lack of financial responsibility and
awareness
• Lack of clear focus
• Insufficient capital
• Optimistic/realistic/pessimistic
IMPROVING CHANCES OF SUCCESS
• Development of
a business plan
•Current and
accurate profile of
the competition
• Current and
accurate profile
of the target
customer
• Go into business
for the right
reasons
• Hire the right people
• Obtaining accurate financial
information in a timely manner
Additional Resources
(Available in A 503g, IEI Resource Center)
• Write a Business Plan… In no Time
Frank F. Fiore
• Business Plan in a Day
Rhonda Abrams
• Preparing Effective Business Plans
Bruce R. Barringer
• The Ernst & Young Business Plan Guide
Brian R. Ford, Jay M. Bornstein, Patrick T. Pruitt
ONLINE RESOURCES
• Entrepreneur.com – gr8 tutorials
• Small Business Administration:
sba.gov/smallbusinessplanner
• Bplans.com – all kinds of goodies
• businessplans.org – MOOT Corp
b-plan competition & b-plan
samples
• myownbusiness.org
IEI BUSINESS PLAN RESOURCES
• Ten workshops per semester
• Resource Center
• Coaching and counseling on all
aspects of new venture creation
– Executives and Entrepreneur in
residence
– IEI staff
– Mentors: industry, subject
matter and discipline experts
BE YOUR OWN BOSS BOWL
• Info sessions in November and
January, plans due in March
• Free book, Write a Business Plan in
No Time by Frank Fiore
• BYOBB template keyed to book
• Formal one-on-one mentoring
program with GPSEG
• Scoring sheet showing emphasis on
various aspects of the plan
QUESTIONS AND DISCUSSION