BUSINESS PLAN: FIRST STEPS
Julia Rastopchina Oksana Kikhtenko Eurasia Regional Advising Conference Moscow, 2004
WHAT IS A BUSINESS PLAN?
A document developed to justify a request for funding An action plan to develop business ideas As a strategic planning tool: describes business strategy, market position, identifies goals, defines budget
KEY QUESTIONS OF A BUSINESS PLAN
What is our business and its mission? Who are our clients and how well do we know them? What are the customers’ needs, what do they want? What do we supply and how does our product create value for our customers?
KEY QUESTIONS OF A BUSINESS PLAN
How is our business developing? How it can/ should develop? How can we prevent others from entering our market? How do we compete with other players on the market?
BUSINESS PLAN GOAL:
To
guarantee that our efforts are aimed at maintaining and enhancing our competitiveness
BUSINESS PLANNING PROCESS
Business planning includes: Analysis of the current situation and trends including competition SWOT – analysis (strengths, weaknesses, opportunities and threats) Defining/refining our business mission – checking for validity/ applicability Key success factors and strategic decisionmaking – main directions Goal-setting (SMART – specific, measurable, agreed upon, realistic, time-bound)
SITUATION ANALYSIS
Micro environment (immediate surrounding) Macro environment (global/national/regional level)
Analysis of micro environment (immediate surrounding)
Customers/ clients Suppliers Labor force Competition
Analysis of macro environment
Economic environment Legal aspects Political environment Technological factors Social factors Global economic conditions
MACRO ENVIRONMENT of your business
External factors Trends Impact on business Reaction
Economic environment
MICRO ENVIRONMENT (IMMEDIATE SURROUNDINGS) of your business
External factors Trends Impact on business Reaction
Clients/ customers
Competitors
Opportunities and threats for company development
Opportunities
Threats
SWOT - analysis
STRENGTHS Key internal advantages a manager can use WEAKNESSES Internal obstacles a manager should be aware of
OPPORTUNITIES Key external advantages a manager should use
THREATS Key external events or future changes that may negatively affect the company’s business
SWOT-ANALYSIS: STRATEGIC MEANING
S STRENGTHS
Company
W WEAKNESSES
O OPPORTUNITIES
Market
T
THREATS
SWOT – analysis: purpose and applications
Summarizes: results of macro and micro environments; opportunities and threats (based on macro environment analysis); strengths and weaknesses (based on micro environment analysis); Helps to develop: strategic action plan based on SWOTmatrix; company strategy
STRENGTHS
Competent leadership Available financial resources Qualified personnel Good reputation with the customers Market leadership Protection against competition Technological supremacy Cost advantages Competitive advantages Innovation capability and ability to implement innovation Seasoned management Better production facilities Potential for external investment
WEAKNESSES
No clear strategy declining competitive position obsolete equipment low profits lack of managerial experience and insight low competence weak or no follow-up on strategy implementation internal problems vulnerability under pressure from competition weak R&D low capacity insufficient market knowledge/awareness bad marketing lack of finance to implement strategy undeveloped distribution/ sales high costs (higher than competition) narrow product range
OPPORTUNITIES
new markets/ market segments expanding production / services expanding product range supplementary products or services weakening of competitors market growth or expansion lower trade barriers on new geographic markets vertical integration (up or down) new technologies availability of external funding
THREATS
new competitors growing sales of substitute products or services slowing market growth unfavorable government policy growing pressure from competition growing negotiating power of suppliers and customers changes in customer needs and preferences unfavorable demographic situation unfavorable currency fluctuations high dependence on demand levels and life cycle of business
KEY QUESTIONS OF A BUSINESS PLAN
What is our business and its mission? Who are our clients and how well do we know them? What are the customers’ needs, what do they want? What do we supply and how does our product create value for our customers? How is our business developing? How it can/ should develop? How can we prevent others from entering our market? How do we compete with other players on the market?
THANK YOU!