How to Start a Financial Planning Business - PowerPoint by stt16066

VIEWS: 8 PAGES: 42

How to Start a Financial Planning Business document sample

More Info
									Strategic Business Planning for Commercial Producers




   How Do I Develop A Strategic
   Marketing Plan?
Strategic Business Planning for Commercial Producers


   Types of Marketing Planning
  • Strategic Marketing
     – Encompasses the entire farm strategy
     – Deals with the broader issue of determining firm’s
       strategic position in the market and how to create
       value from that position

  • Product Marketing/Pricing
     – Deals with the tactical side of selling a product
     – Similar to a set of standard operating procedures
       for marketing a particular product.
Strategic Business Planning for Commercial Producers



     Marketing Defined . . .


   Marketing is anticipating the needs and
    wants of targeted customers and
    managing the process through which
    these needs and wants are satisfied . . .
    profitably
Strategic Business Planning for Commercial Producers

   Management Philosophies
                      Production         Marketing
                       Concept            Concept
          Starting
                        Product           Market
          Point
                     Product Quality
           Focus      and Features
                                       Customer needs


                        Improving
                      production &       Integrated
           Means       distribution      Marketing
                        efficiency



           Ends                        Profits through
                     Profits through
                                         customer
                      sales volume
                                        satisfaction
Strategic Business Planning for Commercial Producers




  Building A Strategic Marketing
  Plan
Strategic Business Planning for Commercial Producers




     Strategic Marketing Plan
     1. Environmental Analysis (SWOT)
     2. Identifying Customers
     3. Competitor/Value Creation
        Analysis
     4. Marketing Mix: The 4 P’s
     5. Financial Analysis and Budget
     6. Implementation and Control Plan
Strategic Business Planning for Commercial Producers




     1. Know Your Marketplace
         • Strengths, Weaknesses,
           Opportunities, and Threats (SWOT)

         • Trends and changes:
            – Market analysis

            – Segmentation

            – Prioritizing target markets
Strategic Business Planning for Commercial Producers


    2. Who Are Your Customers?
    Customers
       vs.
    Consumers

     Customer: firm or person    Consumer: firm or person that
       that buys your product         eventually uses your
                                             product
Strategic Business Planning for Commercial Producers


     Customer/Consumer Trends
        Customers                Consumers
        • Just-in-time           • Households with
                                   fewer people
          inventory
                                 • Active, on-the-
        • Business to              go lifestyles
          business (B2B)         • Concern over the
        • Manufacturing            health aspect of
          mentality                food, with a
        • Industrialization of     desire for good
          agriculture              taste
                                 • Less time for
                                   meal prep
Strategic Business Planning for Commercial Producers



     Know What Is Important to
     Your Customer
     • Get inside the mind of your
       customers
     • Find out why they would buy from
       you          . . . or why they would
       not
     • Truly understand their needs
         – Intentional listening
Strategic Business Planning for Commercial Producers



     3. Competitor/Value
     Creation Analysis
     Make sure you are distinctively
      different
      from your competition
                in areas of importance
                      to your customers
                       • Competitive analysis
                       • Reallocation of
                         resources if
                         necessary
                       • Positioning
Strategic Business Planning for Commercial Producers


   The Value Chain
                 Firm Infrastructure

                  Human Resource Management
   Supporting
   Activities




                  Technological Development


                  Procurement



                Inbound                       Outbound Marketing Service
                          Operations
                Logistics                     Logistics & Sales




                Relationship with Suppliers    Relationship with Buyers
Strategic Business Planning for Commercial Producers



   4. Determining the Marketing Mix
     • The set of controllable variables
       that will accomplish the marketing
       objectives:
           •   Product strategy
           •   Place (distribution) strategy
           •   Promotion (communication) strategy
           •   Pricing strategy
Strategic Business Planning for Commercial Producers

    Product Strategy
      • Portfolio of Products
         – Corn, soybeans, hogs, dairy, cattle, value-added grain,
           fruits and vegetables, custom farming operations, custom
           feeding operations
         – Fits your strengths and weaknesses
         – Provides acceptable risk/return tradeoff
         – Meets needs of a particular customer segment
      • Quality
         – No. 1 versus No. 2
         – GMO vs. non-GMO
      • Service
         – Timely custom operations
         – Pre-sorting of grain or livestock quality
      • Volume
         – Large and small quantities
         – Guaranteed volumes (contract)
Strategic Business Planning for Commercial Producers



   McDonald’s Product
   Package
        •   Food
        •   Fast service
        •   Fun for the kids
        •   Variety
        •   Non-smoking
        •   Consistent product
Strategic Business Planning for Commercial Producers




     Waxy Corn
     •   Corn with specific type of starch
     •   Delivery Schedule
     •   Specific hybrids
     •   Quality requirements
     •   Purity level
Strategic Business Planning for Commercial Producers



   Place Strategy
     • Storage
         – On-farm vs. off-farm
         – Segregated or IP

     • Timing
         – On-demand
         – Equal amounts throughout the year

     • Location
         – Delivery to multiple points

     • Assortments
         – Delivery of different amounts to different places at
           different times
Strategic Business Planning for Commercial Producers



            American Crystal Sugar
            (ACS)
   • M&M Mars changed from a
     commodity focus for inputs to a
     quality assurance focus.
   • ACS keeps the sugar silo at the
     M&M Mars plant full.
   • ACS shifted from a warehouse
     next to the ACS factory in
     Minnesota to an ACS warehouse in
     Pennsylvania near the candy plant.
Strategic Business Planning for Commercial Producers




               Spring Wheat Bakers
       • Farmer-owned cooperative that
         processes wheat, grown on
         Northern Plains into flour
       • Frozen and par-baked bread
         factory in Atlanta, Georgia, a
         population center
Strategic Business Planning for Commercial Producers



  Promotion Strategy
    • Advertising
       – Creating brochures and other advertisements on the
         products your farm provides and what value they
         add
       – Creating a farm logo

    • Personal Selling
       –   Telling your customers how you create value
       –   Meeting your grain elevator manager for coffee
       –   Having lunch with the lender
       –   Taking a Christmas pie to your landlord(s)

    • Public Relations
       – Being a good neighbor
       – Being involved in the community
       – Open house days
Strategic Business Planning for Commercial Producers




     Price Strategy
     Price is the cost the customer must
       bear in order to obtain the
       product. It includes:
     • list price
     • discounts
     • allowances
     • payment period
     • credit terms
Strategic Business Planning for Commercial Producers




    Pricing Methods
     • Value-Based Pricing
         – Set price based on buyers’
           perception of value (rather than on
           the seller’s costs)
     • Cost-Based Pricing
         – Add a standard markup to the cost of
           the product
     • Competition-Based Pricing
         – Set price based on following
           competitors’ prices
Strategic Business Planning for Commercial Producers




     Value-Based Pricing

         • Customer Oriented
         • Based on customer’s
         perceived value



                                    • Match price to
                                    perceived value
                                    • Brand loyalty
Strategic Business Planning for Commercial Producers




     Competition-Based Pricing
                                   •  Price decision
                                     based on actions
                                     of competition
                                   • Less attention on
                                     cost or product
                                     demand
                                   • Large firms all
                                     charge the same
                                     price
                                   • Smaller firms
                                     follow lead of
                                     large firms, may
                                     offer a slightly
Strategic Business Planning for Commercial Producers



    5. Financial Analysis and
    Budgeting
     • Estimate the demand given the pricing
       and promotion strategy.
     • Determine expenses associated with
       production and marketing.
     • Determine anticipated cash flows.
     • Will strategy cash flow? When?
     • What are the critical assumptions of the
       financial analysis and what are the
       impacts of changes in those
       assumptions?
Strategic Business Planning for Commercial Producers




     6. Implementation and Control

     • Focus attention of everyone on
       delivering what the customer
       wants
         – Management of people
         – Monitoring and control
Strategic Business Planning for Commercial Producers




   How Do I Build A Product
   Pricing Plan in A Commodity
   Market?
Strategic Business Planning for Commercial Producers



   Commodity Marketing
      • Homogeneous Product –
          differentiation in services, not product.

      • Low-cost strategy

      • What about the price received?
         – Does every producer get the same price?

      • Marketing plans – systematic pricing
        strategies.
Strategic Business Planning for Commercial Producers




     What Is A Marketing Plan?

     A marketing plan is an outline of price,
        date and quantity objectives used to
        generate a reasonable return for the
        business given the existing market
        conditions.
Strategic Business Planning for Commercial Producers


   Diagram of A Corn Marketing Plan
                                Date Triggers

                     March 15      May 1           Harvest
     Jan. 1
                    Sell 20%       Sell 20%       Sell 60%r


                      $2.50/bu     $2.40/bu         Existing
                                                    Price
                                 Price Triggers
Strategic Business Planning for Commercial Producers



      What Does A Marketing Plan
                 Do?
     • Detached from the decision
     • Proper perspective
     • Introduces discipline
     • Check your logic
     • What if …...
Strategic Business Planning for Commercial Producers


    Steps In A Marketing Plan
    • Relationship between the business plan
      and marketing plan
    • Production history and expectations
    • Expected prices
    • Production costs
    • Price and date targets
    • Review and evaluation
Strategic Business Planning for Commercial Producers



     The Business Plan and the
     Marketing Plan

   • Marketing plan is implementation of
      the BP

   • Implementation consistent with
      objectives

   • What are important considerations?
Strategic Business Planning for Commercial Producers



   Production History and
   Expectations
      •   What is the farm’s history?
      •   Is there an underlying trend?
      •   How variable is production?
      •   Write down expected production.
      •   How does expected production
          relate to pre-harvest sales?
Strategic Business Planning for Commercial Producers




     Price Expectations
        • Assess the situation
           – Historic patterns (seasonal)
           – Basis patterns


        • The current situation
           – Outlook source
           – Market advisors (?!?)
Strategic Business Planning for Commercial Producers



     AgMAS – An Objective Study of
     Market Advisory Services

     • 25 Firms – subscribe to each service.
     • Observe and follow recommendations
     • Compare to a benchmark price answer
       Questions:
         – Do they consistently beat the benchmark?
         – Do they reduce risk and increase returns?
         – Are they as good with corn as with
           soybeans?
         – http://www.farmdoc.uiuc.edu/agmas/
Strategic Business Planning for Commercial Producers




     The Difference
       • What’s the difference between the
         market advisory service and the
         marketing plan?
          – “Beat the Market” vs. “Accepting
            What the Market is Giving.”
          – Active Marketing = Private
            Information
          – Active Marketing vs. Passive
            Marketing
Strategic Business Planning for Commercial Producers




     Cost of Production
        • What are the costs?
        • What revenue cover costs?
        • What price is needed to cover the
          costs?
        • Is this price realistic?
Strategic Business Planning for Commercial Producers

    Price, Date and Quantity
    Objectives
     • Identify price and date triggers ..
         – When should pre-harvest sales be made?

         – What prices are acceptable?

         – Prices attainable?

     • Set quantity objectives according to
         – Financial need

         – Risk perceptions
Strategic Business Planning for Commercial Producers




     Evaluate and Review

     • Stay disciplined!
     • Evaluate your actions.
     • Are conditions changing?
Strategic Business Planning for Commercial Producers



     A Little Marketing Philosophy
     ...

     • Bad outcomes still happen …
     • Never compare to the market
       high ..
     • Your plan for your operation ...
Strategic Business Planning for Commercial Producers




   Strategic Business Planning for
   Commercial Producers

								
To top