writing the winning business/service plan
m. w. piczak September 2006
WHY BUSINESS OR SERVICE PLANNING?
Going beyond conversation Securing funding Obtaining government & other agency subsidies Providing guidance on an annual basis (operating plan) for emerging priorities • Demonstrating that the writer has thought through the project to a high level of detail • Argue feasibility • Behaving in a business-like manner increasingly important • • • •
YOU AND YOUR BLANK SCREEN
• Set work aside & let your progress to date percolate • Identify what is keeping you from making further headway? • Who could help you? (misery sometimes likes company) • Bounce obstacle off colleague & get outside ideas • Sit down again in a few days with fresh start • Write different section of report & then return to problematic area • Have someone else write it
• Think outside the box • “When the going gets weird, the weird start thinking” • Break it, if it is not broken • New paradigms
COMPONENTS OF THE WINNING PLAN
• Substance • Appearance • Presentation
CLASSIC PLAN: 5 ELEMENTS
4 Subplans & backup materials: • Marketing plan • Operations plan • Customer service plan • Financial plan • Appendices/supporting materials
PLAN CONTENTS
• • • • • • • • • • • • • • Table of contents Executive summary (highlights across 4 subplans) Concept/Mission/vision/values/beliefs statements Background/description of service/need Stakeholders (in public sector) Marketing plan Operations/human resource plan Risk assessment/contingency plans Customer service plan Implementation plan Financial plan including control systems Program review/assessment plan Overall conclusion/feasibility Appendices
THE STATEMENTS
• 4 PRIMARY STATEMENTS:
• Concept/Positioning • Mission • Vision • Values/beliefs
CONCEPT/POSITIONING
• In 25-35 words, clearly sets out purpose of organization • “ABC Limited is a business that…that what….
SAMPLE POSITIONING STMT.
• BI provides effective, innovative, and affordable offender management and rehabilitation solutions to government customers in over 2,700 locations in all 50 states and 6 countries. • BI offers a continuum of innovative offender compliance technologies and proven, research-based program services to provide tailored solutions for effectively managing criminal populations.
TAKEN FROM WWW.BI.COM
MISSION STATEMENT- THE PILOT METAPHOR
Think of a jet pilot’s singular purpose as they set out on a sortie…their mission • Words like ‘committed, purpose or dedicated’ signal evidence of mission • ‘mission control’ at NASA
SAMPLE MISSION STATEMENT
VISION STATEMENT
• What you want your organization to grow up and become • What you aspire to become • Roughly equivalent to the concept of idealized self • Often useful to think in terms of short and long term goals
BRINGING IT ALL TOGETHER
MARKETING PLAN
Contains number of key components • 4 statements • SWOT • Competition analysis • Target markets/segments • 4Ps • Promotion plan (daily, monthly, quarterly, annual) • Networking plan
ENVIRONMENTAL SCANNING
Strategy Formulation for Organizations
Marketing Political Economic Social Technological Opportunities & Threats Strengths & Weaknesses Manufacturing Management Finance Control R&D
Environment
Corporate Strategies
Firm
DIAMOND E FRAMEWORK
MANAGEMENT PREFERENCES
ORGANIZATION
STRATEGY
ENVIRONMENT
RESOURCES
SOCIAL RESPONSIBILITY ADDED
SWOT CHARACTERISTICS
• • • • • • • • • • • • Occur at the INDUSTRY level Referred to as trends, shifts, directions Every industry has them Not all equally important Beyond control of industry players Ever changing Typically be winners and losers Business has bias towards stability Speed/direction = velocity O or T simultaneously No response required; awareness sufficient Affects industry players differentially
THINKING AT THE INDUSTRY LEVEL
THE INDUSTRY
Co. F Co. A
Co. B
Co. C
Co. D
Co. E
You are here
INDUSTRY LEVELS
CAN THINK OF THE INDUSTRY AT VARIOUS LEVELS: • International • National • Provincial/state • Regional • Municipal
DATA SOURCES
• • • • • • • • • Government sources and databases www.strategis.ic.gc.ca www.myhamilton.ca Small business enterprise centers Business incubators Industry associations of all kinds Special interest groups Research houses (www.forrester.com) Time, Macleans and other popular business press • Corporate web pages or annual reports
IT’S THE SOURCE YOU WANT
SWOT LEVELS
• Industry level (O & T) • Business level (S & W) • Personal level (S & W)
• Plus, plan to shore up weaknesses
WHAT IT LOOKS LIKE
SMOKING BY-LAWS RELAXED The relaxation of no-smoking bylaws by the City of Richmond was welcome news to food service operators ending years of frustration and uncertainty. The by-law posed serious challenges to operators who faced considerable expense in upgrading HVAC systems. CFRA Surveys show consumers, especially in bars, enjoy having their cigarettes with drinks and meals. (Richmond Reporter, August 31, 2003)
WRITEUP STRUCTURE
• SWOT is introduced and explained • 3 LEVELS OF ANALYSIS • Each 4-5 word point in table gets its own subheading • Each subheading receives explanation as required • O and T receive credible citations or references • Ensure O’s > T’s • O & T May get probability of occurrence and impact assessment • Need plan of action to shore up weaknesses
COMPETITION ANALYSIS
• Among the worst things done in a business plan • Long on description • Lean on analysis • No write/discussion
COMPETITIVE SURVEILLANCE
• • • • Web visits Field visits/shopping the bad guys Newspaper accounts Using your survey to compare competition to you Examine corporate image materials for clues Asking customers Getting products in Reverse engineering
•
• • •
PLAYING HARDBALL
NICE GUY…
WHAT IT LOOKS LIKE
COMPETITOR
ABC Fine Dining 662 West Alameda Drive Burbank, CA
XYZ Diner 1009 West Hollywood Avenue Santa Monica, CA MNO Foodstuffs 123 North Westwood Drive Brentwood, CA
STRENGTHS
Established Good reputation
WEAKNESSES
parking limited dirty service questionable
service spotty
Good value Good prices parking broad menu value pricing go the extra mile
limited hours tries to be everything to everyone service poor
You Kill It, We Cook it Grill 111 North Lincoln Highway La Jolla, CA
tasty food customer participates part of meal is show
appeals to select market service uneven/poor must bring own raw stock
Your Fabulous Restaurant 111 In the Heart of Town Lane Pasadena, CA
25 parking spaces creative cuisine presentation of meal superior service world’s best bourbon baked wings
unknown in community relatively small floor space access from street blocked
ANALYSIS – SYSTEMATIC COMPARISONS
5 SWEEPS THROUGH THE TABLE: •Looking for commonalities across all competitors in strengths = KSFs (CURRENT WINNING FORMULA) •Looking for commonalities across all competitors in weaknesses = KFFs (INDUSTRY PROBLEMS) •Looking for differences between competitors’ strengths and your strengths = CA1 •Looking for differences between competitors’ weaknesses and your weaknesses = CA2 •1 last look for differences between competitors’ weaknesses and your strengths = CA3 •Finding something that you do that noone else does well = DISTINCTIVE COMPETENCE/SIGNATURE
Competition Analysis: Beyond Description
FINAL PRODUCT…
• Table with narrative setting out
• KSFs • KFFs • CA1, 2, 3 • DC/SIGNATURE
SEGMENTING THE MARKET
• “I target the old, • Targeting young, rich and everyone low income…” targets noone
SEGMENTATION BASES
Demographics (age, income, education, gender) Psychographics (attitudes, interests, opinions (AIOs)) Technographics (mouse potato, geek,) – www.forresterresearch.com Benefits (white teeth, high speed) Usage (heavy vs. light; recreational vs. serious; beginner vs. advanced) Lifestyle (active, jet setting) Consumer/industrial/commercial/government/military Large/small/plus sizing Children Price (Value segment at Lakeport)
WHO TARGETS?
• CUSTOMS/AIRPORT SECURITY OFFICERS (female shoppers, racial profiling) • POLICE WITH SPEED TRAPS (roads from highways, transition zones, road to highways, bottom of hills, flat roads) • STUDENTS WHEN THEY STUDY (particular topics based on need to know; acting on professor’s hints/emphasis) • TELEVISION PRODUCERS (varies by show) • SPORTS TEAMS (Bulldogs = families; Leafs = ????) • COCA COLA (selected campaigns go after particular segments) • BEER COMPANIES (18-35, male, sports lover, value) • SATURDAY NIGHT LIVE (urban, 25-50, $) • JERRY SPRINGER (lower income, female) • SOAP OPERAS (house wife, Caucasian) • CRIMINALS (seniors, individual walking alone, empty homes during day time, particular cars, particular parking lots)
RELATIVELY EASY TARGETS
• • • • Families Seniors Females/males High/low income people • City dwellers • Apartment dwellers •Home owners •Children •18-34 Males •18-49 Females •Commercial operations •Industrial operations
GETTING THE NUMBERS
• Having identified targets, must get NUMBERS to back up size of market
NOTICE THE ‘NONE’ CELLS
OUR MISTAKE
• To argue that you will get your marketing messages out to everyone • The reality is that there is not enough time, money or you
ONE SOLUTION
• Define the target • Call Canada Post for Geo Post free service • Co-ordinate with direct mailer and Canada Post to work your database
ANOTHER SOLUTION…
• Enter every customer contact into a customer relationship management software program
4Ps
• Product/service • Price • Place • Promotion
PRICING: TRADITIONAL METHODS
• Skimming • Penetration • Odd figure ($.69) • Psychological (<$10.00) • Some groups/times exact premium or discount • Discounts by volume
PRICING: VARIATIONS
• Mail in rebates • Cash back • Cheaper on weekends or weekdays • Pioneer/Canadian Tire money • Discounts at P. of P. • Air Miles • Buy X, Get X-(X-1) free
PROMOTION PLAN
MONTH January February OBJECTIVE Awareness Interest MEDIA
Trade show; Brabant newspaper Giveaways Chamber Business Showcase
$ $500 $300
March …
Purchase Post Purchase
$1000
OPERATIONS PLAN
WHAT GOES INTO THIS PLAN: • Licenses • Regulations to observe • Permits (fire, permits, elevators) • Gst/pst/bin • Suppliers • •
Operations Plan Contents
CUSTOMER SERVICE PLAN
CHOICES FOR COMPETING: • Price • Service • Responsiveness • Innovation • Quality • Variety • Flexibility
DEVELOPING A C.S. PLAN
• Think through the entire customer service EXPERIENCE • Start at the beginning or end • Look at touch points (phone, voice mail options, web, reception, appearance of reps, etc.) • Search www using c.s. plans • Look around • Read books • Mystery shop yourself • Surveys/focus groups
THE CUSTOMER SERVICE PLAN
THE FINANCIAL PLAN
• Only key financials conveyed • Unfolds like a story of a business yet to be started • Is a natural order • Use graphs to convey key points • Narrative accompanies graphs • Close with feasibility assessment
KEY FINANCIAL STATISTICS
• Start up costs • Sales forecasts • Cashflow projections • Income statement • Balance sheet
The Financial Plan
FEASIBILITY ASSESSMENT
“AND IN CONCLUSION, I BELIEVE THIS BUSINESS IS FEASIBLE GIVEN THAT…” • Low breakeven • Large market & trending upward • SOM .00000001 • Sales trending upward • Opportunity cost handily covered • Ratios solid • Have a 3 month cash reserve • Low startup cost • Low monthly expenses • Steady cashflow • Expenses overstated, inflows understated
APPENDICES CONTENT
ANYTHING THAT INTERRUPTS FLOW & READABILITY OF PLAN: • FINANCIAL STATEMENTS
• • • • • ONE TIME START UP COSTS PROFORMA MONTHLY CASHFLOW, YEAR 1 PROFORMA INCOME/REVENUE STATEMENT, 1-3 YEARS PROFORMA BALANCE SHEET, 1-3 YEARS BREAKEVEN ASSESSMENT
• • • • • • • • • •
Floor plans Location maps Resumés Corporate image/promotional pieces Governance, if relevant Implementation/project management schedule Advisors Suppliers Potential customers The kitchen sink
THE END
writing the winning business/service plan
m. w. piczak September 2006