Beginning a Business Plan

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Beginning a Business Plan

• Jeffrey Hyde
• The Pennsylvania State University

Penn State is committed to affirmative action and
the diversity of its workforce
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Importance of Process Product

• Process
• Forces big-picture perspective
• Leads to common mission
• Product (written plan)
• Communicate internally
• Communicate externally (lenders potential
  partners)

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The Business Planning Cycle
Planning Process
Take Action
Integrate Changes
Explain Deviation
Get Results
Measure Record Results
Compare Actual vs. Plan
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The Business Planning Cycle
Planning Process
Take Action
Integrate Changes
Mission Situation Objectives Goals Strategies
Tactics
Explain Deviation
Get Results
Measure Record Results
Compare Actual vs. Plan
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Defining Your Mission

• Your mission reflects the reason youre in
  business
• Your mission statement may reflect
• Your chosen type of business
• Your shared values
• Desired outcomes (e.g., profit, lifestyle)

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Defining Your Mission

• Jeff Hydes Professional Mission
• To provide timely education and research results
  to farm managers, increasing their knowledge and
  skills thus strengthening
• farm profitability and sustainability
• agricultural viability in PA
• farm families

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Defining Your Mission

• Whats your mission?
• What business are you in?
• What values characterize you and your business?
  (e.g., local foods, work environment,
  environmental concerns, trust, integrity, hard
  work, profit)

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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

• Who are the industry players?
• Input suppliers
• Growers
• Processors
• Wholesalers
• Retailers
• What are the industry trends?

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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

Who and where are your customers? What do they
need? What is their purchasing behavior? How
can you reach them?
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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

Who are your competitors? What are they
like? What products do they have? How have they
grown?
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Situation Analysis

• Industry analysis
• Market analysis
• Competitive analysis
• SWOT analysis

Strengths and Weaknesses are internal to the
business Opportunities and Threats are external
to the business SWOT should be easy after
performing the other analyses
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Group Activity

• Lets perform an OT analysis
• What opportunities and threats do you see in the
  cheese-making business?

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Where are you in the process?

• You have defined your reason for being in
  business Mission
• You know where youre starting from Situation
  Analysis
• Now, define your destination(s) Objectives
  Goals

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Objectives Goals

• Whats the difference?
• Objectives General statement describing intended
  directions long-term or indefinite
• Goals Specific directions describing measurable
  targets short-term with deadline

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Objectives Goals

• An Example

During your SWOT Analysis, you identified
opportunities to sell items that you do not yet
produce.
Objective To expand your product line

• Goals
• To develop 3 gift basket packages by October 15,
  2006
• To begin selling Colby and Pepper Jack cheeses by
  October 15, 2006

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Objectives Goals

• Activity
• Develop one objective for your business
• Define at least one goal to support your objective

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One More Step

• You know
• why you are in business mission
• your starting point situation analysis
• where you want to go objective and goals
• The last step is deciding how to get to your
  destination(s)

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Strategies Tactics

• Strategies describe the overall plan for
  achieving objectives and goals
• Tactics specifically detail how to implement
  strategies

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Strategies Tactics

• An Example

• Goals
• To develop 3 gift basket packages by October 15,
  2006
• To begin selling Colby and Pepper Jack cheeses by
  October 15, 2006

Objective To expand your product line
Lets focus on Goal 1 What are some possible
strategies?
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Strategies Tactics

• Strategy 1 Do everything yourself
• Make baskets
• Add basket liner
• Add cheese, crackers, jelly
• Seal the basket

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Strategies Tactics

• Strategy 2 Outsource everything
• Send cheese to contractor
• Presto! A basket is sent to the customer

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Strategies Tactics

• Strategy 3 Joint venture
• A partner firm provides baskets
• Another provides jellies
• Another provides crackers
• You provide everything else

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Strategies Tactics

• Which strategy
• is right?

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Strategies Tactics

• Tactics simply correlate tasks, names, and
  timelines

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The Planning Cycle Revisited
Planning Process
Take Action
Integrate Changes
Mission Situation Objectives Goals Strategies
Tactics
Explain Deviation
Get Results
Measure Record Results
Compare Actual vs. Plan
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Business Planning Skills Tools

• Information Gathering
• Record keeping
• Research
• Information Processing
• Enterprise cash flow budgets
• Financial statements and ratios

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Beginning a Business Plan
Thank You!! Questions??

• Jeffrey Hyde
• The Pennsylvania State University

Penn State is committed to affirmative action and
the diversity of its workforce