copyright strategic outlooks 2007-2013 surprise chamber of commerce on business planning

Copyright Strategic Outlooks 2007-2013

Surprise Chamber of CommerceOn Business Planning

Planning – A Three Phase Approach

Strategy

•Understanding the Landscape

•Developing Scenarios' to Leverage the Business Environment

•Creating a path to execute

Operation

•Objectives

•Critical Success Factors

•SMART – (Specific, Measurable, Attainable, Relevant, Timely)

Organization

•Responsible

•Reliable

•Learning & Enthusiastic

From Vision to ObjectiveWith Scenarios you created a

VISION of your business and how you see it fit into the

moving environment without regard to internal barriers.

It is now time to add the reality oflimited resources to create an

operating plan!

Testing Your Strategy AnalysisExpanding or Shrinking

Market or Economy?Market or Product Position –

Can it be changed in a timely fashion?Will we get the production from

expanded staff/facilities/territories?How much do we believe in our ability

to manage change?

Barriers or Opportunities?The analysis starts with a mindset!

Creating an Operating PlanStep by Step translation of a

Strategic Plan into specific Operational Objectives.How do we bolster our strengths?How do we cover our weaknesses?What did we see as opportunities?How real are the threats?

Threats and Opportunities are revealed from the Forces Analysis

Strengths & Weaknesses are provided by Resources Assessment.

Creating The Objectives For Each Department

List Current OperationList Planned Vision

Create a Difference List Both Add & Delete

Remaining List becomes planning task list

Attempt to apply the SMART principles to each list Specific Measurable Attainable Realistic Timely

Objective Content Exactly What is the Result? – SPECIFIC

How do we know we are achieving it? – MEASURABLE

Can we do it with the resources given/planned – ATTAINABLE

What are the barriers? Can we overcome them? – REALISTIC

When do we think this objective can be achieved? - TIMELY

Objective

Strategy

Resource

Tactics

Critical Success FactorsThe Objective List is the Key to easily

identifying the essential Critical Success Factors ! Identify 2 to 5 factors for each

department/initiative. The remaining objective although

important become subordinate to the Critical Criteria.

•What we Need to Do !

•How we’re going to Do It!

•How we’re going to Measure It !

Initiatives

Ladder of Critical Success Factors

GuidelinesMust fit into span of

controlMust carry responsibilityMust be Critical to

Mission

Company

Department

Individual

Creating a Model Why a Model?

A model provides a dynamic way to produce costs,budget and an expected financial result from your initiatives.

What does the Model Consist of? Excel Workbook

Assumptions /Fixed Costs Products/Services Personnel Inventory Capital Equipment Financing Marketing Sales General & Administrative

• Income Statement

• Cash Flow• Balance Sheet• Ratios

Beginning Model ResultThis will not be a pretty picture!

Finding AdjustmentsRaise the Water or Lower the

Raising the WaterValue Proposition

Marketing ApproachValue Approach

Examining ASP (average sale price) ATP (average ticket price)

Value Added Add-Ons Pricing Product Portfolio

Margin Analysis

Marketing Approach Basic Principles

Who is the Customer?What are the attributes?

Why would they buy from you?DifferentiationConvenienceServicePrice

How can I reach them?AdvertisingWeb Presence & Links Inbound/outbound reachSocial Media - References

Marketing ApproachCommunications Tiers

Repurchase

Reference/ Satisfaction

Purchase

Driven Impulse

Preference

Personal Comparative

Awareness

Branding Value Post

Sustaining Immediate

Modeling Marketing EffortsRaising the Water

Marketing has distinct measures !Cost per Lead or Cost per SaleLead to Qualified LeadClosing Ratios

Number of calls to close % of close to qualified lead.

If you know these ratios then it is easy to plan a marketing campaign and project sales results.

Model Calculations for Marketing SheetExample –

Assumptions:Reach = 20,000Awareness = 20,000 x 30% or 6,000Preference = 6,000 x 20% or 1,200Purchase = 1,200 x 30% or 300Average Sale Price = $100 x 300 = $30,000Cost of Insertion = $6,000Cost of Goods = 50% or $15,000Change in Gross Sales less Marketing Cost = $9,000

1 2 3 4 5 6 7 8 9 10 11 12 $-

$50,000

$100,000

$150,000

$200,000

$250,000

Monthly Cash Position - 2013

Model ResultsProjected IncomeProjected Cash FlowProjected Balance SheetProjected Ratios

Most Important

Lowering the RocksReview Variable Expenses

Adjust Timing (Hiring, Expanding, Marketing, etc)

Analyze Cost of SalesAnalyze Cost of Goods/ServicesReview Professional Fees

Review Fixed CostsFacilities StaffingGeneral Expenses

CashYou can have good profit and run out

of cash!Receivables are slower than growth. Inventory purchases exceed receipts.Tax payments are out of cycle with business

cycle.It is almost always a function of time!

Model Allows for Solution AnalysisLook Both Ways –

Lower the RocksRaise the Water

Raising the Water Increase Sales Increase Margins Increase Access

Banking–LOC Banking-Term Equity Sale

Lowering the Rocks

Examine Expenses Reduce Inventory Reduce Marketing Defer Capital

Investment Reduce Staff

Operations

Sales Marketing

Finance

Administration

Producing the Operating PlanModel provides the budget!

The initiatives provide the objectives!

The Objectives provide the timeline!

The Objectives & Timeline provide to targets to manage to!

At every level in the company!

Thank YouNext Month – Creating an Organizational Plan

Questions?

Dick Jensenwww.StrategicOutlooks.com

Model Components Assumptions:

Fixed Costs & Ratios Rent (Cost/Sq Ft) Sq Ft. – Space

Allocations etc) Banks, beginning balances &

debts AR/AP Periods Credit Card Fees Ratios

Products/Services Cost Sale Price

Personnel Positions

Exempt/nonexempt Wage mo. or hourly Benefits yes/no Month of hire

Benefit Calculations Health/other

Inventory Purchases

Less Sales(From Sales) Finance

Borrowing Capital Equipment

Purchases Depreciation

Marketing Channels

Expense per Channel Expected Result from

expense Awareness Preference Purchase

Sales Units by

Channel/Region/Product Sales in $ Cost of Goods Sold

Seasonal Adjustment Chart AR/AP

Collections Period Bad Debt

Payment Period General & Administrative

Labor (From Personnel) Withholding Taxes Benefits

General Expenses Rent Utilities Travel & Entertainment Professional Fees Banking Fees

Other Expenses

copyright strategic outlooks 2007-2013 surprise chamber of commerce on business planning

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