Week 4Week 4

EntrepreneurshipEntrepreneurshipThe Importance of Business Planning for a Venture

The Importance of Business Planning for a Venture

ELIB 203ELIB 203

The Importance of Business Planning for a Venture

The Importance of Business Planning for a Venture

“A goal without a plan is just a wish”

When you decide on a brilliant business idea, the challenge is to provide a clear plan to get the idea executed.

You can start writing your business plan (or drafts of it) while planning.

It requires more than one person and people with different skills to plan well.

The Importance of Business Planning for a Venture

The Importance of Business Planning for a Venture

The Importance of Business Planning for a Venture

The Importance of Business Planning for a Venture

From each ten new startups, only one survives within the first two years (the rest fail to continue or go bankrupt)..

If you start your business with no clear plan, you do not know the future of your business.

The Importance of Business Planning for a Venture

The Importance of Business Planning for a Venture

You can set yourself aside from competition and gain a competitive advantage by planning well.

The business plan documents the plan your team is achieving.

How to Set a Good Plan for My Business?

How to Set a Good Plan for My Business?

Creating a business plan may seem boring, but you should not neglect it.

This is the plan that will guide your company and attract investors!

How to Start Planning?How to Start Planning?

• Gather and provide documentation about your business

• Every member in the organization should contribute to, read, and understand these documents

The Documentation you needThe Documentation you need

Vision statement

Mission statement

SWOT analysis

What is SWOT analysisWhat is SWOT analysis

S.W.O.T. is an acronym that stands for Strengths, Weaknesses, Opportunities, and Threats.

A SWOT analysis is an organized list of your business’s greatest strengths, weaknesses, opportunities, and threats.

(See End of Class activity about SWOT analysis)

What is SWOT analysisWhat is SWOT analysis

Opportunities and threats are external (suppliers, competitors, current prices of raw materials); they are out there in the market and you cannot change them

Strengths and weaknesses are internal to the company (such as reputation, patents, employees’ experience, location). You can change them over time

SWOT AnalysisSWOT Analysis

Internal

External

Positive Negative

SStrengths

Internal capabilities that may help a

company reach its objectives

WO

WeaknessesInternal limitations that

may interfere with a company’s ability to achieve its objectives

OpportunitiesExternal factors that the company may be able to exploit to its advantage T

ThreatsCurrent and emerging

external factors that may challenge the company’s

performance

Example of SWOT AnalysisExample of SWOT Analysis

Internal

Factors

Strengths Weaknesses

External

Factors

Opportunities Threats

Technological skills

Leading brands

Distribution channels

Customer loyalty/relationship

Production quality

Scale

Management

Absence of important skills

Week brands

Poor access to distribution

Low customer retention

Unreliable product/service

Sub-scale

Management

Changing customer tastes

Technological advances

Changes in government politics

Lower personal taxes

Change in population age

New distribution channels

Changing customer base

Closing of geographic markets

Technological advances

Changes in government politics

Tax increases

Change in population age

New distribution channels

Example of SWOT AnalysisExample of SWOT Analysis

Internal

Strengths Weaknesses

External

Opportunities Threats

Your specialist marketing expertise.

A new, innovative product or service.

Location of your business.

Quality processes and procedures.

Any other aspect of your business that adds value to your product or service.

Lack of marketing expertise.

Undifferentiated products or services (i.e. in relation to your competitors).

Location of your business.

Poor quality goods or services.

Damaged reputation.

A developing market such as the internet.

Mergers, joint ventures or strategic alliances.

Moving into new market segments that offer improved profits.

A new international market.

A market vacated by an ineffective competitor.

A new competitor in your home market.

Price wars with competitors.

A competitor has a new, innovative product or service.

Competitors have superior access to channels of distribution.

Taxation is introduced on your product or service.

Example of SWOT AnalysisExample of SWOT Analysis

Internal

Strengths Weaknesses

External

Opportunities Threats

Experience: our execs have decades of experiences with plastics, engineering, and successful startups.

Relationships: The company has excellent relationships with firms that collect and distribute PET bottles.

Location: There are no other PET recycler than continue to export to China.

High startup costs: The very high costs of opining a PET plant will require both investments and loans.

Construction time: The recycling and extrusion facility must be built before we can begin processing plastic.

Major facility expansion: The initial PET recycling facility will have a capacity of 46 million pounds, but the current annual stock of recyclable bottle material in California, Oregon and Washington is more than200 million pounds.

R & D: Potential for other uses of PET-recycling by-product.

Environmental protection standards: Whenever the government regulations are updated, we need to develop technically and economically feasible recycling solutions that meet the standards.

Material scarcity: Our business model is PET-dependent. If use of PET bottles declines or becomes obsolete, we will lose our supply.

What Should Be Included in a Business Plan?

What Should Be Included in a Business Plan?

Executive summary Market analysis

Company description Product

Financial

How to Draft a Business PlanHow to Draft a Business Plan

• Activity: Refer to the “Writing a Business Plan: The Basics” document in the handouts on pages 2 to 4.

Focus on your niche

Use clear language

Rewrite frequently

Group Activity Group Activity

In a team, select an industry and a company within this industry; then provide a SWOT analysis

Two teams will be asked to explain their analysis to the class at the end of session

Refer and use the sheet of SWOT analysis in the (Business Modelling Workbook) document in the handouts.