ABC Of Business

Planning And Development

Nkem Joseph-Palmer MBA

AGOGO ENTREPRENEURSHIP INITIATIVE

08099901395, 08037093585

nkem@aggogong.com

Agogo Business Development Initiative

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Oh Dear, What Can The Matter Be?

“Business is a game, played for fantastic stakes, and you’re in competition with experts. If you want to be a win, you’ve got to learn to be a master of the game”- Sydney Sheldon

The basic decisions are involved in every business:

- The Investment Decision

- The Financing Decision

- The Dividend Decision

The “Koko” of the matter: MAKING SUSTAINABLE PROFITS!!!

Current economic downturn has kicked businesses in the guts!

Businesses must set sustainable goals!

Where Do Profits Come From?

Despite the economy or politics, businesses must survive and be

sustainable!

Armed robbers and mortuaries make profit too!!

Simplistically, Profit= Revenue –Expenditure

Profits can come from either increasing revenue or reducing expenditure!!

Revenue is generated by OPERATIONS

Operations give birth to PROFITS!!!

So does Customer request, Business need/strategic opportunity, Innovation,

Technology, Legal requirements, Market demand and the Environment…

What Is Business Planning?

A business plan is a formal statement of business goals, reasons they are

attainable, and plans for reaching them. It may also contain background

information about the organization or team attempting to reach those

goals.-Wikipedia

It can be used as a strategy document, management guide or financing

tool.

For every management system, statistical fluctuations and dependent

events interact to create bottlenecks…Bottlenecks are migratory!!

Due to anticipated bottlenecks along the business lifecycle, planning the

business is very crucial to sustainability!

That’s The Business Life Cycle!

The Business Life Cycle…

Getting Down To Earth…

Even as it is true as in America, it is often said that eight out of every tenbusinesses fail in their first five years in Nigeria.-EDC/PAU;SMEToolkit

Excessive focus on products and services, rather than planning and othermanagement functions, has been identified as the major reason why 60 - 70 percent of Small and Medium Enterprises (SMEs) fail in their first three years ofstarting operations in Nigeria.-ThisDay Newspapers, Wednesday 15TH July 2015

Selecting a vibrant industry is a start, but only a start, to improving theprobability of leading a business with staying power. Note that even the industrywith the highest predicted life span of five years barely cleared the 50%threshold. Thousands of businesses fail even during the best of economic timesand in industries that ride high during those periods.

The leading cause of business failure was determined to be “Incompetence”.Fully 46% of failures could be explained by this broad-brush term. The specificbehaviors that underlie this headline, however, are fairly specific and revealing.These include:

Getting Down To Earth…

Taking an emotional approach to pricing

Non-payment of taxes

No knowledge of industry pricing conventions

No knowledge of financing requirements and conventions

No experience in record-keeping

Unbalanced experience or lack of managerial experience

Living beyond the means of the business

Lack of planning

So How Do We Then Manage

Businesses?

PLAN ORGANIZE CONTROL

“Business Management is the activities associated with running a company,

such as controlling, leading, monitoring, organizing, and planning through

the application of knowledge, skills and techniques”

Scope, scale and complexity is the only differentiation!!

The first step to managing any business is PLANNING the business!

Failing to plan, is planning to fail…

The Inverted or Reversed Pyramid

Goals- Mission Derived

Objectives- Vision Derived

Strategies

Targets

Tasks

Gleaned From The Reversed Pyramid…

Mission Statement

Vision Statement

Goals

Objectives

Strategies

Organogram

Team

What is Business Development?

Business development comprises a number of tasks and processes

generally aiming at developing and implementing growth opportunities

within and between organizations. It is a subset of the fields of business,

commerce and organizational theory.

It is a function that promotes the values of the business plan, and seeks to

meet set goals and objectives, attending to clearly defined baselines.

Sales And Business Development Are

Not In The Same Trouser…

Business Development Tilts Towards

Marketing…

The reason behind this, is that typical goals of business development

include brand placement, market expansion, new user acquisition, and

awareness -- all of which are shared goals of marketing. The slight slide

towards sales is simply because of the tactics business development

employs to achieve those goals.

Business Development Is A Marketing

Function…

The Differentiator…

Simply stated, the function of sales is to sell directly to the end customer.

The function of business development is to work through partners to sell to

the end customer, in a scalable way.

Scalability is the differentiator. It allows a company to use pre-existing sales

teams or communities that a partner has developed to reach new

audiences. Sales is very much an equation of capacity, which is why sales

teams tend to grow so large.

Business development teams, on the other hand, are typically very small,

maintaining their small size by working through existing partner

infrastructures. The art of business development comes in identifying

partners that fit that description, while finding a way to provide value to the

partner's end customer and business.

Essentially…

The foremost word that comes up in the Business Development world is 'relationships'. That's pretty much what it's all about.

Good business development will help identify, maintain and encourage relationship building within a firm, building rapport with both suppliers and customers.

It helps strengthen the bonds between these links, supporting the marketing copy and material that establishes your product in the relevant marketplace.

It helps provide information as to what the client needs to the 'front line' sales team, assisting them in closing the deal at the end of the process.

It helps inform management as to how the market is moving, providing insights into new developments of technology, social media and other digital avenues that the firm can take advantage of, to build and maintain loyalty.

A B C Of Business Planning and

Development

Business management is both a SCIENCE and an ART

Throw away the academics and consider these ABCs in the next slides

We need to get our businesses to work at the desired planned baselines!!!

A-BP

Always properly define what you are involved in: is it a service-oriented business, a product-focused business or a mix of the two? Conceptualization is key!!!!

Always clearly state your company’s long-term mission. Try to use words that will help direct the growth of your company, but be as concise as possible.

Always summarize your market in the past, present, and future. Review those changes in market share, leadership, players, market shifts, costs, pricing, or competition that provide the opportunity for your company’s success.

Always ensure to identify problems and opportunities. State consumer problems, and define the nature of product/service opportunities that are created by

those problems.

Always ensure you summarize the key technology, concept, or strategy on which your business is based.

B-BP

Be certain that you know who your stakeholders are and ensure proper

stakeholder identification and analysis have been done

Be smart! Summarize the competition and outline your company’s

competitive advantage

Beware of constraints: Constraints limit the options of a business manager. ASWOT Analysis is a useful tool, so is an environmental analysis (PESTLE)

Be sure to list five-year goals. State specific, measurable objectives for

achieving your five-year goals. List market-share objectives. List

revenue/profitability objectives.

Be very careful with supply chain management and procurement

C-BP

Cultivate and outline a high-level financial plan that defines your financial

model and pricing assumptions. This plan should include expected annual

sales and profits for the next three years.

Collect and list requirements for the following resources: Personnel,

Technology, Finances, Distribution, Promotion, Products, Services etc

Capable business managers must have interpersonal skills and general management skills such as negotiation, leadership and mentoring

Cut out waste of every type in terms of money, time or scope

Consider summarizing the risks of the proposed business and how they will

be addressed. Estimate expected rewards, particularly if you are seeking

funding

A-BD

Always Scouting: The earliest stage of a company. At this point, business development is about identifying various routes to market, points of leverage and providing the internal team early market feedback. The ability to work with product and engineering teams is a key skill.

Always Testing: At this stage, biz dev will close a few deals to test assumptions and provide measureable input before you scale the business. Analytical skills to set up a framework for what to measure, and examining the data, will determine if and where to scale based on the company’s strengths and vision.Always summarize your market in the past, present, and future. Review those changes in market share, leadership, players, market shifts, costs, pricing, or competition that provide the opportunity for your company’s success.

Always ensure to identify problems and opportunities. State consumer problems, and define the nature of product/service opportunities that are created by those problems.

Always Scaling: After gathering data from early deals and validating a path to achieve your goals, business development is ready to start replicating deals and putting a support structure in place.

B-BD

Be certain that you know who your stakeholders are and ensure properstakeholder identification and analysis have been done

Business development will identify and create partnerships that enableleverage for driving revenue, distribution or that enhance the product. Sales isfocused almost exclusively on driving revenue.

Beware of constraints: All successful deals are a result of accountability andproactive management — by both business development and accountmanagement

Be sure to promote quantitative value! Companies sometimes try to build abusiness purely around a qualitative value proposition, which is difficult and hasa higher likelihood of failure. The market is less willing to pay for a better userexperience or the promise of increased engagement, even if they like theproduct and find it useful. A quantitative value (lowers cost, drives revenue,more customers, etc.) dramatically increases the odds of success.

C-BD

Cultivate good business development practices that will engage internal resources along the way to ensure the company can meet the goals and expectations of a partnership. A lack of support will almost certainly lead to finger pointing and blaming when things go south. Everyone should own part of the success or failure from the start.

Create support from your team, and ensure that everyone needs to understand why the deal makes sense for your company. Does it drive revenue, lead to new users or enable the company to enter a new market or vertical? When the goal is clear and measurable, it makes it easier to address issues like, “Why are we converting below projections?”

Capable business managers know the difference between doing deals and doing the right deals. A good dealmaker can help identify a false signal –- when there is just enough market momentum and revenue to mask the greater opportunity. Conversely, a less experienced dealmaker or one with the wrong incentives can generate enough momentum and distract the company from the bigger opportunity.

Consider that a legal agreement codifies a business arrangement and includes commercial terms as well as what happens if things do not work out. This requires business development and legal counsel to assess the business opportunity versus the business risk and explain the trade-offs to management.

FINAL ANALYSIS…

Near term:

Identify key decisions and issues that need immediate or near-term

resolution.

State consequences of decision postponement.

Long term:

Identify issues needing long-term resolution.

State consequences of decision postponement.

If you are seeking funding, be specific about any issues that require

financial resources for resolution.

Wrap Up!

QUESTIONS???

THANKS FOR LISTENING…..