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Copyright Strategic Outlooks 2007-2013
Surprise Chamber of CommerceOn Business Planning
Copyright Strategic Outlooks 2007-2013
Planning – A Three Phase Approach
Strategy
•Understanding the Landscape
•Developing Scenarios' to Leverage the Business Environment
•Creating a path to execute
Operation
s
•Objectives
•Critical Success Factors
•SMART – (Specific, Measurable, Attainable, Relevant, Timely)
Organization
•Responsible
•Reliable
•Learning & Enthusiastic
Copyright Strategic Outlooks 2007-2013
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!
Copyright Strategic Outlooks 2007-2013
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?
Copyright Strategic Outlooks 2007-2013
Barriers or Opportunities?The analysis starts with a mindset!
Copyright Strategic Outlooks 2007-2013
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.
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
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.
A
•What we Need to Do !
B
•How we’re going to Do It!
C
•How we’re going to Measure It !
Initiatives
Copyright Strategic Outlooks 2007-2013
Ladder of Critical Success Factors
GuidelinesMust fit into span of
controlMust carry responsibilityMust be Critical to
Mission
Company
Department
Group
Individual
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
Beginning Model ResultThis will not be a pretty picture!
Copyright Strategic Outlooks 2007-2013
Finding AdjustmentsRaise the Water or Lower the
Rocks
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
Marketing ApproachCommunications Tiers
Repurchase
Reference/ Satisfaction
Purchase
Driven Impulse
Preference
Personal Comparative
Awareness
Branding Value Post
Sustaining Immediate
30%
20%
30%
50%
Copyright Strategic Outlooks 2007-2013
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.
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
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!
Copyright Strategic Outlooks 2007-2013
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
Copyright Strategic Outlooks 2007-2013
CEO
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!
Copyright Strategic Outlooks 2007-2013
Thank YouNext Month – Creating an Organizational Plan
Questions?
Dick Jensenwww.StrategicOutlooks.com
Copyright Strategic Outlooks 2007-2013
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