Strategic Business Planning Part 1

STRATEGIC BUSINESS PLANNING
Welcome!
Session 1 – July 6, 2004
Instructor - Kevin Hawley

Kevin.Hawley.wg01@wharton.upenn.edu
Copyright © March 2004

Wharton Small Business Development Center
The Wharton SBDC is part of Wharton Entrepreneurial Programs and

the Sol C. Snider Entrepreneurial Research Center. The Wharton
Small Business Development Center is in part financed by a grant from
the Commonwealth of Pennsylvania, Department of Community and
Economic Development. The Wharton SBDC is funded under
Cooperative Agreement No. 4-603001-2-0040-24 by the U.S. Small
Business Administration. The support given by the U.S. Small
Business Administration through such funding does not an expressed
or implied endorsement of any of the co-sponsors’ or participants’
opinions, findings, conclusions, recommendations, products, or
services.
All SBDC programs are non-discriminatory and open to the public.

Reasonable arrangements for persons with disabilities will be made if
requested at least two (2) weeks in advance. Please contact Dr. M.
Therese Flaherty, Director, Wharton Small Business Development
Center, University of Pennsylvania, 433 Vance Hall, Philadelphia, PA
19104, (215) 898-8635.

Agenda – Session 1
 Course Objectives
 Introductions
 The Mission Statement
 Product and Service Descriptions
 Writing and Testing Your Value Proposition
 Management Team Overview
 Preparation for Next Session and Homework
Course Objectives
 Draft Your Business Plan
 Systematic approach
 Areas for improvement identified
 Key assumptions identified and tested
 Refine Your Business Model
 Consistency, feasibility, profitability
 Sustainable competitive advantage
 Understand How Your Team Can Drive the Plan
 Individual and group strengths matched to challenges

Your Responsibilities
 Support and Learn From Other Entrepreneurs
 Complete Assignments Before Class
 Participate in Group Exercises and Discussions
 Respect Each Other’s Intellectual Property Rights
 Take Responsibility for Acting on Feedback
 Continually Work on Refining Your Business Plan
 What Are Your Expectations?

Introductions
 Please give your name and where you’re from
 Let’s hear your “Elevator Pitch”
- A thirty to sixty second description of your business idea,
about as much time as you’d have to explain it to a potential
investor during a ride on an elevator!
 What do you hope to accomplish in this course?
- One sentence about “why you’re here tonight”

The Business Plan

 Executive Summary
 Business Overview
 Financial Data
 Supporting Documents

The Business Plan

 Your Statement of Purpose – Session 1
 Your Mission Statement – Session 1
 The opportunity and the strategy – Session 4
 Economics, profitability, and exit potential – Session 3
 The offering to prospective investors – Session 3
 Financial Data

The Business Plan

 Product/service descriptions – Session 1
 Target markets and customer profiles – Session 2
 Location of business and competitive analysis – Session 2
 Marketing, sales, and operations plans – Session 2, 3, and 4
 Management team and personnel – Session 1
 Investment requirements and expected use of funds – Session 3
 Summary – Session 4
 Financial Data
The Business Plan

 Financial Data – Session 3
 Balance sheet
 Break-even analysis
 Income projections (Profit and Loss Statements)
 Cash flow projections
 Sensitivity (deviation) analysis
 Historical financial reports for existing business

The Business Plan

 Financial Data
 Supporting Documents – Session 4
 Executive team resumes and personal balance sheets
 Supplier, customer, and/or partnership letters of intent
 Job descriptions
 Leases, contracts, and legal documents

The Executive Summary

 Statement of Purpose
 Why are you writing a business plan?
 How much money is needed?
 How will the funds be used?
 Mission Statement
 What do you intend to achieve?
 Are your goals measurable?
 Are your goals meaningful?
 Will this statement keep your efforts focused?
 The opportunity and the strategy
 Economics, profitability, and exit
 Offering to prospective investors

Class Exercise: Mission Statement

No standard format for a mission statement, but...
 Brief – it should be easy to understand and remember
 Flexible – it should be able to accommodate change
 Distinctive – it should make the business stand out


Answers three basic questions:
 What is our most significant market?
 What is our contribution to the market?
 How do we distinguish ourselves from the competition while

making that contribution?


EXAMPLE - Courtyard by Marriott:
 Market: To provide economy and quality minded travelers
 Contribution: with a premier, moderate priced lodging facility
 Distinction: which is consistently perceived as clean,

comfortable, well maintained and attractive, staffed by friendly,
attentive and attractive people.


OTHER EXAMPLES
 AVIS - To ensure a stress-free rental experience by providing

safe, dependable vehicles and special services designed to win
customer loyalty.
 FORD MOTOR COMPANY - We are a global family with a

proud heritage passionately committed to providing personal
mobility for people around the world. We anticipate consumer
need and deliver outstanding products and services that
improve people's lives.

Class Exercise: 3-5 Business Goals

Market: To provide economy and quality minded travelers
Contribution: with a premier, moderate priced lodging facility
Distinction: which is consistently perceived as clean,
comfortable, well maintained and attractive, staffed
by friendly, attentive and attractive people.
Develop three to five measurable goals for your business – they

can relate to success in specific markets, achieving specific
contributions, or maintaining a unique and sustainable
distinction for your business.

Class Exercise: 3-5 Business Goals

Develop three to five measurable goals for your business – they
can relate to success in specific markets, achieving specific
contributions, or maintaining a unique and sustainable
distinction for your business.
S – Short Term (1-5 years)

M – Measurable
A – Attainable
R – Realistically achievable, given your resources
T – Time specific
- 10 Minute Break -

Product/Service Descriptions
 Product/service descriptions
 Target markets and customer profiles
 Location of business and competitive analysis
 Risks, opportunities, and milestones
 Management team and personnel
 Investment requirements and expected use of funds
 Summary
 Financial Data
 What are you selling?
 Who are your intended customers?
 What do you know about them?
 Are they “reachable” and interested?
 What are the benefits of what you’re selling?
 Benefits are what customers want to accomplish!
 Convenience
 Savings
 Pride of ownership
 What are the features of what you’re selling?
 Features are what make benefits possible!
 Location
 Low price
 Quality

Class Exercise: Refining Your

What are you selling: Describe your products/services?
Benefits? What does the customer want when
purchasing such products/services?
Features? How do your products/services provide
what the customer wants?
Refine your product/service descriptions to provide a clear

connection between what you’re selling, the benefits customers
expect, and the specific features of your product/service that
respond to those wants.

Class Exercise: Value Proposition

The Value Proposition is a statement of how your business
satisfies a specific set of customer needs in a way that shows
strong, sustainable competitive potential:
 What are you selling?

 To whom are you selling?
 Why do you customers purchase from you?
 What do they perceive as your “value add” to the purchase?
 How is your value differentiated or unique when compared to
other providers or substitute products/services?
 How long will you be able to maintain that distinction? Why?

Class Exercise: Value Proposition

Without testing your assumptions about the questions below, you
may be basing your business plan on false or incomplete data –
it’s critical to test all of your assumptions at this stage!
 Why do you customers purchase from you?


Homework: Value Proposition

Create five questions you can use to interview your customers (or
prospective customers) to validate your assumptions about the
following:
 Why do your customers purchase from you?

Customers (and/or prospects) are the best place to start when

validating assumptions about a new venture’s potential!

Homework: Value Proposition

Create ten questions you can use to interview your suppliers (or
prospective suppliers) to validate your assumptions about the
following:
 Why will customers purchase from you?

 What will they perceive as your “value add” to the purchase?
 How will your value be differentiated or unique when compared to
Suppliers are an excellent source of information about how

customers behave and how well you’re prepared for success!

Management Team Overview

 What are your team’s strengths?
 Do NOT list weaknesses!
 Relevant experience
 Relevant education
 Assigned roles in the venture
 Matched to specific prior experience
 In what areas will your business need to add talent?
 Availability of competent advisors during start-up phase?
 Expected timing of hires, linked to business milestones

Homework Overview
 Revise and refine your Mission Statement
 Finish drafting your Product/Service descriptions
 Finish writing your questions to test your Value Proposition
 Interviews - test your assumptions with customers and suppliers
 Draft your Management Team Overview
Questions about the assignments?


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Strategic Business Planning Part 1

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STRATEGIC BUSINESS PLANNING

Instructor - Kevin Hawley

Copyright © March 2004

The Wharton SBDC is part of Wharton Entrepreneurial Programs and

All SBDC programs are non-discriminatory and open to the public.

Copyright © March 2004

Copyright © March 2004

 What Are Your Expectations?

Copyright © March 2004

Copyright © March 2004

The Business Plan

Copyright © March 2004

The Business Plan

Copyright © March 2004

The Business Plan

The Business Plan

Copyright © March 2004

The Business Plan

Copyright © March 2004

The Executive Summary

Copyright © March 2004

Class Exercise: Mission Statement

 Brief – it should be easy to understand and remember

 Flexible – it should be able to accommodate change

 Distinctive – it should make the business stand out

Copyright © March 2004

Class Exercise: Mission Statement

 What is our most significant market?

 What is our contribution to the market?

 How do we distinguish ourselves from the competition while

Copyright © March 2004

Class Exercise: Mission Statement

 Market: To provide economy and quality minded travelers

 Contribution: with a premier, moderate priced lodging facility

 Distinction: which is consistently perceived as clean,

Copyright © March 2004

Class Exercise: Mission Statement

 AVIS - To ensure a stress-free rental experience by providing

 FORD MOTOR COMPANY - We are a global family with a

Copyright © March 2004

Class Exercise: 3-5 Business Goals

Develop three to five measurable goals for your business – they

Copyright © March 2004

Class Exercise: 3-5 Business Goals

S – Short Term (1-5 years)

Copyright © March 2004

Copyright © March 2004

Class Exercise: Refining Your

Refine your product/service descriptions to provide a clear

Copyright © March 2004

Class Exercise: Value Proposition

 What are you selling?

Copyright © March 2004

Class Exercise: Value Proposition

 Why do you customers purchase from you?

Copyright © March 2004

Homework: Value Proposition

 Why do your customers purchase from you?

Customers (and/or prospects) are the best place to start when

Copyright © March 2004

Homework: Value Proposition

 Why will customers purchase from you?

Suppliers are an excellent source of information about how