Growth - Tools

1 Business Strategy Development
2 Market Strategy Development
3 Business Plan Outline
4 Sales Web Site - Evaluation Model

1 Business Strategy Development

Introduction

Michael Porter, said:

At general management’s core is strategy: defining a company’s position, making trade-offs, and forging fit among activities.  Most companies owe their initial success to a unique strategic position involving clear trade-offs.

For advanced technology companies, success depends on strategic planning.  Here is why:

•    Advanced technology is characterized by change and uncertainty in markets, technologies, the business environment,
     and in the constant need for new skills – all factors contributing to business risk.
•    Growth is imperative if the value of the company is to increase.
•    To achieve profitable growth, the advanced technology company must constantly build infrastructure across all functional areas.
•    Everything happens fast, sometimes very fast.
•    The real challenge is not strategic planning, but implementation of an operational plan.  If operational activity is not directed, it will be wasted.

The following material has been gathered from many sources.  A quick Google search showed 140,000 listings for ‘strategic planning models and analytical techniques’.  A Wikipedia search yields a five-page summary of strategic planning elements and methods.

It is presented here as a starting point for investigation of strategic planning.

The structure of this document is:

•    Introduction
•    Vision and mission statements
•    Analysis, Goals, and Strategies and Action
•    Analysis (SBU, SWOT)
•    Goals
•    Strategies & Action

A note: The formal business plan is not a strategic plan, nor is it an operational plan – it is a purpose built document, usually used for raising financing

Vision & Mission Statements

The vision is a statement or understanding of where the company is going, in as concrete terms as possible.

In small and medium-sized companies the founder is usually the keeper of the company vision.  It is important to get that vision on a white board.  The vision statement answers the question: what is our long term objective?

The mission statement states why the company exists.

The implications of the mission and vision should be discussed with the management team and key advisors to determine how we operate – what are our values: what do we do, what do we have, need, how do we interact with our markets, and stakeholders?

Analysis, Goals, and Strategies &Action

The planning process now falls into three phases:
Analysis – determine where we are now.
Goals – set targets, quantifiable if possible, that quantify our stated direction.
Strategies & Action – decide how we will implement the goals, and decide what will be done day-to-day.
Analysis

Two commonly used analytical tools are outlined below.

Strategic Business Units

Business units can be differentiated on the following criteria:
Typically, in a small advanced technology company, custom projects and emerging standard products and services co-exist.  The current and future roles of these two very different activities should be considered.

In larger advanced technology companies multiple products, often sold to different markets or market segments, need to be considered, along with the revenue-generating role of installation, training, service, support, and maintenance.

An analysis of strategic business units yields information about company capabilities, markets, competitors, and the business environment.

Strengths, Weaknesses, Opportunities & Threats

The SWOT analysis positions the company by assessing company assets, and looking at the world the company operates in.  It is relatively easy to move from this analysis to setting goals, actions and strategies.

Strengths & Weaknesses are result from an analysis of the company's internal capabilities: Technology, Planning, Marketing, sales, Human resource, Control systems, and Finance.

Opportunities and threats are external factors: Markets, Competition, and the Business environment.

Strengths and opportunities are positive factors, and should be taken advantage of.

Weaknesses and threats are negative factors, and should be dealt with, or at least neutralized.

Goals

Goals should be numeric, wherever possible.  Before setting goals, revisit the vision and mission.  The goals reflect the elements critical for success.  Examples of possible goals are listed below.

Strategies & Action

Strategies state the approach to be taken in achieving goals, actions are then taken to implement the strategies.

For example, a goal of developing strong sales relationships with three distributors in the next year would lead to strategies such as: write a distributor plan, develop criteria for assessing distributors, identify 20 potential distributors, and so on. 

Actions following from the strategies would be assigned to managers and individuals, with due dates, and a mechanism for tracking activity.Implementation is the real challenge – Allan Wilson and Associates can help.


2 Market Strategy Development

This market strategy development model is a classic approach. 

Most entrepreneurs who have sales, have answers to most of the questions in the model. 

Capturing this knowledge is useful in developing plans.

3 Business Plan Outline


Table of Contents:

Executive Summary

The Opportunity & Solution

Market Analysis

Market Strategy

Competition & Business Environment

Supporting Information

Available under Separate Cover

Financial Information


Notes:

1. This plan outline should be used to develop a unique plan for each user.

2. The purpose of a formal business plan is, most often, to find financing. As such it is a sales document. The objective of the writer is to develop a story that is compelling, and that can be implemented.

3. Examples of tools used by Allan Wilson and Associates in developing business plans are noted throughout following the notation, AWA.


Executive Summary


Summarize the opportunity, and our solution. The remainder of the plan will support the business we outline here. This is a high level summary, one or two pages at most.


Questions to answer in the summary:

Why is this plan being written?

What market needs do you propose to fulfill? (Opportunity)

What is your value proposition? (Solution)

What is the size of your market, and your anticipated market share? (Market Analysis)

What is your marketing and sales strategy? How will your strategy make your company a winner in a

competitive market place? (Market Strategy)

What distinguishes your company in a competitive market place (products and services, people)?

(Competition & Business environment)

What are the company’s financial requirements, and for what purposes? (Financial Information)

Why should I finance your plan?

How will I get my money out?


The Opportunity & Solution


(AWA: Business Strategy Development Tools - various)


Opportunity

What market need are we addressing? Stress the benefits we deliver to the customer, not features and functions.


Solution

Detailed product/service description (from the users’ perspective): specific benefits of product/service, our ability to meet needs, competitive advantages, present stage (idea, prototype, small production runs, etc.).

The business model: approach to market, revenue model, and company background & scalability of the company, and distinctive competencies.Strengths & weaknesses of the company, how will the strengths work for us, how will we neutralize or overcome the weaknesses?

How will we neutralize or turn around threats to the company?


Market Analysis


(AWA: Size and Segmentation Grids, Market Checklist, Simple Market Research Model)


The market analysis supports the assertions made in the opportunity section of the plan, and leads logically to the market strategy that will implement the solution.


Industry

Consider: description of your primary industry, size of the industry (historically, currently, and in five years), industry characteristics and trends, regulatory restrictions (methods for meeting the requirements, timing involved, cost, anticipated changes in regulatory requirements).


Target Markets

Distinguishing characteristics of your primary target markets and market segments. Narrow your target markets to a manageable size. Efforts to penetrate target markets that are too broad are often ineffective.  For each target market consider: critical needs, extent to which these needs are currently being met, demographics, geographic location, purchase decision-makers and influencers, and seasonal/cyclical trends.


Primary Target Market Size

Consider: number of prospective customers, annual purchases of products or services meeting the same or similar needs as your products and services, geographic area, anticipated market growth.


Market Penetration

Indicate the extent to which you anticipate penetrating your market and demonstrate why you feel that level of penetration is achievable.

Consider: market share, number of customers, geographic coverage, and rationale for market penetration estimates.


Pricing/Gross Margin Targets

Consider: market price levels, gross margin levels, discount structure (volume, prompt payment, etc.).


Identifying Members of the Target Market

Consider: online directories, trade association publications, government documents, attracting target market members though online methods.


Communications

Consider: sources of influence/advice/bloggers & various social media, public relations initiatives, publications, radio/television broadcasts.


Purchasing Cycle/Sales Cycle

Consider: need identification, research for solutions to needs, solution evaluation process, solution selection responsibility and authority (executives, purchasing agents, engineers, etc.).


Key trends and anticipated changes within your primary target markets


Secondary target markets


Market Strategy


(AWA: Market Strategy Development Model, Channel Development & Pricing & Product Planning Models, eMarketing Model)


The market strategy explains how we will implement our plan to address the opportunity we have identified.


Distribution: channels (include discount/profitability levels at each stage), sales force, personal selling, and sales activities/sales funnel.


Communication: eMarketing, public relations, advertising, and sales collateral (web demos, webinars, social networking, catalogues, brochures, etc.).


Product: outline the products you will sell, immediately, short term, and long term, product development plans.


Pricing: on what basis are you setting your prices (customer opinions, established competitive pricing)? How does your price structure relate to your distribution strategy (commissions, discounts)?


Competition & Business Environment


(AWA: Porter Five Forces Analysis, Competitive Intelligence Model)


Competitors

Consider: identification (by product line or service and market segment), existing, market share, potential (how long will your "window of opportunity" be open before your initial success breeds new competition? 

Who will your new competitors likely be?), direct, and indirect.

Compare our market strategy with the competitors.

Compare our benefits, features, functions, service and support, with the competitors.


Barriers to Market Entry

Consider: cost (investment), time, technology, customer inertia (brand loyalty, existing relationships, etc.),

and importance of your target market to your competition, and existing patents and trademarks.


Business Environment

Consider: political, economic, social, and technological factors.


Supporting Information


As a general rule, include sufficient information in the business plan to convince a reader of the reality of the opportunity, and the practicality of our approach to addressing it.

Additional information can be attached to the plan, under Supporting Information. Further information can be presented as titles only under Available under Separate Cover.

There is no fixed rule as to what information is included, and where. Each plan must reflect the unique value proposition offered by a company.


Operations

Production and service delivery capabilities and procedures.

Operating competitive advantages: techniques, experience, economies of scale, lower direct costs.

Suppliers: identify suppliers of critical elements of production, lead time requirements, evaluate risks of critical element shortages, and describe existing and anticipated contractual relationships with suppliers.


Management

Management staff structure: management staff organization chart, narrative description of the chart.

Key managers: name, position, brief position description, including primary duties, primary responsibilities and authority with previous employers, and unique skills and experiences that add to your company’s distinctive competencies.

Compensation basis and levels (be sure that they are reasonable)

Planned additions to the current management team: position, primary responsibilities and authority, requisite skills and experience, recruitment process, timing of employment, anticipated contribution to the company’s success, and compensation basis and levels.


Legal structure of the business


Ownership

 

Consider: names, percentage ownership, extent of involvement with the company, form of ownership, outstanding equity equivalents.


Board of Directors

Consider: names, position on the board, and extent of involvement with the company, background, and contribution to the company’s success


Advisors


Available under Separate Cover


Market Research Results

Consider: potential customers contacted, information/demonstrations given to potential customers, reaction of potential customers, importance of satisfaction of targeted needs, and the test group's willingness to purchase products/services at various price levels.


Sales Cycle

Consider: initial orders, reorders, and volume purchases.


Sales & Marketing Plans - detailed


Detailed strategic planning documents (vision, mission, goals & objectives, strategies, action plans).


Strengths, Weaknesses, Threats & Opportunities Analysis


Resumes of Key Managers


Sales Collateral


Professional References


Products and Services - Detailed

Product life cycle: description of the product/service’s current position within its life cycle, and factors that might change the anticipated life cycle.

Installation: outline installation process; indicate degree of product customization, and consulting work, training, and other services, required for successful installation.

Service and support: outline the service operation; show how it meets customer requirements, and service operation development plan.


Research and Development

Consider: product life cycle, activities in process, future activities (include milestones), version control, documentation, anticipated results of future research and development activities: new products or services, new generations of existing products or services, complementary products or services, replacement products or services, and competitive response.

 


Market studies


Published information

Consider: magazine articles, and references to books

Patents, copyrights, trade secrets


Significant Contracts

Consider: leases, sales contracts, purchases contracts, partnership/ownership agreements, stock option agreements, employment/compensation agreements, non complete agreements, insurance, product liability, officers’ and directors liability, and general liability.


Financial Information


Funds Required and their Uses

Current funding requirements: amount, timing, type (equity, debt, mezzanine), and terms.


Funding Requirements - Next Three Years

Use of funds: marketing & sales, development, capital expenditures, working capital, debt retirement, and acquisitions.


Long-range Financial Strategies

Liquidating investors positions: going public, leveraged buyout, acquisition by another company, debt service levels and timing, and liquidation of the venture.


Financial Data

Historic financial data (three years) annual statements: income, balance sheet, and cash flows.

Projected financial data (three years): next year (by month or quarter), income statement, balance sheet, cash flow statement, and capital expenditure budget.

Summary of significant assumptions


Alternative Forecasts

Consider: high and low alternative forecasts, summary of significant assumptions.


Analysis

Consider: historical & prospective financial statements, ratio analysis, trend analysis with graphic presentation, and trend analysis with graphic presentation.


4 Sales Web Site - Evaluation Model

Marketing & Sales Strategy

Questions

Our Web Site

Competitor Web Site

1. Product description is easy to navigate, again reflects the customer’s level of comprehension and interest

 

 

2. Product description serves several purposes: 1 cursory view for the decision maker, 2 more detail for the manager, 3 detail for staff and evaluators

 

 

3. Purchase process is clearly stated (buy direct on the site, contact us we will contact you, link to one of our sales partners, and so on)

 

 

4. Pricing is easily understood, summarized – a decision on pricing can be made

 

 

5. Payment options are simple

 

 

6. What happens upon purchase (connection, delivery, uploading, secure connection, and so on) is clear

 

 

7. Communications. Contact, text interaction, live interaction.

 

 

8. Communications. Testimonials easily accessable and support sales message. Text? Video?

 

 

9.  Communications elements - demo, information, blogs, enews, webinars – available and appropriate. Is there an ongoing contact program?

 

 

Home Page

10. First page asks for purchase decision (button, click through to product purchase sign-up)

 

 

11. Asks for secondary decisions (demo, information, blogs, enews, webinars)

 

 

12. First page highlights key benefits to the user

 

 

13. First page identifies target demographic

 

 

14. Look and feel (bars, lists) is in an expected format

 

 

Text Elements

15. Text speaks at the customer’s comfort level (the customer is not made to feel inadequate by the text)

 

 

16. The text reflects the company’s character (which should resonate with the target market)

 

 

17. All text is written to support closing a sale. (product, service and support, about us, customers, white papers, and so on)

 

 

18. Depth of content (white papers) does not interfere with the flow of the sales process, but provides support which may be needed by staff and evaluators

 

 

Design Elements

19. Overall structure/design (reference bars, etc. conforms to currently accepted formats)

 

 

20. Illustrations support the sales message

 

 

21. Videos support the sales message

 

 

22. Is the web technology used easily managed by the target audience