BUSINESS PLAN: FIRST STEPS

Julia Rastopchina Oksana KikhtenkoEurasia Regional Advising Conference

Moscow, 2004

WHAT IS A BUSINESS PLAN?

A document developed to justify a request for funding

An action plan to develop business ideas

As a strategic planning tool: describes business strategy, market position, identifies goals, defines budget

KEY QUESTIONS OF A BUSINESS PLAN

What is our business and its mission? Who are our clients and how well do

we know them? What are the customers’ needs, what

do they want? What do we supply and how does our

product create value for our customers?

KEY QUESTIONS OF A BUSINESS PLAN

How is our business developing? How it can/ should develop? How can we prevent others from

entering our market? How do we compete with other

players on the market?

BUSINESS PLAN GOAL:

To guarantee that our efforts are aimed at maintaining and enhancing our competitiveness

BUSINESS PLANNING PROCESS

Business planning includes: Analysis of the current situation and trends

including competition SWOT – analysis (strengths, weaknesses,

opportunities and threats) Defining/refining our business mission –

checking for validity/ applicability Key success factors and strategic decision-

making – main directions Goal-setting (SMART – specific, measurable,

agreed upon, realistic, time-bound)

SITUATION ANALYSIS

Micro environment (immediate surrounding)

Macro environment (global/national/regional level)

Analysis of micro environment (immediate surrounding)

Customers/ clients Suppliers Labor force Competition

Analysis of macro environment

Economic environment Legal aspects Political environment Technological factors Social factors Global economic conditions

MACRO ENVIRONMENTof your business

External factors Trends Impact on business

Reaction

Economic environment

MICRO ENVIRONMENT(IMMEDIATE SURROUNDINGS)

of your business

External factors Trends Impact on business

Reaction

Clients/ customers      

 Competitors      

       

       

Opportunities and threats for company development

Opportunities

Threats

SWOT - analysis

STRENGTHSSTRENGTHS

Key Key internal internal advantagesadvantagesa manager can usea manager can use

WEAKNESSESWEAKNESSES

Internal Internal obstacles obstacles a manager should be a manager should be aware ofaware of

OPPORTUNITIESOPPORTUNITIES

Key Key externalexternal advantages advantages a manager should usea manager should use

THREATSTHREATS

Key Key externalexternal events or events or future changes that mayfuture changes that maynegatively affect the negatively affect the company’s businesscompany’s business

SWOT-ANALYSIS: STRATEGIC MEANING

S STRENGTHS Company

Market

W WEAKNESSES

O OPPORTUNITIES T THREATS

SWOT – analysis: purpose and applications

Summarizes: results of macro and micro environments; opportunities and threats (based on

macro environment analysis); strengths and weaknesses (based on

micro environment analysis);Helps to develop: strategic action plan based on SWOT-

matrix; company strategy

STRENGTHS

Competent leadership Available financial resources Qualified personnel Good reputation with the customers Market leadership Protection against competition Technological supremacy Cost advantages Competitive advantages Innovation capability and ability to implement

innovation Seasoned management Better production facilities Potential for external investment

WEAKNESSES No clear strategy declining competitive position obsolete equipment low profits lack of managerial experience and insight low competence weak or no follow-up on strategy implementation internal problems vulnerability under pressure from competition weak R&D low capacity insufficient market knowledge/awareness bad marketing lack of finance to implement strategy undeveloped distribution/ sales high costs (higher than competition) narrow product range

OPPORTUNITIES

new markets/ market segments expanding production / services expanding product range supplementary products or services weakening of competitors market growth or expansion lower trade barriers on new geographic markets vertical integration (up or down) new technologies availability of external funding

THREATS

new competitors growing sales of substitute products or

services slowing market growth unfavorable government policy growing pressure from competition growing negotiating power of suppliers and

customers changes in customer needs and preferences unfavorable demographic situation unfavorable currency fluctuations high dependence on demand levels and life

cycle of business

KEY QUESTIONS OF A BUSINESS PLAN

What is our business and its mission? Who are our clients and how well do we know

them? What are the customers’ needs, what do they

want? What do we supply and how does our product

create value for our customers? How is our business developing? How it can/ should develop? How can we prevent others from entering our

market? How do we compete with other players on the

market?

THANK YOU!