Week 01_Strategy
- 2. THE IMPORTANCE OF REVIEWING YOUR BUSINESS PERFORMANCE • You want to know how well your business is performing • You want to know which areas need improvement, and how to prioritize • You plan on expanding • You want to understand how to get the most out of market opportunities • Your business plan is outdated • You are moving in a different direction than the one you had planned • You are reacting to everyday emergencies rather than moving in a specific direction Assessing where you are at is particularly important if:
- 3. • Is there demand for your products /services? • Unique features, how are they different than the rest? • Are you filling a gap in the market? How effectively are you matching your products to customers’ needs? • Which of your products/services are succeeding? Which are not? • Lifetime value of your customers (one-time vs. repeat) • Can you stand the test of changing trends? • At what prices are consumers buying your products/services? Does it work? • Upfront investment • Upsell potential ASSESSING YOUR CORE ACTIVITIES – PRODUCTS/SERVICES
- 4. • PESTLE – Political, Economic, Social, Technological, Legal, Environmental • Key success factors in your industry • Barriers to entry, size of industry, number of players (is it crowded?) • Do your offerings meet market needs? How can you be most competitive? • Cost of customer acquisition • Are you considering regional, national, international expansion? ASSESSING YOUR CORE ACTIVITIES – INDUSTRY TRENDS
- 5. • Who are your top competitors? • Remember “confusers” as well • Range of products/services they offer • Are they satisfying same target market? – Are some customers not targeted? • Do they operate in same geographic area? • Are they profitable? Growing? Scaling down? • Customers’ perception • How do you compare / differentiate yourself? – Price, quality, durability, image, value, name recognition, customer service, location, convenience, hours of operations, employee satisfaction etc. – How easy is it for others to copy you? ASSESSING YOUR CORE ACTIVITIES – COMPETITION
- 6. • Profile – Demographics (age, gender, education level, income, occupation, ethnicity, family lifecycle etc.) – Geography – Psychographics (attitude toward change/risk acceptance, values, priorities) – Lifestyle (media habits, influencers) – Buyer behavior o How will the product be used o Frequency of purchase o Location preferences o Shopping preferences (do your customers research for best value? Or Impulse purchasers?) o Purchasing roles (influencers, decision makers, purchasers, users) • Is target market large enough? Need to find your largest core users ASSESSING YOUR CORE ACTIVITIES – TARGET MARKET
- 7. • Do you really understand your customers and what influences them? • Target customers determine how and where you sell to them • The 4 Ps – Product (what makes it unique/differentiated) – Price (impacts profit, supply, demand and marketing strategy) – Promotion (social media, PR, email marketing, trade shows etc) – Place – where are the ideal places to convert prospects into clients? • Are your goals clearly defined (e.g. mentions of your brand name on social media sites, positive reviews on Google or Yelp, number of shares your blog posts receive)? • Are you using the right metrics to evaluate your current strategy? – E.g. Goal: brand awareness; metrics could include website traffic, page views – E.g. Goal: engagement; metrics could include blog comments, likes/shares/tweets – E.g. Goal: lead generation; metrics could include form completion/downloads, email subscriptions, conversion rate – E.g. Goal: sales; metrics could be online and offline sales – E.g. Goal: up-sell; metrics could be new product sales • Prioritization and associated costs of your decisions ASSESSING YOUR CORE ACTIVITIES – MARKETING
- 8. • Do you find necessary suppliers /equipment? • How reasonable are your costs? • What suppliers best fit your needs? (consider turnaround time, quality, payment terms, willingness to retain inventory, response time, tech support, on-time delivery etc.) • Having difficulty integrating demand and supply? • How much inventory do you need? • What is the weakest link in the supply chain? • Do you have back-up plans? ASSESSING YOUR CORE ACTIVITIES – SUPPLY CHAIN
- 9. • Production methods • Mfg/assembly/packaging -- flow and (in-)efficiencies • Subcontracting arrangements • Analysis of material, labor, overhead costs • High indirect costs (e.g. utilities, maintenance, supplier quality issues, insurance etc) • R&D requirements • Equipment / facilities requirements (annual maintenance and expansion) • Assessment of quality/reliability/warranty/repair + associated costs • Company certifications? • Room to grow or to cut back? ASSESSING YOUR CORE ACTIVITIES – PRODUCTION/ OPERATIONS
- 10. • How comfortable are you with your financials? • Overall trends (sales, costs, profitability) • Cash Flow – balance of $ flowing in and out, must regularly review/update • Working capital ratio (current assets / current liabilities) – Do you have enough short-term assets to cover short-term debt? – High ratio not always good (do you have too much inventory? Are you not investing excess cash?) – Have your requirements change? Do you need to source additional capital? • Costs – must constantly monitor them! – Make sure costs are covered in your sale price – Customers should not be expected to pay for inefficiencies – Can you lower your costs? • Growth - do you have plans to adapt your financing to your business’ growth? • Borrowing / your position on lines of credit and loans? – Look for better/cheaper alternatives ASSESSING YOUR CORE ACTIVITIES – FINANCIALS
- 11. • Does your HR plan support your business objectives? • Structure/staffing • Roles and responsibilities / do people know what’s expected of them? • HR procedures and policies (employee handbook, anti- discrimination etc.) • Compliance (legally required postings, proper documentation, appropriate payroll withholdings, records, documentation etc) • Benefits • Skills inventory / what’s missing? • Recruitment strategy • On-boarding • Performance evaluations • Safety / insurance ASSESSING YOUR CORE ACTIVITIES – HUMAN RESOURCES
- 12. • To the extent possible, automate: – Processes – Marketing – Payroll – Automatic withdrawals for recurring payments – Cloud storage – Etc. Simple systems help you reduce inventory costs, eliminate purchasing errors, improve production efficiency, analyze production costs and integrate manufacturing and accounting. ASSESSING YOUR CORE ACTIVITIES – DO YOU HAVE THE RIGHT SYSTEMS IN PLACE?
- 13. SWOT ANALYSIS / INTERNAL AND EXTERNAL INFLUENCES Financial resources (e.g. funding, sources of income, investment opportunities) Physical resources (e.g. company’s location, product attributes, facilities, equipment) Human resources (e.g. employees, target audiences) Current processes (e.g. employee programs, software systems, efficiency of production) Trademarks, patents, copyrights Market trends (e.g. new products/technology or shifts in consumer needs) Relationships with suppliers and partners Demographics (e.g. target audience’s age, race, gender and culture) Political, environmental and economic regulations (e.g. increasing interest rates)
- 14. • Helps to crate a simplify picture of a complex situation • As part of a regular review process – brainstorming/business planning – To examine your business performance – To assess your prospects – To identify areas for change • Use it for general business overview • And/or specific assessments (e.g. competitive assessment, marketing, etc.) WHY A SWOT?
- 15. • It is a feasibility study – is your business viable? • It is a reality check – tells you where your strengths and weaknesses lie • It helps you anticipate problems and make more informed decisions • It is an implementation plan – Use it as a guide – Stick to a realistic timeline – Fosters accountability • It helps you to think long-term (as opposed to being in survival mode) • It is a marketing tool WHY DOES DEVELOPING A GROWTH PLAN MATTER?
- 16. • Where do you want to be? • What markets should you compete in? • How is the environment changing? • How will it affect your positioning? • What is the competition doing? • Where is your competitive advantage? • What do you need to succeed (assets, $, partnerships, technology, skills, staff etc.)? CONFIRMING / (RE-) SETTING YOUR COMPANY’S DIRECTION
- 17. • Reviewing Your Business Performance • Preparing for Various Scenarios • Strategic Top Line Growth • Effective Product Design and Design for Manufacturing • Operations • Supply Chain Strategy to Grow Your Business • Marketing Plan • Financial Strategy • Creating a Roadmap for Sustainability • Human Resources • Incentives and Access to Capital • Other (e.g. Legal) DEVELOPING A GROWTH PLAN OUTLINE
- 18. • “Homework” after each session / discipline • Write things down • Outsource when it makes sense (e.g. graphic designers, CPAs etc) • Careful when hiring • Decide what to measure – Pick the right Key Performance Indicators (KPIs) for your particular business – Financial targets of course (e.g. revenues, gross and net profit, profit margins, aging accounts receivable etc.) – Non-financial targets as well, e.g. market share, number of new products, customers (trends, frequency of purchases, returning customers…), customer service (waiting time for assistance, complaints, reasons for complaints), time it takes to fulfill an order, staff satisfaction • Set SMART targets / Specific, Measurable, Achievable, Realistic and Time-Bound. • Excuse yourself • Networking is key • Think big FINAL THOUGHTS