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Carmen Nastase Erasmus IP, Iisalmi 23 May 2005

Enterprise level tools for innovation, business plan. Carmen Nastase Erasmus IP, Iisalmi 23 May 2005. Innovation and entrepreneurship in forestry. Innovation activities are one of the important reactions to the challenges in the forestry sector. Innovations between:

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Carmen Nastase Erasmus IP, Iisalmi 23 May 2005

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  1. Enterprise level tools for innovation, business plan Carmen Nastase Erasmus IP, Iisalmi 23 May 2005

  2. Innovation and entrepreneurship in forestry • Innovation activities are one of the important reactions to the challenges in the forestry sector. • Innovations between: • Product innovation - are successful changes in the output of an enterprise or organization • Process innovation - can either be technological innovations or innovations in the organization of the enterprise or organization.

  3. The situation regarding innovation an entrepreneurship in forestry • Innovation system presents actors, institutions and their relations and interactions which are involved in the innovations. • Innovation process: • new idea; • interest; • evaluation; • trial stage; • implementation/adaptation.

  4. Innovation behavior of the firm • External factors - market environment characteristics - regional institutional characteristics - policy institutions • Internal factors - organizational - personal

  5. External factors • Market environment characteristics - size of market; - competition, suppliers; - technical characteristics. • Regional institutional characteristics - knowledge centers – research; - workforce education; - service infrastructure, culture. • Policy institutions - administrative and legal framework; - innovation related forest policies

  6. Internal factors • Organizational - size of company, resources; - quality of workforce; - goals; - strategy; - organizational structure. • Personal - entrepreneurial orientation; - information behavior; - communication behavior.

  7. macro-level governance system extension services, consultancy structural change Information exchange labour resources knowledge finance forest- enterprise product-, process-, innovation costumers/ consumers micro- level information exchange research & education markets/ competitors

  8. Entrepreneurship development • Entrepreneurship can be defined as the process of using private initiative to transform a business concept into a new venture or to grow and diversify an existing venture or enterprise with high growth potential. • Entrepreneurs identify an innovation to seize an opportunity, mobilize money and management skills, and take calculated risks to open markets for new products, processes and services.

  9. Innovation idea • Sources for innovative ideas • Check your idea • Check yourself • Analyse market, customers and environment • Analyse your existing business

  10. Analyze market, customers and environment; Analyze your existing business Innovation idea Sources for innovative idea Evaluation level Implementation Results Check your idea; Check yourself

  11. Business plan based of • Entrepreneurship • The business idea • Business areas

  12. For preparing a Business Plan we must to answer a 3 questions: • WHAT is a Business Plan? • WHO needs a Business Plan? • HOW prepare a Business Plan?

  13. 1. What is a business plan? • Business planning is about results. • A business plan is any plan that works for a business to look ahead, allocate resources, focus on key points, and prepare for problems and opportunities. • Businesses need plans to optimize growth and development according to priorities. • A business plan is like a map and a compass for a business.

  14. mini-plan working plan prezentation plan Business plan

  15. The Different Types of Business Plans Business plans are also called: • strategic plans • investment plans • expansion plans • operational plans • annual plans • internal plans • growth plans • product plans • feasibility plans and many other names.

  16. 2. Who needs a business plan? • You need a business plan if you’re running a business; • You need a business plan if you’re applying for a business loan; • You need a business plan if you’re looking for business investment, new products or new services; • You need a business plan to communicate with a management team.

  17. 3. How prepare a business plan?

  18. Is There a Standard Business Plan? • A normal business plan, includes a standard set of elements. Plan formats and outlines vary, but generally a plan will include components such as descriptions of the company, product or service, market, forecasts, management team, and financial analysis. • Your plan will depend on your specific situation.

  19. - condensed information on each of the chapters bellow • type of business; • products and services offered; • ownership of the business and its legal structure; • profitability consideration. • market and target market; • demand for the product or service; • promotion; • dissemination and delivery; • - pricing strategy. • competition analysis; • - identification of competitive strenght position. • operations plan; • - management team. • capital requirements and sources; • balance sheet; • break-even analysis; • income statement; • - cash flow projection. Outline of a business plan Executive summary Business description: products and services offered Market strategies Competitive analysis and positioning Operations and management plan Financial components

  20. Annex • Business aspects advise: adresses for financing advise,legal advice, marketing advice • Figures • Tables • Graphs • Other sectors advice: research institutes, interests groups, administration, other key innovation areas.

  21. Planning is a Process, Not Just a Plan

  22. Successful implementation starts with a good plan • Is the plan simple? • Is the plan specific? specific budgets? • Is the plan realistic? • Is the plan complete?.

  23. Preparing a business plan • Define and fix objectives, and programs to achieve those objectives. • Create regular business review and course correction. • Define a new business. • Support a loan application. • Define agreements between partners. • Set a value on a business for sale or legal purposes. • Evaluate a new product line, promotion, or expansion.

  24. Keys to Better Business Plans • Use a business plan to set concrete goals, responsibilities, and deadlines to guide your business. • A good business plan assigns tasks to people or departments and sets milestones and deadlines for tracking implementation. • As part of the implementation of a business plan, it should provide a forum for regular review and course corrections. • Good business plans are practical.

  25. Business Plan "Don'ts" • Don't use a business plan to show how much you know about your business. • Nobody reads a long-winded business plan: not bankers, bosses, nor venture capitalists. Years ago, people were favorably impressed by long plans. Today, nobody is interested in a business plan more than 50 pages long.

  26. How Long Should a Business Plan Be? • Page count is not a good way to measure length. • A 20-page plan with dense text and no graphics is much longer than a 35-page plan broken up into readable bullet points, useful illustrations of locations or products, and business charts to illustrate important projections. Measure a plan by readability and summarization. • A good business plan should leave a reader a good general idea of its main contents even after only a quick skimming, browsing the main points, in 15 minutes. • Format, headings, white space, and illustrations make a big difference. Summaries are very important. Main points should show up in a business plan as quickly as they do in a business presentation.

  27. The right length of the plan depends on the nature and purpose of the plan • Will it include descriptions of the company and management team for outsiders to read; • Does it need an executive summary good enough to stand alone; • Does it include detailed research, plans, drawings, and blueprints; • Is it worded to withstand legal scrutiny as part of an investment proposal.

  28. BUSINESS PLAN Standard Outline

  29. EXECUTIVE SUMMARY • Brief Description of the Project • Brief Profile of the Entrepreneur • Project's Contributions to the Economy • Write this last. It's just a page or two of highlights.

  30. Section 1MARKETING PLAN • Description of the Product • Comparison of the Product with Its Competitors' • Location • Market Area • Main Customers • Total Demand • Market Share • Selling Price • Sales Forecast • Promotional Measures • Marketing Strategy • Marketing Budget

  31. Section 2 PRODUCTION PLAN • Production Process (fixed capital, life of fixed capital) • Planned Capacity - Future Capacity • Terms and Conditions of Purchase of Equipment • Factory Location and Layout • Raw Materials Needed - Cost of Raw Materials - Raw Materials Availability • Labour • Cost of Labour • Labour Availability - Labour Productivity • Factory Overhead Expenses • Production Cost

  32. Section 3 ORGANIZATION & MANAGEMENT PLAN • Form of Business • Organisational Structure • Business Experience and Qualifications of the Entrepreneur • Pre-Operating Activities • Pre-Operating Expenses • Office Equipment • Administrative Expenses

  33. Section 4 FINANCIAL PLAN • Project Cost • Financing Plan and Loan Requirement • Security for Loan • Profit and Loss Statement • Cash Flow Statement • Balance Sheet • Loan Repayment Schedule • Break-even Point (BEP) • Return on Investment (ROI) • Financial Analysis

  34. BUSINESS PLANGUIDE QUESTIONSEXECUTIVE SUMMARY • What is the nature of the project? • What are the entrepreneur's competencies and qualifications? • What are the project's contributions to the local and national economy?

  35. Section 1 MARKETING PLAN • What is the product? • How does it compare in quality and price with its competitors? • Where will the business be located? • Within the market area, to whom will the business sell its products? • What share or percent of this market can be captured by the business? • What is the selling price of the product? • What marketing strategy is needed to ensure that sales forecasts are achieved? • How much do you need to promote and distribute your product?

  36. Section 2 PRODUCTION PLAN • What is the production process? • What buildings and machinery (fixed assets) are needed and what will be their cost? • What is the useful life of the building and machinery? • When and where can the machinery be obtained? • How much capacity will be used? • When and how will the machinery be paid for? • Where will the factory be located and how will the factory be arranged? • What is the production cost per unit?

  37. Section 3ORGANISATION & MANAGEMENT PLAN • How will the business be organised? • How will the business be managed and operated? • What is the business experience and qualifications of the entrepreneur? • What pre-operating activities must be undertaken before the business can operate? • What pre-operating expenses will be incurred? • What fixed assets will be required for the office? • What administrative cost will be incurred?

  38. Section 4FINANCIAL PLAN • What is the total capital requirement? • Is a loan needed? What will be the equity contribution of the entrepreneur? And how much? • What security (collateral) can be given to the bank? • What does the Profit and Loss Statement indicate? • What does the Cash Flow Statement indicate? • What does the Balance Sheet indicate? • What is the loan repayment schedule? • What is the break-even point (BEP)? • What is the return on investment (ROI)?

  39. Remember, strategy is focus. A priority list with 3-4 items is focus. A priority list with 20 items is certainly not strategic, and rarely if ever effective. The more items on the list, the less the importance of each. • Sales grow slowly at first, but then shoot up boldly with huge growth rates, as soon as 'something' happens. Have projections that are conservative so you can defend them. When in doubt, be less optimistic.

  40. CONCLUSIONS • - A proper business plan serves as a map. • Use it to establish the points along the route, indicating why • each is important and how it can best be reached. • The plan builds from mission and value to justification, • strategies, tactics, actions and expected results. • Comprehensive business planning increases the likelihood • of the venture’s success.

  41. Contents and references • Innovation and entrepreneurship - how to introduce new products and services in forestry, Innoforce, EFI Project Centre, Draft 3 • The Business Plan Workbook, Borrow C. & Brown R., London, 1992 • How to Write a Business Plan, Terrance Mc Garty, 4th Edition, 1994 • Innovation and entrepreneurship: practice and principles, Drucker, P., New York, Harper & Row Publishers, 1985. • www.bplans.com

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