an introduction to business and business planning pdf

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• Joseph Hadzima

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• Sloan School of Management

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• Entrepreneurship

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Nuts and bolts of business plans, lecture notes.

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AN INTRODUCTION TO BUSINESS AND BUSINESS PLANNING

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Dr. Jay A. DewhurstAn Introduction to Business andBusiness PlanningIntroducing Business through the Development of aBusiness Plan 2 Download free eBooks at bookboon.com An Introduction to Business and Business Planning1st edition© 2014 Dr. Jay A. Dewhurst & bookboon.comISBN 978-87-403-0758-0 3 Download free eBooks at bookboon.com An Introduction to Business Contentsand Business PlanningContents Note to Instructors 10 Foreword 11 Acknowledgments 12 Introduction 131 An Introduction to Business 141.1 Introductory Concepts in Business 141.2 What is a business? 151.3 Entrepreneurship 171.4 Macro and Micro Economics 171.5 Accounting and Financial Management 181.6 Marketing 191.7 Human Resource Management 191.8 The Legal Environment in Business 19 www.sylvania.com We do not reinvent the wheel we reinvent light. Fascinating lighting offers an infinite spectrum of possibilities: Innovative technologies and new markets provide both opportunities and challenges. 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Light is OSRAM 4 Click on the ad to read more Download free eBooks at bookboon.com An Introduction to Business Contentsand Business Planning 231.9 Banking and Securities 231.10 Business Information Systems 241.11 Global Business Environment 282 The Business Plan 282.1 Determine the Potential for Profits 292.2 Determine Market Viability 322.3 Getting Financing 373 The Concept 403.1 Knowledge to Action 433.2 Building Leadership Skills 444 Marketing 454.1 Product 464.2 Price 464.3 Place 484.4 Promotion CHALLENGING PERSPECTIVESInternship opportunitiesEADS unites a leading aircraft manufacturer, the world’s largest learning and development opportunities, and all the support you need,helicopter supplier, a global leader in space programmes and a you will tackle interesting challenges on state-of-the-art products.worldwide leader in global security solutions and systems to formEurope’s largest defence and aerospace group. More than We welcome more than 5,000 interns every year across140,000 people work at Airbus, Astrium, Cassidian and Eurocopter, disciplines ranging from engineering, IT, procurement andin 90 locations globally, to deliver some of the industry’s most finance, to strategy, customer support, marketing and sales.exciting projects. Positions are available in France, Germany, Spain and the UK.An EADS internship offers the chance to use your theoretical To find out more and apply, visit www.jobs.eads.com. You can alsoknowledge and apply it first-hand to real situations and assignments find out more on our EADS Careers Facebook page.during your studies. Given a high level of responsibility, plenty of 5 Click on the ad to read moreDownload free eBooks at bookboon.com An Introduction to Business Contents and Business Planning 55 5 General Management and Operations 56 5.1 Management Theory 58 5.2 The Daily Activities of a Manager 61 5.3 Summary 64 6 Accounting and Finance 64 6.1 Accounting Basics 72 6.1 How to use the Statements 72 6.2 The Profit and Loss Statement 73 6.3 The Balance Sheet 74 6.4 Budgeting 76 6.5 Manual vs Computerized Accounting 77 6.6 Payroll and Employment Taxes 78 6.7 Federal Issues 78 360°6.8 State and Local 83 83 thinking.7 Budgeting and Breakeven Analysis 84 7.2 Cost Volume-Profit Analysis 7.3 Breakeven 360° . .thinking 360° thinking Discover the truth at www.deloitte.ca/careers Dis © Deloitte & Touche LLP and affiliated entities. © Deloitte & Touche LLP and affiliated entities. Discover the truth at www.deloitte.ca/careersDeloitte & Touche LLP and affiliated entities. Discover the tru6th at www.deloitte.caC/cliacrkeeorns the ad to read more Download free eBooks at bookboon.com © Deloitte & Touche LLP and affiliated entities. An Introduction to Business Contentsand Business Planning 877.4 Using the Break-Even Analysis 887.5 The Flexible Budget 918 Financial Statement Analysis 918.1 Liquidity Ratios 958.2 Leverage Ratio 958.3 Profitability Ratios 978.4 Turnover Ratio 988.5 Overall Analysis 1009 Bringing It All Together 1009.1 The Overall Plan 1019.2 The Concept 1019.3 Marketing 1019.4 Management 1019.5 Accounting /Finance and Budgeting 1029.6 Financial Statement Analysis 1029.7 Appendices/Attachments 1039.8 Review and Editing We will turn your CV into an opportunity of a lifetimeDo you like cars? Would you like to be a part of a successful brand? Send us your CV onWe will appreciate and reward both your enthusiasm and talent. www.employerforlife.comSend us your CV. You will be surprised where it can take you. 7 Click on the ad to read moreDownload free eBooks at bookboon.com An Introduction to Business Contentsand Business Planning 10610 Wisdom from the Trenches 10610.1 Charles Schoen, CPA 10710.2 Keefe Duterte 1088.3 Richard Coleman 1108.4 Conclusive Remarks 111 Appendix A 112 Appendix B: Sample Business Plan 112 Medical Office, Inc. 113 Confidentiality Agreement 114 Executive Summary 1161 Objectives 1161.1 Mission 1171.2 Company Ownership 1171.3 Wound Care Equipment 1181.4 Respiratory Care Equipment �e Graduate Programme �e G I joined MITAS because for Engineers and Geoscientists for Engine I wanted real respoInjosiinbeildi�MITAS because wwwM.daisecrosvke.crmomita/Ms.ictoams Ma I wanted real responsibili� Month 16 I was a construction Mo superviIsworaisna const the North Sea super advising and the No helping foremen advis Real work solRveael wporkroblemhselping foInternational opportunities �ree work placements International opportunities solve pr �ree work placements 8 Click on the ad to read moreDownload free eBooks at bookboon.com An Introduction to Business Contentsand Business Planning 1192 Market Analysis Summary 1192.1 Target Market Segment Strategy 1192.2 Industry Analysis 1192.3 Strategy and Implementation Summary 1202.4 Marketing Strategy 1202.5 Sales Strategy 1202.6 Milestones 1202.7 Management Summary 1212.8 Financial Plan 1212.9 Financials and Attachments 123 Endnotes 9 Click on the ad to read moreDownload free eBooks at bookboon.com An Introduction to Business Note to Instructorsand Business PlanningNote to InstructorsDear Instructor:Having taught business introduction courses for many years and exploring different ways to introducestudents to foundational business concepts, I realized that students, while learning important conceptsunder traditional methods, were unable to connect those ideas to one another. The student wouldsuccessfully complete the course, but would not be able to relate marketing to accounting or managementto finance.The purpose of this book this book is to give you, as instructor, a text to introduce students to businessconcepts through the building of a basic business plan. I have used this method for many years and havefound it to have a lasting impression on students.My hope is that you too will find this method useful and this book a great help to you and your students.Best Regards,Dr. Jay A. Dewhurst 10Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningThe fourth category of businesses includes the aforementioned CVS, Walmart and all the large companiesemploying millions of people all around the world. These companies are usually publically traded (theysell stock on one of the public stock markets) and are highly structured with offices either all over acountry or all over the world. These, gain, are not the kind of business this book addresses.So, now that we have some common understanding of the four categories of businesses and understandthe category this book addresses, let’s consider a few important words or phrases of which you, as a newbusiness owner, should have some knowledge.1.3 EntrepreneurshipAn entrepreneur is someone who organizes, manages, and assumes the risks of a business or enterprise.An entrepreneur is an agent of change. Entrepreneurship is the process of discovering new ways ofcombining resources.2Entrepreneurs are often developers of new businesses but are not necessarily the inventor or creator of aproduct or service. Bill Gates and Paul Allen started Microsoft in 1975. Gates and Allen provide a greatexample of creating something from the ground up; however, other great entrepreneurs have taken ideasand improved them. Henry Ford, for example, took the idea of the automobile and both improved itand made it more affordable through mass production.According to Forbes Magazine, there are around 11.5 million new businesses in the US each year, butthe worldwide number is impossible to calculate. Businesses as small as a new vendor along the streets ofCalcutta or as large as a multinational corporation are all included. For our purposes, however, consideran entrepreneur as an individual who starts a new business of any size, either alone or with partners.1.4 Macro and Micro EconomicsEconomics can be a rather intimidating subject as it includes simple concepts we all deal with in everydaylife, as well as complex subject matter that a lifetime of studying is needed to perfect.For purposes of simplification, you need to know that there are two main divisions in economics:macroeconomics and microeconomics.Macroeconomics is the study of large scale economies like that of a country. If you decide to continuein your business studies after this course, you will likely take a class that focuses on this as a subjectmatter. For this book, however, we will not comment beyond this definition. If you would like moreinformation on macroeconomics, a good place to start is The Kahn Academy or other such sites thatgive a broad overview of the subject. 17 Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningMicroeconomics is just that – micro. It focuses on the economy, or the behavior of individuals and/orcompanies and how they spend limited resources. As with macroeconomics, microeconomics is coveredin most business programs as a separate course. To help introduce you to microeconomic topics, termsand concepts are woven throughout the book.1.5 Accounting and Financial ManagementAs stated earlier, my aim in this section is to simply introduce you to business concepts. To that end,below are definitions to introduce you to finance and accounting without getting bogged down in details.Accounting: “the system of recording and summarizing business and financial transactions and analyzing,verifying, and reporting the results; also: the principles and procedures of accounting.”3Finance: “the way in which money is used and handled; especially: the way in which large amounts ofmoney are used and handled by governments and companies.”4In chapter 12, you are introduced to the concepts involved in accounting and finance. These are each,of course, fields of study all to themselves, but for practical purposes I have included sections that willhelp you as you develop budgets and prepare you for the financial needs of your operations. In the past four years we have drilled 89,000 km That’s more than twice around the world. Who are we? We are the world’s largest oilfield services company1. Working globally—often in remote and challenging locations— we invent, design, engineer, and apply technology to help our customers find and produce oil and gas safely. Who are we looking for? Every year, we need thousands of graduates to begin dynamic careers in the following domains: n Engineering, Research and Operations n Geoscience and Petrotechnical n Commercial and Business What will you be? careers.slb.com1Based on Fortune 500 ranking 2011. Copyright © 2015 Schlumberger. All rights reserved. 18 Click on the ad to read more Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business Planning1.6 MarketingMarketing is the one area that is often discovered with more comfort than other business subjects.Entrepreneurs are usually excited about their product or service and are just itching to get out and tellthe world about it.However, marketing is not as straightforward as one might initially think. In chapters 4-9, you will learnabout the different facets of marketing and how they relate to your planning process. Although not overlydifficult, these concepts are critical to your success, and ample time should be invested in these areas.1.7 Human Resource ManagementThe most valuable resource a company has is its people; however, it is also the area that causes the mostchallenges. In chapter 11, you will explore this difficult, yet critical area of study.1.8 The Legal Environment in BusinessA key decision you will need to make in starting your company is deciding what the legal structure ofthe company will be. The legal environment of each country is quite different and typically requires oneto retain the services of a legal professional.In the United States there are typically 6 types, or structures, for a business. The SBA list them as: soleproprietorship, limited liability company, cooperative, corporation, partnership, and S corporation.Sole ProprietorshipA sole proprietorship is the most basic type of business to establish. You, alone own the company andare responsible for its assets and liabilities. Sole Proprietorship Pros Cons→ Simple to start up → Does not protect the owner from personal liability→ Profits flow through to your personal tax – in the U.S., it is → All income is subject Social Security and Medicare typically schedule “C” income but can be other schedules taxes (US only) for rental, farm, investment, or other income. → Allows for a single owner onlyExample of a Sole Proprietorship:Although sole proprietorships can come in sizes from a single owner to many employees, they are mostcommon with very small business such as barbershops, consulting businesses (which can be organizedin other fashions as well) or any business that is too small to warrant the legal and accounting expenseassociated with other legal forms. 19 Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningLimited Liability CompanyAn LLC is designed to provide the limited liability features of a corporation and the tax efficiencies andoperational flexibility of a partnership. Limited Liability Company Pros Cons → May require additional tax filings→ Limits the liability of the owner to the business → Filing fees will apply investment and asset. → Annual reporting required→ Allows for partners→ Flexibility in how the entity and owner(s) are taxed.Note: There are circumstances where the owner’s personal liability can be increased beyond the business.Thesemay include in cases of fraud, negligence or if the LLC was established for the sole purpose of limiting liability.Example of a Limited Liability Company:Limited Liability Companies come in any rage f size from a one man (or woman) show to 100’s oreven 1000’s of employees. The structure does not dictate how the company is operated, but is simply alegal definition that offers some legal liability protection. An added benefit is that the earnings can bedistributed in a more favorable way to the owner, lowering overall tax exposure in some cases.CooperativePeople form cooperatives to meet a collective need or to provide a service that benefits all member-owners. Cooperative Pros Cons→ Particularly useful for farming or other products → The more voices and opinions involved, the more that can benefit from mass purchasing and selling opportunity there is for disagreements and the “watering while leaving the individual business autonomous down” of ideas → Requires additional management as it is a separate organizationExample of a Cooperative:Cooperatives are most commonly seen in rural farming areas when small farmers want to join togetherto protect prices by working together on the quantity they, as a group, can produce. It is also beneficial bygiving the farmers some purchasing power by allowing them to negotiate prices for larger order quantities. 20 Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningCorporationA corporation is more complex and generally suggested for larger, established companies with multipleemployees. Corporation Pros Cons→ Limits liability of owners and investors → Double taxation (both the entity and the profits→ Increases opportunity for investors distributed to the owners/investors are taxed)→ Particularly useful for large organizations but may be → Complexity in tax law uses for smaller operations as well → Increased reporting requirementsExample of a Corporation:Just like most of the other legal forms of businesses, corporations can be small or large. When we typicallythink of a corporation, however, we think of the sky scraper with the enormous executive offices andboard rooms for the cold hearted.Excellent Economics and Business programmes at:www.rug.nl/feb/education “The perfect start of a successful, international career.” CLICK HERE to discover why both socially and academically the University of Groningen is one of the best places for a student to be 21 Click on the ad to read more Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningThis may be the case at times, but corporations can be small and personal or even large and sociallyresponsible. The fact that a business is a corporation is no indication of how they operate or how manythey employ. In fact, many medical doctors have practices that are corporations, but act in a very personal,heartfelt manner toward their patients.S CorporationAn S corporation is similar to a C corporation but you are taxed only on the personal level.5There are other business structures including ones that may be used for professional organizations suchas attorneys, physicians etc. and vary according to the business location. S Corporation Pros Cons → Not as much flexibility for owners→ Gives the advantages of both a corporation and → Tax filings are more complex than in a partnership a partnership→ Pass-through taxation (not double taxed as in the corporation)→ Access to more and better financing/investingFor more information on the structures for businesses in the Unites States, go to www.sba.gov.Example of an S-Corporation:An S-Corporation is typically limited in size by the constraints it has on classes of stock. An S-Corporationis limited in the number of stockholders it may have as well as the classes of stock. An S-Corporationwill only have common stock and not preferred or other classes of stock that allow for distribution ofprofits or investor payouts to be different for different classes of investors.An example of an S-Corporation would be a group of 5 people who start a heating and cooling companyemploying 100 people. Each of the owners is actively involved and pays themselves a salary. In additionto their earning, however, they enjoy a distribution of profits which is not first subject to a corporateincome tax, saving the owners substantially.PartnershipThere are several different types of partnerships, which depend on the nature of the arrangement andpartner responsibility for the business.All partners are “Agents” of the company and may obligate all partners for decisions made unilaterally. 22 Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business Planning PartnershipAll partners are “Agents” of the company and may obligate all partners for decisions made unilaterally.Pros Cons→ Simple to start → Liability to owners is unlimited→ Reporting is flexible → Partners (owners) are jointly and severely responsible→ Allows for multiple owners→ Easy to change entity structure at any time for company obligations→ Gives more and better access to financingAn Example of a Partnership:Most partnerships, which can be called by other names in certain states or countries, are companieswith 2 or 3 owners (can be more). A good example of a partnership would be in a consulting firm oreven a car maintenance garage where the owners are actively involved in the business (Not a limitedpartnership) and are liable for the business personally, jointly and severally (independently).1.9 Banking and SecuritiesEach country differs greatly in the way it handles its banking system. Most countries, however, haveprivate, for-profit banks that work within a centralized banking system controlled by the government. Inthe United States, there is the Federal Reserve System which is technically separate from the government;however, the “Fed” is subject to the government for appointments of chairpersons as well as oversightfrom congress.For the purposes of a small business, banking needs are fairly simple and require very little time toestablish. Each bank may differ in what documentation is required, but often includes documentationfrom the government showing you are recognized as a separate legal entity (unless you are a soleproprietorship), any identification numbers assigned to the business, as well as corporate resolutionswhere applicable.If you need to accept credit/debit cards or some other form of payment, banks can usually offer you aselection of add-on, fee-based services for your accounts.1.10 Business Information SystemsBusiness information systems include everything from your accounting and payroll to the inventorycontrol systems possibly used for point of sale transactions. Needs vary greatly by business and will needto be addressed in your business plan, as these systems can be quite expensive. 23 Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningA great place to start looking for what others are using in your industry is on the web such the US SmallBusiness Administration at www.sba.gov. Type in your business type and software and you will likelyfind custom solutions for your industry. Often, more generic or mainstream software can be used thatwill meet your needs while keeping cost low. In addition to Microsoft Office software, there are manyaccounting programs that are inexpensive and easy to use such as QuickBooks, Sage (Peachtree), andmany others.In addition to your software needs, there are hardware needs you must consider. It is always best to seekout a professional who can advise you on what you will need and the cost associated. Beware, however,that it is in their best interest to sell you equipment, so you will want to get more than one opinion.This book will not address specific solutions as technology changes rapidly.1.11 Global Business EnvironmentSince the Industrial Revolution in the late 1700s to today, markets have become less and less localized,progressing to a more global focus. According to your specific company, which could be a small localrestaurant to an international exporter, your environment will vary widely. . 24 Click on the ad to read more Download free eBooks at bookboon.com An Introduction to Business An Introduction to Businessand Business PlanningUnderstanding global trends and how those trends may affect your business are an important part of theplanning process. The web is a great place to access trade journals and other articles that may provideinsight to your industry. Addressing these trends in your planning process shows a depth of knowledgeand sophistication that will be beneficial to you in the planning, financing and operational phases ofyour business.1.11.1 Critical Inquiry A. Visit www.sba.gov and click on “Starting and Managing” along the top of the page. What five areas of the site did you find most helpful? Why? Be specific. b) Find a website of your choice that discusses starting a business. List five points that you believe will be helpful to you as you begin the business planning process.1.11.2 Ethical ApplicationThe Bernie Madoff ScandalHaving built a secret investment-advising empire on lies and deception in the form of the greatest Ponzischeme ever devised, Bernie Madoff, and his respective companies, had their share of ethical dilemmasthroughout the course of four decades. With tens of billions of dollars invested by clients from all aroundthe world, the scale seems almost unimaginable. Madoff broke most, if not every ethical rule in business.Looking at the broader picture, we can analyze how Madoff ’s humble beginnings showed early warningsigns that he was headed toward major ethical disaster.Early in Madoff ’s career, he worked in the stock market and as a trader. It was then he began runninga side business that he kept out of sight of even his closest family members. The business started off bypromising clients fast, high-yielding returns on their investments. Once investors took the bait, he usedother investments to bring in the high returns. These gains drew the attention of other, newer investorswho saw the potential money-making possibilities. This was the start of the great Ponzi scheme (or“Pyramid Scheme”), in which new clients’ investments would be used to fund older clients’ returns. Thissort of scheme is illegal and unethical, as it requires deception and theft to function.At the height of his career, Madoff was the well-sought after investment advisor in the business, thoughhe was not licensed by the U.S. government to perform such operations. In fact, Madoff used briberytactics to persuade investment companies that funneled capital into his business to never use his name.Though it’s no secret Bernie Madoff was the chief puppeteer of this master scheme, he was not alone inbringing it to fruition. However, it took both the negligent cooperation of business professionals aroundthe world and a glaring lack of due diligence on the part of supervisory government agencies for thisinconceivable fraud to continue as long as it did.Let’s examine how every decision we make can have long-term consequences, which can often be cloudedby the possibility of short-term gains. 25 Download free eBooks at bookboon.com An Introduction to Business The Business Planand Business PlanningAs this book is designed to help students build a business plan as part of a larger curriculum, you will bevarying from this traditional approach, writing some sections in different order and delving more deeplyinto others. For the purposes of this text, you will approach the business plan in the following order: 1. Concept Development 2. Marketing a) Product b) Place c) Price d) Promotion 3. General Management and Operations 4. Accounting and Finance 5. Budgeting 6. Breakeven and Other Analysis 7. Bringing it all Together a) Cover Page b) Executive Summary c) Conclusion/Wrap up Remarks d) Appendix and Other AttachmentsThe importance of a business plan cannot be overstated. Without a solid business plan, you put yourfinancial future in great jeopardy. By doing the work required, you significantly increase your potentialfor success.2.4.1 Knowledge to ActionThe templates needed for this ook are avialable by sending an e-mail to [email protected] placing in the subject line Bookboon template request. (Note: You will be placed on amailing list for entrepreneurs. If you wish to be off of the list, you must purchase the templates atwww.practicalbusinessplanning.com.) With each chapter, you will build on what you have learned andwill ultimately have a business plan as a final project.For this chapter you will go to the section Business Concept and write at least 1–2 pages summarizingyour business concept. The concept can be revisited at any point, so try not to get bogged down intoconcerns you are having. Instead, get something on the page to get you started and return to it later asyour concept takes better shape. 33 Download free eBooks at bookboon.com An Introduction to Business The Business Planand Business Planning2.4.2 Critical InquiryGo to www.sba.org and find their version of a business plan. Answer the following questions: A. What do you like and dislike about this plan? B. Knowing what you know at this point, what can you do to strengthen this plan? C. If you were a lender reading this plan, what questions would you have?2.4.3 Ethical ApplicationMonsanto is an American multinational, agricultural, and chemical corporation based in Missouri. Inrecent years, the company has come under greater and greater scrutiny for its business practices, andwhether or not they are ethical in nature.With a direct reach of over 66 countries worldwide, Monsanto is the leading producer of geneticallymodified (GM) seeds. In its early days, Monsanto was a manufacturer of detergents, pesticides and otherchemicals. It even developed the famous, or rather, infamous, chemical, ‘Agent Orange’ that was used bythe American military during the Vietnam War to inflict brutal casualties to the Viet Cong.Need help with yourdissertation?Get in-depth feedback & advice from experts in yourtopic area. Find out what you can do to improvethe quality of your dissertation! Get Help NowGo to www.helpmyassignment.co.uk for more info 34 Click on the ad to read more Download free eBooks at bookboon.com An Introduction to Business The Business Planand Business PlanningSo how did a company that made military weapons-grade chemicals begin supplying farmers withgenetically modified seeds? Simple. In the mid-1980s Monsanto was patenting pharmaceuticals andmade the jump in 1994 to seed and crop technology. Since this shift in product, Monsanto has beenincreasingly expanding its reach by acquisitioning global seed companies.Ethical Issue 1: BriberyOn the front page of their company policy manual, Monsanto explains its stance on bribery, and firmlyexpresses that it is ‘strictly prohibited’. Unfortunately, in 2005 Monsanto came under fire for its bribery ofan Indonesian official, which resulted in a $1.5 million fine. The initial bribe was to be paid to Indonesiangovernment officials in order to stop environmental impact studies from being conducted on its cotton.There are the multifaceted ethical issues here. Firstly, we must remember that the bribery issue was neverthe primary ethical dilemma. It did, however, do a wonderful job at covering the real issue, which was theenvironmental impact of Monsanto’s cotton production. With a small fee of $1.5 million, the companytook the heat from the bribery scandal, and then continued with its cotton operations in the region.Many companies often illustrate their intentions and true ethical standards when investigations intotheir business practices take place. Looking at Monsanto’s response to the allegations of bribery, a seniormanager (not a low-level employee) directed an Indonesian consulting firm to give $50,000 to a high-level Indonesian environmental official. Immediately following the fallout, Monsanto fired the ”employee”in what they were now labeling a “subsidiary,” or secondary company, effectively distancing themselvesfrom the spotlight. However, Monsanto was also found to have paid bribes to high-level governmentofficials for years.Ethical Issue 2: Unethical ProfiteeringMany images come to mind when I think of “the Terminator,” namely Arnold Schwarzenegger ridinga motorcycle and saying ‘I’ll be back.’ One thing that never comes to mind, or never should come tomind, is food. However, Monsanto has, since its early years as a seed producer, developed a gene withinthe seeds they sell to their farmers termed the ”Terminator Gene.” This gene effectively removes a seedsability to reproduce, causing the farmer to return to the company each year to buy more seeds.This “patent on life” and abuse of low-income farmers is unethical. Ignoring the deeper issues of long-termenvironmental effects, as well as the effects to the world’s seed reserves from this sort of profit-mindedbehavior, should Monsanto be allowed to alter the very genetic makeup of seeds that are used to feedbillions of people around the world? If so, who should be in charge of testing the data to determine ifthis behavior is safe for humans? The FDA, the United States’ Food and Drug Administration, does notconduct tests on companies, but rather, they examine the “self-tests” companies do on their own. Thissort of testing can be easily manipulated, so are self-tests such as these ethical? 35 Download free eBooks at bookboon.com An Introduction to Business The Business Planand Business PlanningEthical Dilemma 3: PCBsMonsanto was the nation’s largest producer of PCBs, a chemical compound used as a coolant, until itwas outlawed in 1977 due to the fact that it is known to be cancer-causing in animals and humans. Thedilemma came when allegations were confirmed that Monsanto had knowingly dumped tons of thechemical compound into streams which led directly to the local water supply. It had also buried millionsof pounds of the chemical on hillsides overlooking local communities. The company paid $700 million tosettle claims but was not shut down for its gross negligence. Similar dumpsites can be found in the UK.Monsanto’s ethical dilemmas do not stop there. From the use of growth hormones which have been shownto cause cancer in humans and injury to cattle, to suing farmers for patent violation because the windblew Monsanto seeds into an adjacent field, to the cause of cancers, allergies, and immune suppressiondisorders worldwide from genetically modified foods, Monsanto is seen by many as the ultimate exampleof a business that has no ethical standards for operation.Your Turn: Look over the three ethical dilemmas and give examples of how Monsanto should have actedethically for each dilemma. Search an ethical issue not listed among the three and describe the issue andhow it could have been handled ethically.112.4.3 Building Leadership SkillsGo to http://freestrengthsfinder.workuno.com/ and take the free strength finder’s test. (You will notneed the expanded test results requiring a fee to be paid; however, you may decide to do so for yourown edification). A. What are your strengths? B. Are you well suited for a profession in business? As an entrepreneur? C. What does this say about your leadership skills? D. Compare your results with the results of your team members. What have you learned about each of them? E. How can you each use the results to work better as a team?2.4.4 The Global StageUsing the three companies from Chapter 1, provide a 1 page historical summary for each companies. 36 Download free eBooks at bookboon.com An Introduction to Business The Conceptand Business Planning3 The ConceptYour goals for this concept chapter are to learn about: • How to develop a concept • How to assess the viability of your conceptMany times the concept phase is either given (such as when you purchase an existing business) or hasbeen bouncing around in your mind for some time. However, it is important not to be too casual aboutthis phase of your plan. Although a restaurant selling hotdogs and hamburgers may seem obvious, thesubtleties that separate you from others may not be so easy to see at first.Let’s consider for a moment a beauty salon. Each salon has basic functions such as shampooing, hair-cutting, permanents, coloring and other services typical for a hair salon. Some may even add manicuresand pedicures, massages, or even tanning. However, the services are basically the same in many respects.So, how is a beauty salon concept not obvious?Brain power By 2020, wind could provide one-tenth of our planet’s electricity needs. Already today, SKF’s innovative know- how is crucial to running a large proportion of the world’s wind turbines. Up to 25 % of the generating costs relate to mainte- nance. These can be reduced dramatically thanks to our systems for on-line condition monitoring and automatic lubrication. We help make it more economical to create cleaner, cheaper energy out of thin air. By sharing our experience, expertise, and creativity, industries can boost performance beyond expectations. Therefore we need the best employees who can meet this challenge! The Power of Knowledge EngineeringPlug into The Power of Knowledge Engineering.Visit us at www.skf.com/knowledge 37 Click on the ad to read moreDownload free eBooks at bookboon.com An Introduction to Business The Conceptand Business PlanningRecently, my son-in-law brought me a business card for a hair salon that focuses primarily on men. Ithas a sports theme with large televisions in a stadium-style waiting room. The employees wear sportshirts of local and national teams, and the rooms have themes such as a locker room.Now compare this concept with the hair salon you last visited. Are these the same concept? Yes, they areboth cutting hair and offer many of the same services, but are they the same concept?When developing your concept, you should not only consider the practical, straightforward product orservice offerings of your company, but the emotional nuances as well.Consider again the typical hair salon seen in every city. How do you feel about it? Does it engendera strong emotion at all? Now consider the sports themed hair salon. How would that make you feel?Which salon engenders a stronger emotion? If you are a sports fanatic, the sports themed salon will likelyexcite you, making you feel something special about yourself and your experience with the salon. It isthis feeling that will not only attract a certain clientele but will often allow for an increase in prices andprofitability. This concept is covered in-depth in marketing but should be considered at this stage as well.When developing your concept there are 5 main questions upon which you should focus: 1. Who are trying to attract? 2. What feeling are you attempting to engender? 3. Is there are market need for this emotion? 4. How will you be different from others? 5. How long will this opportunity last?Who Are You Trying to Attract?Your first reaction to the question of who you want to attract may be, well…everyone, but that is mostlikely not the case. Much like the beauty salon focusing on men who love sports, your business will havenuances that focus on a specific demographic. It is this demographic that you will focus your attentionregarding marketing and other critical decisions for your business.To best determine who you want to attract, consider in your mind’s eye your first week of business. Whatdoes it look like? Who do you see coming in the door as your customer? It is that person on which youwant to focus your attention. 38 Download free eBooks at bookboon.com An Introduction to Business The Conceptand Business PlanningWhat feeling are you attempting to engender?According to the demographic you are targeting, your business should engender a feeling for thecustomer. Everything from the color of the walls to the music playing in the background all set a moodthat should be attractive to your customers. In the case of the sports-themed beauty salon, the stadiumseating, sports networks on the televisions, and the staff wearing jerseys all engender a feeling of beingin a sports stadium. People who do not like sports would not be attracted to this theme, but the targetmarket, likely young males, will be very attracted to this theme and will not only come to the salon, butwill likely pay a premium for that feeling.Consider the last time you bought clothes or at least shopped for them. You can buy clothes in manydifferent outlets, but you chose to buy from that store in particular. Why?If you shop in a mall, you have likely experienced clothing stores that have very scantily clad youngpeople on large posters outside the store and modern loud music playing inside. Obviously this store isnot trying to attract a seventy-year old grandmother. So who are they trying to attract? Clearly they aretargeting a young demographic and have focused the feel of the store to that narrow audience. Whentheir customer buys from them, the customer receives a feeling much more about the store than aboutthe actual clothing purchased. It is that feeling that is incredibly important when developing the conceptfor your business.Is there are market need for this emotion?So, now that you have some idea of the feeling or emotion you want to engender in your audience, youneed to ensure there is an actual market for that emotion. Not all feelings have the same appeal andyours may be too narrow to be viable.It is important to point out at this stage that you should not fall too madly in love with your concept.Remember, the purpose of a business is to make money. If you’re great idea will not make you money,or enough money to make it worth your while, then move on to another idea.If we look again at the sports themed beauty salon and agree that the major audience for this emotionis young males (Yes, women like sports too, but not in the same numbers), it would not make muchsense to place this salon next to an all-female university. However good the idea is, it has to match themarket need.How will you be different from others?Although there are some very original ideas, most are not original and are simply an attempt to builda better mousetrap so to speak. 39 Download free eBooks at bookboon.com An Introduction to Business The Conceptand Business PlanningHow long will this opportunity last?Every idea, regardless of its impact on society, runs its course. That course may be short lived or maylast many lifetimes, but eventually something will come along and replace it.This book, just 20 years ago, would need to have been printed and distributed via bookstores can nowbe viewed electronically or ordered online and shipped directly to your home. This seems very normalto us now, but when the printing press was invented it would not have been conceived of.Of course there are myriad other questions you may ask, but these five are good start. As you progressthrough the business plan, particularly in the marketing section, these and other questions will beanswered, and your concept will be strengthened, increasing your potential for success.3.1 Knowledge to ActionUsing the template provided by this book or available at www.practicalbusinessplanning.com), you willbegin to write your business plan. With each chapter, you will build on what you have learned and willultimately have a business plan as a final project. 40 Click on the ad to read more Download free eBooks at bookboon.com An Introduction to Business Marketingand Business PlanningOne way to help make these decisions is to look at your competitors. Are they running ads? If so, when,how big and where are they placed in the newspaper? However, you need to be careful as your competitorsmay not be doing a good job regarding marketing and following them may get poor results.A second way is to make your decision is trial and error. By experimenting and tracking the results,over time you will find out what works best for you. This, however, can be expensive, so make sure youdo research for your industry first and then do your experiment.For public relations, a newspaper can be very effective. Most newspapers are looking for good storiesand often will give attention to businesses that advertise with them.One way to get free public relations for your business is to use the announcements section. This sectionlets people in your area know of promotions and changes of personnel in the company. Through this youcan essentially get a free advertisement while letting potential customers get to know your employeesnames and faces.Another effective way to get free public relations in the newspaper is to sponsor charitable events in yourarea. By sponsoring the event, the newspaper, when doing a story, will mention your name prominently,many times with a picture.With all marketing, it is important to track your results. You can do so through a variety of methodsincluding questionnaires, simple conversations with customers, or placing promotional identification inthe ad (i.e. have the customer tell they saw it in the newspaper for a 10% discount).TelevisionTelevision advertising can be very expensive, but can also be very effective in reaching a certain audience.If your budget allows and you believe television is a good investment, you should contact several stationsin your area as well as cable and satellite providers. Ask each of these providers to send you a packagedetailing their demographic focus and cost. You will then consider this information, along with the daysof the week and times of day you wish to be seen.Not all television commercials are created equal. I am sure you have seen both good and poor examplesat both the local and national level. It is crucial that you weigh your options, relative to cost, to get thekind of advertisement you want as it is a reflection of your company. 49 Download free eBooks at bookboon.com An Introduction to Business Marketingand Business PlanningRadioOften radio salespersons will speak about “top of mind awareness” when selling radio ad space. Whatthis means is when a radio listener hears an ad several times, they will think of your product or servicewhen they have need. For example: If you are an urgent care medical facility, you want people to thinkof your name if and when they become ill or have an accident.Radio can be effective, but similar to television, you must be careful that the quality of the ad is a properreflection of your business. A “do it yourself ” approach is not often best for marketing, particularly fortelevision and radio.Trade PublicationsTrade publications and journals target a very specific audience. Therefore, if you want to attract customersin a narrow field, such as surgical equipment or software for a specific industry, trade publications andjournals is likely the way to go.In designing advertisements in this medium you should consider that your audience is likely well versedin your field and therefore a broad based appeal may not work. Instead, consider using your ad as ameans of education about your product or service.www.sylvania.com We do not reinvent the wheel we reinvent light. Fascinating lighting offers an infinite spectrum of possibilities: Innovative technologies and new markets provide both opportunities and challenges. An environment in which your expertise is in high demand. Enjoy the supportive working atmosphere within our global group and benefit from international career paths. Implement sustainable ideas in close cooperation with other specialists and contribute to influencing our future. Come and join us in reinventing light every day. Light is OSRAM 50 Click on the ad to read more Download free eBooks at bookboon.com

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1.5: Chapter 5 – Business Planning

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• Page ID 21257

• Lee A. Swanson
• University of Saskatchewan

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Business planning is an important precursor to action in new ventures. By helping firm founders to make decisions, to balance resource supply and demand, and to turn abstract goals into concrete operational steps, business planning reduces the likelihood of venture disbanding and accelerates product development and venture organizing activity. – Delmar and Shane (2003, p. 1165)

We always plan too much and always think too little. We resent a call to thinking and hate unfamiliar argument that does not tally with what we already believe or would like to believe. – Joseph Schumpeter

Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window. – Peter Drucker

Learning Objectives

After completing this chapter you will be able to

• Describe the purposes of business planning
• Describe common business planning principles
• List and explain the elements of the business plan development process outlined in this book
• Explain the purposes of each of the elements of the business plan development process outlined in this book
• Explain how applying the business plan development process outlined in this book can aid in developing a business plan that will meet entrepreneurs’ goals
• Describe general business planning guidelines and format

This chapter describes the purposes of business planning, the general concepts related to business planning, and guidelines and a format for a comprehensive business plan.

Business Planning Purposes

Business plans are developed for both internal and external purposes. Internally, entrepreneurs develop business plans to help put the pieces of their business together. The most common external purpose for a business plan is to raise capital.

Internal Purposes

• defines the vision for the company
• establishes the company’s strategy
• describes how the strategy will be implemented
• provides a framework for analysis of key issues
• provides a plan for the development of the business
• is a measurement and control tool
• helps the entrepreneur to be realistic and to put theories to the test

External Purposes

The business plan is often the main method of describing a company to external audiences such as potential sources for financing and key personnel being recruited. It should assist outside parties to understand the current status of the company, its opportunities, and its needs for resources such as capital and personnel. It also provides the most complete source of information for valuation of the business.

Business Planning Principles

Business plan communication principles.

As Hindle and Mainprize (2006) note, business plan writers must strive to communicate their expectations about the nature of an uncertain future. However, the liabilities of newness make communicating the expected future of new ventures difficult (more so than for existing businesses). They outline five communications principles:

• Translation of your vision of the venture and how it will perform into a format compatible with the expectations of the readers
• you have identified and understood the key success factors and risks
• the projected market is large and you expect good market penetration
• you have a strategy for commercialization, profitability, and market domination
• you can establish and protect a proprietary and competitive position
• Anchoring key events in the plan with specific financial and quantitative values
• your major plan objectives are in the form of financial targets
• you have addressed the dual need for planning and flexibility
• you understand the hazards of neglecting linkages between certain events
• you understand the importance of quantitative values (rather than just chronological dates)
• Nothing lasts forever—things can change to impact the opportunity: tastes, preferences, technological innovation, competitive landscape
• the new combination upon which venture is built
• magnitude of the opportunity or market size
• market growth trends
• venture’s value from the market (% of market share proposed or market share value in dollars)
• Four key aspects describing context within which new venture is intended to function (internal and external environment)
• how the context will help or hinder the proposal
• how the context may change & affect the business & the range of flexibility or response that is built into the venture
• what management can or will do in the event the context turns unfavourable
• what management can do to affect the context in a positive way
• Brief and clear statement of how an idea actually becomes a business that creates value
• Who pays, how much, and how often?
• The activities the company must perform to produce its product, deliver it to its customers and earn revenue
• And be able to defend assertions that the venture is attractive and sustainable and has a competitive edge

Business Plan Credibility Principles

Business plan writers must strive to project credibility (Hindle & Mainprize, 2006), so t here must be a match between what the entrepreneurship team (resource seekers) needs and what the investors (resource providers) expect based on their criteria. A take it or leave it approach (i.e. financial forecasts set in concrete) by the entrepreneurship team has a high likelihood of failure in terms of securing resources. Hindle and Mainprize (2006) outline five principles to help entrepreneurs project credibility:

• Without the right team, nothing else matters.
• What do they know?
• Who do they know?
• How well are they known?
• sub-strategies
• ad-hoc programs
• specific tactical action plans
• Claiming an insuperable lead or a proprietary market position is naïve.
• Anticipate several moves in advance
• View the future as a movie vs. snapshot
• Key assumptions related to market size, penetration rates, and timing issues of market context outlined in the business plan should link directly to the financial statements.
• Income and cash flow statements must be preceded by operational statements setting forth the primary planning assumptions about market sizes, sales, productivity, and basis for the revenue estimate.
• If the main purpose is to enact a harvest, then the business plan must create a value-adding deal structure to attract investors.
• Common things: viability, profit potential, downside risk, likely life-cycle time, potential areas for dispute or improvement

General Business Plan Guidelines

Many businesses must have a business plan to achieve their goals. The following are some basic guidelines for business plan development.

• A standard format helps the reader understand that the entrepreneur has thought everything through, and that the returns justify the risk.
• Binding the document ensures that readers can easily go through it without it falling apart.
• everything is completely integrated: the written part must say exactly the same thing as the financial part
• all financial statements are completely linked and valid (make sure all balance sheets validly balance)
• the document is well formatted (layout makes document easy to read and comprehend—including all diagrams, charts, statements, and other additions)
• everything is correct (there are NO spelling, grammar, sentence structure, referencing, or calculation errors)
• It is usually unnecessary—and even damaging—to state the same thing more than once. To avoid unnecessarily duplicating information, you should combine sections and reduce or eliminate duplication as much as possible.
• all the necessary information is included to enable readers to understand everything in your document
• For example, if your plan says something like “there is a shortage of 100,000 units with competitors currently producing 25,000. We can help fill this huge gap in demand with our capacity to produce 5,000 units,” a reader is left completely confused. Does this mean there is a total shortage of 100,000 units, but competitors are filling this gap by producing 25,000 per year (in which case there will only be a shortage for four years)? Or, is there an annual shortage of 100,000 units with only 25,000 being produced each year, in which case the total shortage is very high and is growing each year? You must always provide the complete perspective by indicating the appropriate time frame, currency, size, or another measurement.
• if you use a percentage figure, you indicate to what it refers, otherwise the figure is completely useless to a reader.
• This can be solved by indicating up-front in the document the currency in which all values will be quoted. Another option is to indicate each time which currency is being used, and sometimes you might want to indicate the value in more than one currency. Of course, you will need to assess the exchange rate risk to which you will be exposed and describe this in your document.
• If a statement is included that presents something as a fact when this fact is not generally known, always indicate the source. Unsupported statements damage credibility
• Be specific. A business plan is simply not of value if it uses vague references to high demand, carefully set prices, and other weak phrasing. It must show hard numbers (properly referenced, of course), actual prices, and real data acquired through proper research. This is the only way to ensure your plan is considered credible.

Developing a High Power Business Plan

The business plan development process described next has been extensively tested with entrepreneurship students and has proven to provide the guidance entrepreneurs need to develop a business plan appropriate for their needs; a high power business plan .

The Stages of Development

There are six stages involved with developing a high power business plan . These stages can be compared to a process for hosting a dinner for a few friends. A host hoping to make a good impression with their anticipated guests might analyze the situation at multiple levels to collect data on new alternatives for healthy ingredients, what ingredients have the best prices and are most readily available at certain times of year, the new trends in party appetizers, what food allergies the expected guests might have, possible party themes to consider, and so on. This analysis is the Essential Initial Research stage.

In the Business Model stage, the host might construct a menu of items to include with the meal along with a list of decorations to order, music to play, and costume themes to suggest to the guests. The mix of these kinds of elements chosen by the host will play a role in the success of the party.

The Initial Business Plan Draft stage is where the host rolls up his or her sleeves and begins to assemble make some of the food items, put up some of the decorations, send invitations, and generally get everything started for the party.

During this stage, the host will begin to realize that some plans are not feasible and that changes are needed. The required changes might be substantial, like the need to postpone the entire party and ultimately start over in a few months, or less drastic, like the need to change the menu when an invited guest indicates that they can’t eat food containing gluten. These changes are incorporated into the plan to make it realistic and feasible in the Making the Business Plan Realistic stage.

Making A Plan to Appeal to Stakeholders stage involves further changes to the party plan to make it more appealing to both the invited guests and to make it a fun experience for the host. For example, the host might learn that some of the single guests would like to bring dates and others might need to be able to bring their children to be able to attend. The host might be able to accommodate those desires or needs in ways that will also make the party more fun for them—maybe by accepting some guests’ offers to bring food or games, or maybe even hiring a babysitter to entertain and look after the children.

The final stage— Finishing the Business Plan— involves the host putting all of the final touches in place for the party in preparation for the arrival of the guests.

Figure 5 – Business Plan Development Process (Illustration by Lee A. Swanson)

Essential Initial Research

A business plan writer should analyze the environment in which they anticipate operating at each of the s ocietal , i ndustry , m arket , and f irm levels of analysis (see pages 51–60). This stage of planning, the e ssential initial research , is a necessary first step to better understand the trends that will affect their business and the decisions they must make to lay the groundwork for, and to improve their potential for success.

In some cases, much of the e ssential initial research should be included in the developing business plan as its own separate section to help build the case for readers that there is a market need for the business being considered and that it stands a good chance of being successful.

In other cases, a business plan will be stronger when the components of the e ssential initial research are distributed throughout the business plan as a way to provide support for the plans and strategies outlined in the business plan. For example, the industry or market part of the e ssential initial research might outline the pricing strategies used by identified competitors and might be best placed in the pricing strategy part of the business plan to support the decision made to employ a particular pricing strategy.

Business Model

Inherent in any business plan is a description of the business model chosen by the entrepreneur as the one that they feel will best ensure success. Based upon their essential initial research of the setting in which they anticipate starting their business (their analysis from stage one) an entrepreneur should determine how each element of their business model—including their revenue streams, cost structure, customer segments, value propositions, key activities, key partners, and so on—might fit together to improve the potential success of their business venture (see Chapter 4 – Business Models).

For some types of ventures, at this stage an entrepreneur might launch a lean start-up (see page 68) and grow their business by continually pivoting, or constantly adjusting their business model in response to the real-time signals they get from the markets’ reactions to their business operations. In many cases, however, an entrepreneur will require a business plan. In those cases, their initial business model will provide the basis for that plan.

Of course, throughout this and all of the rounds in this process, the entrepreneur should seek to continually gather information and adjust the plans in response to the new knowledge they gather. As shown in Figure 8 by its enclosure in the progressive research box, the business plan developer might need conduct further research before finishing the business model and moving on to the initial business plan draft.

Initial Business Plan Draft

The Business Plan Draft stage involves taking the knowledge and ideas developed during the first two stages and organizing them into a business plan format. An approach preferred by many is to create a full draft of the business plan with all of the sections, including the front part with the business description, vision, mission, values, value proposition statement, preliminary set of goals, and possibly even a table of contents and lists of tables and figures all set up using the software features enabling their automatic generation. Writing all of the operations, human resources, marketing, and financial plans as part of the first draft ensures that all of these parts can be appropriately and necessarily integrated. The business plan will tell the story of a planned business startup in two ways by using primarily words along with some charts and graphs in the operations, human resources, and marketing plans and in a second way through the financial plan. Both ways must tell the same story.

The feedback loop shown in Figure 8 demonstrates that the business developer may need to review the business model. Additionally, as shown by its enclosure in the progressive research box, the business plan developer might need conduct further research before finishing the Initial Business Plan Draft stage and moving on to the Making Business Plan Realisticstage.

Making Business Plan Realistic

The first draft of a business plan will almost never be realistic. As the entrepreneur writes the plan, it will necessarily change as new information is gathered. Another factor that usually renders the first draft unrealistic is the difficulty in making certain that the written part—in the front part of the plan along with the operations, human resources, and marketing plans—tells the exact same story as the financial part does. This stage of work involves making the necessary adjustments to the plan to make it as realistic as possible.

The Making Business Plan Realistic stage has two possible feedback loops. The first goes back to the Initial Business Plan Draft stage in case the initial business plan needs to be significantly changed before it is possible to adjust it so that it is realistic. The second feedback loop circles back to the Business Model stage if the business developer need to rethink the business model. As shown in Figure 8 by its enclosure in the progressive research box, the business plan developer might need conduct further research before finishing the Making Business Plan Realistic stage and moving on to the Making Plan Appeal to Stakeholders stage.

Making Plan Appeal to Stakeholders and Desirable to the Entrepreneur

A business plan can be realistic without appealing to potential investors and other external stakeholders, like employees, suppliers, and needed business partners. It might also be realistic (and possibly appealing to stakeholders) without being desirable to the entrepreneur. During this stage the entrepreneur will keep the business plan realistic as they adjust plans to appeal to potential investors and to themselves.

If, for example, investors will be required to finance the business start, some adjustments might need to be relatively extensive to appeal to potential investors’ needs for an exit strategy from the business, to accommodate the rate of return they expect from their investments, and to convince them that the entrepreneur can accomplish all that is promised in the plan. In this case, and in others, the entrepreneur will also need to get what they want out of the business to make it worthwhile for them to start and run it. So, this stage of adjustments to the developing business plan might be fairly extensive, and they must be informed by a superior knowledge of what targeted investors need from a business proposal before they will invest. They also need to be informed by a clear set of goals that will make the venture worthwhile for the entrepreneur to pursue.

The caution with this stage is to balance the need to make realistic plans with the desire to meet the entrepreneur’s goals while avoiding becoming discouraged enough to drop the idea of pursuing the business idea. If an entrepreneur is convinced that the proposed venture will satisfy a valid market need, there is often a way to assemble the financing required to start and operate the business while also meeting the entrepreneur’s most important goals. To do so, however, might require significant changes to the business model.

One of the feedback loops shown in Figure 8 indicates that the business plan writer might need to adjust the draft business plan while ensuring that it is still realistic before it can be made appealing to the targeted stakeholders and desirable to the entrepreneur. The second feedback loop indicates that it might be necessary to go all the way back to the Business Model stage to re-establish the framework and plans needed to develop a realistic, appealing, and desirable business plan. Additionally, this stage’s enclosure in the progressive research box suggests that the business plan developer might need conduct further research.

Finishing the Business Plan

The final stage involves putting all of the important finishing touches on the business plan so that it will present well to potential investors and others. This involves making sure that the math and links between the written and financial parts are accurate. It also involves ensuring that all the needed corrections are made to the spelling, grammar, and formatting. The final set of goals should be written to appeal to the target readers and to reflect what the business plan says. An executive summary should be written and included as a final step.

General Business Plan Format

Include nice, catchy, professional, appropriate graphics to make it appealing for targeted readers

Executive summary

• Can be longer than normal executive summaries, up to three pages
• Write after remainder of plan is complete
• Includes information relevant to targeted readers as this is the place where they are most likely to form their first impressions of the business idea and decide whether they wish to read the rest of the plan

Table of Con t ents

List of tables.

Each table, figure, and appendix included in the plan must be referenced within the text of the plan so the relevance of each of these elements is clear.

List of Figures

Introduction.

• Describes the business concept
• Indicates the purpose of the plan
• Appeals to targeted readers

Business Idea

• May include description of history behind the idea and the evolution of the business concept if relevant
• Generally outlines what the owner intends for the venture to be
• Should inspire all members of the organization
• Should help stakeholders aspire to achieve greater things through the venture because of the general direction provided through the vision statement
• Should be very brief—a few sentences or a short paragraph
• Indicates what your organization does and why it exists—may describe the business strategy and philosophy
• Indicates the important values that will guide everything the business will do
• Outlines the personal commitments members of the organization must make, and what they should consider to be important
• Defines how people behave and interact with each other.
• Should help the reader understand the type of culture and operating environment this business intends to develop

Major Goals

• Describes the major organizational goals
• Specific, Measurable, Action-Oriented, Realistic, and Timely [SMART]
• Realistic, Understandable, Measurable, Believable, and Achievable [RUMBA]
• Perfectly aligns with everything in plan

Operating Environment

Trend analysis.

• Consider whether this is the right place for this analysis: it may be better positioned in, for example, the Financial Plan section to provide context to the analysis of the critical success factors, or in the Marketing Plan to help the reader understand the basis for the sales projections.

Industry Analysis

• Includes an analysis of the industry in which this business will operate
• consider whether this is the right place for this analysis: it may be better placed in, for example, the Marketing Plan to enhance the competitor analysis, or in the Financial Plan to provide context to the industry standard ratios in the Investment Analysis section

Operations Plan

• expressed as a set physical location
• expressed as a set of requirements and characteristics
• How large will your facility be and why must it be this size?
• How much will it cost to buy or lease your facility?
• What utility, parking, and other costs must you pay for this facility?
• What expansion plans must be factored into the facility requirements?
• What transportation and storage issues must be addressed by facility decisions?
• What zoning and other legal issues must you deal with?
• What will be the layout for your facility and how will this best accommodate customer and employee requirements?
• Given these constraints, what is your operating capacity (in terms of production, sales, etc.)?
• What is the workflow plan for your operation?
• What work will your company do and what work will you outsource?

Operations Timeline

• When will you make the preparations, such as registering the business name and purchasing equipment, to start the venture?
• When will you begin operations and make your first sales?
• When will other milestone events occur such as moving operations to a larger facility, offering a new product line, hiring new key employees, and beginning to sell products internationally?
• May include a graphical timeline showing when these milestone events have occurred and are expected to occur

Business Structure and other Set-up Elements

Somewhere in your business plan you must indicate what legal structure your venture will take. Your financial statements, risk management strategy, and other elements of your plan are affected by the type of legal structure you choose for your business:

• Sole Proprietorship
• Partnership
• Limited Partnership
• Corporation
• Cooperative

As part of your business set-up, you need to determine what kinds of control systems you should have in place, establish necessary relationships with suppliers and prior to your start-up, and generally deal with a list of issues like the following. Many of your decisions related to the following should be described somewhere in your business plan:

• Zoning, equipment prices, suppliers, etc.
• Lease terms, leasehold improvements, signage, pay deposits, etc.
• Getting business license, permits, etc.
• Setting up banking arrangements
• Setting up legal and accounting systems (or professionals)
• Ordering equipment, locks and keys, furniture, etc.
• Recruiting employees, set up payroll system, benefit programs, etc.
• Training employees
• Testing the products/services that will be offered
• Testing the systems for supply, sales, delivery, and other functions
• Deciding on graphics, logos, promotional methods, etc.
• Ordering business cards, letter head, etc.
• Setting up supplier agreements
• Buying inventory, insurance, etc.
• Revising business plan
• And many more things, including, when possible, attracting purchased orders in advance of start-up through personal selling (by the owner, a paid sales force, independent representatives, or by selling through brokers wholesalers, catalog houses, retailers), a promotional campaign, or other means
• What is required to start up your business, including the purchases and activities that must occur before you make your first sale?
• When identifying capital requirements for start-up, a distinction should be made between fixed capital requirements and working capital requirements.

Fixed Capital Requirements

• What fixed assets, including equipment and machinery, must be purchased so your venture can conduct its business?
• This section may include a start-up budget showing the machinery, equipment, furnishings, renovations, and other capital expenditures required prior to operations commencing.
• If relevant you might include information showing the financing required; fixed capital is usually financed using longer-term loans.

Working Capital Requirements

• What money is needed to operate the business (separately from the money needed to purchase fixed assets) including the money needed to purchase inventory and pay initial expenses?
• This section may include a start-up budget showing the cash required to purchase starting inventories, recruit employees, conduct market research, acquire licenses, hire lawyers, and other operating expenditures required prior to starting operations.
• If relevant you might include information showing the financing required … working capital is usually financed with operating loans, trade credit, credit card debt, or other forms of shorter-term loans.

Risk Management Strategies

• enterprise – liability exposure for things like when someone accuses your employees or products you sell of injuring them.
• financial – securing loans when needed and otherwise having the right amount of money when you need it
• operational – securing needed inventories, recruiting needed employees in tight labour markets, customers you counted on not purchasing product as you had anticipated, theft, arson, natural disasters like fires and floods, etc.
• avoid – choose to avoid doing something, outsource, etc.
• reduce – through training, assuming specific operational strategies, etc.
• transfer – insure against, outsource, etc.
• assume – self-insure, accept, etc.

Operating Processes

• What operating processes will you apply?
• How will you ensure your cash is managed effectively?
• How will you schedule your employees?
• How will you manage your inventories?
• If you will have a workforce, how will you manage them?
• How will you bill out your employee time?
• How will you schedule work on your contracts?
• How you will manufacture your product (process flow, job shop, etc.?)
• How will you maintain quality?
• How will you institute and manage effective financial monitoring and control systems that provide needed information in a timely manner?
• How will you manage expansion?
• May include planned layouts for facilities

Organizational Structure

• May include information on Advisory Boards or Board of Directors from which the company will seek advice or guidance or direction
• May include an organizational chart
• Can nicely lead into the Human Resources Plan

Human Resources Plan

• How do you describe your desired corporate culture?
• What are the key positions within your organization?
• How many employees will you have?
• What characteristics define your desired employees?
• What is your recruitment strategy? What processes will you apply to hire the employees you require?
• What is your leadership strategy and why have you chosen this approach?
• What performance appraisal and employee development methods will you use?
• What is your organizational structure and why is this the best way for your company to be organized?
• How will you pay each employee (wage, salary, commission, etc.)? How much will you pay each employee?
• What are your payroll costs, including benefits?
• What work will be outsourced and what work will be completed in-house?
• Have you shown and described an organizational chart?

Recruitment and Retention Strategies

• Includes how many employees are required at what times
• Estimates time required to recruit needed employees
• employment advertisements
• contracts with employment agency or search firms
• travel and accommodations for potential employees to come for interviews
• travel and accommodations for interviewers
• facility, food, lost time, and other interviewing costs
• relocation allowances for those hired including flights, moving companies, housing allowances, spousal employment assistance, etc.
• may include a schedule showing the costs of initial recruitment that then flows into your start-up expense schedules

Leadership and Management Strategies

• What is your leadership philosophy?
• Why is it the most appropriate leadership approach for this venture?
• What training is required because of existing rules and regulations?
• How will you ensure your employees are as capable as required?
• Health and safety (legislation, WHMIS, first aid, defibulators, etc.)
• Initial workplace orientation
• Financial systems
• Product features

Performance Appraisals

• How will you manage your performance appraisal systems?

Health and Safety

• Any legal requirements should be noted in this section (and also legal requirements for other issues that may be included in other parts of the plan)

Compensation

• Always completely justifies your planned employee compensation methods and amounts
• Always includes all components of the compensation (CPP, EI, holiday pay, etc.)
• Outlines how will you ensure both internal and external equity in your pay systems
• Describes any incentive-based pay or profit sharing systems planned
• May include a schedule here that shows the financial implications of your compensation strategy and supports the cash flow and income statements shown later

Key Personnel

• May include brief biographies of the key organizational people

Marketing Plan

• You must show evidence of having done proper research, both primary and secondary. If you make a statement of fact, you must back it up with properly referenced supporting evidence. If you indicate a claim is based on your own assumptions, you must back this up with a description as to how you came to the conclusion.
• It is a given that you must provide some assessment of the economic situation as it relates to your business. For example, you might conclude that the current economic crisis will reduce the potential to export your product and it may make it more difficult to acquire credit with which to operate your business. Of course, conclusions such as these should be matched with your assessment as to how your business will make the necessary adjustments to ensure it will thrive despite these challenges, or how it will take advantage of any opportunities your assessment uncovers.
• If you apply the Five Forces Model, do so in the way in which it was meant to be used to avoid significantly reducing its usefulness while also harming the viability of your industry analysis. This model is meant to be used to consider the entire industry—not a subcomponent of it (and it usually cannot be used to analyze a single organization).
• Your competitor analysis might fit within your assessment of the industry or it might be best as a section within your marketing plan. Usually a fairly detailed description of your competitors is required, including an analysis of their strengths and weaknesses. In some cases, your business may have direct and indirect competitors to consider. Be certain to maintain credibility by demonstrating that you fully understand the competitive environment.
• Assessments of the economic conditions and the state of the industry appear incomplete without accompanying appraisals outlining the strategies the organization can/should employ to take advantage of these economic and industry situations. So, depending upon how you have organized your work, it is usually important to couple your appraisal of the economic and industry conditions with accompanying strategies for your venture. This shows the reader that you not only understand the operating environment, but that you have figured out how best to operate your business within that situation.
• Have you done an effective analysis of your venture? (See the Organizational Analysis section below.)

Market Analysis

• Usually contains customer profiles, constructed through primary and secondary research, for each market targeted
• Contains detailed information on the major product benefits you will deliver to the markets targeted
• Describes the methodology used and the relevant results from the primary market research done
• If there was little primary research completed, justifies why it is acceptable to have done little of this kind of research and/or indicate what will be done and by when
• Includes a complete description of the secondary research conducted and the conclusions reached
• Define your target market in terms of identifiable entities sharing common characteristics. For example, it is not meaningful to indicate you are targeting Canadian universities. It is, however, useful to define your target market as Canadian university students between the ages of 18 and 25, or as information technology managers at Canadian universities, or as student leaders at Canadian universities. Your targeted customer should generally be able to make or significantly influence the buying decision.
• You must usually define your target market prior to describing your marketing mix, including your proposed product line. Sometimes the product descriptions in business plans seem to be at odds with the described target market characteristics. Ensure your defined target market aligns completely with your marketing mix (including product/service description, distribution channels, promotional methods, and pricing). For example, if the target market is defined as Canadian university students between the ages of 18 and 25, the product component of the marketing mix should clearly be something that appeals to this target market.
• Carefully choose how you will target potential customers. Should you target them based on their demographic characteristics, psychographic characteristics, or geographic location?
• You will need to access research to answer this question. Based on what you discover, you will need to figure out the optimum mix of pricing, distribution, promotions, and product decisions to best appeal to how your targeted customers make their buying decisions.

Competition

• However, this information might fit instead under the market analysis section.
• Describes all your direct competitors
• Describes all your indirect competitors
• If you can, includes a competitor positioning map to show where your product will be positioned relative to competitors’ products

Figure 6 – Competitor Positioning Map (Illustration by Lee A. Swanson)

• What distinguishes your business from that of your competitors in a way that will ensure your sales forecasts will be met?
• You must clearly communicate the answers to these questions in your business plan to attract the needed support for your business. One caution is that it may sound appealing to claim you will provide a superior service to the existing competitors, but the only meaningful judge of your success in this regard will be customers. Although it is possible some of your competitors might be complacent in their current way of doing things, it is very unlikely that all your competitors provide an inferior service to that which you will be able to provide.

Marketing Strategy

• Covers all aspects of the marketing mix including the promotional decisions you have made, product decisions, distribution decisions related to how you will deliver your product to the markets targeted, and pricing decisions
• Outlines how you plan to influence your targeted customers to buy from you (what is the optimum marketing mix, and why is this one better than the alternatives)

Organizational Analysis

• Leads in to your marketing strategy or is positioned elsewhere depending upon how your business plan is best structured
• If doing so, always ensure this analysis results in more than a simple list of internal strengths and weaknesses and external opportunities and threats. A SWOT analysis should always prove to the reader that there are organizational strategies in place to address each of the weaknesses and threats identified and to leverage each of the strengths and opportunities identified.
• An effective way to ensure an effective outcome to your SWOT Analysis is to apply a TOWS Matrix approach to develop strategies to take advantage of the identified strengths and opportunities while mitigating the weaknesses and threats. A TOWS Matrix evaluates each of the identified threats along with each of the weaknesses and then each of the strengths. It does the same with each of the identified opportunities. In this way strategies are developed by considering pairs of factors
• The TOWS Matrix is a framework with which to help you organize your thoughts into strategies. Most often you would not label a section of your business plan as a TOWS Matrix. This would not normally add value for the reader. Instead, you should describe the resultant strategies—perhaps while indicating how they were derived from your assessment of the strengths, weaknesses, opportunities, and threats. For example, you could indicate that certain strategies were developed by considering how internal strengths could be employed toward mitigating external threats faced by the business.

Product Strategy

• If your product or service is standardized, you will need to compete on the basis of something else – like a more appealing price, having a superior location, better branding, or improved service. If you can differentiate your product or service you might be able to compete on the basis of better quality, more features, appealing style, or something else. When describing your product, you should demonstrate that you understand this.

Pricing Strategy

• If you intend to accept payment by credit card (which is probably a necessity for most companies), you should be aware of the fee you are charged as a percentage of the value of each transaction. If you don’t account for this you risk overstating your actual revenues by perhaps one percent or more.
• Sales forecasts must be done on at least a monthly basis if you are using a projected cash flow statement. These must be accompanied by explanations designed to establish their credibility for readers of your business plan. Remember that many readers will initially assume that your planned time frames are too long, your revenues are overstated, and you have underestimated your expenses. Well crafted explanations for all of these numbers will help establish credibility.

Distribution Strategy

• If you plan to use e-commerce, you should include all the costs associated with maintaining a website and accepting payments over the Internet.

Promotions Strategy

• If you are attracting customers away from competitors, how will these rivals respond to the threat you pose to them?
• If you intend to create new customers, how will you convince them to reallocate their dollars toward your product or service (and away from other things they want to purchase)?
• In what ways will you communicate with your targeted customers? When will you communicate with them? What specific messages do you plan to convey to them? How much will this promotions plan cost?
• If your entry into the market will not be a threat to direct competitors, it is likely you must convince potential customers to spend their money with you rather than on what they had previously earmarked those dollars toward. In your business plan you must demonstrate an awareness of these issues.
• Consider listing the promotional methods in rows on a spreadsheet with the columns representing weeks or months over probably about 18 months from the time of your first promotional expenditure. This can end up being a schedule that feeds the costs into your projected cash flow statement and from there into your projected income statements.
• If you phone or visit newspapers, radio stations, or television stations seeking advertising costs, you must go only after you have figured out details like on which days you would like to advertise, at what times on those days, whether you want your print advertisements in color, and what size of print advertisements you want.
• Carefully consider which promotional methods you will use. While using a medium like television may initially sound appealing, it is very expensive unless your ad runs during the non-prime times. If you think this type of medium might work for you, do a serious cost-benefit analysis to be sure.
• Some promotional plans are developed around newspaper ads, promotional pamphlets, printing business cards, and other more obvious mediums of promotion. Be certain to, include the costs of advertising in telephone directories, sponsoring a little league soccer team, producing personalized pens and other promotional client give-always, donating items to charity auctions, printing and mailing client Christmas cards, and doing the many things businesses find they do on-the-fly. Many businesses find it to be useful to join the local chamber of commerce and relevant trade organizations with which to network. Some find that setting a booth up at a trade fair helps launch their business.
• If you are concerned you might have missed some of these promotional expenses, or if you want to have a buffer in place in case you feel some of these opportunities are worthwhile when they arise, you should add some discretionary money to your promotional budget. A problem some companies get into is planning out their promotions in advance only to reallocate some of their newspaper advertisement money, for example, toward some of these other surprise purposes resulting in less newspaper advertising than had been intended.

Financial Plan

• It is nearly certain you will need to make monthly cash flow projections from business inception to possibly three years out. Your projections will show the months in which the activities shown on your fixed capital and working capital schedules will occur. This is nearly the only way to clearly estimate your working capital needs and, specifically, important things like the times when you will need to draw on or can pay down your operating loans and the months when you will need to take out longer-term loans with which to purchase your fixed assets. Without a tool like this you will be severely handicapped when talking with bankers about your expected needs. They will want to know how large of a line of credit you will need and when you anticipate needing to borrow longer-term money. It is only through doing cash flow projections will you be able to answer these questions. This information is also needed to determine things like the changes to your required loan payments and when you can take owner draws or pay dividends.
• Your projected cash flows are also used to develop your projected income statements and balance sheets.

Pro forma Cash Flow Statements

Pro forma income statements, pro forma balance sheets, investment analysis, projected financial ratios and industry standard ratios, critical success factors (sensitivity analysis).

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SIMILAR ITEMS (based on metadata)

Exploring Business

(13 reviews)

Copyright Year: 2016

ISBN 13: 9781946135094

Publisher: University of Minnesota Libraries Publishing

Language: English

Formats Available

Conditions of use.

Learn more about reviews.

Reviewed by Benton Jones, Assistant Professor, Anderson University on 4/30/24

Exploring Business contains all of the usual topics covered in an introductory business course and goes into sufficient detail in each area that it might be used for mid-level business courses, as well. read more

Comprehensiveness rating: 5 see less

Exploring Business contains all of the usual topics covered in an introductory business course and goes into sufficient detail in each area that it might be used for mid-level business courses, as well.

Content Accuracy rating: 4

The text is accurate to its year of publication.

Relevance/Longevity rating: 4

Most basic business concepts and terms have a long life, but any textbook will contain information that is no longer correct and thus should be supplemented with contemporary sources for studying the current state of the field.

Clarity rating: 5

Exploring business is written a level that is accurate but easy to understand.

Consistency rating: 4

It does seem like some sections were written by different people. That is probably a good thing considering the breadth of the text and the depth of some topics.

Modularity rating: 5

Instructors could easily teach these lessons in a different order or choose to exclude some topics and still use the remaining topics in the order they choose.

Organization/Structure/Flow rating: 5

Well-organized.

Interface rating: 5

Lots of links to external sources referenced. Images are in sufficient resolution. Pages are designed for reading, with text wrapped around images.

Grammatical Errors rating: 5

Free from serious grammar issues.

Cultural Relevance rating: 4

Consistent with most books on these subjects, the text remains culturally neutral where appropriate.

It may have too much information for an Intro to Business class, so if I were teaching from it, I would decide which sections to assign for students to read.

Reviewed by Karen Gaines, Adjunct Professor, Johnson County Community College on 5/4/22

The book covers all the basic information that should be in an introductory business book. However, there is no index/glossary for the reader. read more

Comprehensiveness rating: 4 see less

The book covers all the basic information that should be in an introductory business book. However, there is no index/glossary for the reader.

Content Accuracy rating: 5

The information presented is accurate and presented in a straightforward fashion.

As this is an introductory text, the foundation of relevant information is there. However, some of the narrative and visuals are out dated. In some cases it is purely informative but in other cases the information is 15-20 years old and having that outdated information for the specific topics that are discussed may not engage the reader. Suggest a review of the text and update where it is most relevant with narrative and visuals.

The material was written in a clear and concise manner.

Consistency rating: 5

The format and design is consistent throughout the book.

The chapters were broken down into smaller subsections, which is a benefit to the reader and to the instructor, should they choose to not include or rearrange the order of the reading materials.

The material was presented in an orderly manner. The subsections under each chapter helped enable the reader to choose which section(s) to read.

There were no interface issues.

Did not find grammatical issues.

Cultural relevance might be better addressed in a review and update of the text.

Reviewed by Carole Splendore, Director of Assessment and Accreditation, University of Saint Francis on 12/11/21

The book has good comprehensiveness overall in that it it begins with a theoretical foundation in economics, ethics and social responsibility, and global trade. Then the book pivots into the knowledge one must have for the decisions which must be... read more

The book has good comprehensiveness overall in that it it begins with a theoretical foundation in economics, ethics and social responsibility, and global trade. Then the book pivots into the knowledge one must have for the decisions which must be made upon starting a business such as business type and developing a business plan. Finally it moves into managerial aspects. I think the book would be benefitted with a section on emerging trends (other than globalization and ethics and CSR, there is the speed of information, the rate of change, the knowledge worker, democratization and the flattening of the hierarchy). Leadership styles is lacking. There needs to be examples of charts and forms for planning and accounting.

I think leadership styles was oversimplified to the point of being somewhat inaccurate. Otherwise, the book is ok.

The consumer price index chart only goes to 2002. The data for wages are from 2010. Same with other charts. But I think it will be easy to update the charts. In strategic planning, it lays out the elements of a plan without showing what a plan looks like, so has limited utility. Also, TQM is discounted today in leadership studies.

Clarity rating: 4

It is clear. It goes over a lot of topics quickly, but not in depth. This leaves me a bit concerned that students will not understand the complexities of what they are reading. For example, it describes how to be a good team member but does not disclose how to handle difficult conversations which is what is underneath much of the advice given.

The book was mostly consistent. Ethics and global issues came into the assignments in later chapters. Finance included personal finance. The book seems to have a directive perspective in leadership but then a collaborative perspective in followership which is inconsistent.

The book is well segmented, and the flow of the chapters is well-considered.

Organization/Structure/Flow rating: 4

The structure is very good from theoretical grounding in the first three chapters to decisions points in the next two chapters to managerial aspects in the eleven. It is lacking a section on innovation and a final chapter on emerging trends and future considerations. It leaves the student with no tools to imagine how they could excel in business. The learning objectives, diagrams, takeaways, and exercises which bracket each section are helpful for memory. Assignments bring in concepts from earlier chapters.

The interface looks fine. It is not confusing. After engaging in an interface though, the reader gets brought back to the beginning of the book.

The grammar was fine.

To begin with Apple in a book with a chapter on ethics is tone deaf. Why discuss Adam Smith but not Marx? Why was Foucault necessary? The ethical case studies were good.

It would be helpful if the business plan and accounting forms were presented in a way so they could be filled out.

Reviewed by Dhruba Banjade, Lecturer, University of Texas at Arlington on 6/1/21

The book covers must of the relevant topics in Finance. However, I suggest to include more on Time value of Money, Risk and Return concept. read more

The book covers must of the relevant topics in Finance. However, I suggest to include more on Time value of Money, Risk and Return concept.

Yes. The book is excellent in terms of accuracy.

Relevance/Longevity rating: 2

The authors discuss most of the events based on old data. For example, Unemployment and workplace deaths. Authors use the data from 1970 to 2010 only. Unemployment and workplace deaths must be explained based on the recent data.

The text is written clearly.

Yes. The text is consistent.

Modularity rating: 4

There are 16 chapters in the book. Each chapter is sub-divided into small sections. It helps to readers to understand clearly.

The topics are presented in the logical manner.

Interface rating: 4

The test is clearly written. The readers will not confuse.

Grammatical Errors rating: 4

There are no grammatical errors.

Cultural Relevance rating: 5

The text is not culturally insensitive.

Yes. The book briefly discusses the time value of money part. Most of the finance courses (introductory courses) discuss the time value of money (present value, future value, annuity, annuity due, perpetuity) and risk and return concepts. Thus, I suggest authors include one or two more chapters and incorporate these concepts also.

Reviewed by Louis Bruneau, Part Time Faculty, Portland Community College on 8/15/17

This book covers everything normally covered in an text introducing business. There was no index or glossary with the review edition I had. read more

This book covers everything normally covered in an text introducing business. There was no index or glossary with the review edition I had.

I did not find anything to be concerned about with respect to accuracy, errors or biases.

Relevance/Longevity rating: 5

The world is moving rapidly and textbooks thus have a limited life. This book seems to be current/up-to-date and likely to be stay so for a reasonable time (about three years).

It should be easy to revise/update given its modular format. Instructors may want and should be able to update easily.

The book is very readable; ideas are well supported with explanations and illustrations.

I found the book to be consistent within chapters and mostly consistent chapter-to-chapter. The few little things I found were not a problem , but an opportunity for class discussion.

This is the feature that I most appreciated. With each chapter having six to ten modules it allows an Instructor great flexibility in class presentation. I also liked the modularity which allows for substitution with Instructor selected modules or additions/deletions to customize the material.

The structure of the book is logical and clear. I lays the groundwork and builds nicely upon it.

There were no interface issues noted in my reading of the book.

I noted no grammar, capitalization, punctuation or mechanical errors with the book.

The book is not insensitive or offensive in any way.

Clearly, I like the book. Were I able to use it I would.

The length of the book, 737 pages-without appendix or glossary, might put some students and/or Instructors off, but the modular format more than compensates.

Reviewed by Kim Gravelle, Business Management Instructor, Century College on 6/20/17

This text introduces students to the many facets of business, including business ethics and social responsibility, operating in global business environment, marketing, accounting, and finance. The topics covered are in close alignment with the... read more

This text introduces students to the many facets of business, including business ethics and social responsibility, operating in global business environment, marketing, accounting, and finance. The topics covered are in close alignment with the textbook I am currently using. There are many figures and tables sprinkled throughout each chapter to support the text and to add interest. I have a printed copy of this textbook, and key words are defined in the margins. These are missing from the PDF version.

The content is accurate, error-free, and unbiased. The examples used appear to be carefully prepared, although some of them are outdated.

the content is relevant, although some examples are a bit outdated as stated earlier. Some of these could easily be refreshed.

The text is very clearly written, and the author has an easy to follow writing style. Definitions of key terms are clearly and concisely presented.

The textbook is consistent. Each chapter starts with an interesting opening vignette; each chapter is broken down into several sections with clearly articulated learning objectives. The subsections contain key takeways and relevant exercises. All chapters end with a Cases and Problems section. This includes an "Ethics Angle" and "Team-Building Skills."

The text is readily divisible into smaller reading sections. There are several subheadings in each chapter to facilitate this. It appears that the chapters could be used out of sequence to a large extent.

The topics are presented in a logical, clear manner. The book is well organized, with the key takeaways boxes and section exercises breaking up the lesson.

I did not experience interface issues. The book was easy to navigate, and the links that I followed worked as expected. Images and charts were colorful and did not appear distracting or confusing.

I did not see spelling, grammar, or punctuation errors. The book is well written.

The textbook does present examples that are inclusive of varying race, ethnicities, and backgrounds.

Reviewed by Linda Davenport, Program Lead, Business Administration, Klamath Community College on 6/20/17

This textbook appears to cover the subjects typically taught in an Intro to Business course in good depth. The marketing chapters are a bit condensed, but the most significant components are clearly defined. The textbooks that I typically use... read more

This textbook appears to cover the subjects typically taught in an Intro to Business course in good depth. The marketing chapters are a bit condensed, but the most significant components are clearly defined. The textbooks that I typically use have more charts and graphs to present, for example, a comprehensive list of HR laws, but there are many other ways to access those resources (and since they are frequently updated, it probably makes more sense to use an outside reference for items like that).

I spot reviewed throughout numerous sections and found no errors.

Please see my reference on #1. This book appears to provide a tremendous foundation, but outside resources will need to be included as laws change, businesses shift their leadership, etc.

This book is extremely comfortable to read. Technical terms are explained and used, and supporting examples are provided in numerous chapter sections.

This book has a very consistent flow and "pattern" of delivery....it appears to be easy to follow as each chapter has a common framework.

The chapters in this book are broken down in understandable "chunks" which certainly make for easier reading and more comprehension.

The flow of the topics makes sense. I have used and/or reviewed at least 10 similar textbooks over the past 13 years for my Intro to Business course and there is a common approach to organizing the topics. This book follows that and even adds in additional components that are often missing from other texts.

This book's interface is high quality. I had no problems accessing any of the resources that were included throughout the chapters. If there are issues, I did not encounter them.

The grammar seems very appropriate.

I looked at particular sections that could potentially raise a concern and found that they were carefully and tactfully worded. Good examples to support the topics!

I am delighted and surprised that this author has offered this text for use as an OER....the textbook is high quality, comparable in content to many other "highly recommended" texts that I have used in previous years, and I look forward to seeing the instructor resources. Aside from the lack of an author name, this textbook seems to be a superior choice for an Intro to Business course!

Reviewed by Robert Eliason, Lecturer, James Madison University on 4/11/17

With 16 chapters, this Foundations of Business text provides a wide view of the field. Additional chapters that expand the content include: starting a business, the role of accounting, personal finances, and legal aspects of business. Areas... read more

With 16 chapters, this Foundations of Business text provides a wide view of the field. Additional chapters that expand the content include: starting a business, the role of accounting, personal finances, and legal aspects of business.

Areas missing in this book but are found in many current textbooks include a growing interest in analytics and big data, decision-making, or project management. Social media is not featured. The in-depth chapter on teams does not cover how to run meetings.

No content errors were found.

Relevance/Longevity rating: 3

The core theories and business structures that are the basis for the textbook will remain the same for future years. With the last major update being in 2012 and many examples from the previous decade, some examples that seem current and relevant at the time are now no longer in the popular business news.

The reading level is appropriate for college-level readers. Business terms are highlighted but no glossary is provided.

Each chapter is divided into sections. Each section has learning objectives, clear division of content with headings, a Key Takeaways summary, and exercise or brief case, and references. Each chapter ends with expanded problems and a short case.

Constructed with concise, stand-alone chapters, the text can be easily modified by removing unwanted chapters, sections, or individual content while allowing additional information or features, such as videos, to be added. Missing in the digital text reviewed are the Instructor’s Manual, an integrated business plan exercise and supporting finance spreadsheet, and a major case on Nike.

Organization/Structure/Flow rating: 3

The overall order of the chapters matches similar textbooks. It does order some chapters similar to what would be needed to start a new business. The construct of the chapters does allow picking and choosing chapters or to teach the content out of the presented order.

The text is available in PDF, Kindle, e-pub, WordPress, OpenDocument text, and .mobi formats. The digital text formats do create hanging titles and widowed lines.

The text is free of spelling, grammatical, and formatting errors. Links to videos correctly connect to YouTube video pages outside of the text.

The text considers cultural barriers, diverse employees and customers, communication issues, and international business.

Exploring Business, Version 2.0, provides a solid introduction to the principals of business. It reflects a refined content developed over years of development and classroom experience. Both theoretical and practical content is provided. With over 2000 pages, this text provides a wide range of topics that exceeds those found in most introductory or principals of business textbooks.

Reviewed by Shayne Narjes, Marketing Faculty, South Central College on 2/8/17

Exploring Business is being used as the textbook for the Introduction to Business course I am teaching this term at South Central College. Overall, the book provides good coverage of the topics that would be expected from a survey course for... read more

Exploring Business is being used as the textbook for the Introduction to Business course I am teaching this term at South Central College. Overall, the book provides good coverage of the topics that would be expected from a survey course for business as a discipline.

The only issues with accuracy that I have noted so far are due to timeliness of the examples since the book was originally published in 2010. That said, the examples seem correct in terms of facts at the time of publication.

Although some of the examples have evolved since the book was published the examples are relevant. For example, the Tylenol case study from 1982 occurred before many of the students in my class were born but it is still a relevant example.

The book contains the business terminology required to impart the concepts relevant to an introduction to business course. The writing style is easy to follow and in an informal survey of my students they suggested the book presented information in a way they could understand. One minor issue involves the use of figures in which the figure is on one page of the PDF while the figure caption is on the previous page.

The text is consistent in they way terminology and concepts are presented. Each of the chapter subsections includes learning objectives at the start of the section and the end of each section includes: "Key Takeaways", exercises or activities and a references section.

Each of the chapters is divided into smaller sections of 3-7 pages and this is a particularly effective approach given the format is a PDF file. This allows my learners to easily move between different parts of the chapter using the PDF bookmarks.

There is a clear and logical structure to Exploring Business which comes primarily from the consistency mentioned earlier in this review.

The main issue with the interface involves the book page numbers and the page numbers of the PDF document being different. This cannot really be helped but it does require some explanation when directing students to page 428 of the book which is actually page 444 of the PDF.

There seem to be few grammar errors. The prolific use of dashes and colons may present a slightly different way of reading information for some learners but the use of the different grammatical devices appeared to be correct.

Overall, the book seems to be from an inclusive perspective and the chapter on The Global Business Environment encourages students to "learn about the habits and traits of other cultures."

Some of my students have mentioned that they miss having physical book and I reminded them they can print the book if they wish.

Reviewed by Steve Skripak, Professor of Practice, Virginia Tech on 12/5/16

The text covers a multitude of areas of business. Even instructors that do not want to use every chapter can find applicability to their introductory business courses. However, the version of the book that I was able to access did not have an... read more

The text covers a multitude of areas of business. Even instructors that do not want to use every chapter can find applicability to their introductory business courses. However, the version of the book that I was able to access did not have an effective index or glossary, making it hard to pinpoint specific content without thumbing through entire chapters.

Content Accuracy rating: 3

Most chapters of the book are accurate, although some of the examples have gotten very dated and others, like using Caesar's Palace for the technology chapter, were probably outdated when the book was first released. In several places, most notably economic systems, the book seems very biased - a graphic in that chapter positioned socialism as the middle ground. In order to use this book, I had to do a major rewrite of that chapter to remove what I considered to be a sociallistic bias.

As with any business textbook, some examples are rather outdated. This book is neither better nor worse than other texts, with the exception of the material on Caesar's previously mentioned. Business changes and updates are needed; it's just a fact of life.

Clarity rating: 3

The book is clearly written and conversational in tone, which will likely appeal to many undergraduate students. Its main shortcoming is a sometimes verbose and repetitive writing style. It often employs a series of rhetorical questions to get students thinking, but some of those series contain so many questions that it is easy to envision students becoming irritated by the repetition and skipping on to the end of the section.

No issues with respect to consistency were noted in my review.

Modularity rating: 2

The text is divided into logical chapters, though some of them are so long as to merit further division considering the reading attention span of an undergraduate student (as well as this reviewer). However, there are numerous self-references within the book, both within and between chapters, which would create challenges in using a subset of the book.

The book follows the flow of topics that is typical of an introductory business textbook.

No navigation or display issues were noted, though a fair number of graphics were extremely basic and did not add great value for the reader.

Grammatical errors were infrequent, though writing clarity could be improved in many instances.

Cultural Relevance rating: 3

In editing the book for my course, I did remove a very small number of examples that I was concerned could be a bit offensive. I found the economics chapter and the union chapter to be rather biased to the left and edited them to be what I view as more balanced.

Many of the Key Takeaways boxes, intended to be a short recap of key points, were practically verbatim repeats of the previously mentioned content. These sections often added unnecessary length to the chapters without being of any additional value. In the interest of brevity (my objective being a book targeted enough that students would actually read it), I also removed the case studies since this kind of material is the most difficult to keep current.

Reviewed by Amanda Everhart, Academic Advisor/Lecturer, University of North Carolina, Greensboro on 12/5/16

This is a total teaching package that breaks down all of the basic areas of Business and then presents them in a fun and interesting way. Materials are up to date and provide flexibility in their use as a whole or individually. read more

This is a total teaching package that breaks down all of the basic areas of Business and then presents them in a fun and interesting way. Materials are up to date and provide flexibility in their use as a whole or individually.

The content covered is accurate and up to date with no obvious errors or biased opinions given.

Business as a whole is constantly growing and changing with technology but is based on firm foundations that have withstood the test of time. This book does a great job of laying the ground work of these foundations and then covers the changes that have taken place over the years as well as leaves room for future changes.

The text is very clear and concise with great visuals added to enhance the clarity. It is written in a way that can be understood by many different levels of student.

The format of the book is very consistent and uses terminology that is easy to understand throughout its entirety.

The breakdown of the books sections is very easily divisible and each section has multiple sub sections that can be used in the same lesson or as a stand alone class topic.

Each topic within the book is laid out in a logical structure with key takeaway points for each section as well as an exercise that incorporates all of the key points at the very end.

The book is broken into sections using bold color coding to make finding a particular component easy and all of the graphics are clear and visually appealing.

I do not see any grammatical errors within the text.

The book primarily focuses on business practices within the US but a large chapter of the book is devoted to the global business environment. The information that is given is not in any way offensive or biased.

I feel that this is a really good resource for a basic Business Studies class. It supplies everything that the student and instructor need for a course.

Reviewed by Dr. Randall Wade, Instructor and Chair, Business Technology, Rogue Community College on 8/21/16

This text covers all of the major topics taught in an introductory business class. Students are provided with a good foundation of business, including coverage of business ethics, social responsibility, international aspects of business, and a... read more

Comprehensiveness rating: 3 see less

This text covers all of the major topics taught in an introductory business class. Students are provided with a good foundation of business, including coverage of business ethics, social responsibility, international aspects of business, and a discussion of economics. The basic functions of business (management, marketing, accounting, and finance) are thoroughly covered, while additional chapters on personal finance and business law are also included. The drawback is that the various digital formats (other than reading the book on-line) were missing a Table of Contents. In addition, students do not have access to an end-of-chapter (or even end-of-text) glossary or an index. This is a major flaw to this text.

I did not find any glaring errors in regard to accuracy. Much care has been taken to ensure that the pictures and writing are unbiased, as well as gender and culturally diverse. Many of the chapters start out discussing the opening vignette which is missing, so the reader comes in with no idea of what the author is talking about.

While I am not a fan of publishers updating texts on a two-year cycle with minimal changes to warrant a new edition, the reality is that this text was published in 2010. That means that the currency of the book is at least a decade old. While the author has added some additional current topics (sustainability and social media), the references are still over a decade old (accessing them on the Internet in 2012 does not make them current).

The companies referenced in many chapters could clearly be updated. Using former Senator George McGovern as an example in Chapter 16 is not relevant to today’s students. He was current news in the late 1960’s and early 1970’s, but the majority of students today would not know who he even was (he passed away in 2012). Discussion of new digital currency (Bitcoins) would be a nice addition to the text. Overall, I have not seen that Exploring Business 2.0 is that much different from the original version.

The text is well written, with many pictures, graphs, and figures interspersed to make it easy to follow. I like the conversational writing style and succinct definitions of key words. I would have preferred to have a glossary of terms (either at the end of the chapter or end of book), instead of the highlighted links. By clicking on the highlighted word, the same definition comes up that is already on the same page.

Terminology was easy to understand (although the hyperlinks were redundant). In many cases, the Key Takeaway boxes were also redundant. For example, Chapter 4 spends one page covering questions to ask in selecting a form of business ownership, and then the Key Takeaway box virtually repeats the same material on the next page – redundant! Otherwise, the reader is able to build on key terms as they progress through the course.

Modularity rating: 3

While each chapter was segmented into logical modules, overall, the book was not. Typically, an introductory text would be divided into units (foundation, business ownership, management, marketing, accounting, finance). This text does not have that division (unless provided by the instructor) and the student just moves from one chapter into the next.

Sixteen chapters provides ample material for a semester course, but for a school on a quarter system, the adopter would have to eliminate some chapters from coverage. Personally, I would leave out Chapter 8 (writing e-mails and memos is covered in a business communications class – not introduction to business); Chapter 14 (nice material but it does not fit with the rest of the subject matter); Chapter 15 (again, nice material but one that can be covered in both a marketing class and/or an introductory computer class) and Chapter 16 (Business Law is a standalone class – contract law can be covered in more depth in a separate class and the legislation needs to be updated).

Chapters 9 and 10 could easily have been divided into 4 separate chapters covering the four P’s of the marketing mix.

As mentioned previously, the text covers the primary topics one would expect to find in an introductory business book. Each chapter builds on the previous one with the recurrent theme of building a business plan. While I would not have included the last three chapters (they really were written as more stand-alone chapters and did not relate well to the previous material), some instructors may find them useful. I would have liked more elaboration on the history of labor unions and their evolving role in the service sector as the manufacturing sector has diminished.

I was able to access the definitions of the hyperlinked terminology in each chapter using the on-line reader, but they would not work in the .pdf version on my tablet. Many of the reference links were also inaccessible on my tablet. However, the .pdf file worked well on my PC and I was able to access all terminology and hyperlinked references without any trouble. The charts and images came up successfully (both on a PC and a tablet). I found the graphics did a good job in breaking up the writing, while supplementing the material in the text.

Grammatical and spelling errors are a pet peeve of mine, especially in textbooks. I found the text to be very well written and easy to read, without any grammatical or spelling errors to distract the reader.

The illustrations and examples in the text have included a variety of races, ethnicities, gender, and other culturally diverse backgrounds. The writing style was neither left-, nor right-focused, but rather inclusive and considerate of all cultures appropriately.

Because of the lack of an index and glossary, I would most likely not consider this text for an introductory business course. The exercises at the end of each chapter were thought provoking and required the student to do actual research and formulate some logical responses to the questions, rather than just reciting verbatim from the chapter.

While the author has over a decade of using the business plan project successfully, after 40 years of teaching graduate, university, and community college students, I’m not convinced that the first business course a student is exposed to should tackle such a project. Students do not have the foundation in business to create an effective plan, nor do they have the expertise to prepare the financial section of the plan (even with a simple to use Excel component). Exposing students to the basic components of a business plan as outlined in Chapter 5 is a positive step in giving them the skills to prepare a business plan later on in their business studies.

The author-written instructor manual is a big plus in adopting this book. No one knows the book better than the author and well-structured teaching materials are key to success in the classroom. I would hope that these materials, as well as the test bank, are compatible with the major Course Learning Systems (such as Blackboard).

Reviewed by Daniel Gore, Adjunct Instructor & Teaching Specialist, University of Minnesota School of Journalism & Mass Communication on 6/10/15

The breadth of the content covered exceeded my expectations. The textbook allows discussions and in-class conversations which help students understand the may externalities affecting a business. There are some introductory conversations about... read more

The breadth of the content covered exceeded my expectations. The textbook allows discussions and in-class conversations which help students understand the may externalities affecting a business. There are some introductory conversations about economics, international influences, staffing, regulatory considerations, governance, and ethical concerns to name a few. The book integrates exercises to prompt classroom activity and discussion, along with sufficient graphic support to make the textbook easily consumable.

Dr. Collins took care in writing the book to ensure that the language and examples used are fair and without agenda. While it is written for the mixed economic structure of the U.S., there are some primary discussions about alternative economies--sufficient enough to spark dialogue for critical thinking by students.

The content is current and relatable, as it uses topics, companies and organizations which are still relevant. As with any text which cites actual cases, they will not remain evergreen. There are some references to WorldCom and other businesses which are no longer top-of-mind, but they are still within the readers' generation to be useful. The references are as current as any can reasonably expect. Dr. Collins takes those case studies and helps elevate the examples beyond the current year, and inspires readers to consider the topics irrespective of their chronology.

The text is written in a very comfortable lexicon which will be accessible to the college-level student. The book provides sufficient supporting information and references to issues which may be more complex. It was thankfully void of useless business jargon.

The flow of the book allows the instructor and reader to take a logical walk through the aspects of business which are in scope of the book. The language was consistent throughout the textbook and allowed for a methodical understanding of the content which built on itself chapter after chapter.

At almost 1,000 pages it's a large textbook for a semester course, if it's use was to complement other aspects of a lesson plan. As such, I think the text could be used out of sequence, or modularly. This adds to the book's utility, as I could easily see how portions of the book could be filled in with independent writings, assignments or in-class speakers on a given topic.

The flow of the book builds well upon itself, each chapter leading, or preparing for successive chapters' discussions. However, I find that the elegance in the structure is that you could pick up in the middle of the book, without having been required to have read a previous chapter. (In most instances, though this is not universally applicable to the book). I appreciated that the book examined the topic of business at a much broader level than just an operational level. The explorations of the economy, social responsibility, governmental pressures, stakeholder influences and human resource components were a rich teaching for students.

The digital format of the book worked fine in the default .pdf viewer I used on my laptop. The links I tried worked successfully. The images, graphs and graphics all appeared as I expected them. It is not particularly stimulating in its layout and design, which can influence a reader's attention span; however it was not distracting nor unappealing as some textbooks can be.

I found the book to be structurally written well, adhering to commonly accepted writing styles. I did not read it with a red pen in hand, but the words, spelling and punctuation did not cause me any concern.

I felt that the book was very inclusive in its examples and illustrations of issues. In particular, the book discussed globalization considerations of business, and went well beyond simply translating materials into another language. Dr. Collins really opens the opportunity to have lengthy discussions about social inclusiveness--how even in a single country, social issues affect how businesses relate to their marketplace. It was among the first examples of this level of dialogue I've seen in a textbook targeted at introductory business.

I would consider adopting this text for a course. It is useful because it does not have a strong philosophical agenda toward or away from the politics of business. While it does describe situations which may seem to favor the worker, or protecting the worker; the text does not castigate business or big-business.

Table of Contents

• Chapter 1: The Foundations of Business
• Chapter 2: Business Ethics and Social Responsibility
• Chapter 3: Business in a Global Environment
• Chapter 4: Selecting a Form of Business Ownership
• Chapter 5: The Challenges of Starting a Business
• Chapter 6: Managing for Business Success
• Chapter 7: Recruiting, Motivating, and Keeping Quality Employees
• Chapter 8: Teamwork and Communications
• Chapter 9: Marketing: Providing Value to Customers
• Chapter 10: Product Design and Development
• Chapter 11: Operations Management in Manufacturing and Service Industries
• Chapter 12: The Role of Accounting in Business
• Chapter 13: Managing Financial Resources
• Chapter 14: Personal Finances
• Chapter 15: Managing Information and Technology
• Chapter 16: The Legal and Regulatory Environment of Business

Ancillary Material

About the book.

The author's goals in writing Exploring Business Version 2.0 was simple: introduce students to business in an exciting way.

Exploring Business is adapted from a work produced by a publisher who has requested that they and the original author not receive attribution. This adapted edition is produced by the University of Minnesota Libraries Publishing through the eLearning Support Initiative. Though the publisher has requested that they and the original author not receive attribution, this adapted edition reproduces all original text and sections of the book, except for publisher and author name attribution.

This textbook has been used in classes at: College of Alameda, Columbia Basin College, Flagler College, Johnson County Community College, Pasadena City College, Penn State University, Renton Technical College, San Diego Mesa College, Sierra College, Yuba College.

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Business.govt.nz, in association with, introduction to business planning.

If you are self-employed, own or run a business, planning helps you step out of day-to-day tasks to set work goals and decide how you’re going to reach them.

Business planning is about setting a clear plan for where you and your business are going and how to achieve goals. It also involves regular monitoring to make sure you’re on track.

Why it’s important

Every business benefits from a business plan, whether you’re a one-person, part-time operation or a large corporation. Regular business planning helps you:

• have a clear plan of where you’re going and the path ahead
• build a business that best suits you and your lifestyle
• understand your current business skills and identify any gaps
• spot opportunities that can help you reach your end goal
• use your resources wisely — without a plan you can end up spreading your time, money and energy too thinly
• know whether to say yes or no to opportunities that come up — if they don’t support your vision, move on.

Countdown to launch

Before launching Common Ledger, Carlos Chambers and his team had an idea for software to streamline the information accountants received from their clients’ different programs. They spent six months speaking to accountants in New Zealand and Australia to understand their potential market and refine their product.

“We learned there was this really deep problem that accountants around the world were facing. That’s what we were looking for — huge problem and huge opportunity and a huge way to really help this industry move forward.”

The next step was to develop an 18-month plan and a three-to-five-year strategy to turn their start-up into a fully fledged company. They’ve since raised more than $1m and launched in both countries.

“We’re close to our targets on our initial forecasts. We’ve brought on the right board. We’ve hired the right team members. All these things are probably the result of thorough planning. We would never have been able to usefully create our strategy if we hadn’t done that first six months of research.”

Read Common Ledger’s full story — and those of other small businesses — on our case studies page:

See what others are doing

Common elements in business planning

What goes into a business plan can vary, but often includes:

• an overview of your business — name, products or services you offer, revenue, key partners, goals
• an overview of your market — your customers, your industry, how many people will buy your product or service, whether you’ll sell overseas
• your marketing strategy — how you’ll get customers, the cost of attracting customers
• competitor analysis — your rivals, how your strengths and weaknesses compare, your competitive edge
• financials — your costs, revenues, growth rates, measures of success
• team — employees’ skills, skills you need, your mentors and advisors
• operations information — IT, systems, compliance.

Introduction to business finance

What you need to know about exporting

Business planning tips

• Put time in your diary for business planning — monitoring progress regularly is good to do.
• Set short-term, mid-term, and long-term goals to help you understand the milestones you’re trying to reach.
• Do your planning offsite — getting out of your normal workplace can put you in a different mindset and help you see things you wouldn’t normally.

Involving your team in business planning can be a good thing. Don’t delegate the planning though. Having the owner or manager involved in setting the direction of the business is important.

Common mistakes

Avoid these common mistakes:

• Getting caught up in the day-to-day running of the business without taking the time to look forward.
• Reacting to things as they pop up as opposed to setting clear goals.
• Investing time and money into things outside your value proposition. Make sure you have a clear statement that sets out how your product or service solves customers’ problems, and refer to it when you plan.
• Creating a business plan that sits on the shelf and doesn’t get used.
• Failing to regularly check in on how you’re tracking to your plan.
• Failing to think through what happens if your business grows. For example, if you might export your goods or services in future, you’ll need to prepare well in advance.

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An Introduction to Business and Business Planning

This book introduces students to business concepts experientially as they develop a business plan for a fictional business the student creates. With each chapter, the student learns introductory concepts and then applies those concepts to their business plan. This method of introducing students to business concepts encourages the student to apply new concepts as well as connect concepts covered in prior chapters.

The text comes with free downloadable templates for the business plan including financial projections which are particularly difficult at the introductory level.

Instructors are encouraged to have students work either individually or in teams and present the business plan at the end of semester as if they are seeking financing from a bank of venture capital group.

This book is the first in a series of practical guides that help business students learn and then apply new concepts.

Dr. Jay Dewhurst writes as any strong-minded academic would write, with research and exploration. The difference in this book is that he writes from years of personal experience as an entrepreneur.

You are about to gain invaluable knowledge and understanding without having to do all the research…he has done it for you, and has given the subject matter the advantage of his experiences.

As a former professor, I will tell you that this book is one of those you will keep for valuable reference for a long time to come.

Dr. Dewhurst has spent most of his adult years investing in business ventures. He has become expert in his knowledge of how to begin and cause a business to become profitable. He has been a mentor to scores of young adults who want to learn the unique career of being an entrepreneur.

Jay is a world traveler, imparting his knowledge and experience through seminars and workshops in many countries. He is a loving husband, doting father, and grandfather.

I am honored to recommend this book to all who choose to read it.

– Ross C. Harrison (Ret.) Educator/Minister

• Note to Instructors
• Acknowledgments
• Introduction
• Introductory Concepts in Business
• What is a business?
• Entrepreneurship
• Macro and Micro Economics
• Accounting and Financial Management
• Human Resource Management
• The Legal Environment in Business
• Banking and Securities
• Business Information Systems
• Global Business Environment
• Determine the Potential for Profits
• Determine Market Viability
• Getting Financing
• Knowledge to Action
• Building Leadership Skills
• Management Theory
• The Daily Activities of a Manager
• Accounting Basics
• How to use the Statements
• The Profit and Loss Statement
• The Balance Sheet
• Manual vs Computerized Accounting
• Payroll and Employment Taxes
• Federal Issues
• State and Local
• Cost Volume-Profit Analysis
• Using the Break-Even Analysis
• The Flexible Budget
• Liquidity Ratios
• Leverage Ratio
• Profitability Ratios
• Turnover Ratio
• Overall Analysis
• The Overall Plan
• The Concept
• Accounting /Finance and Budgeting
• Financial Statement Analysis
• Appendices/Attachments
• Review and Editing
• Charles Schoen, CPA
• Keefe Duterte
• Richard Coleman
• Conclusive Remarks
• Appendix B: Sample Business Plan
• Executive Summary
• Company Ownership
• Wound Care Equipment
• Respiratory Care Equipment
• Target Market Segment Strategy
• Industry Analysis
• Strategy and Implementation Summary
• Marketing Strategy
• Sales Strategy
• Management Summary
• Financial Plan
• Financials and Attachments

Jay A. Dewhurst

Introduction to Business Planning

• © 1987
• Latest edition
• Kevan Scholes 0 ,
• Mary Klemm 1

Sheffield Business School, UK

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University of Bradford Management Centre, UK

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Table of contents (7 chapters)

Front matter, introduction.

• Kevan Scholes, Mary Klemm

Organising for planning

Strategic planning — thinking ahead, making decisions, completing jobs on time, implementing plans, planning in practice — a case study, back matter.

• strategic planning

About this book

Authors and affiliations.

Kevan Scholes

Bibliographic Information

Book Title : Introduction to Business Planning

Authors : Kevan Scholes, Mary Klemm

DOI : https://doi.org/10.1007/978-1-349-18669-3

Publisher : Red Globe Press London

eBook Packages : Palgrave Business & Management Collection , Business and Management (R0)

Copyright Information : Macmillan Publishers Limited 1987

Edition Number : 1

Number of Pages : XVIII, 253

Additional Information : Previously published under the imprint Palgrave

Topics : Management

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The essential components of a successful L&D strategy

Over the past decade, the global workforce has been continually evolving because of a number of factors. An increasingly competitive business landscape, rising complexity, and the digital revolution are reshaping the mix of employees. Meanwhile, persistent uncertainty, a multigenerational workforce, and a shorter shelf life for knowledge have placed a premium on reskilling and upskilling. The shift to a digital, knowledge-based economy means that a vibrant workforce is more important than ever: research suggests that a very significant percentage of market capitalization in public companies is based on intangible assets—skilled employees, exceptional leaders, and knowledge. 1 Intangible Asset Market Value Study, Ocean Tomo.

Learning and development—From evolution to revolution

We began in 2014 by surveying 1,500 executives about capability building. In 2016, we added 120 L&D leaders at 91 organizations to our database, gathering information on their traditional training strategies and aspirations for future programs. We also interviewed 15 chief learning officers or L&D heads at major companies.

Historically, the L&D function has been relatively successful in helping employees build skills and perform well in their existing roles. The main focus of L&D has been on upskilling. However, the pace of change continues to accelerate; McKinsey research estimates that as many as 800 million jobs could be displaced by automation by 2030.

Employee roles are expected to continue evolving, and a large number of people will need to learn new skills to remain employable. Unsurprisingly, our research confirmed our initial hypothesis: corporate learning must undergo revolutionary changes over the next few years to keep pace with constant technological advances. In addition to updating training content, companies must increase their focus on blended-learning solutions, which combine digital learning, fieldwork, and highly immersive classroom sessions. With the growth of user-friendly digital-learning platforms, employees will take more ownership of their professional development, logging in to take courses when the need arises rather than waiting for a scheduled classroom session.

Such innovations will require companies to devote more resources to training: our survey revealed that 60 percent of respondents plan to increase L&D spending over the next few years, and 66 percent want to boost the number of employee-training hours. As they commit more time and money, companies must ensure that the transformation of the L&D function proceeds smoothly.

All of these trends have elevated the importance of the learning-and-development (L&D) function. We undertook several phases of research to understand trends and current priorities in L&D (see sidebar, “Learning and development—From evolution to revolution”). Our efforts highlighted how the L&D function is adapting to meet the changing needs of organizations, as well as the growing levels of investment in professional development.

To get the most out of investments in training programs and curriculum development, L&D leaders must embrace a broader role within the organization and formulate an ambitious vision for the function. An essential component of this effort is a comprehensive, coordinated strategy that engages the organization and encourages collaboration. The ACADEMIES© framework, which consists of nine dimensions of L&D, can help to strengthen the function and position it to serve the organization more effectively.

The strategic role of L&D

One of L&D’s primary responsibilities is to manage the development of people—and to do so in a way that supports other key business priorities. L&D’s strategic role spans five areas (Exhibit 1). 2 Nick van Dam, 25 Best Practices in Learning & Talent Development , second edition, Raleigh, NC: Lulu Publishing, 2008.

• Attract and retain talent. Traditionally, learning focused solely on improving productivity. Today, learning also contributes to employability. Over the past several decades, employment has shifted from staying with the same company for a lifetime to a model where workers are being retained only as long as they can add value to an enterprise. Workers are now in charge of their personal and professional growth and development—one reason that people list “opportunities for learning and development” among the top criteria for joining an organization. Conversely, a lack of L&D is one of the key reasons people cite for leaving a company.
• Develop people capabilities. Human capital requires ongoing investments in L&D to retain its value. When knowledge becomes outdated or forgotten—a more rapid occurrence today—the value of human capital declines and needs to be supplemented by new learning and relevant work experiences. 3 Gary S. Becker, “Investment in human capital: A theoretical analysis,” Journal of Political Economy , 1962, Volume 70, Number 5, Part 2, pp. 9–49, jstor.org. Companies that make investments in the next generation of leaders are seeing an impressive return. Research indicates that companies in the top quartile of leadership outperform other organizations by nearly two times on earnings before interest, taxes, depreciation, and amortization (EBITDA). Moreover, companies that invest in developing leaders during significant transformations are 2.4 times more likely to hit their performance targets . 4 “ Economic Conditions Snapshot, June 2009: McKinsey Global Survey results ,” June 2009.
• Create a values-based culture. As the workforce in many companies becomes increasingly virtual and globally dispersed, L&D can help to build a values-based culture and a sense of community. In particular, millennials are particularly interested in working for values-based, sustainable enterprises that contribute to the welfare of society.
• Build an employer brand. An organization’s brand is one of its most important assets and conveys a great deal about the company’s success in the market, financial strengths, position in the industry, and products and services. Investments in L&D can help to enhance company’s brand and boost its reputation as an “employer of choice.” As large segments of the workforce prepare to retire, employers must work harder to compete for a shrinking talent pool. To do so, they must communicate their brand strength explicitly through an employer value proposition.
• Motivate and engage employees. The most important way to engage employees is to provide them with opportunities to learn and develop new competencies. Research suggests that lifelong learning contributes to happiness. 5 John Coleman, “Lifelong learning is good for your health, your wallet, and your social life,” Harvard Business Review , February 7, 2017, hbr.org. When highly engaged employees are challenged and given the skills to grow and develop within their chosen career path, they are more likely to be energized by new opportunities at work and satisfied with their current organization.

The L&D function in transition

Over the years, we have identified and field-tested nine dimensions that contribute to a strong L&D function. We combined these dimensions to create the ACADEMIES framework, which covers all aspects of L&D functions, from setting aspirations to measuring impact (Exhibit 2). Although many companies regularly execute on several dimensions of this framework, our recent research found that only a few companies are fully mature in all dimensions.

1. Alignment with business strategy

One of an L&D executive’s primary tasks is to develop and shape a learning strategy based on the company’s business and talent strategies. The learning strategy seeks to support professional development and build capabilities across the company, on time, and in a cost-effective manner. In addition, the learning strategy can enhance the company culture and encourage employees to live the company’s values.

For many organizations, the L&D function supports the implementation of the business strategy. For example, if one of the business strategies is a digital transformation, L&D will focus on building the necessary people capabilities to make that possible.

Every business leader would agree that L&D must align with a company’s overall priorities. Yet research has found that many L&D functions fall short on this dimension. Only 40 percent of companies say that their learning strategy is aligned with business goals. 6 Human Capital Management Excellence Conference 2018, Brandon Hall Group. For 60 percent, then, learning has no explicit connection to the company’s strategic objectives. L&D functions may be out of sync with the business because of outdated approaches or because budgets have been based on priorities from previous years rather than today’s imperatives, such as a digital transformation.

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To be effective, L&D must take a hard look at employee capabilities and determine which are most essential to support the execution of the company’s business strategy. L&D leaders should reevaluate this alignment on a yearly basis to ensure they are creating a people-capability agenda that truly reflects business priorities and strategic objectives.

2. Co-ownership between business units and HR

With new tools and technologies constantly emerging, companies must become more agile, ready to adapt their business processes and practices. L&D functions must likewise be prepared to rapidly launch capability-building programs—for example, if new business needs suddenly arise or staff members require immediate training on new technologies such as cloud-based collaboration tools.

L&D functions can enhance their partnership with business leaders by establishing a governance structure in which leadership from both groups share responsibility for defining, prioritizing, designing, and securing funds for capability-building programs. Under this governance model, a company’s chief experience officer (CXO), senior executives, and business-unit heads will develop the people-capability agenda for segments of the enterprise and ensure that it aligns with the company’s overall strategic goals. Top business executives will also help firmly embed the learning function and all L&D initiatives in the organizational culture. The involvement of senior leadership enables full commitment to the L&D function’s longer-term vision.

3. Assessment of capability gaps and estimated value

After companies identify their business priorities, they must verify that their employees can deliver on them—a task that may be more difficult than it sounds. Some companies make no effort to assess employee capabilities, while others do so only at a high level. Conversations with L&D, HR, and senior executives suggest that many companies are ineffective or indifferent at assessing capability gaps, especially when it comes to senior leaders and midlevel managers.

The most effective companies take a deliberate, systematic approach to capability assessment. At the heart of this process is a comprehensive competency or capability model based on the organization’s strategic direction. For example, a key competency for a segment of an e-commerce company’s workforce could be “deep expertise in big data and predictive analytics.”

After identifying the most essential capabilities for various functions or job descriptions, companies should then assess how employees rate in each of these areas. L&D interventions should seek to close these capability gaps.

4. Design of learning journeys

Most corporate learning is delivered through a combination of digital-learning formats and in-person sessions. While our research indicates that immersive L&D experiences in the classroom still have immense value, leaders have told us that they are incredibly busy “from eight to late,” which does not give them a lot of time to sit in a classroom. Furthermore, many said that they prefer to develop and practice new skills and behaviors in a “safe environment,” where they don’t have to worry about public failures that might affect their career paths.

Traditional L&D programs consisted of several days of classroom learning with no follow-up sessions, even though people tend to forget what they have learned without regular reinforcement. As a result, many L&D functions are moving away from stand-alone programs by designing learning journeys—continuous learning opportunities that take place over a period of time and include L&D interventions such as fieldwork, pre- and post-classroom digital learning, social learning, on-the-job coaching and mentoring, and short workshops. The main objectives of a learning journey are to help people develop the required new competencies in the most effective and efficient way and to support the transfer of learning to the job.

5. Execution and scale-up

An established L&D agenda consists of a number of strategic initiatives that support capability building and are aligned with business goals, such as helping leaders develop high-performing teams or roll out safety training. The successful execution of L&D initiatives on time and on budget is critical to build and sustain support from business leaders.

L&D functions often face an overload of initiatives and insufficient funding. L&D leadership needs to maintain an ongoing discussion with business leaders about initiatives and priorities to ensure the requisite resources and support.

Many new L&D initiatives are initially targeted to a limited audience. A successful execution of a small pilot, such as an online orientation program for a specific audience, can lead to an even bigger impact once the program is rolled out to the entire enterprise. The program’s cost per person declines as companies benefit from economies of scale.

6. Measurement of impact on business performance

A learning strategy’s execution and impact should be measured using key performance indicators (KPIs). The first indicator looks at business excellence: how closely aligned all L&D initiatives and investments are with business priorities. The second KPI looks at learning excellence: whether learning interventions change people’s behavior and performance. Last, an operational-excellence KPI measures how well investments and resources in the corporate academy are used.

Accurate measurement is not simple, and many organizations still rely on traditional impact metrics such as learning-program satisfaction and completion scores. But high-performing organizations focus on outcomes-based metrics such as impact on individual performance, employee engagement, team effectiveness, and business-process improvement.

We have identified several lenses for articulating and measuring learning impact:

• Strategic alignment: How effectively does the learning strategy support the organization’s priorities?
• Capabilities: How well does the L&D function help colleagues build the mind-sets, skills, and expertise they need most? This impact can be measured by assessing people’s capability gaps against a comprehensive competency framework.
• Organizational health: To what extent does learning strengthen the overall health and DNA of the organization? Relevant dimensions of the McKinsey Organizational Health Index can provide a baseline.
• Individual peak performance: Beyond raw capabilities, how well does the L&D function help colleagues achieve maximum impact in their role while maintaining a healthy work-life balance?

Access to big data provides L&D functions with more opportunities to assess and predict the business impact of their interventions.

7. Integration of L&D interventions into HR processes

Just as L&D corporate-learning activities need to be aligned with the business, they should also be an integral part of the HR agenda. L&D has an important role to play in recruitment, onboarding, performance management, promotion, workforce, and succession planning. Our research shows that at best, many L&D functions have only loose connections to annual performance reviews and lack a structured approach and follow-up to performance-management practices.

L&D leadership must understand major HR management practices and processes and collaborate closely with HR leaders. The best L&D functions use consolidated development feedback from performance reviews as input for their capability-building agenda. A growing number of companies are replacing annual performance appraisals with frequent, in-the-moment feedback. 7 HCM outlook 2018 , Brandon Hall Group. This is another area in which the L&D function can help managers build skills to provide development feedback effectively.

Elevating Learning & Development: Insights and Practical Guidance from the Field

Another example is onboarding. Companies that have developed high-impact onboarding processes score better on employee engagement and satisfaction and lose fewer new hires. 8 HCM outlook 2018 , Brandon Hall Group. The L&D function can play a critical role in onboarding—for example, by helping people build the skills to be successful in their role, providing new hires with access to digital-learning technologies, and connecting them with other new hires and mentors.

8. Enabling of the 70:20:10 learning framework

Many L&D functions embrace a framework known as “70:20:10,” in which 70 percent of learning takes place on the job, 20 percent through interaction and collaboration, and 10 percent through formal-learning interventions such as classroom training and digital curricula. These percentages are general guidelines and vary by industry and organization. L&D functions have traditionally focused on the formal-learning component.

Today, L&D leaders must design and implement interventions that support informal learning, including coaching and mentoring, on-the-job instruction, apprenticeships, leadership shadowing, action-based learning, on-demand access to digital learning, and lunch-and-learn sessions. Social technologies play a growing role in connecting experts and creating and sharing knowledge.

9. Systems and learning technology applications

The most significant enablers for just-in-time learning are technology platforms and applications. Examples include next-generation learning-management systems, virtual classrooms, mobile-learning apps, embedded performance-support systems, polling software, learning-video platforms, learning-assessment and -measurement platforms, massive open online courses (MOOCs), and small private online courses (SPOCs), to name just a few.

The learning-technology industry has moved entirely to cloud-based platforms, which provide L&D functions with unlimited opportunities to plug and unplug systems and access the latest functionality without having to go through lengthy and expensive implementations of an on-premises system. L&D leaders must make sure that learning technologies fit into an overall system architecture that includes functionality to support the entire talent cycle, including recruitment, onboarding, performance management, L&D, real-time feedback tools, career management, succession planning, and rewards and recognition.

L&D leaders are increasingly aware of the challenges created by the fourth industrial revolution (technologies that are connecting the physical and digital worlds), but few have implemented large-scale transformation programs. Instead, most are slowly adapting their strategy and curricula as needed. However, with technology advancing at an ever-accelerating pace, L&D leaders can delay no longer: human capital is more important than ever and will be the primary factor in sustaining competitive advantage over the next few years.

The leaders of L&D functions need to revolutionize their approach by creating a learning strategy that aligns with business strategy and by identifying and enabling the capabilities needed to achieve success. This approach will result in robust curricula that employ every relevant and available learning method and technology. The most effective companies will invest in innovative L&D programs, remain flexible and agile, and build the human talent needed to master the digital age.

These changes entail some risk, and perhaps some trial and error, but the rewards are great.

A version of this chapter was published in TvOO Magazine in September 2016. It is also included in Elevating Learning & Development: Insights and Practical Guidance from the Field , August 2018.

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Jacqueline Brassey is director of Enduring Priorities Learning in McKinsey’s Amsterdam office, where Nick van Dam is an alumnus and senior adviser to the firm as well as professor and chief of the IE University (Madrid) Center for Learning Innovation; Lisa Christensen is a senior learning expert in the San Francisco office.

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How to Create a Social Media Marketing Strategy in 9 Easy Steps [Free Template]

Creating your social media marketing strategy doesn’t need to be painful. Create an effective plan for your business in 9 simple steps.

A social media marketing strategy is a summary of everything you plan to do and hope to achieve on social media. It guides your actions and lets you know whether you’re succeeding or failing.

The more specific your plan is, the more effective it will be. Keep it concise. Don’t make it so lofty and broad that it’s unattainable or impossible to measure.

In this post, we’ll walk you through a nine-step plan to create a winning social media strategy of your own. We’ve even got expert insights from Amanda Wood, Hootsuite’s Senior Manager of Social Marketing.

How to create a social media strategy:

Bonus: Get a free social media strategy template   to quickly and easily plan your own strategy. Also use it to track results and present the plan to your boss, teammates, and clients.

What is a social media marketing strategy?

A social media strategy is a document outlining your social media goals, the tactics you will use to achieve them and the metrics you will track to measure your progress.

Your social media marketing strategy should also list all of your existing and planned social media accounts along with goals specific to each platform you’re active on. These goals should align with your business’s larger digital marketing strategy.

Finally, a good social media plan should define the roles and responsibilities within your team and outline your reporting cadence.

Create. Schedule. Publish. Engage. Measure. Win.

Creating your own social media marketing strategy (video guide)

No time to read the whole article? Let Amanda, Hootsuite’s own Senior Manager of Social Media Marketing, guide you through our free social media marketing strategy template in less than 10 minutes:

How to create a social media marketing strategy in 9 steps

Step 1. choose goals that align to business objectives, set s.m.a.r.t. goals.

The first step to creating a winning social media strategy is to establish clear objectives and goals. Without goals, you have no way to measure success and return on investment (ROI) .

Each of your social media marketing goals should be SMART : s pecific, m easurable, a ttainable, r elevant and t ime-bound.

Psst: Need help getting started? We’ve got social strategy guides for small businesses , financial services , government , higher education , healthcare , real estate , law firms , and non-profits .

Oh, and if you need examples of smart social media goals , we’ve got you covered there too.

Once you’ve decided on your goals, track them in a social media strategy doc — grab our free template if you don’t have one already.

Track meaningful metrics

Vanity metrics like number of followers and likes are easy to track, but it’s hard to prove their real value. Instead, focus on things like engagement, click-through, and conversion rates.

For inspiration, take a look at these 19 essential social media metrics .

You may want to track different goals for different social media networks, or even different uses for each network.

For example, if you use LinkedIn to drive traffic to your website, you would measure click-throughs. If Instagram is for brand awareness, you might track the number of Instagram Story views. And if you advertise on Facebook, cost-per-click (CPC) is a common success metric.

Social media goals should align with your overall marketing objectives. This makes it easier to show the value of your work and secure buy-in from your boss.

Start developing a successful social media marketing plan by writing down at least three goals for social media.

“ It’s easy to get overwhelmed by deciding what to post and which metrics to track, but you need to focus on what you want to get out of social media to begin with,” says Amanda Wood, Hootsuite’s Senior Manager of Social Marketing. “Don’t just start posting and tracking everything: match your goals to your business, and your metrics to your goals.”

Step 2. Learn everything you can about your audience

Get to know your fans, followers, and customers as real people with real wants and needs, and you will know how to target and engage them on social media.

When it comes to your ideal customer, you should know things like:

• Average income
• Typical job title or industry

Here’s a simple guide and template for creating audience/buyer personas .

Don’t forget to document this information in your strategy doc!

Social media analytics can also provide a ton of valuable information about who your followers are, where they live, and how they interact with your brand on social media. These insights allow you to refine your strategy and better target your audience.

Jugnoo, an Uber-like service for auto-rickshaws in India, used Facebook Analytics to learn that 90% of their users who referred other customers were between 18- and 34-years-old, and 65% of that group was using Android. They used that information to target their ads, resulting in a 40% lower cost per referral.

Check out our guide to using social media analytics and the tools you need to track them .

Step 3. Get to know your competition

Odds are your competitors are already using social media, and that means you can learn from what they’re doing.

Conduct a competitive analysis

A competitive analysis allows you to understand who the competition is and what they’re doing well (and not so well). You’ll get a good sense of what’s expected in your industry, which will help you set social media targets of your own.

It will also help you spot opportunities and weaknesses you can document in your social strategy doc.

Maybe one of your competitors is dominant on Facebook, for example, but has put little effort into X (Twitter) or Instagram. You might want to focus on the social media platforms where your audience is underserved, rather than trying to win fans away from a dominant player.

Use social media listening

Social listening is another way to keep an eye on your competitors.

Do searches of the competition’s company name, account handles, and other relevant keywords on social media. Find out what they’re sharing and what other people are saying about them. If they’re using influencer marketing, how much engagement do those campaigns earn them?

Pro tip : Use Hootsuite Streams to monitor relevant keywords, hashtags and accounts in real-time.

Try Hootsuite for free. You can cancel anytime.

As you track, you may notice shifts in how your competitors and industry leaders are using social media. You may come across new, exciting trends. You might even spot specific social content or a campaign that really hits the mark—or totally bombs.

Use this kind of intel to optimize and inform your own social media marketing strategy.

Just don’t go overboard on the spy tactics, Amanda advises. “ Make sure you aren’t ALWAYS comparing yourself to the competition — it can be a distraction. I’d say checking in on a monthly basis is healthy. Otherwise, focus on your own strategy and results.”

Step 4. Do a social media audit

If you’re already using social media, take stock of your efforts so far. Ask yourself the following questions:

• What’s working, and what’s not?
• Who is engaging with you?
• What are your most valuable partnerships?
• Which networks does your target audience use?
• How does your social media presence compare to the competition?

Once you collect that information, you’ll be ready to start thinking about ways to improve.

We’ve created an easy-to-follow social media audit guide and template to walk you through each step of this process.

Your audit should give you a clear picture of what purpose each of your social accounts serves. If the purpose of an account isn’t clear, think about whether it’s worth keeping.

To help you decide, ask yourself the following questions:

• Is my audience here?
• If so, how are they using this platform?
• Can I use this account to help achieve my goals?

Asking these tough questions will keep your social media strategy focused.

Look for impostor accounts

During the audit, you may discover fake accounts using your business name or the names of your products.

These imposters can be harmful to your brand—never mind that they’re capturing followers that should be yours.

You may want to get your accounts verified too to ensure your fans know they are dealing with the real you.

Here’s how to get verified on:

• X (Twitter)

Step 5. Set up accounts and improve profiles

Decide which networks to use.

As you decide which social networks to use, you will also need to define your strategy for each.

Benefit Cosmetics’ social media manager, Angela Purcaro, told eMarketer : “For our makeup tutorials … we’re all about Snapchat and Instagram Stories. [X], on the other hand, is designated for customer service.”

Hootsuite’s own social team even designates different purposes for formats within networks. On Instagram, for example, they use the feed to post high-quality educational infographics and product announcements and Stories to cover live events or quick social media updates.

View this post on Instagram A post shared by Hootsuite 🦉 (@hootsuite)

Pro tip : Write out a mission statement for each network. A one-sentence declaration to keep you focused on a specific goal.

Example: “We will use X for customer support to keep email and call volumes down.”

Or: “We will use LinkedIn for promoting and sharing our company culture to help with recruitment and employee advocacy.”

One more: “We will use Instagram to highlight new products and repost quality content from influencers.”

If you can’t create a solid mission statement for a particular social media channel, you may want to ask yourself if it’s worth it.

Note : While larger businesses can and do tackle every platform, small businesses may not be able to — and that’s ok! Prioritize social platforms that will have the most impact on your business and make sure your marketing team has the resources to handle content for those networks. If you need help focusing your efforts, check out our 18-minute social media plan .

Set up your profiles

Once you’ve decided which networks to focus on, it’s time to create your profiles. Or improve existing ones so they align with your strategy.

• Make sure you fill out all profile fields
• Include keywords people would use to search for your business
• Use consistent branding (logos, images, etc.) across networks so your profiles are easily recognizable

Pro tip : Use high-quality images that follow the recommended dimensions for each network. Check out our always-up-to-date social media image size cheat sheet for quick reference.

We’ve also got step-by-step guides for each network to walk you through the process:

• Create a Facebook business page
• Create an Instagram business account
• Create a TikTok account
• Create a X (Twitter) business account
• Create a Snapchat account
• Create a LinkedIn Company Page
• Create a Pinterest business account
• Create a YouTube channel

Don’t let this list overwhelm you. Remember, it’s better to use fewer channels well than to stretch yourself thin trying to maintain a presence on every network.

Optimize your profiles (and content) for search

Never heard of social SEO ? It’s time to learn.

44% of Gen Z consumers use social platforms to research their purchase decisions, which means it’s extra critical that your channels are optimized for social search.

That means making sure your profile names are clear and descriptive, you’re including relevant hashtags and keywords in your bio and on every post, and you’re using features like alt text and captions to include your target keywords as naturally as possible.

Step 6. Find inspiration

While it’s important that your brand be unique, you can still draw inspiration from other businesses that are great on social.

“ I consider it my job to stay active on social: to know what’s trending, which campaigns are winning, what’s new with the platforms, who’s going above and beyond,” says Amanda. “This might be the most fun step for you, or the hardest one, but it’s just as crucial as the rest of them.”

Social media success stories

You can usually find these on the business section of the social network’s website. ( Here’s Facebook’s , for example.)

Case studies can offer valuable insights that you can apply to your own social media plan.

Award-winning accounts and campaigns

You could also check out the winners of The Facebook Awards or The Shorty Awards for examples of brands that are at the top of their social media game.

For learning and a laugh, check out Fridge-Worthy, Hootsuite’s bi-weekly awards show highlighting brands doing smart and clever things on social media.

Your favorite brands on social media

Who do you enjoy following on social media? What do they do that compels people to engage and share their content?

National Geographic, for example, is one of the best on Instagram, combining stunning visuals with compelling captions.

View this post on Instagram A post shared by National Geographic (@natgeo)

Then there’s Shopify. The ecommerce brand uses Facebook to sell themselves by showcasing customer stories and case studies.

And Lush Cosmetics is a great example of superior customer service on X. They use their 280 characters to answer questions and solve problems in an extremely charming and on-brand way.

Source: lushcosmetics on X

Notice that each of these accounts has a consistent voice, tone, and style. That’s key to letting people know what to expect from your feed. That is, why should they follow you? What’s in it for them?

Consistency also helps keep your content on-brand even if you have multiple people on your social media team.

For more on this, read our guide on establishing a compelling brand voice on social media .

Ask your followers

Consumers can also offer social media inspiration.

What are your target customers talking about online? What can you learn about their wants and needs?

If you have existing social channels, you could also ask your followers what they want from you. Just make sure that you follow through and deliver what they ask for.

Step 7. Create a social media content calendar

Sharing great content is essential, of course, but it’s equally important to have a plan in place for when you’ll share content to get the maximum impact.

Your social media content calendar also needs to account for the time you spend interacting with the audience (although you need to allow for some spontaneous engagement as well).

Set your posting schedule

Your social media content calendar lists the dates and times at which you will publish types of content on each channel. It’s the perfect place to plan all of your social media activities—from images, link sharing, and re-shares of user-generated content to blog posts and videos. It includes both your day-to-day posting and content for social media campaigns.

Your calendar also ensures your posts are spaced out appropriately and published at the best times to post .

Pro tip: You can plan your whole content calendar and get recommended best times to post on every network based on your past engagement rate, impressions, or link click data in Hootsuite.

Hootsuite’s Best Time to Publish feature

Determine the right content mix

Make sure your content strategy and calendar reflect the mission statement you’ve assigned to each social profile, so that everything you post is working to support your business goals.

(We know, it’s tempting to jump on every meme, but there should always be a strategy behind your social media marketing efforts!)

You might decide that:

• 50% of content will drive traffic back to your website
• 25% of content will be curated from other sources
• 20% of content will support lead-generation goals (newsletter sign-ups, ebook downloads, etc.)
• 5% of content will be about your company culture

Placing these different post types in your content calendar will ensure you maintain the right mix.

If you’re starting from scratch and you’re not sure what types of content to post, try the 80-20 rule :

• 80% of your posts should inform, educate, or entertain your audience
• 20% can directly promote your brand.

You could also try the social media content marketing rule of thirds :

• One-third of your content promotes your business, converts readers, and generates profit.
• One-third of your content shares ideas and stories from thought leaders in your industry or like-minded businesses.
• One-third of your content is personal interactions with your audience

Whatever you decide on, be sure to document it in your strategy doc.

Don’t post too much or too little

If you’re starting a social media marketing strategy from scratch, you may not have figured out how often to post to each network for maximum engagement yet.

Post too frequently and you risk annoying your audience. But, if you post too little, you risk looking like you’re not worth following.

Start with these posting frequency recommendations:

• Instagram (feed): 3-7 times per week
• TikTok: 3-5 times per week
• Facebook: 1-2 times per day
• X (Twitter): 1-5 times per day
• LinkedIn: 1-5 times per day

Pro tip : Once you have your social media content calendar planned out, use a scheduling tool to prepare messages in advance rather than updating constantly throughout the day.

We might be biased, but we think Hootsuite is the best social media management tool. You can schedule social media posts to every network and the intuitive calendar view gives you a full picture of all your social activity each week.

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Step 8. Create compelling content

Remember those mission statements you created for each channel in Step 5? Well, it’s time to go a bit deeper, a.k.a. provide some examples of the type of content you’ll post to fulfill your mission on each network.

If you’re not sure what to post, here’s a long list of social media content ideas to get you started. Or (to make it even easier) you can use an AI tool like OwlyWriter to generate on-brand content in a flash.

The idea here is to:

• Keep your content aligned with the purpose of each network;
• Show other stakeholders (if applicable) what kind of content they can expect to see on each network.

This last point especially will help you avoid any tension when your colleagues want to know why you haven’t posted their case study/whitepaper/blog post to TikTok yet. It’s not in the strategy, Linda!

Ideally, you will generate content types that are both suited to the network and the purpose you’ve set out for that network.

For example, you wouldn’t want to waste time posting brand awareness tweets if you’ve designated X/Twitter for primarily customer support. And you wouldn’t want to post super polished corporate video ads to TikTok, as users expect to see short, unpolished videos on that platform.

It might take some testing over time to figure out which type of content works best on which type of network, so prepare to update this section frequently.

We won’t lie: content creation isn’t as easy as everyone not on the social team seems to think. But if you’re struggling, Amanda suggests going back to basics.

The first question to ask is: is there cohesion between your content types? Is your content providing value? Do you have a good mix of entertaining, or educational content? What does it offer that makes a person stop and spend time? Creating a few different content pillars or categories that encompass different aspects of storytelling for your brand, and what you can offer your audience is a good start.

This brings us to Step 9.

Step 9. Track performance and make adjustments

Your social media marketing strategy is a hugely important document for your business, and you can’t assume you’ll get it exactly right on the first try.

As you start to implement your plan and track your results, you may find that some strategies don’t work as well as you’d anticipated, while others are working even better than expected.

That’s why it’s important to document your progress along the way.

Look at performance metrics

In addition to the analytics within each social network (see Step 2), you can use UTM parameters to track social visitors as they move through your website, so you can see exactly which social posts drive the most traffic to your website.

Benchmark your results

You’ve got your numbers, but how do they stack up to the competition in your industry? Industry benchmarks are a great way to evaluate your performance against other businesses in your category.

If you’ve got Hootsuite Analytics , you can use our built-in social media benchmarking tool to compare the performance of your social accounts against the average of brands in your industry with just a couple of clicks.

You can set up custom timeframes, switch between networks — Instagram, Facebook, X (Twitter), LinkedIn, and TikTok — and look up benchmarks for metrics like followers, audience growth rate, engagement rate, clicks, shares, and much more.

You’ll also find resources to improve your performance  right in the summary section:

Re-evaluate, test, and do it all again

Once this data starts coming in, use it to re-evaluate your strategy regularly. You can also use this information to test different posts, social marketing campaigns, and strategies against one another. Constant testing allows you to understand what works and what doesn’t, so you can refine your social media marketing strategy in real time.

You’ll want to check the performance of all your channels at least once a week and get to know the basics of social media reporting so you can track your growth over time.

Pro tip: If you use Hootsuite, you can review the performance of all your posts on every network in one place. Once you get the hang of checking your analytics, you may even want to customize different reports to show specific metrics over a variety of different time periods.

Surveys can also be a great way to find out how well your social media strategy is working. Ask your followers, email list, and website visitors whether you’re meeting their needs and expectations, and what they’d like to see more of. Then make sure to deliver on what they tell you.

Finalizing your social media strategy

Spoiler alert: nothing is final.

Social media moves fast. New networks emerge, others go through demographic shifts.

Your business will go through periods of change as well.

All of this means that your social media marketing strategy should be a living document that you review and adjust as needed. Refer to it often to stay on track, but don’t be afraid to make changes so that it better reflects new goals, tools, or plans.

When you update your social strategy, make sure to watch our 5-step video on how to updating your social media strategy for 2024:

Social media strategy template

Ready to start documenting? Grab your free social media strategy template below!

What’s next? When you’re ready to put your plan into action, we’re here to help…

Save time managing your social media marketing strategy with Hootsuite. From a single dashboard you can easily:

• Plan, create, and schedule posts to every network
• Track relevant keywords, topics, and accounts
• Stay on top of engagement with a universal inbox
• Get easy-to-understand performance reports and improve your strategy as needed

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With files from Shannon Tien .

Do it better with Hootsuite , the all-in-one social media tool. Stay on top of things, grow, and beat the competition.

Become a better social marketer.

Get expert social media advice delivered straight to your inbox.

Christina Newberry is an award-winning writer and editor whose greatest passions include food, travel, urban gardening, and the Oxford comma—not necessarily in that order.

Amanda Wood is a senior social marketing professional who combines analytical and creative thinking to build brands.

As head of social at Hootsuite, Amanda oversees the global social strategy encompassing organic and paid social on Instagram, Facebook, Twitter, TikTok, and LinkedIn, a social engagement and listening strategy, and an employee advocacy program.

As the leader of a high-performing social team, she has extensive experience collaborating with creatives to bring campaigns to life on social and drive business results.

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Data Science Principles

Are you prepared for our data-driven world.

Data Science Principles is a Harvard Online course that gives you an overview of data science with a code- and math-free introduction to prediction, causality, data wrangling, privacy, and ethics.

What You'll Learn

What is data science, and how can it help you make sense of the infinite data, metrics, and tools that are available today? 

Data science is at the core of any growing modern business, from health care to government to advertising and more. Insights gathered from data science collection and analysis practices have the potential to increase quality, effectiveness, and efficiency of work output in professional and personal situations. 

Data Science Principles makes the foundational topics in data science approachable and relevant by using real-world examples that prompt you to think critically about applying these understandings to your workplace. Get an overview of data science with a nearly code- and math-free introduction to prediction, causality, visualization, data wrangling, privacy, and ethics. 

Data Science Principles is an introduction to data science course for anyone who wants to positively impact outcomes and understand insights from their company’s data collection and analysis efforts. This online certificate course will prepare you to speak the language of data science and contribute to data-oriented discussions within your company and daily life. This is a course for beginners and managers to better understand what data science is and how to work with data scientists.

Data Science Principles is part of our Harvard on Digital Learning Path.

The Harvard on Digital course series provides the frameworks and methodologies to turn data into insight, technologies into strategy, and opportunities into value and responsibility to lead with data-driven decision making.

Explore More Courses in this Learning Path

The course is part of the Harvard on Digital Learning Path and will be delivered via  HBS Online’s course platform .  Learners will be immersed in real-world examples from experts at industry-leading organizations.  By the end of the course, participants will be able to:

• Understand the modern data science landscape and technical terminology for a data-driven world
• Recognize major concepts and tools in the field of data science and determine where they can be appropriately applied
• Appreciate the importance of curating, organizing, and wrangling data
• Explain uncertainty, causality, and data quality—and the ways they relate to each other
• Predict the consequences of data use and misuse and know when more data may be needed or when to change approaches

Your Instructor

Dustin Tingley  is a data scientist at Harvard University. He is Professor of Government and Deputy Vice Provost for Advances in Learning and helps to direct Harvard's education focused data science and technology team. Professor Tingley has helped a variety of organizations use the tools of data science and he has helped to develop machine learning algorithms and accompanying software for the social sciences. He has written on a variety of topics using data science techniques, including education, politics, and economics.

Real World Case Studies

Affiliations are listed for identification purposes only.

Mauricio Santillana

Listen to Harvard Professor and faculty member at Boston Children’s Hospital analyze Google Flu, its failures, and lessons learned.

Latanya Sweeney

Explore the difficulties faced in keeping data anonymous and private with Harvard Professor and Director of the Data Privacy Lab in IQSS at Harvard.

Dan Restuccia

Learn how Burning Glass Technologies uses text analysis to recommend job openings, skill development, and labor market trends.

Available Discounts and Benefits for Groups and Individuals

Experience Harvard Online by utilizing our wide variety of discount programs for individuals and groups. 

Past participant discounts.

Learners who have enrolled in at least one qualifying Harvard Online program hosted on the HBS Online platform are eligible to receive a 30% discount on this course, regardless of completion or certificate status in the first purchased program. Past Participant Discounts are automatically applied to the Program Fee upon time of payment.  Learn more here .

Learners who have earned a verified certificate for a HarvardX course hosted on the  edX platform  are eligible to receive a 30% discount on this course using a discount code. Discounts are not available after you've submitted payment, so if you think you are eligible for a discount on a registration, please check your email for a code or contact us .

Nonprofit, Government, Military, and Education Discounts

For this course we offer a 30% discount for learners who work in the nonprofit, government, military, or education fields. 

Eligibility is determined by a prospective learner’s email address, ending in .org, .gov, .mil, or .edu. Interested learners can apply below for the discount and, if eligible, will receive a promo code to enter when completing payment information to enroll in a Harvard Online program. Click here to apply for these discounts.

Gather your team to experience Data Science Principles and other Harvard Online courses to enjoy the benefits of learning together: 

• Single invoicing for groups of 10 or more
• Tiered discounts and pricing available with up to 50% off
• Growth reports on your team's progress
• Flexible course and partnership plans 

Learn more and enroll your team ! 

Who Will Benefit

Students and Recent Graduates

Prepare for your career by building a foundation of the essential concepts, vocabulary, skills, and intuition necessary for business.

Early- and Mid-Career Professionals

Recognize how data is changing industries and think critically about how to develop a data-driven mindset to prepare you for your next opportunity.

Marketing and Project Management Professionals

Learn how data science techniques can be essential to your industry and how to contribute to cross-functional, data-oriented discussions.

Learner Testimonials

"This is a topic that people in any industry should have at least basic knowledge of in order to create more efficient and competitive businesses, tools, and resources."

Carlos E. Sapene CEO, Chief Strategy Officer

"I found value in the real-world examples in Data Science Principles. With complicated topics and new terms, it's especially beneficial for learnings to be able to tie back new or abstract concepts to ideas that we understand. This course helped me understand data in this context and what algorithms are actually trying to solve."

Alejandro D. Financial Services Analyst

"Data Science Principles applies to many aspects of our daily lives. The course helps guide people in everyday life through decision making and process thinking."

Jared D. Senior Director of Sales

"The way this complicated topic was presented and the reflection it caused was impressive. I enjoyed the way I could dive into a whole new world of expertise in such an engaging way with all these various tools such as videos, peer discussions, polls, and quizzes."

Sonja Schwetje Managing Director/Editor-in-Chief, ntv

Data Science Principles makes the fundamental topics in data science approachable and relevant by using real-world examples and prompts learners to think critically about applying these new understandings to their own workplace. Get an overview of data science with a nearly code- and math-free introduction to prediction, causality, visualization, data wrangling, privacy, and ethics.

Download Full Syllabus

• Study a flu detection case study alongside Professor Dustin Tingley and Mauricio Santillana , Assistant Professor at Harvard’s T.H. Chan School of Public Health.
• Explain why data collection is important.
• Identify factors that may affect data quality.
• Recognize that not all data is numerical.
• Explain how the organization of data can affect the information you are able to extract from it.
• Study a predicting sepsis case alongside Craig Umscheid , Vice President and Chief Quality and Innovation Office, University of Chicago Medicine.
• Understand the basic structure of a predictive algorithm.
• Identify where human decisions shape predictive systems.
• Evaluate the success of a predictive system.  
• Study The Google Tax Case. 
• Explain why it is important to establish causal relationships.
• Identify barriers to establishing causal relationships in a variety of settings.
• Identify why randomization can help establish a causal relationship but also create other problems.  
• Explore a privacy and facial recognition case study with Latanya Sweeney , Professor of the Practice of Government and Technology at the Harvard Kennedy School and Sciences, director and founder of the Public Interest Tech Lab , and director and founder of the Data Privacy Lab .
• Explain why data privacy is important.
• Describe what can constitute a violation of privacy.
• Critique existing privacy policies.
• Create a set of ethical tenets to guide data work at their own organizations.  
• Study the Burning Glass and Text Data case.
• Identify sources of non-numerical data.
• Explain why it would be useful to use non-numerical data.
• Describe the differences in approach for supervised and unsupervised learning.
• Identify use cases for neural networks.  
• Explore a case study on reducing food waste with Shelf Engine.
• Describe some algorithms commonly used in data science.
• Understand basic workhorse algorithms in data science such as regression.
• Explain why and how such tools are made substantially more complex.
• Explain the crucial role humans have in overseeing and maintaining algorithms.
• Explain some of the trade-offs between more sophisticated algorithms, including the costs of running and evaluating their success.
• Learn about the Harvard Link case study.
• Explain the importance of data transformation and wrangling.
• List the common technologies used within data science ecosystems.
• Describe the connection between data science tasks, software tools, and hardware tools.
• Identify potential sources of bottlenecks in the data science process.  
• Work on a health care prioritization case study.
• Recognize a problem that an algorithm might be able to solve.
• Recognize the challenges created by using data science tools in ways outside their intended use.
• Identify steps within the data science process that need auditing.  

Earn Your Certificate

Enroll today in Harvard Online's Data Science Principles course.

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Explore and connect to our courses via articles, webinars, and more.

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