Enterprise level tools for

innovation, business plan

Carmen Nastase
Erasmus IP, Iisalmi 23 May 2005
 Innovation and
entrepreneurship in forestry

 Innovation activities are one of the important

reactions to the challenges in the forestry sector.

 Innovations between:

- Product innovation - are successful changes in

the output of an enterprise or organization

- Process innovation - can either be technological

innovations or innovations in the organization of
the enterprise or organization.
 The situation regarding innovation
an entrepreneurship in forestry

 Innovation system presents actors, institutions

and their relations and interactions which are
involved in the innovations.

 Innovation process:
- new idea;
- interest;
- evaluation;
- trial stage;
- implementation/adaptation.
 Innovation behavior of the
firm

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

 Organizational
- size of company, resources;
- quality of workforce;
- goals;
- strategy;
- organizational structure.
 Personal
- entrepreneurial orientation;
- information behavior;
- communication behavior.
 macro-level
governance structural extension services,
system change consultancy
Information exchange

micro- labour forest-

resources enterprise costumers/
level knowledge consumers
product-, process-,
finance innovation

information
research & exchange markets/
education competitors
 Entrepreneurship development

 Entrepreneurship can be defined as the process of

using private initiative to transform a business concept
into a new venture or to grow and diversify an existing
venture or enterprise with high growth potential.
 Entrepreneurs identify an innovation to seize an
opportunity, mobilize money and management skills,
and take calculated risks to open markets for new
products, processes and services.
 Innovation idea

 Sources for innovative ideas

 Check your idea

 Check yourself

 Analyse market, customers and environment

 Analyse your existing business

 Analyzemarket,
Analyze market,
customersand
customers and
environment;
environment;
Analyzeyour
Analyze your
existingbusiness
existing business

Innovation
Innovation
idea
idea Evaluation
Evaluation Implementation
Implementation Results
Results
Sourcesfor
Sources for level
level
innovative
innovative
idea
idea
Checkyour
Check your
idea;
idea;
Checkyourself
Check yourself
Business plan based of

Entrepreneurship
The business idea
Business areas
For preparing a Business Plan we must to answer a
3 questions:

1. WHAT is a Business Plan?

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

working prezentation
mini-plan
plan plan
 The Different Types of Business Plans

Business plans are also called:

- strategic plans
- investment plans
- expansion plans
- operational plans
- annual plans
- internal plans
- growth plans
- product plans
- feasibility plans and many other names.
 2. Who needs a business
plan?

 You need a business plan if you’re running a

business;
 You need a business plan if you’re applying for a
business loan;
 You need a business plan if you’re looking for
business investment, new products or new services;
 You need a business plan to communicate with a
management team.
3. How prepare a business plan?
 Is There a Standard
Business Plan?

 A normal business plan, includes a

standard set of elements. Plan formats and
outlines vary, but generally a plan will include
components such as descriptions of the company,
product or service, market, forecasts,
management team, and financial analysis.

 Your plan will depend on your specific situation.

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

 Business aspects advise: adresses for financing

advise,legal advice, marketing advice
 Figures
 Tables
 Graphs
 Other sectors advice: research institutes,
interests groups, administration, other key
innovation areas.
Planning is a Process, Not
Just a Plan
 Successful implementation starts
with a good plan

 Is the plan simple?

 Is the plan specific? specific budgets?
 Is the plan realistic?
 Is the plan complete?.
 Preparing a business plan

 Define and fix objectives, and programs to

achieve those objectives.
 Create regular business review and course
correction.
 Define a new business.
 Support a loan application.
 Define agreements between partners.
 Set a value on a business for sale or legal
purposes.
 Evaluate a new product line, promotion, or
expansion.
 Keys to Better Business
Plans

 Use a business plan to set concrete goals,

responsibilities, and deadlines to guide your
business.
 A good business plan assigns tasks to people or
departments and sets milestones and deadlines
for tracking implementation.
 As part of the implementation of a business plan,
it should provide a forum for regular review and
course corrections.
 Good business plans are practical.
 Business Plan "Don'ts"

 Don't use a business plan to show how much you

know about your business.

 Nobody reads a long-winded business plan: not

bankers, bosses, nor venture capitalists. Years
ago, people were favorably impressed by long
plans. Today, nobody is interested in a business
plan more than 50 pages long.
 How Long Should a
Business Plan Be?

 Page count is not a good way to measure length.

 A 20-page plan with dense text and no graphics is much
longer than a 35-page plan broken up into readable
bullet points, useful illustrations of locations or
products, and business charts to illustrate important
projections. Measure a plan by readability and
summarization.
 A good business plan should leave a reader a good
general idea of its main contents even after only a quick
skimming, browsing the main points, in 15 minutes.
 Format, headings, white space, and illustrations make a
big difference. Summaries are very important. Main
points should show up in a business plan as quickly as
they do in a business presentation.
 The right length of the plan depends on the
nature and purpose of the plan

 Will it include descriptions of the company and

management team for outsiders to read;
 Does it need an executive summary good enough
to stand alone;
 Does it include detailed research, plans, drawings,
and blueprints;
 Is it worded to withstand legal scrutiny as part of
an investment proposal.
BUSINESS PLAN

Standard Outline
 EXECUTIVE SUMMARY

 Brief Description of the Project

 Brief Profile of the Entrepreneur
 Project's Contributions to the Economy

 Write this last. It's just a page or two of

highlights.
 Section 1MARKETING PLAN

 Description of the Product

 Comparison of the Product with Its Competitors'
 Location
 Market Area
 Main Customers
 Total Demand
 Market Share
 Selling Price
 Sales Forecast
 Promotional Measures
 Marketing Strategy
 Marketing Budget
 Section 2 PRODUCTION PLAN

 Production Process (fixed capital, life of fixed

capital)
 Planned Capacity - Future Capacity
 Terms and Conditions of Purchase of Equipment
 Factory Location and Layout
 Raw Materials Needed - Cost of Raw Materials -
Raw Materials Availability
 Labour
 Cost of Labour
 Labour Availability - Labour Productivity
 Factory Overhead Expenses
 Production Cost
 Section 3 ORGANIZATION &
MANAGEMENT PLAN

 Form of Business
 Organisational Structure
 Business Experience and Qualifications of the
Entrepreneur
 Pre-Operating Activities
 Pre-Operating Expenses
 Office Equipment
 Administrative Expenses
 Section 4 FINANCIAL PLAN

 Project Cost
 Financing Plan and Loan Requirement
 Security for Loan
 Profit and Loss Statement
 Cash Flow Statement
 Balance Sheet
 Loan Repayment Schedule
 Break-even Point (BEP)
 Return on Investment (ROI)
 Financial Analysis
 BUSINESS PLAN
GUIDE QUESTIONS
EXECUTIVE SUMMARY

 What is the nature of the project?

 What are the entrepreneur's competencies and
qualifications?
 What are the project's contributions to the local
and national economy?
 Section 1 MARKETING
PLAN

 What is the product?

 How does it compare in quality and price with its
competitors?
 Where will the business be located?
 Within the market area, to whom will the business
sell its products?
 What share or percent of this market can be
captured by the business?
 What is the selling price of the product?
 What marketing strategy is needed to ensure that
sales forecasts are achieved?
 How much do you need to promote and distribute
your product?
 Section 2 PRODUCTION
PLAN

 What is the production process?

 What buildings and machinery (fixed assets) are
needed and what will be their cost?
 What is the useful life of the building and
machinery?
 When and where can the machinery be obtained?
 How much capacity will be used?
 When and how will the machinery be paid for?
 Where will the factory be located and how will the
factory be arranged?
 What is the production cost per unit?
 Section 3
ORGANISATION &
MANAGEMENT PLAN
 How will the business be organised?
 How will the business be managed and operated?
 What is the business experience and
qualifications of the entrepreneur?
 What pre-operating activities must be undertaken
before the business can operate?
 What pre-operating expenses will be incurred?
 What fixed assets will be required for the office?
 What administrative cost will be incurred?
 Section 4FINANCIAL PLAN

 What is the total capital requirement?

 Is a loan needed? What will be the equity
contribution of the entrepreneur? And how much?
 What security (collateral) can be given to the
bank?
 What does the Profit and Loss Statement indicate?
 What does the Cash Flow Statement indicate?
 What does the Balance Sheet indicate?
 What is the loan repayment schedule?
 What is the break-even point (BEP)?
 What is the return on investment (ROI)?
 Remember, strategy is focus. A priority list with
3-4 items is focus. A priority list with 20 items is
certainly not strategic, and rarely if ever effective.
The more items on the list, the less the
importance of each.
 Sales grow slowly at first, but then shoot up
boldly with huge growth rates, as soon as
'something' happens. Have projections that are
conservative so you can defend them. When in
doubt, be less optimistic.
 CONCLUSIONS

- A proper business plan serves as a map.

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

 Innovation and entrepreneurship - how to

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