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Month October 2013

Business planning rationale & considerations

Strategic & Business Plans Are Critical

Primary Reasons To Develop A Business Plan

  1. To map the future in order to get where you need to be “on-time”
  2. To support growth & funding or the “investment” of others in the project
  3. To develop & communicate a course of action
  4. To help manage a budget & cash
  5. To support a strategic launch and or exit
  6. For organization, accountability & leadership

Key Considerations When Developing The Plan

  1. Write from an external perspective with analysis and clear thinking
  2. Understand & plan for internal & external challenges
  3. Research/understand supply side (mfg. & demand side issues thoroughly)
  4. Understand your competition
  5. Attention to detail—credible projections and assumptions
  6. Focus on the opportunity—unique business propositions/will it work
  7. Ensure all areas are covered
  8. Attention to detail in economic models and financials
  9. Executive summary must stand on its own
  10. Formalize a robust review process
  11. Assign clear and logical accountability

Key Components of a Valuable Strategic Business Plan

  1. Objectives
  2. Executive review
  3. Technology/Manufacturing/Engineering
  4. Market analysis
  5. Supply & demand analysis—vetting & advance contracts where possible
  6. Environmental analysis
  7. Company analysis (mgmt./org./IP/funding/history/needs/success factors)
  8. Competitive analysis
  9. Business & market strategy to manage the immediate items above
  10. A carefully developed and answered SWOT assessment
  11. Business model [definition]
  12. Financial analysis/ Economic model
  13. Tactical implementation for all Strategies

Understanding economics in the news

There are three kinds of economics: curve-shifting, pop-art, and media. Formal theorizing favored by academic economists usually involves shifting curves on diagrams, so it is called curve-shifting economics. Its technical character makes it suitable mainly for those seeking degrees in economics. Pop-art economics is found in economic best-sellers. Although fun, it is too often harebrained. Media Economics is the economics encountered on the business pages of newspapers and on television, etc. This is what business people and interested laypersons need to know about economics, and what students should be learning about economics in addition to curve-shifting.

These types of economics each have two variants: microeconomics and macroeconomics. The former analyzes the behavior of individual firms and consumers, with attention focused on issues such as how consumers make choices, how firms determine prices, and the implications of government-imposed sales taxes or quotas. The latter, looks at the big picture, analyzing economy wide variables such as inflation, unemployment, interest rates, and exchange rates. Attention here focuses on issues such as what determines business cycles, how interest rates are set, and the implications of the government’s printing more money or fixing the exchange rate, etc.

Media economics consists of up-and-down economics, focusing on understanding what causes economic numbers such as interest rates, unemployment, or inflation to go up or down, and economic policy evaluation, focusing on adjusting the merit of government policy.

Really Important Macroeconomic Ideas

  • Everything Depends on Everything Else
  • Gross Deceptive Product (i.e., Gross Domestic Product)
  • Discouraged/Encouraged Workers
  • The Multiplier
  • The Natural Rate of Unemployment
  • Productivity
  • Printing Money
  • Inflation and Money-Supply Growth
  • Interest Rates and Bond Prices
  • Real-versus-Nominal Interest Rates
  • Inflation Asymmetry
  • Trade Deficit
  • Monetary Policy Lost under Fixed Exchange Rates
  • Purchasing Power Parity
  • Interest Rate Parity

For further reading see: Macroeconomic Essentials