IP INNO FOREST, 4 September 2007, Sopron Carmen Nastase Enterprise level tools for innovations, business plan

Innovations and entrepreneurship  Innovation and entrepreneurship are considerer in European Union as increasing economics vector, competitiveness and rural development.  The successful entrepreneurial is usually based on a significant innovation.  Innovation activities are one of the important reactions to the challenges.

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

Innovation behavior of the enterprise  External factors - market environment characteristics - regional institutional characteristics - policy institutions  Internal factors - organizational - personal - financial, etc

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

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.

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

Tools for innovations processes  Idea generation – brainstorming, macro screening, micro screening, SWOT analysis  Feasibility  Capability  Launch & Rollout

Idea generation & brainstorming  Brainstorming is a dynamic tool, where quantities of ideas are offered with no criticism.  It can help people solve problems, develop new products or services and increase productivity.  The brainstorming is a good initial one for the Business Plan to generate and select ideas of products/services business.

Brainstorming  All members of the group must participate. Be creative. The more ideas, the better.  No idea should be blocked.  All ideas will be respected and not evaluated. Do not criticise or judge. All ideas are equally valid at this point.  Ideas already mentioned must be avoided.  The ideas should not be detailed. Keep ideas brief, do not tell stories

Macro screening  The Macro Screening is a very important step positioned between the project idea generation and the final decision about the most promising business idea.  Macro Screening helps to do a first selection; it’s like pouring all these ideas into a funnel.

Micro screening  The Micro Screening links the macro screening with the SWOT Analysis (strengths, weaknesses, opportunities, threats), hence being the crucial nexus between these two.  It adds quality to the selection process by adding different parameters related to economic judgements (market, skill availability, technology, etc.).

Micro Screening Table PROJECT good or service Solvent demand Availabilit y of qualified personnel Availabilit y of technolog y / equipmen t Availabilit y of raw material TOTALCompetit ors Corrected TOTAL Critical success factors ( + ) ( = )( - )( = ) Scoring system: 5 – extremely high ; 4 –high ; 3 – average ; 2 – fair; 1 – poor; 0 – absent Critical success factors: write text

SWOT analysis  The SWOT Analysis (strengths, weaknesses, opportunities, threats) is based on these concrete project ideas.  It is quite a simple but very powerful tool which enables the participants to do a proper comparison of the last three projects remaining after the micro screening process.

Innovation Life Cycle Process  Ideation  Concept development  Evaluation (business and technical)  Commercialization  Improvement innovation

Business plan based on  Entrepreneurship  The business idea  Business areas

What is outline of your business plan? Please divided in the working groups and find the standard outline of a business plan – 5 min.

For preparing a Business Plan we must answer a following questions: 1.WHAT is a Business Plan? 2.WHO needs a Business Plan? 3.HOW to 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.

prezentation plan working plan mini-plan Business 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 element. 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.

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

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.

Individual GANTT Chart Table (example) Months Activities 2/993/994/995/996/997/998/999/9910/9911/9912/991/00 Seek legal advice Choose land and buy Plan plant layout Finalise loan Register Order machines Prepare plant Advertise Recruit personnel Install machines Trial production Open business

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.  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

 When a business plan is being worked out, there are too many big questions, the answers of which only the entrepreneur can know, that are far too important to be left to someone else who claims that he can spare the entrepreneur the trouble of preparing his own business plan - no one can do it better than you!

Summary  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.

Every business need an innovation engine to generate the great ideas that will propel the business forward into the future. Thank you for attention!