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Non-Financial Progress Financial information is important, but incomplete. The qualitative or non-financial aspects of corporate performance may provide stronger insights than historical financial performance. Has employee morale increased? Has employee skill increased, through coaching, training and good hiring? Has management quality increased, through coaching, training and good hiring?

Have company products maintained their competitive position? Has there been an increase in the quality and effectiveness of Operations? Has there been an increase in the quality and effectiveness of Marketing? Has there been an increase in the quality and effectiveness of Administration? Has there been a steady increase in focus on satisfying key customers?

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Has the company identified the three key areas in which it must excel? If yes, list them.

Five (5) Key Planning Areas for Your Business Future – GT Growth and Transition Strategies, LLC

Has the company significantly improved in the three key areas? Experience is the great teacher and the great misdirecter. Some lessons may have been right at the time but are no longer valid and some conclusions may not have been valid at any time applies to individuals as well as businesses. List the 3 - 5 events, trends or themes that have had a major impact on the company over the last 5 years.

Then, describe how the company's mentality was shaped. What prejudices and assumptions now have a big influence on the company's self-image and its implicit perception of its strengths, weaknesses, employees, suppliers and customers? What lessons were learned? What lessons should have been learned? Example - Wrong Lessons Learned A retail business started a second store, which was unsuccessful.

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The owners concluded 'we should stick to one store, where our key strength is. Therefore, before we open another store, we must research and analyze thoroughly. Detailed notes will capture the Write Your invaluable first impressions and most creative ideas.

Strategic Business Planning

This will simplify the later task of Notes preparing a detailed, intelligent plan. An individual should know his or her condition before starting an exercise program and a company should know its Position before launching a strategic initiative. Each Position describes a cluster of interrelated characteristics.

Characteristics include a company's financial and non-financial resources and capacity to grow, adapt and compete. Obviously, a company with positive characteristics has more attractive choices than a company with negative characteristics. Status Quo Once superb, but no longer competitive at an Olympic level. Tune Up Not ill but not athletic; may be overweight and under exercised.

Turnaround Smokes; eats and drinks to excess. Get Out Severe health problems. Diagram 2. Overlaps indicate that differences between adjoining Positions may be blurred at the margin. In short, these companies are a waste of scarce economic resources and speedy closure will minimize losses to suppliers, lenders and owners.

Closure may be by voluntary liquidation or by bankruptcy. There is another category of Get Out companies: profitable companies in a declining industry or companies without the financial or managerial resources to compete in a rapidly growing or changing industry. These companies can be distinguished from Status Quo, Tune Up or Turnaround companies by the severity of the medium to long term challenges posed by the external environment relative to their internal financial and managerial resources.

These Get Out companies may be sold to stronger competitors, suppliers or customers or they may be phased out over many months. Of the five Positions, the Get Out position is the hardest for shareholders and executives to accept intellectually and emotionally. Procrastination concerning an exit decision when a company is, truly, in the Get Out position may result in large operating losses and less recovery of equity when the exit decision is finally made and implemented.

Procrastination can result in the shareholders retiring with less and perhaps much less retirement wealth. An exit decision is not a negative choice. For Get Out companies, an exit strategy is a positive strategic option to re-deploy equity from a high risk, single company the classic 'all the eggs in one basket' problem to lower risk, diversified investments such as a balanced equity portfolio.

Shareholders of Get Out companies should be cautious of advice from staff that 'the business will improve.

Should Smaller Companies Make Formal Plans?

Shareholders of Get Out companies should also be cautious about family considerations such as providing on-going employment for family members: if the company is truly in the Get Out Position, the family members will become unemployed sooner or later. Finally, diagnosing Get Out companies requires professional insight and objectivity.

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Then, prepare scenarios and projections to determine the optimum exit strategy. Do not finalize an exit diagnosis without a professional opinion. Do not implement an exit strategy without professional assistance. Turnaround companies may have operating losses, decreasing equity and weak working capital. Suppliers and especially the bank may be nervous and may try to reduce their exposure. In severe cases, paying the payroll may be a problem. Turnaround companies in healthy, growing industries can often be saved. Companies in declining industries may face the double obstacles of internal problems and intensifying competitive pressures on pricing and margins.

Companies in rapidly growing industries may face the double obstacles of internal problems and intensifying competitive pressures to achieve technological and quality leadership.

What Works?

Conversely, turnaround companies which are fundamentally sound but which have incurred substantial loses due to an unsuccessful technological leap, an acquisition or a major expansion 'bet the company and lost' may be saved by the simple expedients of ending the mistake 'cutting the losses' and, perhaps, attracting additional equity investment.

Shareholders and management may be overwhelmed by the problems, dispirited by past errors and failures and paralyzed by fear that further mistakes might cause irreparable damage. Accordingly, some Turnaround companies sink into the Get Out Position and drift into oblivion. In other cases, management may panic and make radical changes in products or customer and supplier relationships in order to gain temporary cash flow improvements at the sacrifice of medium and longer-term viability. Products have not been ranked and prioritized by profitability or competitiveness. Product quality may rank near the bottom of the industry and may be produced by outmoded and expensive processes.

A proliferation of products and services or managerial indifference may have caused excessive overheads, and overheads become onerous as revenues stagnate or fall. Due to the typical creditor pressures, the planning and implementation process should be compressed. Company management should not attempt a turnaround without experienced professional assistance. Financial results are mediocre and slipping.

Cash flow may be insufficient for investment in new technology. Overheads are probably high. Management may not have kept pace with accelerating requirements for sophisticated business acumen, product quality and productivity. Tune Up companies may be in industries that are growing or stable; however, Tune Up companies may rapidly reach a crisis if a new industry player or technology intensifies competition. Tune Up companies may not know their customers and likely use a stale marketing strategy; but they may still have some customer loyalty or brand awareness.

The shareholders, Boards Of Directors, management and staff may be similar to those of Status Quo companies, with the important exception that in Tune Up companies there may be a widespread but possibly undefined sense that some change is required. Accordingly, a meaningful, permanent attitude shift may be easier to achieve in Tune Up companies than in Status Quo companies.

Overall, Tune Up companies may have many moderate weaknesses, but they also have some building blocks of success, such as an established customer base, adequate products and management and staff with the potential to be re-energized and re-focused. They are living on the benefits of past achievements, harvesting yesterday's efforts and investments.

Status Quo companies were probably at one time Go For Gold companies that became self-satisfied and lost a sense of Urgency.