November 09, 2009
The Role of Business Planning
Please note that contributed articles, blog entries, and comments posted on EDACafe.com are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
Russ Henke - Contributing Editor


by Russ Henke - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!


To continue, describe any current vertical market niche(s) and how any current products and services fit into these niches, set out where the company has been and is, and then where the your team would like to it to be in the future, in new products, services, new revenues and profit, how possibly new people will be allocated among various roles and functions, what facilities the company has and you will need, where new people are to be located and may be located in future, what steps you might take and/or your company currently takes to protect trade secrets & patents (if any), what unique infrastructure, trademarks and intellectual property may be involved in your new ideas,
etc.


Then state the current situation in which you find yourself, either alone or within a company; who is on or will be on your current team, if anyone; who some of the typical customers are currently, if any; what vertical niches of the market that you enjoy today, if any; what you think ‘customers’ “need” and will need in future, and how a refreshed entity will help fulfill those needs by leveraging your business plan.


Tell about the overall market niche you want to attack, and whether it has been growing and will grow by 2012 and beyond, and how rapidly, and do the same for each chosen current or new technical or commercial vertical market niche.


Tell how the present company, if any, currently learns of sales leads, how it currently reaches customers and sells to them, what the key metrics of the business are that promote selling, what the geographic coverage is, what the sales cycle seems like, who the company partners with now and should partner with (or acquire) in the future with your new ideas, and why affiliating with such partners/acquisition targets makes sense.


For the latter, state what advantages would accrue to your company if such a new affiliation were carried out, whether market niche dominance might occur, and what backup partners/acquisition targets might be sought if the primary ones are not available, and what the downsides might be of affiliating (less independence, financial risk, etc.).


Challenges:


Next we’ll move on the challenges which your current company faces—both internal as well as external. Identify what the potential vulnerabilities are, including the “employee assets going home every night”; missing, aging or under-performing products or services; hard-to-maintain infrastructure interfaces; possible problems with people recruiting and retention, compensation, stock & options, pricing or profit % problems; cash flow, legal issues, licensing, lease, subscription/transaction issues, dependencies on certain outside sources, long lead times, and other miscellaneous risks.


Next move on to identify COMPETITORS. Name them all, if possible, and then list for each the similarities and differences between your company’s current & newly-proposed products and services, and theirs. List their strengths and weaknesses, and MOST IMPORTANTLY, identify the UNFAIR ADVANTAGES that you believe you have or will have over them (or vice versa). These unfair advantages become the “value propositions” of your design idea or company - - the “differentiation” - - the compelling reasons of why you will win and succeed in your chosen market niches. (Also, define clearly what “winning”
means in your case).


Also, list what you think competitors might be doing NOW, and what they might be doing in the future, to block your new ideas or business. What will you do and should you do, to battle them?


Discuss the existing and/or new people you may get involved with your idea or company, their “history” and backgrounds and strengths vs. weaknesses, spots yet to be filled, and vulnerabilities if key people quit. Document personnel needs going forward, new ideas of where these people can be recruited or obtained, what new incentives may be offered, etc.


Objectives:


What are the next three years’ intrinsic objectives and financial targets (or longer)?


Try to be very specific with these objectives. For examples:


* Achieve $ X million in total new revenue by YE 2012.


* Achieve $ Y million in product revenue in YE 2012.


* Achieve $ Z million in Services in YE 2012.


* Sign up new partners (ABC, DEF, et al).


* Convert XX corporate accounts from competition by YE 2012.


* Hire X permanent people with Y background by 1-01-11.

        

* Start a Training Class for the Selling Process by 09-01-11.

        

* Achieve a balance of international to domestic revenue of ZZ% by YE 2012.


* Etc.


Each Objective should have implementation details associated with it, by the time the business plan is declared complete.


What is the planning team’s confidence that these can be achieved? Give most likely, upside and downside scenarios. List all the assumptions!


What specific things do you have to do, to realize your objectives? In what specific order? When do they have to be underway, and then completed (milestones)?


What are the constraints (if any) on your design ideas or business imposed by the existing company management, Board and/or investors? List some milestones that you plan to use to measure progress, and give some measure of sensitivity to making/missing milestones (past & future). State some countermeasures that can be used if you miss milestones (i.e. what is the importance of timing, market windows, etc.).


Evaluate the pros & cons of radical alternatives, and what might happen to your ideas or the company as results.


Finally, write a hard-hitting final paragraph of the Executive Summary.


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PTK Contents & Excerpts A. & B. © 2009 Russell F. Henke 



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Coming next month: Progress at Mentor Graphics’ Mechanical Analysis Division


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The writer would like to express a debt of gratitude and thanks to Ms. Peggy Aycinena for the outstanding contributions she made to EDA Weekly during her long tenure as Contributing Editor, and to wish her every success in her new activities going forward.



-- Russ Henke, EDACafe.com Contributing Editor




Since 1996, Dr. Russ Henke has been president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies for Henke Associates now numbers more than forty. During his corporate career, Henke operated sequentially on "both sides" of MCAE/MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron, SDRC, Schlumberger Applicon, Gould Electronics, ATP, and Mentor Graphics. Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. He is also a member of the IEEE and a Life Fellow of ASME International. In April
2006, Dr. Henke received the 2006 Lifetime Achievement Award from The CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES).


Since May 2003 Russ Henke has (along with Jack Horgan) now published a total of eighty-one (81) independent articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Further information on HENKE ASSOCIATES, & the full Planning Tool Kit Special Promotion, etc., is available at
http://www.henkeassociates.net. March 31, 2010 will mark the 14th Anniversary of the founding of HENKE ASSOCIATES.





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-- Russ Henke, EDACafe.com Contributing Editor.


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