Business plan workshop Business Plan Competition for women

Maastricht Centre for Entrepreneurship

Female Business Plan CompetitionOperations planning, Wednesday March 16th

Lecturer: Wynand Bodewes

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Female Business Plan Competition

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Female Business Plan CompetitionOperations planning, Wednesday March 16th

Lecturer: Wynand Bodewes

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Starting your venture

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Why planning (operations) makes sense

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Planning your operations

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Entails deciding on

scope of the venture’s operations

based on fear

based on calculus

I.e. what will you do, what do intend you leave to others


Scoping

Forward

principal-agent issues between you and your distributors/resellers

Backward

supplier hold-up (the supplier profits, and not you)

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Backward scopingdifficulties arise when

supplier has to commit to

site-specificity (i.e. co-location)

physical-asset specificity (i.e. moulds)

human asset specificity (i.e. training their workers)

because such commitments

are sunk-costs (buyer holdup)

render you dependent on a sole supplier (supplier hold-up)

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Scoping pitfalls

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Sleeping with the enemy can be fatal

If you marginalize your role, also your margins will be small

long term ability to compete

What happens to an IP broker at the negotiating table?

you MUST sub-licence or the contract with the IP owner will be revoked

you sell an idea, not a product or a business


Scoping

Present ability, resources & competences

Future ability to compete

cost leadership (process innovation)

differentiation (product innovation)

As scoping decisions affect one’s future competitive positioning, it they also represent strategic choices

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Complementarity

Some activities are connected: they are complements

In such cases, scoping should consider the complementary activities, not the individual ones.

e.g. product development & production capability may be strongly interwoven

e.g. manufacturing subsystems with pre-standard interfaces

e.g. complex and novel technology/product

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Outsourcing operational tasksreduces operational risk as it reduces the managerial task

minimises financial risk as it reduces investment needs

speeds up execution of one’s plan (no lead time to build)

outsourcing is a reversible decision

67 % of Inc 500 were started with less than $ 50,000 in capital

21% required more than $ 100.000

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Scoping options

Industry life-cycle

initially one may have to do all itself, later there may be others who can do tasks better and more efficient

Partner selection

profile your partner

large, established, dependent, dynamic, cost conscious, fast

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An analytical approach to scopingFocus on value added of activities

re-occuring tasks

unique tasks

Map your value chain, transform it into a worksheet

if activity is strategic, then internalise (unless competitive suppy industry)

non-strategic then outsource (unless threat of forward integration by supplier)

calculate the “minimum efficient scale” to find out whether or when it makes financially sense to internalise

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Break


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Understanding your (future) operations

Attract investors to invest in the business

Guide the owner and managers in operating the business

Give direction to and motivate employees

Provide an environment to attract customers and prospective employees


Resource requirements & capacity planning

Operational implementation of the proposed venture

what resources are needed to execute the chosen business model and the expected demand

Physical resources

Human resources

Machinery & equipment

This translates into financial resources

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Capacity planningRequired capacity

labour hours

machine hours

floor space

translates into

manpower requirements (FTE and positions)

equipment needs

scaling

Gradual / incremental

slack capacity

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Operating cycle

external

processing orders

internal

order fulfilment (production)

calendarize asset utilisation (peaks in capacity requirements)

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Bill of capacityTotal standard time

of each piece of equipment

of each type of labour

to produce one unit of your (initial) product

Requires (and shows!) detailed knowledge of your venture’s operational processes

equipment suppliers may help you specify the standard times for your production process

but also potential sub-contractors (if you ask for it)

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Demand forecast & Master production scheduleWill you produce to demand or to inventory

build in some slack between demand and supply

transform demand into a production plan,

Anticipate to ramp up production!

Calendarise resource requirements (that result from your forecasted sales)

manhours, machine hours

Capacity requirements

FTE, Machines

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Business plan workshop Business Plan Competition for women

Education

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youmaastricht centre

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capacity planning

production plan