Chapter 5: ASSEMBLING THE WORKING GROUP

CHAPTER 5

Assembling the Working Group

The work of the individual still remains the spark that moves mankind ahead even more than teamwork. – IGOR SIKORSKI

TO PREPARE YOUR INTERNATIONAL BUSINESS PLAN , you will need to draw on the experience and talents of many people. In this chapter, we take a brief look at all the parties that might be part of the working group for your company’s international business plan. Central to the working group is the person who is tasked with preparing the plan—perhaps you, your department or someone within your chain of command. The plan preparer will need to draw on the expertise of various professionals to assess the proposed technologies and to support the practical feasibility of the plan. A financial expert is an essential member of the working group, as are the senior managers on whom depends the successful implementation of the plan. Presentation of the plan, including objective review, can be just as important as the content, and therefore, the working group should include those who have a gift for clarifying the communications of others: good editors and analysts.

You

Presumably you opened this book because you’ve been asked to prepare an international business plan, review the work of another or are the owner of a small business enterprise. Business planning should be a priority in every business organization and command the attention of senior managers. The actual drafting might, however, be done by different people depending on the size of the company and available resources. Consider the following examples: ■ In a small- to medium-sized business, which may have anywhere from one to 100 employees, the CEO may draft the plan. In turn, the CEO may ask the managers from one or more of the functional areas described below to provide additional information. ■ In larger organizations, responsibility for drafting the international business plan may be turned over to a group of middle-level managers from different areas of the company, perhaps even including overseas subsidiaries. The end product will then be routed up to senior management for comment and action. ■ An entrepreneur looking to start up a new business with an international focus may not have staff resources to help with research, nor a track record of domestic activity. Special care will need to be given in identifying actual market opportunities and potential risks.

Regardless of who you are, let’s start with the basic point. If you are going to be preparing the first draft of the plan, be realistic about your skills, knowledge and expertise. If you are not mathematically inclined, don’t focus on financial

projections. Start thinking about whom you are going to bring in to help. Similarly, if you try a first stab at the numbers, don’t get frustrated, give up and stop working on implementation. Instead, simply move on to another part of the plan and revisit the numbers later.

Another important thing to remember is that information in the plan and the data collected for research purposes (even if it does not actually appear in the plan) is generally sensitive and proprietary to the company. As such, you have to take steps to safeguard that information and the distribution of the draft within your working group. If you aren’t familiar with security procedures, including the use of appropriate legends and markings on drafts and confidentiality agreements as described in Chapter 3, be sure to consult legal counsel. Also, make sure the plan cannot be accessed by unauthorized personnel on your company’s computer system.

Engineering, Design & Manufacturing

If your firm plans to sell technology, machinery or products with substantial design elements, it is important that someone with a technical background be involved in drafting the business plan. The technologist must be able to explain the technical aspects of your product. Such a person will also be involved in describing the technical aspects of the business and industry. One of the hardest parts of writing this section is making technical subjects easy to understand. To get it to that level may require more rewrites than any other section of the plan.

The analysis and discussion of technology in an international business plan must account for the state of knowledge and level of practice in each of the foreign countries that will be impacted by the plan. For example, the company’s ability to take advantage of the benefits of low-cost manufacturing in a foreign country will be dependent on how the company’s technology is absorbed and understood in that country. If the technology is too advanced, local laborers may have difficulty achieving the necessary standards of quality and performance. Similarly, the demand for a technology-based product in a new foreign market depends on existing industry standards in the country and the actual needs of potential endusers. High performance automobiles have limited appeal in a country that has few paved roads.

In addition, the engineering and technology analysis must assess the level of intellectual property protection available in the foreign country and the risks associated with competition from substitute technologies or solutions. The ability to attain a competitive advantage through the use of intellectual property rights, particularly patents, varies substantially around the world. Also, consumers in many developing countries are often reluctant to abandon traditional shopping methods and products, thereby increasing the risks associated with introducing innovations.

For goods-based businesses, the plan must carefully describe how you will manufacture the product. If you are not already a manufacturing specialist, you will need to consult someone with a background in manufacturing, production

or project management. You may have designed and built the prototype, but fullscale manufacturing is different.

Management

A business plan should include more than just the CVs of the company’s senior managers and other key employees. It should fully analyze the appropriate managerial and organizational structure for the company in relation to its stated objectives. This is particularly important for an internationally focused company because of the need to deal with logistical issues caused by distance and differences in time zones.

You may be the company’s senior manager, in which case you should have the appropriate vision to determine the type of organizational structure that is necessary. If not, you need to secure information about current reporting channels in order to make recommendations to senior management regarding organizational changes and the types of resources that might be required in order to implement a global strategy. In many cases, a company may turn to one or more outside consultants on human resources and management issues to assist in this process. Moreover, recruiting agencies may be asked to assist the company in locating appropriate candidates for new positions, particularly posts in foreign countries that require personnel with local background and experience. PLAN NOTE: Venture capital firms and some private “angel” investors insist on management positions and input into the operation. If the requisite expertise is there, this presents no problem. However, business planners will need to resist placing people in management simply because they have invested funds.

Financial

This is where you need a numbers person. Get someone who can “run” the numbers, preferably someone with experience in preparing financial projections. The best choice would be someone with experience in doing projections for business plans. There is a certain art in being able to look at expense items, revenue sources and cost of funds. While an accounting background coupled with an understanding of reporting practices in key target markets is helpful, the finance person should also have management savvy and a good feel for the actual operational requirements of the business. Investors, senior managers and independent directors always appreciate the value of an experienced chief financial officer, regardless of the size of the business.

Legal

While the ultimate responsibility for the preparation and content of the business plan lies with you, attorneys will sometimes play a role in the drafting process. When the business plan is prepared for external use, such as fund-raising from outside investors, one of the attorney’s most important jobs is to ensure that

the document complies with the disclosure requirements of applicable securities laws. If the plan is being presented to prospective joint venture partners, legal advice should be sought to as to how much must be disclosed in the plan and how to protect the company’s proprietary information.

As to the specific content of the plan, legal counsel should be the first resource for discussions of legal and regulatory hurdles confronting the company in trying to enter new foreign markets. In many cases, the company must overcome the requirements of foreign investment and/or technology transfer laws, a process that could delay the start of a new investment project or impact the costs associated with the investment. Also, your legal counsel should become familiar with your entire business, including existing contractual relationships, and should have access to all parts of the plan to ensure that it accurately describes current operations. An experienced business lawyer can often answer basic questions that fall outside of strictly legal issues.

Marketing

Having a well-designed product that can be produced is only the first stage of the battle. You have to get it to the market and get people to buy it—that is where the real work begins. You will need someone with experience in marketing, distribution and sales in each of the target markets. Do not make the mistake common to entrepreneurs of assuming that marketing is easy or that “anybody” can do marketing. Everything—literally, everything—a company does affects and is affected by the marketing process. Marketing should receive your constant attention as it will make the difference between success and failure. Everyone involved in the project must pursue their goals with marketing in mind. The marketing plan section of the business plan is the central nervous system of the project. Be aware that every year hundreds of perfectly good products fall by the wayside because firms let their focus deviate from marketing. Don’t let it happen to you.

Securities-Offering Advisors

If the business plan is tied to an offering of securities (equity stock), the company may have engaged an investment banker or finder to assist in locating investors. In those cases, the offering advisor will work to make sure that the plan is an effective selling document. They will also have an interest in making sure that the plan does not expose them to securities law liability. Responsibility for preparation and content of the offering documents will be laid out in any agreement between the company and its professional selling agent.

Professional Editor/Writer

Having finished your first draft, see if you can find a professional editor/writer to rewrite the plan. Business writers can smooth out the rough spots, fill in missing

items and create a more professional look. Their work will raise your plan to another level.

Remember that the plan is, in and of itself, a marketing tool, and therefore needs professional treatment. A good editor will make the document functional and, most importantly, readable. Proper editing will be just as valuable to your project as professional legal or financial advice so don’t skimp on the budget. As with all such services, you get what you pay for.

Group of Experts

Okay, the plan is finished and has been rewritten several times. Now you should take it for a test spin before you open it up to the critique of the target reader group (e.g., investors). You need to be as careful as possible to ensure that the draft reflects your best efforts and capabilities to complete the task successfully. Seek out businesspeople whom you respect and ask them to read and comment on the plan. When confidentiality is a concern, look for resources within the company who can not only informally review the style of the document but also provide input on the information that may need to be included on their specific functional areas. If the plan is being prepared for presentation to outside investors, consider first presenting it to an external focus group that can provide feedback on the plan and the pitch associated with the plan. PLAN NOTE: Many municipalities and large consulting firms offer “incubator” services for entrepreneurs looking for professional input. The municipalities provide the services in the hope that a successful firm will bring jobs and taxes to the city or region. Consultancies are hoping to get accountancy or consulting business in the future. Either way, they offer low (or no) cost assistance in business development. They can also act as a conduit for investment.

Internal Audit Group

Remember that the most important use of the business plan for a “going concern” is for internal guidance. For this to happen, you should have regular meetings to review the plan and measure your company’s performance against it. This is particularly true if employee performance and compensation are tied to meeting business plan objectives. The most effective approach is to have a designated group with responsibility for reviewing actual company performance versus projections under the plan. As disparities develop, they should have authority to change the plan.