Business Management Practices for Small To
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Business Management Pracces for Small to Medium Sized Forest Products Firms Omar Espinoza Robert Smith Preface! One!of!the!most!exciting!and!frightening!choices!an!individual!can!make!is!to!start!a! small!business.!Yet!this!entrepreneurial!spirit!is!the!backbone!of!our!economy!and! the!free!enterprise!system!that!drives!many!individuals!to!great!success.!From! Henry!Ford!to!Frederick!Weyerhaeuser,!individuals!with!a!good!idea!can!help!shape! a!nation.!This!book!is!written!to!provide!the!information!you!will!need!to!start!your! small!forest!products!company.!However,!business!planning!is!not!what!you!really! want!to!do.!If!you!are!like!most!entrepreneurs,!you!have!a!product!or!service!in! mind!and!want!to!sell!it!without!a!lot!of!formal!planning!in!mind.!Yet,!since!the! majority!of!small!businesses!fail!within!five!years,!the!more!you!plan!before!you! start!the!business,!the!greater!the!chances!of!success.!Coming!from!a!family!that!ran! successful!and!notDsoDsuccessful!small!businesses,!I!am!confident!that!if!you!apply! the!concepts!in!this!book,!you!will!have!a!better!chance!of!capitalizing!on!your! business!idea!and!have!a!successful!enterprise.!This!book!is!a!“work!plan”!for!you.!If! you!answer!the!questions!at!the!end!of!the!chapters!and!develop!the!suggested! business!plan,!you!will!have!an!idea!of!the!work!that!is!needed!to!be!successful.! Robert!Smith! Acknowledgments! The!authors!would!like!to!acknowledge!the!Department!of!Sustainable!Biomaterials! at!Virginia!Tech!and!the!Department!of!Bioproducts!and!Biosystems!Engineering!at! the!University!of!Minnesota.!A!number!of!students!helped!in!the!preparation!of!this! manuscript,!including!Scott!Lyon!and!Chris!Rider!at!Virginia!Tech!and!Maria! Fernanda!Laguarda!Mallo!at!the!University!of!Minnesota.!Final!editorial! contributions!were!done!by!Helen!Thompson!at!Virginia!Tech.! This!project!was!supported!by!the!Wood!Education!and!Resource!Center,! Northeastern!Area!State!and!Private!Forestry,!Forest!Service,!U.S.!Department!of! Agriculture,!award!number:!2010DDGD148.! Virginia!Tech!does!not!discriminate!against!employees,!students,!or!applicants!on!the!basis!of!age,!color,! disability,!gender,!gender!identity,!gender!expression,!national!origin,!political!affiliation,!race,!religion,! sexual!orientation,!genetic!information,!veteran!status,!or!any!other!basis!protected!by!law.!For!inquiries! regarding!nonDdiscrimination!policies,!contact!the!executive!director!for!Equity!and!Access!at!540D231D 8771!or!Virginia!Tech,!North!End!Center,!Suite!2300!(0318),!300!Turner!St.!NW,!Blacksburg,!VA!24061.! Front!cover!photo!credits:!Robert!Smith!and!Omar!Espinoza.!! Back!cover!photo!credits:!Robert!Smith!and!Maria!Fernanda!Laguarda!Mallo.! Cover!design:!Maria!Fernanda!Laguarda!Mallo.! ii! ! ! ! Business!Management!Practices! for!Small!to!Medium!Sized!Forest!Products!Firms! ! ! Omar!Espinoza! Assistant!Professor! Forest!Products!Management!Development!Institute!Chair! Bioproducts!and!Biosystems!Engineering!Department! University!of!Minnesota! St.!Paul,!Minnesota! ! ! Robert!Smith! Professor!and!Head,!Department!of!Sustainable!Biomaterials! and!Associate!Dean!for!Engagement! College!of!Natural!Resources!and!Environment! Virginia!Polytechnic!Institute!and!State!University!! Blacksburg,!Virginia! ! ! ! ! ! ! ! ! ! Published!by:! Virginia!Polytechnic!Institute!and!State!University! Printing!Services! Blacksburg,!Virginia! June!2015! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! iv! Table&of&Contents& Introduction!................................................................................................................!1! Chapter!1:!The!U.S.!Forest!Products!Industry!.............................................................!3! Products!and!Markets!..............................................................................................!4! Lumber!...............................................................................................................!5! Pulp!and!Paper!Products!..................................................................................!10! Structural!WoodDBased!Panels!.........................................................................!11! Nonstructural!WoodDBased!Panels!..................................................................!11! Engineered!Wood!Products!.............................................................................!12! Wood!Energy!Products!.....................................................................................!15! ValueDAdded!Wood!Products!...........................................................................!16! Industrial!Wood!Products!................................................................................!19! Chapter!Questions!.................................................................................................!20! Chapter!2:!What!Is!Business!Management?!.............................................................!21! The!Management!Process!.....................................................................................!21! Planning!............................................................................................................!22! Organizing!........................................................................................................!22! Implementing!...................................................................................................!23! Controlling!........................................................................................................!23! Manager’s!Checklist!...............................................................................................!23! Employee!Engagement!..........................................................................................!24! Chapter!Questions!.................................................................................................!25! Chapter!3:!Strategic!Planning!....................................................................................!27! Mission!and!Vision!Formulation!............................................................................!28! Mission!.............................................................................................................!28! Vision!................................................................................................................!29! SWOT!Analysis!.......................................................................................................!29! LongDTerm!Strategies!and!Objectives!....................................................................!31! ShortDTerm!Strategies!and!Objectives!...................................................................!31! Strategy!Implementation!and!Evaluation!..............................................................!32! Chapter!Questions!.................................................................................................!33! Chapter!4:!Human!Resource!Management!...............................................................!35! Human!Resource!Planning!.....................................................................................!35! Job!Descriptions!and!Specifications!.......................................................................!36! Recruitment!and!Selection!....................................................................................!37! Training!and!Development!....................................................................................!40! Compensation!and!Benefits!...................................................................................!42! Chapter!Questions!.................................................................................................!44! Chapter!5:!Marketing!Management!.........................................................................!45! Marketing!Fundamentals!–!The!Four!P’s!...............................................................!45! Product!.............................................................................................................!46! Promotion!........................................................................................................!47! Price!.................................................................................................................!48! Placement!........................................................................................................!51! ! iii! Market!Research!....................................................................................................!52! Talk!to!Customers!............................................................................................!53! Watch!Competitors!..........................................................................................!54! Read!Trade!Publications!...................................................................................!54! Access!Information!From!Academic!Institutions!..............................................!54! Contact!Government!Agencies!........................................................................!55! Market!Customization!and!Niche!Marketing!.........................................................!55! Online!Marketing!...................................................................................................!58! Websites!...........................................................................................................!58! Email!Marketing!...............................................................................................!58! Online!Promotions!and!Ads!.............................................................................!58!