Think about your hand. It has five fingers, right (hopefully)? Or just imagine you have five fingers. In the same way I want you to know that there are five parts to a business plan:
1. The Summary; also called "Executive Summary" or "Introduction"
2. The Marketing Plan
3. Operations Plan
4. Financial Plan
These are the names I have used and it is easy for me to remember them.
What Does Each Name Stand For:
1. The Marketing Plan - "What I Want To Do" - What type of business are you wanting to start? What market do you want to start your business in? Who do you want to cater to?
2. The Operation Plan - "How I Am Going To Do It" - What kind of business structure do I need for this enterprise? Who do I need to network with? Do I need a mentor?
3. The Financial Plan - "What It Will Cost To Do It" - What are the costs of production, cost of sales or monthly expenses? How much profit will the business make in 12 months?
Part 1: Marketing Plan
The marketing plan, when not written correctly, has far reaching consequences:
1. If the marketing plan is wrong, then every other part of the business plan will be wrong. i.e. if you create a product that people do not want, then the way you plan to structure the business (Operations) and what you think it will cost (Financial) will be wrong.
2. If the information you have about who your customers are is wrong then the business will not work.
3. If the information you have about your competitors are wrong then the business will struggle.
4. If the way you have defined your market is wrong then the whole business will collapse like a wobbly stool!
Trust me when I say the Marketing Plan is the most important part of the business plan.
What Is Included In The Marketing Plan?
Industry overview - Past, Present & Future
a. Let's say you want to start a business selling baby food. Your Industry overview is the information you can find out that relates to the overall food industry. Information such as: what has happened in the past to food consumption, how much does the average household spend on food and what are the projections for the consumption of food? How many babies are born in your area; nationally or internationally? (Don't worry this information is readily available online and at your Business Libraries; start there.)
b. Industry Overview is important because it exposes you to vital trends that may affect your business. Some businesses are so seasonal that this information can make or break the business.
Sector overview: - Past, Present & Future
a. Using the same Baby food sales business example: Baby Food is a sector within the Food Industry so this business will need to know how much food babies consumed in the past, what they are consuming now and what they are likely to be consuming in the future. You might want to know an estimate of how many children are born per year and what the projections are for the following 10-20 years.
b. Remember most businesses never consider the future. They are too busy trying to deal with the day to day aspect that they are not planning for the future. Do not acquire this mindset. Writing your business plan offers you the opportunity to think and plan ahead and position your business greater than what your competitors do!
III. Competitors: You can bury your head in the sand and convince yourself wrongly that there are no competitors for your business or you can take an active approach to learn from your competitors and use the information to further your business.
Competitors come in 3 shapes and sizes:
a. Direct,
b. Indirect
c. Future Competitors
Let's break this down: If you are a Hairdresser located on a high street your Direct Competitor are other established Hairdressers in your vicinity 1-2 miles radius. Your Indirect Competitors could be those Mobile Hairdressers or those working from home or even those located 5-10 miles away that your potential customers can drive to. Your Future Competitors are those in schools and colleges studying Hairdressing.
Therefore investigating your competitors has become extremely important. The kind of information you want to know about your competitors include and not exclusively:
S.W.O.T. Analysis - What are the Strengths, Weaknesses, Opportunities and Threats of your competitors?
Manufacturers - Who are they working with?
Relationships with other - What type of business relationships do your competitors have?
Finance - How are they financed? By shares, loans or personal funds?
Suppliers - Who supplies their products? (Hang around outside their shop or business)
Consumers - What type of consumers do your competitors have? - age, sex, etc.
Promotion Strategy - How do they promote themselves?
Geographical Coverage - How far do your competitors operate?
Product Range - How many types of products do they sell or do they offer other attractive services?
Culture - What is their work culture?
Staff - How many? What ages? Sex? Etc.
Size - How big or small is this business in terms of sales or profits?
Cost Structure - How do they charge?
Reputation of the business - What do people say about your competitors both good and bad
Ownership of the business - Who is the owner of the business? Is it a franchise?
Distributors Used - Who are they?
Segment Served - Do they cater to a particular niche?
Motivators Beyond Money- Can you find out?
Management information - Who manages your competitors business? Do they have a Dragon giving them advice?
Industry Opinion - What do experts say about them?!
You might need to do some hard detective work but you are only able to develop your products/service once you know what others are doing. Otherwise you will set up a business that will just be like the rest; struggling businesses!
Where Do You Get This Information?
Visit Local Stores
Shared Customers
Shared Accountants
Lawyers/Solicitors
Suppliers
Reports Exhibitions
Internet
Local Business Libraries
Industry Magazines
Companieshouse.gov.uk (if they are a limited company they need to log their annual accounts here. You can down load it and find useful information about your competitor's Sales, Finance, Staff, Loans etc. all for £1-£3
IV. Product/Service: Now that you have done the above research you are ahead of most people who have an untested idea and force it on the market only to discover someone else next door has the exact product/service and he is struggling.
Since you know what your competitors are doing, which has given you insight into the market, you know what the experts are saying about your industry and what/how your niche (sector) is doing. You are ready to create a Unique Product/Service.
Even if you have been working in an industry for years and you believe you will be the next Steve Jobs, research is still vital to your success.