Newsletter Archive

Business Plans

As you might expect, a major portion of my business is creating and implementing business plans for clients. Because of this, I am often asked what the most important components of a plan are. While that will depend on the situation, at least a general overview is usually consistent.

So, here's the Neil summary of the important sections for a business plan:

1. Executive Summary
   This is the last section that you write – it boils the entire writeup down into a maximum of 2-3 pages so the busy executive can grasp your entire analysis in less than 10 minutes of reading. This section is not really necessary unless your plan exceeds 20 pages or so.
    
2. Company Description
   What the company does (line of business), how long it's been around, growth trends, etc. In short, a SHORT history of the company in question.
    
3. Industry Analysis & trends
   How many competitors (same industry as yours) and substitutes (same function, but different industry) are you facing? Is the competitive field fragmented, concentrated, oligopolistic, etc.? What is the recent health of the industry, and what is the prognosis for the next few years? Are there any major changes that are likely and can be forecasted?
    
4. The Target Market
   What are the characteristics of the ideal (or probable) customers? If there are several categories of probable customers, rank them in descending order of attractiveness. How would the customer use the product for his/her benefit? If the target market has unique characteristics (industry, size, age, income, # employees, etc.), are those characteristics of a nature that would allow you to identify that target group?
    
5. The Competition
   For this particular product or service, who is the competition and who are the substitutes? To a major extent, this is a more specific version of Part III above, looking at specific companies and products instead of general product & service lines. Just as importantly, it looks at those competitors/substitutes against which you will be going head-to-head.
    
6. Strategic Position & Risk Assessment
   Your basic SWOT analysis - Strengths, Weaknesses, Opportunities, and Threats. The first two tend to be inward-focused (just the company itself), and the latter two more global (what is external to the company that could help me big-time or derail me?). It is crucial that this be thorough, objective, and detailed.
    
7. Marketing Plan & Sales Strategy
   This is where everything starts coming together. Part VI should have demonstrated some gaps in the competition where you can move in and establish your USP: the U nique S elling P roposition that tells a prospect why they should buy from you instead of from your competitor. The USP might be price, performance, productivity, warranties, tech support, or a whole host of other possibilities.
   
   Then your marketing plan comes together from there - what tactics are the best to get the USP across to the target market(s) you identified? It might include: TV, radio, general or specialty magazines, salespeople, direct mail, booths at trade shows, public relations, email, logs, email, banner ads, etc.
    
8. Operations
   A description of the production facilities, distribution means, etc. – both current and anticipated.
    
9. Technology Plan
   Primarily in terms of handling web traffic, and establishing and managing the data base for customer inquiries and to improve the success of your promo efforts.
    
10. Management & Organization
    Are the right managers, with the right skills, in place? If not, are gap-fillers being trained internally, or are they scheduled to be hired from the outside? Can you get by with consultants instead of employees? Are enough people in place or being trained for such critical functions as coding, customer support, troubleshooting, accounting, etc.?
     
11. Regulatory Issues
    This covers a wide range of indirect and indirect issues, depending on your industry. For example, all companies will have issues with business licensing, taxes, corporate structure, and the like. Food service companies will have additional issues with public health codes, and chemical companies probably have EPA concerns. Remember that your issues may change over time as you grow, since many labor-related statues don’t kick in until your company has reached a certain number of employees.
     
12. Development, Milestones, & Exit Plan
    What and when is your ultimate goal? For example, do you want to hit $50 million in annual sales within 5 years, or expand to four continents by 2009, or just provide a steady income for you and your spouse until retirement? Along the way, what interim goals (sales dollars or units, profitability, sales outlets, etc.) do you have every 6-12 months? These become your milestones to make sure you don't get too far out of line before addressing some basic issues. Finally, what do you plan to do with the business when your working days are over, and how will you engineer that change?
     
13. The Financials
    While there are three basic types of financial statements, this ex-banker believes the most valuable one is cash flow (when does money go in and out), so you can see how much you need to raise/borrow to pull the venture off. A new venture NEVER has positive cash flow in the early stages. Balance sheets and income statements are nice, but cash is what pays the bills and your salary.

There you have it – the basic items you have to consider and figure out when starting a new venture or launching a product. Of course, I would argue that it is well worth your while to hire an expert to construct the plan – both to make sure that the plan is encompassing and objective, and to obtain good input outside of your particular expertise.

Should you create the plan yourself, but want an expert’s eyes to take a look at it for final review, Stratamar can do that for only $250. Just email us to let us know it’s coming (payment will be handled via PayPal), and ship it to us as a MSWord document. We’ll dissect it and respond within 72 hours with suggestions, comments, questions, and other notes to make sure you have every nuance covered satisfactorily. Or, if you are having a problem with, or need a review of, a particular section, we can offer guidance there for just $50. This review will not entail direct research, but we will steer you in the right direction for finding the ideas or comparisons that you need. This response will also be within the 72-hour time frame.

SHORT SHOTS

Super Bowl Ads:

Well, the big day will be here in only three days – the annual TV commercial fest interrupted (occasionally) by a couple of running or passing plays. Next week is always fun in my classes, as we start the period praising and trashing the various efforts. Let us know how you feel about them, and if you believe they’re worth the reported $2.4 million per 30-second spot. Synopses of the upcoming commercials are already available on most marketing discussion boards.

Media Consolidation

There were two major moves recently in this category. First, FCC chairman Michael Powell announced his plan to step down shortly. Almost simultaneously, the Bush Administration announced that it would not appeal a court decision that blocked Powell’s attempted relaxation of media ownership limits.

What does this mean? In the short run, the trend for large companies (Viacom, News Corporation, etc.) to own more and more media outlets will stop. For you, this may well mean a few more choices when selecting media for ads, and a bit more price competition. Since the consolidation bandwagon started a couple of years ago, this writer has seen more and more package deals being forced on media buyers (if you want ads on this hot show, you must also buy ads on this affiliate show that nobody watches). Competition will be a welcome offset to the firmer ad pricing we are seeing as the economy slowly recovers.

Consumer Attention Spans

In a related story on January 28, MediaPost reported that the time that the average person spends online has increased by about one-third since 2000. But, it also appears that this extra online time is NOT being taken from time spent with other media (TV, print, etc.). Instead, it appears that consumers are becoming even more adept at multi-tasking, and are accomplishing more in a given unit of time.

From the marketer’s viewpoint, this makes it even more difficult to get the attention of the consumer. In addition, consumers are becoming less tolerant of wasted time and messages, so it is imperative to get to the point quickly and memorably.

New Media Outlets

Is anybody else watching the proliferation of body parts being auctioned on eBay for advertising outlets? I thought it had peaked recently when one gent auctioned his forehead as an ad space. But, last week came a report that a young (pregnant) lady has offered her stomach as a large (albeit temporarily) ad space.

Any thoughts as to what will be next?

Polls

Our poll-crazy society got a good look at the negative side of marketing research during the recent U.S. elections – exit polls showed Kerry winning handily early in the day, yet we all know the election turned out otherwise .

Stories last week started to identify the causes – the respondents were more prone to being from the pro-Kerry camp because of a desire to participate, voters may not have been selected at random, skews in the times of day that Democrats vs. Republicans tended to vote, etc.

These errors were basic, and just emphasize the fact that NO poll is ever 100% perfect or accurate. I tell my clients and students to never stake very much in the results of any poll unless they know: (1) the exact questions, (2) the method of asking those questions, (3) the manner in which the respondents were selected, and (4) who paid for the research. It’s amazing how the answers to these few questions will consign most results to the junk heap.

NEED HELP OR HAVE A QUESTION?

Of course, there’s no way we could let an entire newsletter go by without one bold, self-serving pitch. We’re here to be your marketing experts whenever you need it, whether it’s for an entire project or just a few hours to give a fresh perspective on a situation. We’ve recently completed projects for new approaches in self-propelled transporters, high-class educational vacations, online banking, non-profit fund raising, software marketing, and education, and we’d love to put some of that expertise to work for you. Even if you just have a question you’d like to discuss, or see addressed in the next newsletter, email or call us at your convenience.

Have a safe and happy February – Spring is just around the corner.

Neil Brown, President
Stratamar, inc.
neilbrown@stratamar.com
614 946-4614

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