From Small Business Startup To Business Success Story (Part 3) In ten powerful steps …

Step 6: Developing your Marketing Plan

Marketing is the activity you undertake to identify and satisfy your customers’ needs and

wants. It involves:

• Finding out what your customers want and giving them more, and

• Finding out what they don’t want and giving them less,

And doing both of these things within the constraints of your business capabilities, the

competition and the general business climate.

Again, you start with the work that you did with Business Value Proposition and use it to

build a Marketing Plan. The Marketing plan however, expands on your initial questions about

customers, their needs, your credibility and your uniqueness.

The Marketing Plan should answer the following five key questions:

1. Which customers will I approach?

2. What product or services will I offer this segment?

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3. What price will I charge to customers in this segment?

4. What is the best way of getting my goods and services to the customer in this segment?

5. What is the best way of promoting my goods and services to this segment?

The emphasis must be placed on looking at your market before you look at your offer. This is

the key to marketing - putting the customers first.

Until you know who your customers are and what their real needs are, it is useless trying to

sell what you want to sell.

Customers will buy from you only when they believe you can satisfy their needs and/or solve

their problems.

You have to study your customers before you can say, “This is what they want” or “This is

the offer I will make to them.” In short, your marketing plan looks at how you intend to continue

winning and keeping customers.

The stages in a marketing plan are:

1. Find out what is happening now, which means:

a. Finding out about your customers. For example – likes, dislikes, preferences

and needs.

b. Finding out about your competition – what they offer and do not offer the

competition.

c. Finding out about the business environment - what the current trends are and

what future customers will want.

d. Finding out about your own business – what you can produce, the market to

compete in.

2. Working out what marketing objectives you want your business to achieve.

3. Working out strategies to achieve those marketing objectives.

4. Measure how successful your strategies are at achieving what you want and adjusting

them if necessary.

Get started by asking yourself the following questions:

• What do I know about my customers?

• What do I know about my competition?

• What is the business environment like at the moment?

• Where am I going to go to find out further information about my customers,

competition, and the business environment?

• What do I want my business to achieve in its first 12 months?

• What market niche will I be focusing on?

• What prices will I be charging?

• What promotional tools are going to work the most effectively for me?

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Step 7: Developing your Employment Plan

Your employment plan looks at how you intend to make your business operate, and it should

be based upon the assumption that people are the most valuable resource of any business.

While there is no “right” outline, your staff plan should answer the following questions:

• Can you operate without employees?

• On what basis will they be needed?

• If you don't have employees, who will operate the business if you are absent?

• Who are your current employees?

• What does your organizational chart look like?

• How do you select and train employees?

• What skills and experience are you looking for in employees?

• What are their areas of responsibility?

• What are their specific duties and functions?

• What are their expectations?

• What training will your employees need?

• How will you motivate your employees?

• How will you evaluate your employee’s performance?

• What must you tell your employees before they start?

• Which administrative and financial record systems do you use to manage your employees?

• What are your requirements for holidays?

• Can you handle emergencies and your absences from work?

• What are your future employment requirements and plans?

• What effect will technology have on your employment plans?

• What incentives are offered to employees?

Step 8: Developing your Financial Plan and Funding Requirements

In the Business Evaluation Step, you looked at some preliminary financial numbers to

determine your business’s viability.

The Financial Plan of your Business Plan seeks to measure, in dollar terms, the effectiveness

and value of your operation, both in the past and right now, and to enable you to forecast the

probable results of your future operations.

You are in business to make a profit, and your financial plan will enable you to measure,

control, evaluate and forecast your profitability, your financial needs and your financial viability.

During the planning for your firm, it is clear that the ability to think ahead and forecast

various future events and trends is a vital part of that process.

For example, in assessing the likelihood of your firm reaching the sales level needed to

achieve the desired profit, forecasting is used. Forecasting is aimed at trying to find out how

much the firm can sell.

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A forecast is a prediction or 'best guess' about some aspect of the future. Budgets are plans

expressed in numbers-usually money. These activities are future-oriented, and their purpose is to

anticipate the firm's future financial situation, so that action can be taken to prevent or avoid

problems or difficulties. Budgets cannot eliminate risks, but they can help to reduce their effects

on the business by means of preventive action.

The existence of a well-prepared business plan, which includes financial forecasts and a set

of budgets, will be widely regarded by bankers, suppliers and others as evidence that your firm is

skillfully managed.

If accompanied by a good record system, budgets also allow the financial aspects of your

firm to be controlled. Variations from budgeted (that is, planned) costs, as measured by your

firm's records, show up exactly where tighter control of costs is necessary.

There are two commonly used starting points for budgeting. One is to set your profit target.

The other is to forecast the sales expected for the budget period, usually as follows:

• Monthly-for the first six or 12 months

• Then quarterly-for the second year, and

• Then half-yearly-for the third year.

Sales forecasting requires careful assessment of the market potential for the firm's product or

service, and prediction of your firm's likely share of that potential.

Next, it involves predicting or estimating how much of each product line or service can be

sold, and at what prices. Unit sales by unit price will give the forecast sales income. Some firms

obtain a range of forecasts, from 'worst' through 'most likely' to 'best'.

When your business has been operating for some time, accuracy of forecasting improves

because you can use past trends, observed seasonality or variations in buying patterns, and other

information. For a new venture there must be some 'crystal ball gazing' involved, but this is

better than not forecasting at all!

Once sales forecasts and a realistic sales budget are available, you can prepare as many other

budgets as you need. These could include:

• Manufacturing cost budget

• Cost of goods sold budget

• Profit and loss budget

• Operating expenses budgets (various)

• Balance sheet and funding (capital) budgets, and

• Cash flow budget (in small firms, this is probably the most important budget).

We can help you put these budgets together. These financial forecasts will be necessary for

you to determine exactly what needs to be done to make your business a success.

Even more than that, creating the financial plan will be necessary for you in seeking out the

capital you need.

Based upon your budgets you want to be able to answer these questions:

• What are my capital requirements?

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• How much money can I personally invest in this business?

• Am I prepared to give away some control of your business by getting a partner into your

business?

• How do I finance this business?

• Do I borrow?

• If I borrow, how much interest can I pay?

• Who should I borrow from?

• Should I seek an equity partner?

• How will this affect my potential income?

Once you have completed the Operations, Marketing, Staffing and Financial Plan and

determined where you are going to get the funding necessary. You can set about starting your

business. But before you do that, you need to make sure that you develop a strong financial

control system.

Step 9: Developing your Accounting Systems

Once you have a base of financial budgets, profit and loss statements, balance sheets and

cash flow records, you need to develop a system for continual maintenance of these records. An

adequate financial record keeping will answer the following questions:

• How does my profit in this period compare to the previous period?

• How am I doing relative to my competition?

• How can I get my profit up?

• Are my expenses too high?

• What is my net worth?

• What do I owe?

• What do I own?

• How is my cash flow?

• How much do my customers owe me?

• How long past due are the payments?

We can help you develop your accounting system. As stated earlier, not having an adequate

financial accounting system is the second most common reason why businesses fail. If you don’t

have this ability you need to consult with someone who does!

Step 10: Getting Started:

As you know, success is a journey, not a destination. Our “Profit Builder” newsletter is

designed to give you ongoing tips to help you achieve your business success. Look for the next

issue in your mailbox as our unadvertised bonus gift to you, in hopes that your dreams will soon

be your reality.

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