Sunday, March 05, 2006

First Steps: Business Plan Basics

You've come to that fork in the road, where starting your own business is the path you want to travel. Fantastic, but as any business owner will tell you, having the idea and getting it off the ground successfully are 2 very different things.

Whilst this blog isn't designed to be a guide to starting a business, it seems like a good place to start and help put the marketing process into perspective - especially for first time business owners.

As I look around and watch many budding entrepreneurs take the first steps towards starting their own businesses, I am amazed by the lack of planning that goes into commencing these ventures. There is a plethora of resources out there to help first time business owners avoid the pitfalls of start-ups, but inevitably enthusiam and hast make way to the self fulfilling profecy of first time business failure.

The majority of these failures are spawn by a lack of planning. It's almost a cliche in the business world that businesses don't plan to fail, they just fail to plan...and so for all those novices, starting out in the corporate world, below is a basic outline for your business plan (source: - a great site for business start-up ideas) Make this the first step towards your business success.

A comprehensive business plan is essential for any new corporate venture, whether your starting up a multi-million dollar enterprise, or a local deli. More than just necessary for getting finance, the business plan, which should be a continually updated document, forces company owners to sit back and honestly evaluate their goals and the strategies necessary to meet them. So whether you use the outline below or some other version, make sure your business plan is your first task.

1. Executive Summary. The Executive Summary provides a succinct synopsis of the business plan, and highlights the key points raised within. The Executive Summary must communicate to the prospective investor the size and scope of the market opportunity, the venture’s business and profitability model, and how the resources/skills/strategic positioning of the Company’s management team make it uniquely qualified to execute the plan. The Executive Summary must be compelling, easy-to-read, and no longer than 2-4 pages.

2. Company Analysis. This section provides a strategic overview of the company and describes how the company is organized, what products and services it offers/will offer, and goes into further detail on the company’s unique qualifications in serving its target markets.

3. Industry Analysis. This section evaluates the playing field in which the company will be competing, and includes well-structured answers to key market research questions such as the following:

  • What are the sizes of the target market segments?
  • What are the trends for the industry as a whole?
  • With what other industries do your services compete?

    4. Analysis of Customers. The Customer Analysis section assesses the customer segment(s) that the company serves. In this section, the company must convey the needs of its target customers. It must then show how its products and services satisfy these needs to an extent that the customer will pay for them.

    5. Analysis of Competition. This section defines the competitive landscape of your business. It identifies who the direct and indirect competitors are, assesses their strengths and weaknesses and delineates your company’s competitive advantages.

    Marketing Plan. The marketing plan details your strategy for penetrating the target markets. Key components include the following:

  • A description of the company’s desired strategic positioning
  • Detailed descriptions of the company’s product and service offerings and potential product extensions
  • Descriptions of the company’s desired image and branding strategy
  • Descriptions of the company’s promotional strategies
  • An overview of the company’s pricing strategies
  • A description of current and potential strategic marketing partnerships/ alliances

    Operations/Design and Development Plans. These sections detail the internal strategies for building the venture from concept to reality, and include answers to the following questions:

  • What functions will be required to run the business?
  • What milestones must be reached before the venture can be launched?
  • How will quality be controlled?

    Management Team. The Management Team section demonstrates that the company has the required human resources to be successful. The business plan must answer questions including:

  • Who are the key management personnel and what are their backgrounds? What management additions will be required to make the business a success?
  • Who are the other investors and/or shareholders, if any?
  • Who comprises the Board of Directors and/or Board of Advisors?
  • Who are the professional advisors (e.g., lawyer, accounting firm)?

    Financial Plan. The Financial Plan involves the development of the company’s revenue and profitability model. It includes detailed explanations of the key assumptions used in building the model, sensitivity analysis on key revenue and cost variables, and description of comparable valuations for existing companies with similar business models.

    In addition, the financial plan assesses the amount of capital the firm needs, the proposed use of these funds, and the expected future earnings. It includes Projected Income Statements, Balance Sheets and Cash Flow Statements, broken out quarterly for the first two years, and annually for years 1-5. Importantly, all of the assumptions and projections in the financial plan must flow from and be supported by the descriptions and explanations offered in the other sections of the plan. The Financial Plan is where the entrepreneur communicates how he/she plans to “monetize” the overall vision for the new venture.

    Appendix. The Appendix is used to support the rest of the business plan. Every business plan should have a full set of financial projections in the Appendix, with the summary of these financials in the Executive Summary and the Financial Plan. Other documentation that could appear in the Appendix includes technical drawings, partnership and/or customer letters, expanded competitor reviews and/or customer lists.

    Expertly and comprehensively discussing these components in their business plan helps entrepreneurs to better understand their business opportunity and assists them in convincing investors that the opportunity may be right for them too.
  • Friday, February 17, 2006

    The journey begins...

    Welcome to the first of many installments in this Marketing Groove blog...

    So before we get into the serious news, information and insights, many of you will be asking:

    Why another blog about marketing??

    Let's face it, in this ever changing commercial landscape, it is an arduous task to run a business especially if you are a smaller operator. By the time you've dealt with all the tactical components of the business, it's hard to dedicate time to your strategic planning, and beyond setting plans - actually doing the necessary reseach to implement the appropriate plans for your business and markets.

    And so - Marketing Groove was born!!!

    Designed to be an easily accessible realm for business operators to stay in touch with what's happening in the world of marketing.

    So what to expect:

    A constant flow of insights, news and reviews from the exciting world of marketing. This is not designed to be a "How To" style guide, but more of a forum for sharing valuable research and information.

    Importantly, this blog is not a one way communication - quite the contrary, and I welcome constant feedback from visitors, with the goal to share their thoughts and experiences and make the blog a more valuable resource for all...

    So enough with the preface and on with the show...