THE WINNING BUSINESS PLAN

Business Plans Are Absolutely Essential if a Business Hopes to Succeed. Now Ken Tarlow Shares More Elements of a Winning Plan.

PART THREE

By Ken Tarlow

In the last issue, we began discussing the key elements of a winning business plan. Let's continue this time with even more components to help you plan your business strategy:

POTENTIAL MARKET

When discussing your potential market, you must demonstrate comprehensive knowledge of your customers and the industry your customers are in:

• Who they are

• Where they are

• How they operate

• How they evaluate competitive products

• How much of your product they are willing to buy 

MAJOR COMPETITION

In addition, you want to be aware of your competition and discuss your competitors in the plan. You would include information on:

• Who they are

• Where they are

• How their product may be better than yours

• How your product is better than theirs

SALES STRATEGY

How will you approach the marketing of your new product. When discussing this in your business plan, include several aspects of the strategy:

• Identify the major competition in your targeted market. Explain how you intend to deal with them.

• How is your product sold to your customers? By whom? Your own sales people, manufacturer's representatives, distributors?

• How do your competitors sell their products?

• How do the companies in your market do their purchasing? Do they have a central buying office? Do they buy seasonally? What terms do they include in their purchase orders? What quantities do they buy?

Essentially you should discuss the background history of the industry that buys your product and their purchasing methodology. Even if your product is new and there are no other products like it on the market, the same questions must be answered. In other words, how has your market grown over the years? Discuss the technological trends of your industry and your market.

Important: Estimate the sales of your product in dollars and units, the share of the market you are aiming for, and how long it will take you to achieve that share.

IMMEDIATE MARKET

Define the location of your immediate market. There is a big difference between your potential market and your immediate market. Your "immediate" market is what you can reach. What you can't reach, don't count. Then define the location of your next market area, and so on. Estimate the time period for reaching each of these markets. In your proforma, you have indicated how much you expect your company to grow from the time you start to the end of the year.

Explain how you intend to reach your customers (sales representatives or your own sales people) and the sales support you intend to provide. If you are building a company for the long term, your company must earn a reputation for reliability and service. Describe how you propose to establish this reputation.

List by name each customer of importance, the size of the order they have given you, or an estimate of how much they will buy. If you consider the information appropriate, discuss the physical distribution of your product and shipping factors and costs, particularly whether you, your customer or your vendor will be paying shipping costs.

Explain your price policies and discount structure. Price policies vary by product and industry. You might want to discuss how inevitable price fluctuations might affect company revenues.

Customer communications (advertising, promotion, public relation, one-to-one sales, trade shows, handouts, letters) inform your customers about your product. If appropriate, include an advertising budget or communications program. Indicate if it's tied into discount allowance. The objective is to let your reader know how you intend to communicate with your customers.

NEXT ISSUE: More on the Business Plan

The above article was excerpted from Tarlow's MIND TO MONEY, a cassette tape/workbook package that can help you develop a new product from the idea stage to the marketplace. MIND TO MONEY may be ordered from Dream Merchant at $59.95 plus $4.95 CA sales tax and $5 shipping and handling ($69.90 total). Send orders to Dream Merchant, 2309 Torrance Blvd., Suite 104, Torrance, CA 90501.

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