WRITTEN BY YAHEL DEMETER
Small businesses and organisations must have a clear business plan. Start-ups, by definition, have no fixed business plan but rather goals that must be achieved by varying means. In the next article I will present the ten stages of creating a marketing-focused business plan.
THE WINNING COMBINATION OF A BUSINESS PLAN AND MARKETING PLAN FOR SMALL BUSINESSES, START-UPS AND ORGANISATIONS
A business plan for a small business is very different from that of a start-up, though its goal remains the same: to provide its creator with a bird’s-eye-view of the business venture, so that he can make the right decisions with all the tools that allow him to see the big picture. While business plans for small businesses are intended primarily for the entrepreneurs, a start-up business plan is equally intended for investors, and it usually varies according to technological capabilities. Therefore, when writing the business plan, keep in mind that anything can change at any moment, and that the plan I will describe here should be constantly reexamined and adjusted. The business plan of a start-up is also different in terms of financing and market penetration strategy, as I’ll explain shortly. Even small and medium businesses ought to remember that the business reality is very dynamic and can change at the drop of a hat. Therefore, the plan should be updated from time to time, and a SWOT model should be applied on a regular basis, as I’ll explain below.
1. Stage One - Writing a Vision
In this section you need to write down your vision. Place it at the top of the business plan so that you have a clear understanding of your personal and professional goals before you jump into the water. If you need help writing a vision, you can get it here in the article about how to write a vision. This is important not only for investors but for you too, because it will focus your business activities. If what you want to do doesn’t solve the problem directly or indirectly, nix it because it will probably obscure your business focus.
2. Stage two - Mapping the Needs of the Market
Here you write where you think the market is heading in the next few years and how it will change. When you specify the changes you expect the market to undergo, you must also explain how you intend to deal with them and make the best of them. Make sure to also write about the current cycle in the market and the problem you seek to solve. In this stage, you must review the relevant market for your product or service, without segmenting target audiences or competitors, and focus on markets of complementary products in order to illustrate the specific place where your product or services will fit in. You should include, among other things, information about the market's potential growth rates, the risks associated with entering it, the financial cycles of the market. Finally, ask yourself whether it is worthwhile to start a business in light of this information and if so, why. After this stage, add the results of the SWOT model, which I will expand on immediately.
3. Stage Three - Reviewing the Target Audience
Here you need to focus on each segment, and get acquainted with the "persona" you created for each one, based on the explanation that appears in this article. So you don’t have to skip back to read it (though I recommend you do it later), I'll remind you that the persona is a representative character for every segment of the target audience. The persona must be characterized, focusing on daily routine; financial state and marital status; occupation, personality traits, family characteristics, socio-economic and demographic status; goals in life, etc., and anything else that gets you familiarized with the character of your target audience. This is important, because when you build a marketing strategy you adjust the textual and graphic messaging for these people. The better you characterize them, the more accurate your messaging will be and the more marketing resources and money you will save in the future, because you’ll be much more focused.
4. Stage Four - Your Competitors
In this stage, you include the information about your direct and indirect competitors, the barriers that prevent the target audience from switching to your brand, a breakdown of your relative advantage over competitors, comparison between you and your competitors in a chart that lists your strengths, weaknesses and brand characteristics. Conclude this stage by analyzing your potential competitors, those that will be emerge in the future. As I noted in the article on business branding, there are two types of competition:
Direct competition: Brands that offer the same products and services that you offer.
Indirect competition: Brands that offer other products that compete over the same customer at the same point in time or provide the same solution to the need, even though the product is different.
5. Stage Five - Your Product or Service
Here you present your products and services and their value proposition. At the end of this stage, you must include a section that talks about intellectual property and whether you need to register a patent, design, or copyright for your products or services.
6. Stage Six - Your Marketing Strategy
Here you will list all your conclusions regarding your marketing strategy, brand values and brand assurance; market penetration strategy, advertising strategy, business model and pricing. I always advise my clients to elicit the help of an expert at this stage of pricing and during the financial stage at the end of the business plan, to help them process the information professionally and set realistic prices for the services and products. Here, the pricing is based on a marketing perspective as well as the business model. They both address the question of “what is the profit model”, or, in other words, where the money comes from. Here you specify your pricing method, your product and service packages, and your marketing system as a tool for retaining your consumers.
7. Stage Seven - Your Team
In this stage, you must write down the ideal team you want to hire, be it external subcontractors or employees. Specify exactly how you’ll recruit the right people, and how you’ll measure their integration and success. This stage is meant to prevent personal biases that might cause you to recruit the wrong people in the future and keep them for personal reasons, even if they are not good for you.
8. Stage Eight - Business Development
Here you must write how you want to develop in the next five years, both in terms of the target audience and in terms of new markets that require geographic expansion and development through partnerships with indirect competitors. In this stage, you must also address the issue of validation (I discuss this at length in my taped lecture at the top of the page) and write how you will examine your success and the parameters by which you assess your business development. Next to each conclusion, you need to write what it means exactly and how you intend to handle it.
9. Stage Nine - Build your Economic Model
Here, too, I recommend that you elicit the help of a professional, even if you think you know the material. In this stage, you must build a business flow model for at least two years, and ideally for five years, in which you discuss the financing of the business, the break-even points, gross and operational profitability indices, the return on investment and the basic assumptions underlying the cash flow.
10. Stage Ten - Write a Summary
The summary serves as a showcase for the agenda you will present in the business plan, and can be sent separately. I recommend that you also include a graphical timeline that illustrates your business activities, to help the reader understand where you are headed and help you better understand your next moves.
SWOT MODEL: ONE OF THE MOST IMPORTANT MODELS TO KNOW
The SWOT model is perhaps one of the most popular models, and I rarely begin a consultation process without going over it. It’s a short and easy to understand model that helps you simplify processes and behave better in a competitive environment. The model consists of two main parts, each with their own two subsections: the first one refers to your business, product or service; and the second refers to the market around you. The “S” stands for strengths, the “W” stands for weaknesses, the “O” stands for opportunities in the market, and the “T” stands for the threats in the market. The model is intended to help you hide your weaknesses, beware of the threats, emphasize your strengths and take advantage of the opportunities by recognizing them in advance.
Strengths can be exclusive intellectual property, machinery, personnel, innovation, technological progress, market pioneering, and so on. Notice that pioneering can also be a weakness, an innovative idea can also be a threat because it can be copied unless it’s well protected, and machines are not a permanent strength because competitors can get them too. If you own a restaurant, for example, then nearby parking spaces are a strength. If you are an airline, then conducting and learning from customer satisfaction surveys is a strength, and so on.
Weaknesses can be equipment wear and tear, lack of parking space, unstable personnel, technological delays and anything that weakens you against your direct competitors, not the indirect ones.
Opportunities can be political elections, which, as you know, can also be a threat; changes in the market that, as you know, can also be a threat; and any business opportunity unrelated to your organisation or business.
Threats are mainly market instability or competition-related issues, such as copyability, government instability, disloyal target audience, erosion of the value of the product or service in the market, increase in competition, and anything that threatens your business activity but is not directly related to you, or rather, not a result of your marketing, operations, or logistics.
IN CONCLUSION, HERE ARE TWO IMPORTANT TIPS REGARDING THE SWOT MODEL:
The secret is to constantly ask if you are assigning the value to the right place and whether there are no other places where it can appear.
The SWOT model is very dynamic, and may undergo minor or major changes between quarters. Its goal is to keep you alert and allow you to seize opportunities and hide weaknesses. I like applying the SWOT model every quarter with my clients and for my own business, because it keeps me aware of the market around me.
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