All Companies Need to Have Detailed Business Plans
By: Sharon Berman,
Published: Los Angeles Business Journal, Entrepreneur’s Notebook
Ask businesspeople if they’ve written a business plan, and many will tell you they don’t need to. They know exactly where they’re taking their business, they’ll say. Or their plan is in their head, so they don’t have to write it down.
That’s too bad, because a business plan is an essential tool for any enterprise, no matter in what stage of life it is.
If you don’t believe me, just try to get funding without a business plan. The first thing most prospective investors will ask to see is a written plan. They’ll want to know if there indeed is a market for your product or service, what that market is like, how well you understand it, when they’ll get their money back and how much profit they can hope to make. One key question they’ll have is: How do you plan to market your product or service?
Doing your homework is the first step toward creating a good marketing plan. In fact, gathering information that will help you make reasonable marketing assumptions and forecasts is half the battle. Without such information, you won’t have the right foundation on which to build your business.
The kind of information you need to have can be found by answering a few questions: What are your most profitable services or product lines? What market trends may have an impact on your business? (For example: Are businesses in your field bundling their services or selling them individually?) What changes in the regulatory or legislative environment may affect your enterprise?
You also need to identify your target markets. In doing so, consider demographics, geographics and psychographics. For example, do your potential customers see themselves as upscale, whether or not their incomes justify it? What criteria do they use in making their purchasing decisions? They may tell you their sole criterion is price, but does your data confirm that?
When you’re ready to put together your actual plan, think about your objectives. The more specific and quantifiable you can make them, the more focused you can be, thereby increasing your chances for success. You’ll also want to put a time frame on your objectives. You might look at the short term on a quarter-by-quarter basis, and at the long term on a year-by-year basis. Or you might start with a year as your short term, and then set your long-term time frame at three years.
Examine your positioning in the marketplace – the place you hold in your buyers’ minds. It’s a good idea to develop a statement that delineates your positioning. The problem with many positioning statements is that they make grandiose claims about being “the best” and “the highest quality” – positions they cannot sustain.
Make sure to focus on your main communication points. Write down the important messages you want to impart to your market, no matter what medium (advertising, direct mail, Web page, etc.) you plan to use.
You also need to set out a strategy. Often, people skip this step and jump directly to tactics. Strategy is a broad-brush description of how you’ll pursue your objectives. For example, your strategy might be to increase your visibility or to educate your target markets.
Have you evaluated the range of available tactics and selected the ones you believe will give you the best bang for the buck? These can include telemarketing, direct mail, marketing materials, networking and merchandising. Remember, there is no magic bullet. Marketing success will not come from a single tactic; it will result from a mix of tactics.
How Much to Spend?
It’s hard to know which tactics to use until you know how much you can spend. There are two main approaches to budgeting. One is zero-based budgeting, in which you start from zero and determine what you’ll need to spend to get where you want to go.
The other way to budget is to take a “top down” approach. You probably have some ballpark idea of what a realistic budget would be. Start with what your company spent the previous year, some outfits plan for a straight percentage increase – such as 10 percent over last year’s budget. A key question to ask yourself is: What do I want to accomplish? If your launching a new service line or some other new initiative, you may need to jettison history altogether.
Try to be as detailed as possible in formulating your marketing plan. When you advertise, what size ads will you buy? If media relations is an important part of our strategy, what media outlets will you target?
Unfortunately, many marketing plans stop here, when they’re still missing two key elements: a timetable and a way to measure results. A timetable can keep you on track throughout the year. A method for measuring results will tell you how well your tactics are working, and it will enable you to introduce midcourse corrections and make even more effective plans for the following year.
Don’t forget, your marketing plan is not set in stone. It’s meant to be a flexible document that you’ll adjust as circumstances change. But by making sure that your plan has all the essential ingredients, you’ll at least get off to the best possible start and will be on a firm footing as you move forward.
Sharon Berman is principal of Berbay Marketing & PR, a marketing consulting firm specializing in working with professional services firms. She can be reached at email@example.com.
The firm’s website is www.berbay.com.