Suggestions
1. In real estate the key is location, location, location. In a business plan the key is evidence,
evidence, evidence. The content here will make or break your plan. This shows whether you
know what you are writing about or not.
2. There are a number of resources available to the small business person that are .either free or
relatively inexpensive.
* Trade associations and journals.
* Chamber of Commerce.
* Competitors' sales literature.
* People--customers and sales representatives.
3. Venture capitalists look for a well-thought-out plan. Thoroughness here demonstrates the
degree of effort of thought and "homework" done on the business.
* Be specific when describing the target market. Explain in detail.
* Document, prove, cite evidence.
4. Write in terms of benefits sought by the customer as much as possible. Customers buy
benefits.
5. Be enthusiastic and realistic when describing the potential market. No one can capture 100% of any market.
6. The market research you present here is critical. You need solid evidence to back up your business plan.
While market research may be a relatively brief part of this section, it is the backbone of your plan.
* Don't hesitate to use others' studies. There are numerous marketing publications, journals,
and government/academic studies available in local libraries on almost any market segment.
* Your local Chamber of Commerce may have a demographic/economic/socio-graphic study
for your community or region as a service to local small business.
7. You may identify your market a number of ways. Be sure the way you choose fits your
business and product/service.
* Demographics--quantifiable characteristics: age, income, education, gender, etc.
* Psychographics--interests, values, beliefs, etc.
* Sociological--family structure, ethnic values, etc.
* Geographics--location, location, location.
8. What you write here will be important to your marketing plan, your timeline, and the
explanation of critical risks sections of the rest of your plan.
9. Don't forget to do a thorough job of competitor analysis as well as looking at your markets.
10. Your responses to the competitors should be customer-focused responses.
Resources Needed to Write
1. A copy of your Executive Summary, to ensure that you now detail everything you mentioned
there and that you don't add anything that should also be referenced in the Executive Summary.
2. Any market research studies you've conducted or secondary market research you've collected
about your business and market.
3. A customer profile consisting of a picture or verbal description of your target market.
Advertising professionals often create a portfolio, complete with a picture of their '"typical
customer" in order to keep focused and in tune with the customer.
4. A copy of your company goals and objectives, to ensure your marketing effort stays in line
with your company strategy.
5. An outline of your competitive advantage(s).
6. A competitive profile on each important competitor which includes:
* Why they are a competitor.
* Sales volume in units and dollars and market share.
* Their apparent market strategies.
* A SWOT analysis of each competitor.
* Their competitive style--aggressive, conservative, etc.
* Probable future actions in your market.
7. An analysis of your competitors' advantages over you in the following categories.
* Price.
* Performance.
* Durability and versatility.
* Speed or accuracy.
* Ease of: a)use; b) maintenance; and c) installation--including cost of installation.
* Product features including size or weight and styling or appearance.
8. An analysis of your advantages over your competitors in the same categories listed above.
Markets
1. What market research have you conducted or found about your customer?
* Detail either the sources of your information or how you deduced it.
2. Who are the potential buyers for your products? Describe the customer according to any of the
following or any combination:
* demographics.
* psychographics.
* sociologically.
* geographics.
3. How many potential customers are there?
* What percentage can you realistically capture?
* This is critically important to the justification of the financial forecasts that will follow.
4. Why do they buy?
* What is their primary purchase criterion: price, quality, availability, convenience, or...?
* Are there price tiers in the target market?
* What features do they seek? What benefits do they want?
* Do they have a preference as to how and where they buy? How strong is it? How will you
change it?
5. What are the potential annual purchases?
* How do the customers decide to buy?
* How often do they buy?
* What is the buying cycle? Is there a seasonality to your market?
* Is demand tied to any other product/service, Le., computer disks to computer sales?
6. What do they buy?
* Price--how much will changes in price affect your customers' purchases? Important
to know in advance.
* Quality--will they pay more for better quality?
* Image-- is brand name important?
* Are customers brand loyal?
7. Describe the overall market
* Does the research show a profitable market for your business, product/service?
(Remember size or lack of service to a market does not automatically imply opportunity.
No one may be serving that market for a reason.)
* Location and size, in number of customers and sales dollars. Is the market growing?
* Growth rate, trends.
* Provide a table of projected industry sales in this market.
* Project your market share, best case, worst case, most likely case. (This is important to
your financial forecasts later.)
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Market Trends
1. How might the economy affect sales of your product/service?
* What is the economic forecast for your geographic area for the next year, the next five
years?
2. How might government programs, policies, or legislation affect your industry, business, or
product/service?
3. How might technological factors affect your product/service sales?
4. What social/cultural factors might impact your sales?
* Changing demographics of market segment: aging, moving, increasing/decreasing
incomes.
* Changing social structure, i.e., increase in single working parents, might result in an
increased need for quick, inexpensive prepared meals that can be heated and eaten.
* Changing values.
5. How will you track these trends-how will you continually evaluate customer needs?
Competition
1. Who are your primary existing competitors?
* List the top 3 or 4, with a sentence explanation of why each is a competitor. (Region,
price, similar product, etc.)
* Identify the price leader, quality leader, and service leader.
2. Conduct a Strength and Weakness Analysis on each primary competitor.
* How will you counter their advantages/strengths, exploit their weaknesses?
3. What distinguishes their product/service from yours?
* Features and Benefits.
* Price.
* Product performance.
* Other relevant product attributes.
4. What are their apparent strategies in developing the market?
* Product development.
* Pricing.
* Distribution.
* Promotion.
5. What are your company's comparative strengths and weaknesses?
6. Who are your potential competitors?
* Why would they enter your market(s)?
* When would they enter your market(s)?
* How might they enter, position themselves?
7. What are the barriers to entry for new competitors? (Not all will apply: which are key?)
* Economies of scale--a new company will not have the cost efficiencies of an established
firm.
* Product differentiation--strong brand identification or customer loyalty can be a problem.
* Capital requirements--is there a significant up-front cost: physical plant, inventory,
equipment, etc.?
* Switching costs--to the customer. Sometimes with system-type products, the customer
must change more than just one item.
* Regulatory environment--are there regulations, federal, state, or local, that are difficult to
meet?
Market Share
1. Quantify, where possible and appropriate, i.e., amount of revenue, size of market share, etc.
2. Sales forecast
* What is the nature of the sales cycle: long or short, simple or complex?
* Provide, in chart form, your sales forecasts for the current year, next year, for a total of
five years out.
* What is the average sale?
* Forecast projections in terms of best case, worst case, most likely case.
* Project sales in terms of units, revenues--gross and net.
Sales Forecast Table
Sales 20xx 20xx 20xx 20xx 20xx Best Case $$ -
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