Three Fs for Writing a Business Plan
Writing a real business plan comes innately only to a few. And that too after much skill. Those few may have chosen it as a career. Sometimes people in the academe write them for firms to earn a living. While the task is a chore to many for beginners it is a complete riddle. Start-ups find themselves compelled to write one for various reasons. The most common reason among them is to raise funds. People also write such plans for private investors. The aim then to get them to invest money in the firm. Another motive is to raise the stake in the firm. Also, entrepreneurs write them while seeking for new business. Even to sell the firm. Not knowing how to write one can be a nightmare. Here we give you a practical approach. We hope it can serve as a basic guideline.
Writing a real business plan comes innately only to a few. And that too after much skill. Those few may have chosen it as a career. Sometimes people in the academe write them for firms to earn a living. Even to sell the firm. Here we give you a practical approach.
Many people fail in their attempts to sit down and write a business plan. Because they face starting problems. An outline can help in overcoming the problem. Outlining involves jotting down what to write. Bear in mind the purpose of drafting the plan. Write as if you are talking to the target reader. In addition, think about who would be reading it. And draft an outline of what kind of info or data to include in it. Start writing the business plan section by section. This way provides a unified and logical flow to the rest of the content. It then becomes easier to arrange facts. Then start compiling them in a clear manner. Such a framework would appeal to the right audience.
Many people fail in their attempts to sit down and write a business plan. Because they face starting problems. An outline can help in overcoming the problem.
This stage is known as mapping scheme because it involves forming the exact order of sections. Delve deeper and write each area concisely for greater clarity. Planning stage is the muscles and flesh. It makes the content rich. Well, the target reader should find solid evidence of the business plan here. It would also enforce the standing of the plan. A few writing skills are needed here to make the concepts and ideas compelling.
This stage is known as mapping scheme because it involves forming the exact order of sections. Also called planning stage. Planning stage is the muscles and flesh. It makes the content rich. Well, the target reader should find solid evidence of the business plan here.
The draft is still rough at this stage as it needs some final touches. The next step is to edit it from top to bottom. Editing gives coherence and a smooth flow to the arguments expressed in the business plan. People write business plans to make a case. Hence it needs winning power. Repeat the main points throughout the document. For more emphasis furnish it with facts and figures. Make sure to use logic. Reasoning backed by information that was stated earlier in the plan can make arguments clearer. Edit the business plan further by paying attention to the smallest details. Fine-tuning the business plan in a detail oriented manner increases the readability of the document. If possible, let a third person review it for further refinement.
People write business plans to make a case. Hence it needs winning power.
A universally accepted and a regular business plan template is as follows:
- Executive Summary: Executive summary is the most important part of a business plan. Ideally it highlights the strengths of the company. This part briefs the reader the competitive advantage of the business. Briefly summarize why you have the best business idea. It is a snapshot statement of the program of activities as a whole. It touches on the company profile and typically runs from 3 to 4 pages in length.
- Company Overview: It should start by providing a brief history of the group ownership. It then goes on to describe the organization of the enterprise. A timeline as to when the business was founded is equally important. Information such as locations and facilities should also be included. Add the names of the key members of the management team. Profiling their backgrounds is an indicator of a well-thought-out business plan too.
- Industry Analysis: This section requires substantial research. It gives an understanding of the external factors of the playing field and how the company responds to them. Explain what the cyclical changes are, profit opportunities, and how the company fits into the industry.
- Market Analysis: The objective of market analysis is to provide a quantitative and qualitative assessment of the market. Such facts as demographics, segmentation, and market need are highly sought out by savvy investors. Market value, size, and regulation shows the investors that the business is lucrative enough.
- Competitive Analysis: Identify the competitors’ strengths and weaknesses. A distinct advantage of the firm over the competition is a prerequisite for a business plan. The unique competitive strategies will set the company apart from others. Discuss here, if any, any barriers to entry and exit into the market.
- Customer Analysis: This is a critical section that defines the characteristics of the target customer. Usually the characteristics are explained through their buying criteria and how the product typically satisfies their needs. Include also an in-depth analysis of the growth of the customer base, their average revenues, and service delivery model.
- Marketing Agenda: Emphasize the unique selling proposition of the business in this section. Along with that the pricing and positioning strategy and distribution plan should also be included. A marketing plan that outlines the steps taken to retain existing customers or gain new customers will add credibility.
- Strategy and Implementation: Insert in this segment a detailed plan of the marketing strategy and its implementation. It typically articulates how the company’s management intends to reach the products to the market. It includes the sales strategy, personnel hire, promotions and advertisement, distribution outlets, pricing, service delivery, guarantee policies and the like. Emphasis would be on past sales and a sales forecast.
- Organization and Management: Highlight who does what and their added value to the company. It is a simple but effective way to portray an organizational chart with a narrative. This section would reassure the investor that the people onboard are more than names on the organizational diagram.
- Financial Plan: Most investors are visuals. So, set up a spreadsheet with the past sales, sales forecast, and expense budget. It is also a good idea to incorporate a cash flow statement, assets, and liabilities. Some investors may require a breakeven analysis and the cost of doing business. A business planning software can be an invaluable help here.
- Appendix: In general, this section holds the entire supporting documents. All that information that was too large to be included in the main body should go in here. Any figures, statistics, charts, graphs and illustrations that augment the main points in the body must be in this section.
3F plan provides a systematic and practical approach to preparing a business plan. It has been proven to bring success to budding entrepreneurs. Bear in mind to also study the target readers. And finally tweak the plan. Stress those areas that would appeal to them. Good luck!
Title Photo Credit: Helloquence
The Best Sales Promotion, Before, During and After
The objective of the best sales promotion is to increase sales for a particular product through stimulating additional demand for the product. The end goal is to generate revenue over and above the standard. And the intent is almost always a short-term gain, unlike some marketing strategies that are designed to create customer loyalty, brand awareness and long-term return on investment. Successful promotions are the ones that have struck a chord with the intended audience and have met the desired results of increased business. Companies replace the non-performing promotional activities with performing ones to maximize the benefit.
What is it that makes some campaigns successful and others not? Here we dissect the variables involved pre-promotion, during and after the promotion. Usually, a particular successful promotional campaign may not have had all the factors described here, but a majority of them have. A careful analysis of such ingredients can help companies replicate the successful promotions and roll them out in another market or on a wider scale in the same market. On the other hand, the strategies that worked in the past may not necessarily work out in the future. So, it is recommended to exercise caution.
The primary variables involved in all promotional activities are the product, the market, the channel, the competition, and the budget. We examine the dynamics of each of these before the promotion, during and after the promotion.
- Product: A promotional activity narrowly targets a small subset of the larger target market. The campaign should take into consideration what benefit of the product would appeal to the audience. The promotion should highlight that feature that closely corresponds to that interest.
- Market: Understand the dynamics of the target audience and the stage in the product lifecycle. For example, how often does this market use the product? Conduct a preliminary research on the demographics and behavioral patterns of the market. Learn the cultural nuances of the area.
- Channel: Depending on the target market decide on the mode of delivery that would most appeal to the target market. Then consider a variety of channels that would help meet the promotional goals. For example, retail outlets, malls, media, community centers, event venues, etc.
- Competition: Find out if a direct or an indirect competitor has done a similar sales promotion. If so, what was the outcome? If the promotional activity has produced disappointing results, then there is no point in replicating it in the same market. It would end up in a waste of resources.
- Budget: Work out every element of the promotion that would incur a direct and variable cost. It would be ideal if some partners can bear some costs or if other stakeholders involved could share them in return for a benefit. Agree upon the cost-sharing model in advance with all concerned.
During the Promotion
- Product: Start a conversation with the customer through different media outlets before the promotional deal and communicate with them about the product’s features and benefits. Asking for personal references can work for high ticket items. Social media campaigns are very effective ways to hold a prominent position in people’s minds.
- Market: Rather than a mass approach, acknowledge and re-engage with old customers as well as encourage new customers to try the product by offering free samples and demonstrations. Direct marketing in certain markets and products is a highly efficient way to reach out to high net worth individuals.
- Channel: Help the customers make purchase decisions by making the product available as and when they require it using various channels. Motivate them to buy it by bringing the product to their doorstep. Try personal selling if appropriate when the customer appreciates a direct interaction on a one to one basis.
- Competition: Differentiate the product from the rest. Provide technical information to the prospects on why the product is different. Emphasize on those qualities and advantages that allow the customers to ask relevant questions rather than giving a sales pitch. If possible, distribute special coupons with expiration dates.
- Budget: For budget-constrained clients who show a serious interest in the product offer friendly payment terms in liaison with the local financial institutions. Create and foster brand loyalty by giving them various options on how they can conveniently get hold of the product. Offering them special deals is also a good way to seal deals faster.
- Product: Conduct a post-promotion analysis on what worked and did not work within the targeted audience. Consider what other benefits of the product were appealing. Fine-tune and replicate the ones that worked and discard the ones that did not.
- Market: Make a note of the receptiveness and rejection of the customers to the product features. Create a qualified database of the old customers as well as the new ones in the market. Tweak the product if necessary and possible to adapt to the cultural sensitivity.
- Channel: During the next promotion consider using only those modes of delivery and the channels that were beneficial and that brought the greatest return on investment. Do a survey directly with the first-time purchasers and regular purchases on the preferred usage of a channel.
- Competition: Do a competitive analysis on other companies who are selling similar or augmented products. Rather than competing headlong, work out strategic partnerships to leverage the sales. Some tactical alliances with local partners can even bring the production cost down for both parties.
- Budget: Calculate the cost incurred to carry out the promotion. Compare that to the incremental sales revenue obtained purely by carrying out the campaign. Work out the benefits and risks of the cost-sharing model. Post-promotion phase is a good time to evaluate the mode of payment most preferred by the target market.
The following matrix can help while doing a post-promotion analysis. The information filled out can be useful in designing an improvised promotion the next time.
Photo Credit: Roman Kraft
The new sales compensation program has been researched, cost modeled, and is ready for roll out. So what’s the process? Send out an email describing the new plan and consider it done? Cross your fingers that sales managers will answers questions for their reps?
Don’t assume that because the people who designed the new plan understand it, that anyone else will. Real understanding takes days, weeks, or sometimes months. Put yourself in the shoes of the sales organization, concerned with their livelihood and any possible disruption, and develop your change plan to drive the strategy with the sales team in mind. When making your next change, consider the following six steps:
- Start strong. Conduct your due diligence to make sure the program is bullet-proof and ready to go.
- Craft the change story. Be honest about the reasons for the change, and develop a clear message around the C-level goals.
- See the organization’s view. Expect some resistance, and identify who those resisters might be so you can get them on board.
- Get the change forecast. Know your organization’s readiness for the change and your team’s resolve to see it through.
- Leverage the learning modes. Use multiple methods, including those that serve visual, audio, and other learning types to communicate with the organization.
- Follow the process. Begin communication early and follow your approach until well after introduction.
On Day One, announce the new plan with strategic themes and reinforce at the team level. Make the plan announcement within the context of the overall sales strategy. This is the first formal communication of the change story. Translate the story to the team through sales management in concert with the strategic announcement. Sales management should then work with the team in break-out groups that get into the details of the program, answer questions, and make sure that each member of the organization understands the new program.
In the first 14 days following the announcement, open the communications channels. To support the announcement, open up your support channels to capture the inevitable inbound questions and manage the flow of communications. These vehicles typically include an inbound voice hotline, a dedicated e-mail account, a company-operated blog, and social media presence. While some of these vehicles may seem non-traditional, it’s not uncommon for the sales organization to establish its own web and social media presence in response to a major change. It’s usually better for the company to move proactively in this direction than to reactively defend.
Thirty days after the announcement, test for understanding. No matter how well accepted the plan is during the announcement, don’t assume the whole organization understands it. Following the announcement, managers should work on a schedule to reach out to reps and confirm their understanding of the plan and their objectives.
Sixty days after the announcement, test for behavioral change. The first sign that the plan is beginning to work is a pattern of behaviors that are consistent with the objectives of the program. Test for these changes through direct coaching and observation by sales managers and through performance measurement through vehicles like the CRM system that track activities and steps in the sales process.
At the 90-day point, test for performance results under the new plan. Depending upon the length of the sales cycle, results may begin to show during the initial months or after the first quarter. With many implementations, the sales organization may actually experience a dip in performance after the introduction as it adjusts from any initial distractions and begins a new, consistent rhythm.
When making the change to your program, start early with socialization, craft the right story for your change environment, and stay sensitive to the organization while you work through your multi-mode communications process.
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Photo Credit: Mathyas Kurmann