The Ten Keys to a Successful
Business Plan
By:
Bob De Contreras
1.
1.
“Most importantly, have the passion for your business.”
The Challenge:
Having the passion for your business means it is something you may want
to do for the rest of your life. It is not a sideline until the job market
improves. It is not something you can manage part-time while you are looking for
a “real” job. You may not be passionate about the idea initially, but if you
don’t become passionate as you do your research, beware. Sometimes, your passion
will be the only thing that will keep you going.
2.
“Define your market.”
The Challenge:
A market is a group of buyers that have common buying wants and needs.
Business owners need to understand if the market is big enough to go after and
whether or not it is reachable. Many small businesses fail to define their
market, lack emphasis on customers and groups of customers (market segments),
and how to reach buyers in those market segments. Your market definition should
include market size, growth rate, market trends, market influencers, number of
buyers, buyer wants and needs, competitive analysis and regulatory influences.
Test your definition by meeting with other companies in your market segment and
with potential buyers.
3.
“Ensure you have a winning business model.”
The Challenge:
A business consists of
a market and a product or service;
not just an operation or a product. You must define both.
Export-import is not a business; rather, “importing decorative candles for sale
by mail-order to wealthy collectors of oriental art” defines a business. You
need to understand how your business will coexist in your selected market
segment. How will your business operate within an environment of suppliers,
manufacturers, distribution channels, competitors and buyers? Put the whole
picture together so you know how your company fits in.
4.
“Know how to beat your competitor(s).”
The Challenge:
New businesses need a creative concept. Sometimes they just follow the
pack; thus have no competitive advantage. New businesses cannot ignore the
competition. You must look for underserved niches in the marketplace. The
creative concept does not have to define a totally new class of business, but
rather a “twist” on an existing business may be adequate. Know all about your
competitors and clearly understand how you will beat them. With a product that
is uniquely differentiated and satisfies the buyers need, you will win more than
you lose.
5.
“Create a winning product or service.”
The Challenge: There are three
strategies for success in dealing in a competitive environment: lowest cost
(not lowest price), best product and market focus. The first two are difficult
or impossible to achieve for most small businesses. The third, focus, requires
management discipline and overcoming the urge to do too many other things. If
you really understand your buyer and know what it takes to win against
competition, your product or service will be easy to sell. Anything less will
lead to failure.
6.
“Have a compelling value proposition.”
The Challenge: You must fit within
your buyer’s priority list for planned purchases. The benefit of your
product has to be at the forefront of your customer’s needs. The best way to
express the value of your product or service is to present a return on
investment (ROI) analysis. You should be providing either higher revenue or
lower cost/expense, and it should take less than a year to pay the investment
back. Anything else is probably a “nice to have,” and is unlikely to win in a
market where buyers are only purchasing “must have” solutions.
7.
“Have a targeted marketing plan.”
The Challenge: Select the right way
to deliver your message to your potential buyer: advertising, trade
articles, mail or email campaigns, telemarketing, distributors, value added
remarkets, dealers or direct sales force. Many companies are over-reliant on
franchises as offering a silver bullet strategy for support and getting started.
They don’t sufficiently analyze what the franchiser brings to the table that you
can’t do for yourself. Franchisees sometimes over-estimate the value of the
support from the franchiser; in that, is it worth the franchising fee and the
royalty payment? Can those costs be made up by efficiencies offered by the
franchiser? Can those costs be passed on to your customer? If not, the
franchisee is at a competitive disadvantage. Those with a "brand" that can bring
customers in the door on "day one" and provide active business operation
assistance, rather than arms length promises, are particularly worth looking
into. Once you have generated qualified leads, manage them through the entire
sales process.
8.
“Create the most efficient sales channel and
excellent customer support.”
The Challenge: Establish a sales
forecast. Hoping for sales is not planning. Sales forecasts are based on
understanding the buyer in your selected market segment and on the experience of
others in it. Many new companies underestimate the time it takes to build a
business to the point where it is profitable. As a result, many new businesses
are under-financed and have insufficient working capital to sustain themselves
in the initial growth period or during seasonal downturns. Being new and small
is no excuse for cutting corners in dealing with customers. Would you go into a
shop in the mall with cheap looking furnishings and lighting? Don’t try to save
money there. Your sales and support efforts should be guided to create a
satisfied customer who is willing to be a reference to other potential customers
and give you repeat business as well.
9.
“Understand your entire financial model.”
-
Establish realistic sales, cost, capital and expense plans
-
Understand cash flow and profit dynamics
The Challenge: Establish a solid
financial plan. Many new companies are unplanned or under-planned. Planning
cannot deal with all the surprises in the real world, but why be surprised by
things you can anticipate and deal with beforehand? Planning requires a highly
detailed and kinetic vision of the future of the business that reduces that
vision to the language of business, dollars and cents. A financial plan is
required to raise money from banks and investors in addition to helping you set
financial objectives. Many new companies try to save money by avoiding the costs
of lawyers, accountants and insurance agents. One mistake can cost you many
times the small cost of relying on experts. Operationally, the most important
financial dynamic to understand is cash flow. Know how money comes into and goes
out of your company and when the transactions occur. The penalty for not
managing your financials well is running out of money and probably losing your
business.
10.
“Ensure you have a winning team.”
The Challenge: Pick the best people for
your company. Many new businesses reach too far in a single step; for example,
starting a trucking business without any prior experience. Take it
“step-by-step”. Often the first step is to get a job in a business similar to
the one you want to start. Learn the business from the inside out. Then start
your own business. With the right experience under your belt, build your team
with people that fill out the strengths that you need to run your business. Pick
only the best people that can get the job done. Avoid hiring friends and family.
Brought to you by:
[BACK]
Bob De Contreras
Rich Kramarik
RTBA | Cary | Greensboro | Raleigh | Research Triangle Park | North Caroliina
Contents © Copyright Research Triangle Business Advisors 2008, All rights reserved.
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