Who Needs a Business Plan?
Maybe you do - here are some simple planning tools to help you keep your edge

Most business owners and managers would agree that a business plan is a valuable if not necessary tool. You might find, however, that few of them have ever written one. There are many reasons why: in some cases because of a lack of time, in others because they don’t know where to begin. The good news is that business planning doesn’t have to be an overwhelming, scientific process.

There are occasions where a formal, written business plan is necessary to get a business started, particularly when outside loans or investments are needed. The reason that banks and investors demand a business plan is to understand your vision of the business and to ensure that the vision can become a reality. They want to see your rationale and the results that you expect.

Financing a business isn’t the only good reason to write a business plan. A business plan can be a great way to ensure that you yourself are being realistic in what you are trying to accomplish. After all, who has more to gain or lose should a business succeed or fail? Whether you take the time to write a complete business plan or not, there are some parts of the business planning process that can prove invaluable.

The “3 C’s”

The starting point in the business planning process is known as an analysis of the “3 C’s” - Customer, Company, and Competition. A detailed knowledge of each of these points is critical to the development of a sound business strategy. Everything from product selection to pricing, advertising and more depend upon a thorough knowledge of the environment in which a business operates.

Customer - The focal point in any business should be the customer - without them, there is no business. A business owner must maintain a constant vigil over the customer if they hope to acquire and maintain their business. Knowing the customer can mean many things, however. Many people make the mistake of examining a customer based upon demographic information - that is age, education, and income. One of the more important ways to know a customer is psychographically, or based upon their lifestyle. How people live and spend their time often correlates to the types of products that they buy, and how much money that they spend on them.

Company - It is also important to recognize what a company has to offer their customers. Every company is better at something than their competitors. The trick is to recognize what that is and to exploit it. In some cases it might be price, in others product knowledge and customer service, or even just location. A simple tool to evaluate a company’s ability to compete is a SWOT analysis. This analysis simply lays out the company’s Strengths, Weaknesses, Opportunities and Threats, usually with 3-5 bullet points each. Strengths and Weaknesses focus on factors inside the
company, while Opportunities and Threats focus on external issues, like new products or changes in the competitive landscape.

Competition - Never underestimate the effects that competition can have on your business. The problem with the competition is that it is hard to tell what your existing competition is going to do, or where new competition is going to come from. Sometimes it is helpful to first do a SWOT analysis on each of your major, direct competitors. This will help to define your competitive advantage over them. Where things get “dicey” are with indirect competitors. Most companies tend to examine competitors that sell the same products. In reality, competitors include all companies looking for the same dollars from a consumer. In the case of a furniture dealer, this could include carpeting, wallpaper, a television, or any number of other home improvement or lifestyle products.

The “4 P’s”

Once you’ve gained a clear picture of your Customers, Company and Competition, you can begin to formulate your “4 P’s”, also known as your “marketing mix”. This marketing mix contains all of the elements of your business related to delivering the benefits of your products to your consumers. Each component of this marketing mix should be catered to match up with the “3 C’s” analysis that you’ve completed, especially regarding your Customer.

Product - The first element of your marketing mix is your product. Many people make the mistake of describing the product based upon its features. In the case of a retailer, the product is not the physical product that the customer takes out of the store. It is the benefits that the product provides, i.e. comfort, convenience, and expandability. To take it a step further, they are also buying certain benefits from the retailer - price, selection, product knowledge, customer service. These are the things that bring a customer to buy from you rather than your competition. It is critical that when you talk with your customer, either directly or through advertising, that you stress the particular benefits that you provide to the customer.

Price - The next element of your marketing mix is price, which isn’t quite as simple as it sounds. You have to decide what type of customer you are selling to and what level of service that you are going to offer. If you offer a lot of service to an upscale clientele, then you can charge more for your product. Keep in mind that everything is relative. You can only charge more for your product than a competitor if your service is superior. Otherwise people will buy from them.

Promotion - In this context, promotion is meant to describe any and all ways that you communicate with your customers, which can include radio, television, newspaper, direct mail and more. Which of these marketing vehicles you choose depends again on the customer that you are trying to reach. It is important that you choose a vehicle that reaches those key, qualified customers as directly as possible. For example, you wouldn’t advertise on a country music station if your customers are older, well-off and listen to classical music. Again, it is critical to know who your customer is. To help gather this information, you could give people who shop in your store a gift of some type in return for filling out a survey.
Place - Place is the last element of the marketing mix, and in the case of a retailer, perhaps the most important. When you analyze a location, it is critical to understand how many types of customers will be exposed to or have access to your location. Many retailers have been very successful in unique, non-traditional locations that were visible on a major commuter route. Again, it is important to locate your store where your target consumer has access to it.

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