GROWING YOUR BUSINESS SESSION TWO

Transcription

1 GROWING YOUR BUSINESS SESSION TWO

2 Learning Objectives Understand the business planning process, feasibility studies, and the internal and external uses of a formal business plan. Understand the components and organization of business plans. Understand why, how and when to do market research. Understand how to collect primary and secondary data. Begin market research by identifying industry data and resources.

3 QUESTIONS ABOUT BUSINESS PLANNING Is a business plan really necessary for a small business like mine? How will planning affect my bottom line? What s the connection between a business plan and management skills? Why do lenders and investors care about business plans? How can I make plans when everything s so uncertain? Do I have to get everything right the first time? What happens if I learn new things or change my business idea? Can t I just launch my business idea now, and deal with management issues as they come up? How often is planning necessary? Who can help me complete my plan? What if I don t complete my plan? NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-1

4 LADDER OF RISK

5 THE BENEFITS OF BUSINESS PLANNING SEEING THE BIG PICTURE. Planning helps you sort through business issues and identify the ones that cause most problems. CLEAR COMMUNICATION. A good business plan clearly explains your goals to employees, partners, lenders and investors. NEW OPPORTUNITIES. Change brings opportunities. Careful planning helps you make the most of them. SURVIVING ECONOMIC DOWNTURNS. Small businesses are vulnerable to changes in the economy. Owners who plan are more likely to stay in business. CONTINUOUS IMPROVEMENT. Comparing planned to actual results is a terrific way to improve your business operations. BEING PREPARED. A business plan helps you avoid, minimize or recover from disasters. ASSESSING FINANCIAL PERFORMANCE. Preparing a financial plan helps you measure and improve your business s financial performance. NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-2

6 THE PLANNING CYCLE 5. Repeat 1. The Planning Process 2. Take Action 4. Make Changes 3. Measure & Record Results NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-3

7 KEYS TO SUCCESSFUL PLANNING As the owner, you must take the lead role. Everyone in your family and your business should have input. Goals and objectives must be clear, realistic and include a deadline. Your plan should include contingency plans for worst-case scenarios. Your plan should be flexible. Review your plan often, and revise it when necessary. NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-4

8 BUSINESS GOALS & OBJECTIVES Goals are the things you want your business to accomplish within a specific timeframe. Short-term goals are things you want to accomplish within one year. Long-term goals are things you want to accomplish within two to three years. Objectives are the specific steps you will take to reach your goals. SHORT-TERM GOAL Increase the profitability of my business by 10% over the coming year. LONG-TERM GOAL Develop new markets by targeting international customers in Year 3 OBJECTIVE 1 Land 3 new accounts over the next 6 months. OBJECTIVE 2 Reduce production costs by 5% over the next 3 months. OBJECTIVE 1 Complete international marketing plan by June of Year 2 OBJECTIVE 2 Hire a designer to create an e-commerce site by the end of Year 2 NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-5

9 BUSINESS GOALS & OBJECTIVES

10 SMART GOAL EXAMPLE Broad Goal: I want to start a business. Specific: I will sell handmade cards through Etsy.com. Measurable: I will be ready to take my first Etsy order within four weeks, and I will aim to sell a minimum of five cards per week. Attainable: I will get set up on Etsy first. Then, I will build an inventory of 30 handmade cards to sell. Finally, I will promote my business and build customer relationships through word of mouth, referrals and local networking. Relevant: Selling handmade cards will allow me to benefit financially from my favorite hobby. Time-Based: My Etsy store will be up and running within four weeks, and I will have an inventory of 30 cards to sell within six weeks. SMART Goal: Within a month, I am going to get set up to sell handmade cards on Etsy, which will allow me to benefit financially from my favorite hobby. Within six weeks, I will have an inventory of 30 handmade cards to sell and aim to sell a minimum of five cards per week, building customer relationships through word of mouth, referrals and local networking.

11 ELEMENTS OF A GOOD MISSION STATEMENT Reflects the core purpose and direction of the company Embodies the basic values of the owners and employees Short, specific and focused Written in plain English, without trendy jargon and buzzwords NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-6

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13 BASIC FEASIBILITY STUDY SCOPE Define your business opportunity (e.g., introducing a new product or targeting a new market) Does this opportunity require you to redefine your current business concept? SWOT ANALYSIS Strengths and weaknesses relate to internal factors like marketing, personnel, management and finance. Opportunities and threats relate to external factors like competition, technology, economic and political conditions, and social trends. FINANCIAL FEASIBILITY What are your startup capital requirements for this opportunity? What are your annual operating costs for this business opportunity? What is the annual sales volume needed to cover your startup and operating costs for this opportunity? Will you finance this opportunity out of regular profits, or borrow to accomplish your goals? FEASIBILITY OF SALES VOLUME Is your break-even sales volume realistic? NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-7

14 SWOT ANALYSIS

15 ADVANCED FEASIBILITY STUDY MARKETING FEASIBILITY How will you differentiate your product from competing brands? How will you promote your product to target customers? What price are your customers willing to pay? How will this affect your profitability and sales volume? How will you deliver your product? Will this method meet your sales goals as well as your customers needs? LOGISTICAL FEASIBILITY Will existing equipment be able to meet increased sales? Will suppliers and partners be able to meet your needs? Can your transportation system handle an increase in volume if sales take off? Will you need an additional or new retail outlet, warehouse, factory or distribution hub? PERSONNEL FEASIBILITY Do you have enough personnel to take advantage of the business opportunity? Do they have the necessary skills and training? If you need new employees, or outside contractors or advisors, can you afford the associated costs? LEGAL FEASIBILITY Can you comply with all applicable laws (local, state, federal, international)? Are there intellectual property issues to consider? NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-8

16 CONTENTS OF THE MARKETING PLAN A. PRODUCTS AND SERVICES PRODUCT DESCRIPTION. What is your product? What needs does it meet? FEATURES AND BENEFITS. What are your product s features and benefits? B. MARKET ANALYSIS CUSTOMER ANALYSIS. Who and where are your target customers? COMPETITIVE ANALYSIS. Who and where are your competitors? What are their strengths and weaknesses? MARKET POTENTIAL. How big is your target market? What percentage can you capture? What trends affect it? What barriers to entry exist? C. MARKETING OBJECTIVES, STRATEGIES &TACTICS PRODUCT STRATEGY. What is your product line? What is your product positioning strategy? What is your brand identity? PRICING STRATEGY. What are your pricing objectives? What is your pricing strategy? PLACEMENT STRATEGY. How will you get your products to your customers? Why is this the right choice for them and for you? PROMOTIONAL STRATEGY. How will you promote your business? What media will you use? How much will it cost? How will you measure success? D. DIRECT SALES AND CUSTOMER SERVICE SALES STRATEGY. How will you sell to your target customers? Why did you choose this method? CUSTOMER SERVICE STRATEGY. What are your quality control policies? How will you track and measure customer satisfaction? What is your refund and return policy? How will you communicate with customers, and what steps will you take to resolve problems? NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-9

17 ELEMENTS OF MARKETING MARKET RESEARCH Gather primary and secondary data about your industry. Gather primary and secondary data about your customer, competition and market potential. MARKET ANALYSIS Analyze the data you gathered about your industry, customer, competition and market potential. Identify your target customer. Identify your competitive advantage. MARKETING OBJECTIVES, STRATEGIES AND TACTICS Determine the best methods of getting your goods and services to your customers, based on your market analysis. Create a marketing mix using the Four Ps: Product, Price, Placement, Promotion. NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-10

18 SOURCES OF INDUSTRY DATA North American Industry Classification System (NAICS) Industry Statistics Portal Office of Industry &Analysis trade.gov/industry SBA Industry Guides (accessible from U.S. Business Reporter Standard & Poor s Industry Surveys Encyclopedia of American Industries (available through library) Local, state and national trade and industry associations Local, state and national nonprofit foundations Follow industry leaders and experts on social media Professional industry analysts and market researchers Chambers of commerce Small Business Development Centers (SBDCs) National Association of Manufacturers Statistics of U.S. Business Industries at a Glance ProQuest Statistical Insight (available through library) Standard & Poor s Statistical Service Encyclopedia of Emerging Industries (available through library) Business and industry magazines and websites Conduct interviews and surveys with key industry contacts Follow competitors on social media Local newspapers and magazines Online industry forums and sites NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-11

19 WAYS TO GATHER PRIMARY DATA Face-to-face interviews Phone interviews or mail interviews surveys Mail surveys Phone surveys Online surveys Post research questions on social media (e.g., blogs, Twitter, Facebook) NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-12

20 Common Marketing Mistakes Using only secondary research. Relying on the published work of others doesn't give you the full picture. It can be a great place to start, of course, but the information you get from secondary research can be outdated. You can miss out on other factors relevant to your business. Using only web resources. When you use common search engines to gather information, you get only data that are available to everyone and it may not be fully accurate. To perform deeper searches while staying within your budget, use the resources at your local library, college campus or small-business center. Surveying only the people you know. Small-business owners sometimes interview only family members and close colleagues when conducting research, but friends and family are often not the best survey subjects. To get the most useful and accurate information, you need to talk to real customers about their needs, wants and expectations.

21 DRAWING INDUSTRY CONCLUSIONS How has your industry developed? How do small businesses operate within your industry? What are your industry s current growth patterns? What is your industry s current size? Is it expected to grow or shrink over the next three years? What niche markets are hot? How does international trade affect your industry? How will new and emerging technology affect your industry? How will current and new regulations affect your industry? NXLEVEL GUIDE TO GROWING YOUR BUSINESS OHD 2-13