- Market Metrics Inc. - http://www.marketmetrics.ca -

10 tips for planning your business

People often ask us for tips about creating a marketing or business plan for their small business. We believe that the following steps are essential and can help you successfully develop an effective plan for any size of business.

1.  Make the Time to Put Together a Plan

The stereotype is that entrepreneurs fly by the seat of their pants. But according to studies, successful entrepreneurs overwhelmingly use business plans — those who completed a business plan are six times more likely to start a business than others, and thriving entrepreneurs are much more likely to have a formal business plan (1). Why? Simple — putting together a business plan forces you to think through your opportunities, make best use of your strengths and shore up your weaknesses.

And planning isn’t just for start-ups — established businesses that wish to grow need to keep up with changing market conditions, trends, and competitive offerings.

So whether you’re an entrepreneur starting a new business or a business owner wanting to grow your existing business, a market analysis and internal review are the best way to get the facts needed to answer the core strategic questions faced by all businesses:

 2.  Focus on the Thinking — Not the Presentation

 A marketing plan focuses on the revenue-generating part — sales and marketing. It examines your market, sizes and segments it, specifies your product, identifies your target customer, and explains how you will reach your target customer and sell to them. It usually includes a sales forecast and a budget of sales and marketing expenses. An established company that wants to grow usually needs a new marketing plan.

 A business plan is an expanded version that covers all aspects of a business, and includes details of the management team, HR and IT requirements, projected financial statements and other operational aspects. A start-up usually needs a complete business plan.

 Remember that the thinking is what’s most important in your plan, not a pretty format. Invest your time in answering the strategic questions above — don’t get bogged down making pretty presentations or using complex planning software.

 3.  Cover the Essentials in Your Plan

 The core of a marketing plan are the internal review and market analysis.

 The goal of your internal review is to define the current situation faced by your business, and what you want to do. The internal review should cover:

 The market analysis should include:

4.  Gather Together the Tools You’ll Need to Get it Done

 You’ll need to make time, discipline to get it done, and a PC with a high-speed Internet connection — but that’s just the start.

 Most importantly, you’ll need access to information resources not usually available to employees at most companies. The following lists essential information resources (note — links to some of this information can be found on our web site by clicking the RESOURCES tab).

 A suitable marketing plan outline, spreadsheets and/or templates are very handy. If you work at a large company, there may be internal templates available. There are many free templates on the Internet, and an endless choice of books and PC software available for purchase.

 5.  Involve Your Key People

 It isn’t realistic to expect your people to wholeheartedly support a plan if they had no input to it. You should involve your management team and perhaps some key employees.

 In most SMEs, the business owner, President or General Manager frequently assumes responsibility for developing strategy with assistance from the VP of Sales & Marketing. Your sales and marketing staff should definitely help flesh out the go-to-market plan. The Controller can help with historical financial data and analysis, while the COO or VP Operations will want to understand and discuss any business process impacts.

 If you have had any recent management turnover, it might be a good opportunity to review and even fine-tine your marketing plan. At worst, your new managers will learn the thinking behind the plan; at best, they can contribute fresh ideas. Either way, they’ll obtain a better understanding of your company’s plans and maybe even a higher level of commitment.

6. Develop a Go-To-Market Action Plan

After identifying a viable opportunity, you have to figure out how to seize it. You will need to develop a “go-to-market” action plan that defines how you reach your customers and sell your product or service to them. After you’ve answered this conceptually, you need to identify specific practical actions, and budget the time and money to do them. Then use your plan to manage your activities.

Developing a go-to-market action plan typically involves activities such as:

 7.  Evaluate Getting Help versus Doing It Yourself

 If you are performing your own market analysis, don’t underestimate the time required to source relevant information, analyze it, draw meaningful conclusions, and clearly articulate the results. This process usually takes 6-10 weeks, although it can easily drag out longer if nobody is dedicated to it. From a financial perspective, consider what the value of your time — or a member of your senior management team’s time — is worth.

 Consultants can help you with any or all of the activities discussed above. Some companies hire consultants because they lack the resources to create a marketing plan in a timely manner. Other firms bring in external expertise to quarterback the process and supplement their internal skills and/or knowledge. Most find that a consultant can offer at least two important benefits: experience managing the planning process, and objective and independent viewpoint.

 If you use a consultant, make sure that the consultant understands your company’s specific needs and prepares a custom proposal for you. An experienced consultant will want to learn about you and your company before putting together a proposal, so make time for a briefing meeting. When evaluating consultants, we suggest that you look for the following qualifications:

 Remember that consultants sell their expertise by units of time, so be sure that you jointly define what the consultant will — and won’t — do. This is called the “project scope”. If something isn’t included in the project scope, you probably won’t get it. A reputable consultant won’t start a project without an agreement in place since this might lead to disagreement later over the project scope. For this reason, such practice is explicitly forbidden by the Canadian Association of Management Consultants’ Code of Professional Conduct.

 Of course, consultants may offer you a fixed price for the scope of work. With a fixed-price proposal you will have to pay extra for anything not included in the proposal.

Most consultants use a payment schedule that combines an advance with progress payments. An advance commits both parties to the project and is a tangible sign that the proposal satisfactorily addressed the client’s needs.

 8.  Know When to Stop Planning

Making a good plan is important, but your success will come when the plan is executed. Don’t let the planning process drag past the point when further improvements are marginal — just so you can add that little bit more detail or polish the prose further. Use this checklist to determine when it’s time to move on from planning to execution.

9.  Communicate Your Results… to Everybody!

 The best market analysis and go-to-market plan won’t help if your people don’t know about it and work towards executing it. Prepare a concise summary and present your marketing plan to all of your staff.

 It might be appropriate to share some of this information outside the company, too. Prospective investors will definitely want to see your marketing plan. So will your advertising agency or free-lance writers. It could help suppliers anticipate your needs as a customer. Don’t worry about giving away the company secrets — you can prepare a short for-external-use version that doesn’t contain confidential information. And you can use it to help customers understand your company and its direction — big companies usually like to see a “corporate introduction” presentation before doing business with a new supplier.

 10.  Put a Review Process in Place

In practice, start-ups often work simultaneously on their market analysis and go-to-market action plan since they don’t have either on-hand. Established companies may wish to revamp their marketing strategy and/or focus on better execution. Larger companies almost always have an established management practice whereby an annual planning cycle is used to update market analysis, revise go-to-market plans, and prepare a budget to quantify both the desired results and the necessary resources.

After you’re finished, put together your own process to come back and review your results on a regular basis. After all, you need to monitor the execution of your go-to-market plan. You may need to make mid-course corrections and a good review can be your “early warning” system.

And since the business environment changes over time, you’ll eventually have to adjust your strategy. That means re-analysing your market.

The ideal process for an established business is a thorough quarterly business review — a half- or even full-day meeting that includes your management team and key staff — with an annual planning review. Start-ups need to be even more focused. A shorter monthly business review meeting is a reasonable frequency for most start-ups.

SOURCES

 (1) “Panel Study of Entrepreneurial Dynamics”, 2004, Dr. William B. Gartner, Spiro Professor of Entrepreneurial Leadership, Clemson University and Jianwen (Jon) Liao, Associate Professor of Strategy and Entrepreneurship, Illinois Institute of Technology

(Note: This post is also available as a PDF download frm the Market Metrics website.)