You Can Do It. Thomas Greenbaum
Is Easy to Understand - A vital element in the evaluation of an idea is whether the target consumer quickly and easily understands it. For example, the addition of a citrus flavor to traditional Coke is a simple concept that any customer would understand immediately. On the other hand, if a smart phone manufacturer added a feature that would dramatically reduce the number of dropped calls or would expand the coverage of the phone, this would have to be explained in very simple terms to the consumer. Most consumers do not care how the company achieved this capability; they only want to know that it is a benefit they will get from the enhancement.
Represents a benefit, not a feature - Customers are seeking benefits and not features when evaluating ideas as prospective reasons to buy. For example, if a tool company developed a new type of drill that could withstand the heat of constant use, the customer (i.e., professional contractor, DIY home user) would be more interested in what that means for them in terms of the use of the drill. It still makes the same hole, but the benefit is probably that the drill will save time as you can work continuously without having to wait for it to cool off. Therefore the benefit of the new technology is saving of time or perhaps to a professional contractor saving money!
Another example of promoting features versus benefits would be a new plumbing service business. They could advertise their feature of having more plumbers in the town than any other company (a feature) or offer to provide 1-hour service for all emergencies (a benefit).
Advertisable / Marketable - The last criteria is that the point of difference be advertisable and marketable so that it can easily be communicated to the target customer. To accomplish this, it must be able to be communicated within only 3-5 words. If it requires more than that it probably has little valuable in terms of the communications capabilities to the target customer.
SUMMARY - Nothing is more important than the idea you have for your business. Take the time to ensure that you have fully developed your idea and then plan to do the appropriate testing to be sure it is worth your time and effort. Extra time planning and researching your idea will pay significant dividends to you as the venture unfolds, and will dramatically increase the probability that your venture succeeds.
CHAPTER THREE - The Business Plan
One of the first questions that clients raise when coming to SCORE for counseling is whether they have to write a business plan. The correct answer to this question is whether the individual is willing to use the business plan as a working document in the venture, or only as a one time exercise to start the business or to help raise money. In the ideal world, the business plan is a living document that is developed when a business is started, and then maintained and updated at regular intervals as the venture matures
Why Develop a Formal Business Plan? - There are several very important reasons why a business would benefit from doing a business plan. Specifically:
It provides a discipline that forces the writer to think-through all the aspects of a business that will be important to the success of the venture. This includes both the strategic approach (i.e., overall business strategy; marketing strategy, pricing strategy etc) and the tactical elements (promotion programs, advertising, networking, etc.) of a program to launch the business.
It increases the likelihood that the writer of the plan has carefully evaluated the competitive marketplace, is familiar with the category/business where they will compete and, importantly, knows the profile of the major competition to whom they will face as they begin the venture.
It provides a very important communications vehicle for explaining the business to other parties. For example, anyone who would consider investing in the business will want to see a business plan to be able to understand the market in which they are operating and what their plan is to enter the category in light of the competition. It also provides the very important financial details such as P&L projections, cash flow analyses and balance sheet estimates for the first three years of the venture.
It forces you to set financial goals for the business that will become the benchmark for success as the venture matures. These goals should be updated at least semi-annually based on the experiences in the actual marketplace.
It gives you the discipline to set specific goals for the business for the coming year. For example, what are the 3-5 things that you would like your business to accomplish in the plan year? Do you want to generate ‘x’ number of new accounts, ‘y’ levels of awareness, ‘ z’ levels of retail distribution, etc. These are very important benchmarks against which you would be able to judge the progress of the business as time goes on. Importantly, this is an exercise that should be on going, and not just something that is implemented only in the first year of preplanning the business.
A business plan should be a dynamic, rather than a static document. Some organizations write a plan when they start their business and never look at it again. The smarter organizations will continuously review their plan and revise it based on new learning and actual in-the-market experience.
How to Write a Business Plan - An effective business plan is generally written over an extended period of time (weeks or months) as each section will require some research and analysis. Some SCORE clients come to us with the goal of seeking to develop an effective plan, and our goal is often to try and write one section every week or two based on the learning at that point in time. There are a few key steps that should be taken in the process that will facilitate writing the plan.
Conduct your own research of the business category in which you will enter, with the objective of learning as much as possible about how the category operates, and importantly what it takes to be successful in the market. Before you write the plan you should be able to identify the 3-5 keys to success in the business you will be entering.
Seek secondary sources that can add to your knowledge of the categories. For example, some business libraries will have examples of business plans written by others that you could use as an example of how you plan to approach the venture. One library in New York City (Science and Industry Business Library -. SIBL) contains hundreds of business plans for different types of companies, and you might find one written about your type of business or something very close to it. Another excellent source for business plan examples is the website www.bplans.com. They also have hundreds of sample plans you can use to help you develop your document.
Identify a business plan format that appeals to you. There is no ‘ right’ business plan format. If you search Google for business plan formats you will get 20,800,000 results, none of which is the ideal, but most of which probably are adequate. In this chapter we will identify the sections of a business plan that we believe to be most important. You can decide if this is right for you, or you go to other sources for an approach that makes you feel more comfortable.
Determine your personal goals. Specifically, what are you trying to achieve with your venture. Are you seeking to develop a large business with many employees that will generate approximately $XXX in personal income? Or is your goal to just create a successful one-person venture that can give you $YYY income each year? Perhaps your goal is to be a high profile businessperson who is regularly quoted in the papers and online, and this is more important to you than the income you make from the business? Needless to say, there are infinite combinations of personal goals but it is essential that you carefully think through yours, as they will impact significantly on the type of business plan you develop.
Length of a Business Plan - One of the most common questions we get from clients is how long the plan should be. We have seen plans that are three pages and others that are eighty pages. Generally, the length of the plan depends on the use for which it is written, thus it is often necessary to have two plans. Specifically, an investor or lender of any type generally will not be favorable toward a plan that exceeds 10 pages, thus requiring you to summarize much of the important information. However, a plan written to help you assess and ultimately manage the business might be 20-40 pages. We always suggest