Here we are in the final installment of Building a Better Business Plan, focused on markets and materials.
Markets: Getting to know your customers and competitors
It’s okay to be brief here, as long as you’re specific. This section should be put together with input from employees, and it should be based on both experience and research.
Detail the markets you are involved in, or plan to get involved in. Is your market local, provincial, national, cross-border or worldwide? Saying “I will sell to anyone and everyone” could result in unsound business decisions, because it does not allow you to pursue clear and specific objectives. Your business could have trouble finding the customers it needs to succeed as a result of this lack of focus.
Profile your customers or potential customers. You need to know who they are, how many there are, and where they are located. With this information in hand, you have a better understanding of how to attract them. A very good (not to mention free) tool to use for this purpose is the Statistics Canada website. With some poking around, this website offers a vast amount of information, broken down into communities, age, gender, income levels, etc.
Your Competitors: The goal here is to answer the questions “Who are they, where are they located, and what are they doing?” This information falls under the old saying “Keep your friends close, but your enemies closer.” If they are doing something different, better or worse, then you can act on these opportunities now and come out ahead.
You can research them by reviewing their websites, monitoring ads or articles in local newspapers, listening to local radio stations, paying attention to the flyers in your mailbox, and asking your customers about them. Check out this blog post on how to create a competitor matrix comparing your business with your competitors. Familiarizing yourself with this information will help differentiate yourself from your competitors by taking advantage of their shortfalls. If a few things are working well for them, why not use that tactic as well?
Materials: Creating your product
Finally, in the materials section of your business plan, lay out how you plan to create your product. Because you have prepared projections on income and market research, you should be able to determine how many products or services you plan to sell, and the number you require to meet current and future demand.
You should also list all the materials, parts and resources required to make your product, in addition to where or from whom you can obtain them. Consider your potential suppliers and their prices for the different components. Then answer the question, “How am I going to put this together?” For example, if you require machinery, who is going to put it all together? Knowing the type of equipment you need will assist you in determining the skill level required of your labour force, and the type of salary outlay required.
Next, detail the production stages required to make your product ready for sale. Prepare a flow chart, which includes the following elements: storing, processing, assembling, finishing, inspecting and packing. By putting this down on paper, not only will you make sure you haven’t missed any holes, but you can later show it to your employees so they fully understand what is needed to complete the job.
Finally, address the questions “Where is this all going to take place ? Is there enough space to do all of this?” Considering the business premise when determining your location is important. For example, you would not want to locate your hunting and fishing shop across the street from a large high school. Nor would you want to run a water purification facility in someone’s backyard.
I like to think of a business plan as your own personal GPS, to make sure you stay on the right path. By taking the time to produce a detailed business plan, you can better determine if and when it makes sense to go ahead with your idea. Your plan should be used as a tool you refer to and revise at minimum semi-annually, to make sure you stay on the right path.