THE BUSINESS PLAN - DESCRIPTION OF THE BUSINESS 

     In this section, provide a detailed description of your business. An excellent question to  ask yourself is: "What business am I in?" In answering this question include your products,  market and services as well as a thorough description of what makes your business  unique. Remember, however, that as you develop your business plan, you may have to  modify or revise your initial questions. 

     The business description section is divided into three primary sections. Section 1 actually  describes your business, Section 2 the product or service you will be offering and Section  3 the location of your business, and why this location is desirable (if you have a franchise,  some franchisors assist in site selection). 

1. Business Description 

     When describing your business, generally you should explain: 
          1. Legalities - business form: proprietorship, partnership, corporation. The licenses  or permits you will need. 
          2. Business type: merchandizing, manufacturing or service. 
          3. What your product or service is. 
          4. Is it a new independent business, a takeover, an expansion, a franchise? 
          5. Why your business will be profitable. What are the growth opportunities? Will  franchising impact on growth opportunities? 
          6. When your business will be open (days, hours)? 
          7. What you have learned about your kind of business from outside sources (trade  suppliers, bankers, other franchise owners, franchisor, publications). 

     A cover sheet goes before the description. It includes the name, address and telephone  number of the business and the names of all principals. In the description of your business,  describe the unique aspects and how or why they will appeal to consumers. Emphasize any  special features that you feel will appeal to customers and explain how and why these  features are appealing. 

     The description of your business should clearly identify goals and objectives and it should  clarify why you are, or why you want to be, in business. 

     THE BUSINESS PLAN - 2. Product/Service 

     Try to describe the benefits of your goods and services from your customers' perspective. 
     Successful business owners know or at least have an idea of what their customers want or  expect from them. This type of anticipation can be helpful in building customer satisfaction  and loyalty. And, it certainly is a good strategy for beating the competition or retaining your  competitiveness. Describe: 
          1. What you are selling. 
          2. How your product or service will benefit the customer. 
          3. Which products/services are in demand; if there will be a steady flow of cash. 
          4. What is different about the product or service your business is offering. 

     THE BUSINESS PLAN - 3. The Location 

     The location of your business can play a decisive role in its success or failure. Your  location should be built around your customers, it should be accessible and it should  provide a sense of security. Consider these questions when addressing this section of  your business plan: 
          1. What are your location needs? 
          2. What kind of space will you need? 
          3. Why is the area desirable? the building desirable? 
          4. Is it easily accessible? Is public transportation available? Is street lighting  adequate? 
          5. Are market shifts or demographic shifts occurring? 

     It may be a good idea to make a checklist of questions you identify when developing your  business plan. Categorize your questions and, as you answer each question, remove it  from your list. 

    THE BUSINESS PLAN - The Marketing Plan 

     Marketing plays a vital role in successful business ventures. How well you market you  business, along with a few other considerations, will ultimately determine your degree of  success or failure. The key element of a successful marketing plan is to know your  customers-their likes, dislikes, expectations. By identifying these factors, you can develop  a marketing strategy that will allow you to arouse and fulfill their needs. 

     Identify your customers by their age, sex, income/educational level and residence. At first,  target only those customers who are more likely to purchase your product or service. As  your customer base expands, you may need to consider modifying the marketing plan to  include other customers. 

     Develop a marketing plan for your business by answering these questions. (Potential  franchise owners will have to use the marketing strategy the franchisor has developed.)  Your marketing plan should be included in your business plan and contain answers to the  questions outlined below. 
          1. Who are your customers? Define your target market(s). 
          2. Are your markets growing? steady? declining? 
          3. Is your market share growing? steady? declining? 
          4. If a franchise, how is your market segmented? 
          5. Are your markets large enough to expand? 
          6. How will you attract, hold, increase your market share? If a franchise, will the  franchisor provide assistance in this area? Based on the franchisor's strategy? how  will you promote your sales? 
          7. What pricing strategy have you devised? 

     Appendix I contains a sample Marketing Plan and Marketing Tips, Tricks and Traps, a  condensed guide on how to market your product or service. Study these documents  carefully when developing the marketing portion of your business plan. 

    THE BUSINESS PLAN - 1. Competition 

     Competition is a way of life. We compete for jobs, promotions, scholarships to institutes of  higher learning, in sports-and in almost every aspect of your lives. Nations compete for the  consumer in the global marketplace as do individual business owners. Advances in  technology can send the profit margins of a successful business into a tailspin causing  them to plummet overnight or within a few hours. When considering these and other  factors, we can conclude that business is a highly competitive, volatile arena. Because of  this volatility and competitiveness, it is important to know your competitors. 

     Questions like these can help you: 
          1. Who are your five nearest direct competitors? 
          2. Who are your indirect competitors? 
          3. How are their businesses: steady? increasing? decreasing? 
          4. What have you learned from their operations? from their advertising? 
          5. What are their strengths and weaknesses? 
          6. How does their product or service differ from yours? 

     Start a file on each of your competitors. Keep manila envelopes of their advertising and  promotional materials and their pricing strategy techniques. Review these files  periodically, determining when and how often they advertise, sponsor promotions and offer  sales. Study the copy used in the advertising and promotional materials, and their sales  strategy. For example, is their copy short? descriptive? catchy? or how much do they  reduce prices for sales? Using this technique can help you to understand your competitors  better and how they operate their businesses. 

     THE BUSINESS PLAN - 2. Pricing and Sales 

     Your pricing strategy is another marketing technique you can use to improve your overall  competitiveness. Get a feel for the pricing strategy your competitors are using. That way  you can determine if your prices are in line with competitors in your market area and if they  are in line with industry averages. 

     Some of the pricing strategies are: 
          retail cost and pricing 
          competitive position 
          pricing below competition 
          pricing above competition 
          price lining 
          multiple pricing 
          service costs and pricing (for service businesses only) 
               service components 
               material costs 
               labor costs 
               overhead costs 

     The key to success is to have a well-planned strategy, to establish your policies and to  constantly monitor prices and operating costs to ensure profits. Even in a franchise where  the franchisor provides operational procedures and materials, it is a good policy to keep  abreast of the changes in the marketplace because these changes can affect your  competitiveness and profit margins. 

     Appendix 1 contains a sample Price/Quality Matrix, review it for ideas on pricing strategies  for your competitors. Determine which of the strategies they use, if it is effective and why it  is effective. 

     THE BUSINESS PLAN - 3. Advertising and Public 
     Relations 

     How you advertise and promote your goods and services may make or break your  business. Having a good product or service and not advertising and promoting it is like not  having a business at all. Many business owners operate under the mistaken concept that  the business will promote itself, and channel money that should be used for advertising  and promotions to other areas of the business. Advertising and promotions, however, are  the life line of a business and should be treated as such. 

     Devise a plan that uses advertising and networking as a means to promote your business. 
     Develop short, descriptive copy (text material) that clearly identifies your goods or  services, its location and price. Use catchy phrases to arouse the interest of your readers,  listeners or viewers. In the case of a franchise, the franchisor will provide advertising and  promotional materials as part of the franchise package, you may need approval to use any  materials that you and your staff develop. Whether or not this is the case, as a courtesy,  allow the franchisor the opportunity to review, comment on and, if required, approve these  materials before using them. Make sure the advertisements you create are consistent with  the image the franchisor is trying to project. Remember the more care and attention you  devote to your marketing program, the more successful your business will be. 

     A more detailed explanation of the marketing plan and how to develop an effective  marketing program is provided in the Workshop on Marketing. See Training Module 3 -  Marketing Your Business for Success.