Posted by: Aakash Barot | August 8, 2011

How to Write a Business Plan

Business planning is a vital component of starting and growing a successful enterprise. Many different templates and variations of business plans exist, so you must choose the right one for your purpose and your enterprise.
Who is the intended audience?
Some business plans are designed for internal audiences (owners, employees, Boards of Directors or Advisors, and senior management) for an existing organization for the purposes of implementing a growth strategy and may be referred to as a strategic plan. It can also serve as a guide solely for the owner of a new business to help clarify their vision and goals.
A business plan could also be for external audiences (investors, clients, suppliers, new hires, bankers and other lenders such as government) for the purposes of attracting financing, talent or suppliers for a new or existing business. A document for this audience may initially take the form of a condensed version of the larger business plan, especially for attracting funding. This version is known as the business opportunity document or business funding proposal and is typically followed by the business plan itself. Obtaining financing is a significant issue for many businesses and this tool can be an enormous advantage when approaching investors or lenders.
What goes in the business plan?
The business plan is a comprehensive document that is created to describe the future of the venture, consisting of:
• executive summary
• company history and background
• clear description of the business concept and value proposition
• marketing analysis including competitive analysis and market development plan
• production and operations assessment and development plan
• financial assessment and projections
• management and human resources assessment and plan
• implementation plan
• identification of resources
• proposed deal structure for investors (if appropriate)
• survival strategy describing inherent risks and mitigation strategies
• growth strategy
• exit strategy

Some of these may be longer or shorter, or even optional, depending on the format and the intended audience.
The reader should be able to clearly understand what the value proposition is, why the business will succeed and how it is going to achieve this success. If the plan is being pitched to investors, the investor should understand as soon as possible what the proposed deal structure is and what the return will be. To do this you must support any claims and assumptions about what the business will do with realistic research. Unrealistic financial projections are a sure fire way to lose investors’ interest or for an owner to lose perspective.
How long should it be?
A typical business plan may consist of 20 pages although some business plans can be 100 pages or more, depending on the purpose of the plan, who the target is, and the nature of the business. For example, if the plan is going to be used to attract investors it may require more detail than if it was to be used internally to communicate a growth strategy, while if the business concept is relatively simple it may be conveyed more briefly than a more complicated enterprise.
Should I use a template? Or a consultant?
There are so many business plan templates to choose from that it’s tempting to simply cut and paste or hire outside consultants to write your business plan. However, it’s best for the owner(s) of an organization to write the plan, even if you decide to bring in outside help to review and refine it. Often entrepreneurs do not take the time, nor do they feel a business plan is necessary for their businesses to succeed. They often think that taking time to write a business plan is just impossible and would be a waste of time. But when they learn how the process could benefit their organization they are more likely to get started! Even if there is no immediate audience for the document itself, the planning process itself is invaluable.
Conclusion
A business plan is an easy way to communicate the business idea to the prospective audience, to assist in preventing problems, and to identify growth strategies, as well as a tool used in the search for funding. A business plan should be used as a tool for the entrepreneur to guide the business operations rather than a strict manual or blueprint to be adhered to and implemented exactly. The business plan can also be designed to help owners of businesses to clarify the strategy of a particular business and provide insight to manage risks.
Entrepreneurial training is becoming a significant component of many learning institutions in response to the escalating numbers of business start-ups worldwide. Business plan writing is being taught to would-be entrepreneurs more than ever before. New venture analysis is an integral part of the business plan creation process as is what to do with the opportunity once it is identified.
Although being a successful entrepreneur is attractive, over 70% of new businesses do not survive after year two. Having a business and knowing what to do with it are very separate issues and creating a well-executed business plan for the right reasons will enhance the odds that your venture will be one of the ones to succeed.

Executive summary:

The executive summary is the introduction to a formal business plan. It summarizes the business proposition, key financial projections, where the business stands at present and elements that are critical for success. While you may be tempted to rush through this part before attacking the bulk of your business plan, remember this is the first thing a potential investor will read. If your executive summary doesn’t grab his or her attention, then he or she probably won’t bother reading the rest of your package.
Brevity is key. A good executive summary ranges from half a page to two pages; anything longer and you risk losing your reader’s attention or appearing unfocused. A safe bet is to keep it under one page.
Although it leads off the business plan, the executive summary should be written last. That way, you can cull information from the rest of the report, and make certain there are no inconsistencies.
The executive summary is also the best place to describe your mission statement. Develop a concise description, no more than a few sentences, that explains:
• Why your business exists
• What its goals are
• How you will achieve those goals
Next, develop the business description or concept. This is where you offer more detail about the type of business you want to open, who the customers will be and what the competitive advantage is. A competitive advantage explains why customers will chose your business over marketplace rivals. Your reasons may include:
• Filling a void in the marketplace
• Offering a better product than what currently exists
• Offering a comparable product, but at a better price than your rivals
From there, you’ll move onto a brief description of your financial outlook. This part of the executive summary should mention the expected costs of starting up, as well as your bottom-line financial projections for the short and long term.
The next issue to address is the status of your business. It may still be only in the idea stage. Perhaps you’ve already raised a little money. Or, it may be that you are fully operational and looking to expand. Investors will interpret your current business position as a signal as to how much capital is needed to advance your company, and whether or not this matches the type of opportunity they are looking for.
The final part of the executive summary will focus on critical factors that will determine your chance for success. These items will be specific to your business, but may include:
• Low staff turnover
• A technology patent
• A strategic partnership
• Externalities, such as the continuation of a marketplace or economic trend
Overall, the executive summary should offer a glimpse into what the business plan holds. Hit on all the important points; if you hold off on composing it until after you’ve written the rest of your business plan, it should practically write itself.

The Company History

The business plan background, which follows the executive summary, should detail your company’s history. This part will vary, depending on how developed your business is. The history of a startup is obviously different than for an existing company. This section should be about a page long, although it’s OK to stay under that limit if you’re starting a brand-new company.
Here are a few points that you should be sure to include in this section:
• The origin of the idea for the business
• Your progress to date
• Problems you’ve faced so far
• Short-term growth plans
For a new business you might want also to include some personal history and business background. Some points to make in this section:
• Your educational history
• Other companies you’ve worked for
• Previous businesses you’ve started
• Your technical skills
• Your areas of expertise in your industry segment
• Your areas of weakness or inexperience and how you plan to compensate for them
• Any relevant professional clubs or associations you belong to
Overall, this section of your business plan should give an interested investor a better idea of who you are and how this business idea came about. Again, keep it concise and avoid extraneous personal information.

Business Concept:

It is crucial that your business plan states your business concept and value proposition. Since this part of the business plan follows the executive summary and company history, readers already should have a general idea of your company. The business concept, however, comprises your vision of the company, explaining the value your product or service will bring to the customer, why you are especially qualified to offer it, as well describing your offering’s uniqueness and growth potential.
This in turn enables you, as well as interested parties and potential investors to research and analyze the concept for feasibility, both from a market and financial perspective.
The Feasibility Test
Think of a feasibility test as a reality check for your big idea. According to Entrepreneurship For Dummies by Kathleen Allen, a feasibility test weighs the validity of your business concept by examining four points:
• The product your firm will offer
• The customer you will target
• Your value proposition
• How you will get the product to its intended users
By this stage you should have a firm grasp on what product or service you intend to offer, as well as who you believe will be your primary customer. The final item requires weighing various distribution channels, but, again, should be answerable with a little leg work.
The Value Proposition
In essence, your value proposition is what makes customers choose you, instead of the competition. It’s part marketing, part operations and part strategy.
On a subconscious level, customers will compare the value proposition of your company against those of your competitors when deciding where to take their business. With that in mind, a few things to remember when writing your value proposition:
• Keep it short and uncluttered. Your value proposition explains why customers should buy from you. If you can’t sum it up in 10 words or less, chances are you won’t be able to execute it, either.
• Be precise. Your customers have specific needs; your value proposition should offer targeted solutions
• This is about your customer, not you. Your value proposition should discuss only what matters to your customers and the value you can bring to them.
• Value comes in numerous forms. Money, time, convenience and superior service are a few of the ways you can help deliver value to your customers.
Distribution Strategy
The last part of the business concept is how you will deliver your product to your customers. There are several factors to consider when plotting your distribution strategy:
• Will you set up a brick-and-mortar shop or office, sell online or both?
• What unique obstacles exist for your company in these two different channels?
• If your company sells a product, will you have the space to keep enough inventory on hand, or will customers have to agree to waiting periods?
• Can you strike exclusive deals with any particular distributor or retailer? Do your competitors have any such deals that hinder your operation?
Remember, vision is important if your business is going to grow. The more focused your business concept is, the greater the likelihood that you’ll attract investors and customers.

Market Analysis

You may possess all the confidence in the world that yours is a perfect product with a clearly defined customer base. If that’s the case, you’ll need to figure out how you’re going to get your product into the hands of those customers. That’s where the marketing analysis section of your business plan comes into play.
Traditional marketing strategy consists of three components, known as the “three C’s”:
• Company: Know the strengths and weakness of your firm.
• Competition: Know the same about your competitors.
• Customer: Know who they are and what they want.
Analyze the Competition
Of the three C’s, the competitor analysis may give you the toughest time, especially if you are new to the marketplace. First, you should look at your direct competitors. Take, for example, a McDonald’s restaurant in a busy downtown area. Its direct competitors would be any nearby Burger King or Wendy’s restaurants. Its indirect competitors would be other restaurants in the same downtown area, even upscale ones. Customers eat lunch just once a day, and all these restaurants are fighting for this finite group of customers.
Examine any substitutes. Instead of going out for lunch, some people may opt to bring lunch from home, or skip lunch entirely. These are both factors McDonald’s would need to examine when analyzing a location’s competitive position.
Assess the Marketplace
Once you’ve identified your direct and indirect rivals, as well as substitute competitors, you’ll want to gauge your potential fit in the marketplace. Some issues to consider:
• Competitor strengths and weaknesses
• Whether new competitors are entering the marketplace, or existing ones are leaving
• The product or products that your competitors rely on for most of their revenue
• Ways to overcome the threat of substitute goods
Develop a Marketing Program
After you have addressed the three C’s, you can move on to developing a marketing program, which involves analyzing “the four P’s,” collectively known as the marketing mix:
• Product: What you are selling
• Price: How much you will charge
• Place: Where you will sell your product
• Promotion: Special incentives you will use to get people to try your product
Craft a Market Development Plan
You’re now ready for the final phase of your marketing analysis – crafting a market development plan. The information you provide here likely won’t come into play until you’ve established your company and have been running for a few years, but investors will find it helpful to see how you envision your company evolving. Your market development plan should address such questions as:
• Does recent data show the market for your product is growing?
• Do you have a plan to offer new products or line extensions in the first few years?
• Are there other ways to position your company more competitively in the marketplace?
• Does your marketing plan offer ways to grow overall demand within your industry sector?
These marketing and competitive analyses are vital parts of your business plan and will likely be the most extensive portion of it. Take the time to do thorough research on your competitors and how the market has behaved in recent years. A disorganized marketing strategy can ruin even the best of products, simply because your target customers will never hear of them.
Operation Strategy

A business plan should include an assessment of your production and operations strategy. Operations have a steep learning curve, but many successful companies, such as Wal-Mart, have grown by leveraging their operational infrastructure.
What Role Will Operations Play in Your Company?
This will depend on the nature of your business. If you’re selling a consumer good, it will be important to make sure you can get your products to your clients at the time you promise. A service company relies on an operational plan to make sure customers are seen in an efficient manner. When writing your business plan, focus on where production and operational efficiencies are needed to help the company succeed, including buying power and economies of scale.
Where Will You Get Your Sourcing Materials?
This mostly applies for startups selling goods, rather than services. In this section of the business plan, spell out what raw materials are needed to make your product and from where you plan to get them. Sourcing can offer a huge cost advantage (or disadvantage) in the production stage, so it is important to do research on this. The price on commoditized products such as wood and plastic will likely be similar regardless of where you get them, but there could be a lot of variability if you require specialized materials.
Can You Outsource Any of This?
Sometimes the best production strategy is to let someone else handle it. As a startup, you’re unlikely to have the capital to build your own factory to produce your product, so outsourcing to a manufacturing company is probably already in your plans. Look for a manufacturer, either domestic or foreign, who has experience producing goods similar to yours. Companies such as UPS, FedEx and DHL are no longer just package-shipping companies: They all offer supply-chain management services to help firms who want to offload that responsibility, and whose scale makes them more efficient.
Balance Opportunity Cost with Surplus Charges
An accurate projection of the demand for your product is key to a successful operational strategy. Remember to consider opportunity costs when placing an order. If you’re selling sweaters for $50, and you run out, every person who wanted a sweater and couldn’t get one represents a missed opportunity of $50 in revenue. Of course, if you order too many sweaters, you’ll be left with surplus inventory.
In your business plans, offer ideas of how you will unload any surplus. For example, selling slow-moving items to a liquidator can bring in some additional revenue, while donating surplus goods to a nonprofit can yield a nice tax deduction. Both methods reduce the cost associated with maintaining the inventory, such as warehousing and handling or disposing of the items yourself.
Be Diligent
It’s not uncommon for entrepreneurs to get tripped up at this stage of planning. Many new business owners have minimal experience in operations and production. Whether you develop this strategy yourself or bring in a consultant to help, be sure your business plan clearly states the role operations will play in your company, who will be involved in establishing this infrastructure and what the potential costs are.

Financial Projections

Creating financial projections for your startup is both an art and a science. Although investors want to see cold, hard numbers, it is tough to predict your financial performance three years down the road, especially if you are still raising seed money. Regardless, a short- and medium-term financial projection is a required part of your business plan if you want serious investors’ attention. Here are some tips for crafting solid financial projections.
Get Comfortable with Spreadsheets
Spreadsheet software is the starting point for all financial projections. Microsoft Excel is the most common, and chances are you already have it on your computer; there are also special software packages you can buy to help with financial projections. Spreadsheets offer flexibility, allowing you to quickly change assumptions or weigh alternate scenarios.About.com’s Guide to Spreadsheets can help you get started.
Go Beyond the Income Statement
The income statement is a standard measuring tool used to convey your projected revenues and expenses. A good financial projection also will include a projected balance sheet, which shows the breakdown of assets, liabilities and owner’s equity. In addition, it will include a cash flow projection, which reveals the actual movement of cash through your company in a given period.
Your financial projections should include estimates of how much money you plan to borrow and interest repayments on those loans. Additionally, be sure to follow the Generally Accepted Accounting Principles, or GAAP, which are set forth by the Financial Accounting Standards Board, the private-sector organization responsible for setting financial accounting and reporting standards in the U.S. If financial reporting is new territory for you, have an accountant review your projections.
Provide Short-Term and Medium-Term Projections
You should be able to offer investors:
• A short-term projection of the first year, broken down by month
• A three-year projection, broken down by year
• A five-year projection. Don’t include this one in the business plan, since the further into the future you project, the harder it is to predict; however, have it available in case an investor asks for it.
When projecting growth, consider the state of the market in which you are operating, as well as trends in raw material and labor costs, and whether you foresee needing additional funding in the future.
Account for Startup Fees
Fees related to licenses, permits and equipment should be included in the short-term projections. Also keep in mind the difference between fixed and variable costs; differentiate where appropriate. Variable costs usually will be included under the category of “cost of goods sold.”
Offer Two Scenarios ONLY
Investors will want to see a best-case and worst-case scenario, but don’t inundate your business plan with myriad “medium-case” scenarios. It will likely just cause confusion.
Make Your Assumptions Reasonable and Clear
As mentioned before, financial forecasting is as much art as it is science: You’ll have to assume certain things, such as your revenue growth, how your raw material and administrative costs will grow, and how effective you’ll be at collecting on accounts receivable. It’s best to be realistic in your projections as you try to recruit investors. If your industry is going through a contraction period and you’re projecting revenue growth of 20 percent a month, red flags will begin to pop up.

Management and Human Resource Plan

Your business plan should include a description of your organizational structure, including your management and human resources capabilities, philosophy and needs, the number of employees you intend to hire, how you will manage them and your estimated personnel costs. Begin this section by outlining your own managerial experience and skills as well as that of your team (if you already have one formed), the roles each member will play, and any particular areas of strength or deficiency in your lineup.
It’s fine if you don’t yet have a complete team in place when you write your plan. Simply use this section of your business plan to outline the organizational structure, complete with job descriptions, how you plan to recruit key team members, and what their respective responsibilities will be.
Even if you don’t plan to have an extensive management team, if you expect to hire non-managerial employees such as salespeople or clerical workers for your startup, you should consider recruiting a human resources manager, or at least use an HR consulting firm. Human resource management requires an immense amount of time and paperwork, and an experienced HR consultant should be able to quickly get your payroll and benefits running, giving you more time to concentrate on growing the business.
This person’s responsibilities will include:
• Handling FICA and unemployment taxes and paperwork
• Ensuring compliance with the Family and Medical Leave Act
• Staying on top of IRS filings
This portion of your business plan also may include a brief overview of your HR strategy. Investors may be curious about how your payroll will be handled and the associated costs of administering it, as well as the type of corporate culture you plan to create.
Items to include in this section:
• Pay scale: What are reasonable market salaries for managers and non-managers?
• Vacation time: This is not required by law, but most firms offer it to stay competitive and keep employees refreshed. Also, outline how vacation time will accrue as tenure grows, because this represents a labor cost.
• Insurance: Health insurance is a common staple benefit, although skyrocketing prices have forced many firms to cut back on this offering. If you can’t afford a health plan, look into just subsidizing one and having employees pay the rest, or see if a professional association can help you get a bulk rate.
• Additional benefits: Other things to consider include life insurance, a 401(k) and matching funds, bereavement leave, religious and floating holidays, and a potential bonus structure.
It may be overwhelming to contemplate these benefits and their costs in the early stages, but keep in mind that in a competitive labor market, your firm will need to offer something to entice qualified personnel and, more importantly, to keep them working for you.

Implimentation Plan
Even the most well-thought-out business plan is just a stack of paper if it isn’t coupled with a plan for implementation. This is the portion of the business plan where you’ll clarify objectives, assign tasks with deadlines, and chart your progress in reaching goals and milestones. Here are some guidelines for successful business plan implementation:
Objectives: Your objectives should be crystal clear and specifically spelled out, since you’ll use them as a building block for the rest of the implementation plan. For example, let’s assume your startup is a small consulting firm. Your objective should be tough but reachable, and could read something like this:
• Secure office space and be open for business in three months.
• Sign three clients within first three months of operations.
• Sign 10 clients within first year.
Tasks: This part details what must be accomplished to achieve your objectives. Include a task manager for each step, so that roles are clearly defined and there is accountability. As you enumerate tasks and assignments, these descriptions should be plainly and generally stated; don’t get into a step-by-step, micromanaged explanation of how the tasks will be carried out. Emphasize the expected results associated with these tasks. Continuing with the above example, the tasks section might read like this:
• Secure office space – real estate agent
• Obtain licenses and permits – you
• Set up office phones and computers – office manager
• Begin recruiting clients – sales manager
• Create marketing collateral – marketing manager
• Solicit referrals from clients – relationship manager
This list is obviously very specific to this particular firm and is a brief illustration. You may wish to go into more details, assigning tasks to yourself such as obtaining financing, networking with prospective clients, etc.
Time allocation: Each task should be paired with an appropriate time frame for completion. You should be aggressive but reasonable with your time allocation in order to ensure not just completion but competent work. For assistance in framing this timescale, use a program such as Microsoft Project, or just create your own Gantt chart – a helpful tool that shows how long it will take to complete different tasks and in what order the tasks should be finished.
Progress: You or a member of your management team needs to be in charge of monitoring each task’s progress and the completion percentage of each objective. When delays occur, try to get to the root of the problem. Did the person responsible drop the ball? Did he or she have too many responsibilities to handle? Did a third party, such as a supplier or the bank, fail to hold up its end of a deal? Adjust your Gantt chart appropriately to account for the delay, and make a note of the previous deadline and the reason it was missed.
While the above steps may seem like overkill, the early days of a startup are critically important; it’s a time when good management patterns are set and also probably a lean era when revenue has yet to start rolling in. The more efficiently you start implementing your business plan, the more likely it is that you will survive this early period

Resource Planning

Identifying business resources you will bring to the venture and those you’ll need to acquire in order to start operating, such as staff, equipment and the cash to finance these necessities is another key element of the business plan.
Among other things, you’ll need to describe the source and amount of your initial equity capital, as well as account for the equipment necessary to produce your products or services. Perhaps you already have some office furniture or computers; you may have secured financing from a bank or investors, or will invest your personal savings in the business. Do you have existing staff, and will you need to hire others?
Your plans for obtaining needed personnel, equipment and cash to meet your capital expenses will be detailed throughout your plan. How about mentors and key advisers? These are non-tangible resources whose value to your business can be immense. In describing each of the resources that you have and need, couch each in terms of the value it will bring to your fledgling business, both in the near term and down the road.
This is a good time to evaluate your technical resources and requirements. Some businesses rely more heavily on technology than others, and such companies will need a strong IT network to get started. If that’s the case, you may be intimidated by the up-front cost, but keep in mind that your product will only be as good as the technology behind it, and if you buy low-grade gear, you’ll probably have to replace it in a few years

Deal Structure

If you plan to make the rounds of venture capital firms or approach potential angel investors, you need to keep the lender’s interests firmly in mind. Simply put, these institutions or individuals want to protect their investment and generate a high return. With that in mind, here are some things to remember when structuring an investment deal:
Corporate structure: The legal structure you choose for your business will dictate your tax obligations and legal liability, as well as how you handle outside investment. Remember, if you plan to sell shares to more than 100 investors, you must set up as a C-Corp.
Preferred shares: Investment firms may insist on purchasing a special class of preferred stock with their shares. Generally, these shares are more expensive, but it gives them priority over regular shareholders. The firm may also want preferred shares to be convertible, meaning they can be converted to regular stock at any time.
Returns: Anyone putting capital into your business is going to want a dramatic return on their investment, so explain how they’ll get it. These investors want to know about an exit strategy — by sale, IPO or buyback — giving them a way to cash in on their investment. Be specific about the exit options; one way is to name possible buyers of your business. If this exit is a long way off, however, set up a dividends distribution schedule.
Non-monetary incentives: Will the investor be able to handpick a member of the company’s board? A VC firm or angel may want to reserve the right to purchase more equity at a later date or have a clause that automatically sells them more stock once certain revenue benchmarks are reached.
Restrictions: This protects you, the entrepreneur, from investors prematurely dumping their shares. Most investment agreements have rules stating when shares can be sold and in what quantities.
Protect your equity with non-compete clauses: All top managers should sign non-compete clauses to make sure they don’t leave your firm to immediately work for your top competitor. Investors will want to see these to make sure your company’s intellectual property is well protected. They may also insist on a clause that keeps you tied to the company.
State laws: Are there any state regulations that make your investment particularly attractive or unattractive? States have different rules regarding equity ownership, and some states don’t assess an income tax.
Future offerings: How will additional equity offerings be handled? Investors want to make sure their shares don’t get diluted as the company grows and may insist on having right of first refusal.

Survival Strategy

A strong business is one that can ride out the tough times. Your business plan should be able to account for a soft economy or an industry slump and should have the built-in flexibility you’ll need in order to react quickly and nimbly in the face of change.
Take these business survival measures to insulate your company in the event of an unexpected downturn.
Maximize Your Cash Holdings
Remember that cash is king, and with it you can pay your suppliers and the bank. A quick way to boost your cash reserves is to sell off surplus inventory and then cut back your inventory orders until the situation improves. You can also push to improve your accounts receivables collection.
Diversify
Your infrastructure may allow you to quickly start selling alternative products that are unaffected by adverse market conditions. For example, during Prohibition, Anheuser-Busch Inc. sold malt syrup and a non-alcoholic beverage. When the ban on alcohol was lifted in 1933, the company had the resources in play to begin producing beer again.
Be Aggressive
If you can afford to do so, a slowdown can be the perfect time to introduce a new product or strike a strategic partnership. Surprise your competition while they’re busy worrying about their own future.
Use Freelancers and Part-Timers
They can help build business at a lower cost because, unlike full-time workers, you typically don’t have to provide benefits like health care and you can pay them at a lower rate than full-time employees.
Focus on Service
Good customer service will always help to differentiate you from your bigger competitors. In an economic slowdown, your clients may be looking to cut costs, too. If you boost your customer service efforts toward existing clients, it’s more likely they’ll stay you with during the slowdown — and they may even expand their business with you once things pick up again.
Look for Substitute Materials
If your business is heavily dependent on raw materials, look for less expensive, substitute goods. The savings will go straight to your bottom line.
Revise Your Revenue Projections
Use the new projections to try and renegotiate the terms of your trade credit and bank debt.
Involve Your Employees
You may be surprised that your employees are willing to help come up with ways to cut costs. But smart workers realize their job status is tied to the overall health of the business.
Don’t Abandon Development
The costliest mistake you can make during a rough period is to focus entirely on cutting costs to survive and abandon product development. New products can help differentiate you in a tough market. Also, when the market improves, you don’t want to be caught with an empty development pipeline.
Growth Strategy

Potential investors who read your business plan will want to know how you plan to grow your business once it is off the ground. This entails more than just demonstrating how your revenue will grow. The growth strategy section of your business plan is about proving to others that you have a plan for bringing your product to new customers and new markets, and perhaps even introducing new products.
The obvious objective in outlining your growth strategy is to show how these moves will increase sales. This can happen in a number of ways:
Multiple locations: If your business requires a retail presence, outline where you might seek to open additional shops and what your geographic strategy will be. Don’t assume you can go national just because your product is regionally successful.
New client bases: Once you’ve reached your original core customers, who else might be interested in your products? If you’re a business-to-consumer company, think about offering business-to-business services, and vice-versa. Office supply stores, for example, have been very successful at catering to the needs of individuals as well as small-business owners.
New products: New products are an obvious way to grow sales, but their issuance often is poorly executed. Discuss your plan for introducing new products or services in the short, medium and long term. These can be variations of your core product or completely new offerings that expand your overall base.
Franchising: Restaurants often turn to franchising, and it is a feasible option for many other industries as well. Franchising works best when your product is consistent and customers have certain expectations about your brand.
Online strategy: How will you use the Internet to grow your sales? Will you sell your product on your own corporate Web site, partner with an existing Internet retailer or maybe advertise online to build local brand awareness? Using the Web is not mandatory for selling your product, but your growth strategy should include an online element.
Marketing: Look back at the marketing section of your business plan. If you’ve already addressed facets of your business growth strategy in that section, you can use it to detail your expansion, and then refer to your marketing section as an implementation tool.
Decreasing costs: Growth has bottom-line advantages, too. The more business you do, the more you can take advantage of learning curves and economies of scale. Learning curves allow you to become more efficient as you gain experience. Economies of scale refer to a reduction in average cost over time because of factors such as buying power and managerial specialization.
Acquisitions: A final option to address is growth through acquisition. This would come into play after your startup is more established and ready to expand into other markets. At this stage, you may want to address which companies, or types of companies, would make ideal acquisition targets. Look for companies that are a good fit for your product and distribution methods, but that also present new opportunities for growth. Any duplication from an acquisition should be balanced out with growth areas.

Exit Strategy:

The final portion of your business plan outlines your exit strategy. It may seem odd to develop a strategy this soon to leave your business, but potential investors will want to know your long-term plans. Your exit plans need to be clear in your own mind because they will dictate how you operate the company. For example, if you plan to get listed on the stock market, you’ll want to follow certain accounting regulations from day one. If you plan to pass the business to your children, you’ll need to start training them at a certain point.
Here’s a look at some of the available strategies for entrepreneurs:
Exit Strategies for Long-Term Involvement
• Let it run dry: This can work especially well in small businesses like sole proprietorships. In the years before you plan to exit, increase your personal salary and pay yourself bonuses. Make sure you are on track to settle any remaining debt, and then you can simply close the doors and liquidate any remaining assets. With the larger income, naturally, comes a larger tax liability.
• Sell your shares: This works particularly well in partnerships such as law and medical practices. When you are ready to retire, you can sell your equity to the existing partners, or to a new employee who is eligible for partnership. You leave the firm cleanly, plus you gain the earnings from the sale.
• Liquidate: Sell everything at market value and use the revenue to pay off any remaining debt. This is a simple approach, but also likely to reap the least revenue. Since you are simply matching your assets with buyers, you probably will be eager to sell and therefore at a disadvantage when negotiating.
Exit Strategies for Short-Term Involvement
• Go public: The dot-com boom and bust reminded everyone of the potential hazards of the stock market. While you may be sitting on the next Google, IPOs take much time to prepare and can cost anywhere from several hundred thousand to several million dollars, depending on the exchange and the size of the offering. However, the costs can often be covered by intermediate funding rounds.
• Merge: Sometimes, two businesses can create more value as one company. If you believe such an opportunity exists for your firm, then a merger may be your ticket to exit. If you’re looking to leave entirely, then the merger would likely call for the head of the other involved company to stay on. If you don’t want to relinquish all involvement, consider staying on in an advisory role.
• Be acquired: Other companies might want to acquire your business and keep its value for themselves. Make sure the offered sale price meshes with your business valuation. You may even seek to cultivate potential acquirers by courting companies you think would benefit from such a deal. If you choose your acquirer wisely, the value of your business can far exceed what you might otherwise earn in a sale.
• Sell: Selling outright can also allow for an easy exit. If you wish, you can take the money from the sale and sever yourself from the company. You may also negotiate for equity in the buying company, allowing you to earn dividends afterwards — it clearly is in your interest to ensure your firm is a good fit for the buyer and therefore more likely to prosper.

Advertisements
Posted by: Aakash Barot | February 3, 2011

Question is the Answer

One incredible concept I’ve applied to myself since I was young is my ability to question myself, all my beliefs and my perceptions on life or being alive. To have this ability and retain no hatred or bias is difficult if not impossible; this also got reinforced when I started working for an assessment company. Where I was trying to find reason why customer should buy assessment,
What is assessment and how it helps and so on. In this quest I discovered that what I learnt about the assessment which is nothing but a set of questions is true for me myself – my life also. It’s important we assess our self-timely, effectively and analytically.

So let me start answering to some of the question that might arise from this topic:
WHY?
Why should we assess our self?
I strongly believed that if you can’t measure you can’t improve. So to improve you must measure where you are, why are you there, what is holding you back and how can you get there where you want to be. Hence asking the right questions to yourself help’s you stay on track. Questions are like wakening call, which alerts you if you have gone wrong somewhere.
But we usually get scared to ask our self some tough questions with fear to get the realization of failure, and tell our self – stories why not to question our self and why it’s time to wait. But we fail to understand that in reality, ignoring question won’t ignore the problem.

Questions don’t only work as check post but also helps you widen your perception.
I always question myself in a debate/conflict/controversy: why does other person think he/she is correct, on the basis of what information he is betting on his point, Is there any information he/she is missing or is there anything I don’t know. Can I try to learn and know what he knows and see if there is scope to change my opinion? Try knowing what he knows, why did he had those beliefs….!!!
There are two outcomes to it: 1. you either get a wider perception, get an opportunity to embrace the reality or you get point on how to defeat that person in the debate/conflict/controversy.

To end with here is a collection of some of the very interesting questions on life, which is worth asking and answering to our self:
1. How old you would be if, you didn’t know how old you are?
2. If you had an opportunity to get a message across large group of people, what would be your message?
3. Is it possible to lie without saying a word? (Silence)
4. If not now than when?
5. What would you do differently if you knew no body would judge you?
6. Are you holding onto something that you need to let go off?
7. Have you done anything lately worth remembering?
8. When is it time to stop calculating risk and rewards and just do what you know is right?
9. Do you think crying is a sign of weakness or strength?
10. When you are of 60 or 80 yrs of age what will matter you most?
11. Do you enjoy and celebrate the things you do have?
12. When it’s all said and done, will you have said more than done?
13. When was the last time you tried to do something new?
14. Which activities make you lose track of time?
15. What is difference between living and existing?
16. Time or money?
17. What makes you smile?
18. If you could do all over again, would you change anything?
19. IF you had to teach something, what would you teach?
20. Are you aware that someone has it worse than you do?
21. What would you regret fully doing, being or having in your life?
AND THE MOST IMPORTANT ONE:
22. Do you ask enough questions or do you settle for what you know?

Would really like to see some of the answers from you, if you can write in the comment box below along with the reference question no.
Thanks for reading – Keep coming back.
Cheers,
Aakash Barot.

Posted by: Aakash Barot | December 18, 2010

Misleading Reasoning Associations

1. FAULTY CAUSE: (post hoc ergo propter hoc) mistakes correlation or association for causation, by assuming that because one thing follows another it was caused by the other.

example: A black cat crossed Babbs’ path yesterday and, sure enough, she was involved in an automobile accident later that same afternoon.

example: The introduction of sex education courses at the high school level has resulted in increased promiscuity among teens. A recent study revealed that the number of reported cases of STDs (sexually transmitted diseases) was significantly higher for high schools that offered courses in sex education than for high schools that did not.

2. SWEEPING GENERALIZATION: (dicto simpliciter) assumes that what is true of the whole will also be true of the part, or that what is true in most instances will be true in all instances.

example: Muffin must be rich or have rich parents, because she belongs to ZXQ, and ZXQ is the richest sorority on campus.

example: I’d like to hire you, but you’re an ex-felon and statistics show that 80% of ex-felons recidivate.

3. HASTY GENERALIZATION: bases an inference on too small a sample, or on an unrepresentative sample. Often, a single example or instance is used as the basis for a broader generalization.

example: All of those movie stars are really rude. I asked Kevin Costner for his autograph in a restaurant in Westwood the other evening, and he told me to get lost.

example: Pit Bulls are actually gentle, sweet dogs. My next door neighbor has one and his dog loves to romp and play with all the kids in the neighborhood!

4. FAULTY ANALOGY: (can be literal or figurative) assumes that because two things, events, or situations are alike in some known respects, that they are alike in other unknown respects.

example: What’s the big deal about the early pioneers killing a few Indians in order to settle the West? After all, you can’t make an omelette without breaking a few eggs.

example: Banning “head” shops from selling drug paraphernalia in order to curb drug abuse makes about as much sense as banning bikinis to reduce promiscuity.

5. APPEAL TO IGNORANCE: (argumentum ad ignorantiam) attempts to use an opponent’s inability to disprove a conclusion as proof of the validity of the conclusion, i.e. “You can’t prove I’m wrong, so I must be right.”

example: We can safely conclude that there is intelligent life elsewhere in the galaxy, because thus far no one has been able to prove that there is not.

example: The new form of experimental chemotherapy must be working; not a single patient has returned to complain.

6. BIFURCATION: (either-or, black or white, all or nothing fallacy) assumes that two categories are mutually exclusive and exhaustive, that is, something is either a member of one or the other, but not both or some third category.

example: Either you favor a strong national defense, or you favor allowing other nations to dictate our foreign policy.

example: It’s not TV. It’s HBO.

7. FALSE DILEMMA: (a form of bifurcation) implies that one of two outcomes is inevitable, and both have negative consequences.

example: Either you buy a large car and watch it guzzle away your paycheck, or you buy a small car and take a greater risk of being injured or killed in the event of an accident.

example: You can put your money in a savings account, in which case the IRS will tax you on the interest, and inflation will erode the value of your money, or you can avoid maintaining a savings account in which case you will have nothing to fall back on in a financial emergency.

8. FAULTY SIGN: (also includes argument from circumstance) wrongly assumes that one event or phenomenon is a reliable indicator or predictor of another event or phenomenon.

example: the cars driving in the opposite direction have their lights on; they must be part of a funeral procession.

example: That guy is wearing a Raiders jacket and baggy pants. I’ll bet he’s a gang member.

9. DAMNING THE SOURCE: (ad hominem, sometimes called the genetic fallacy) attempts to refute an argument by indicting the source of the argument, rather than the substance of the argument itself.

example: There is no reason to listen to the arguments of those who oppose school prayer, for they are the arguments of atheists!

example: The American Trial Lawyers Association favors of this piece of legislation, so you know it has to be bad for ordinary citizens.

10. TU QUOQUE: (look who’s talking or two wrongs make a right) pointing to a similar wrong or error committed by another.

example: Gee, Mom and Dad, how can you tell me not to do drugs when you both smoke cigarettes and drink alcohol?

example: The United States has no business criticizing the human rights policies of the Third World nations, not as long as discrimination and segregation continue to exist in the United States.

11. EQUIVOCATION: allows a key word or term in an argument to shift its meaning during the course of the argument. The result is that the conclusion of the argument is not concerned with the same thing as the premise(s).

example: Only man is rational. No woman is a man. Therefore, no woman is rational.

example: No one who has the slightest acquaintance with science can reasonably doubt that the miracles in the Bible actually took place. Every year we witness countless new miracles in the form recombinant DNA, micro-chips, organ transplants, and the like. (the word “miracle” does not have the same meaning in each case)

12. BEGGING THE QUESTION: (petitio principii) entails making an argument, the conclusion of which is based on an unstated or unproven assumption. In question form, this fallacy is known as a COMPLEX QUESTION.

example: Abortion is murder, since killing a baby is an act of murder.

example: Have you stopped beating your wife?

13. TAUTOLOGY: (a sub-category of circular argument) defining terms or qualifying an argument in such a way that it would be impossible to disprove the argument. Often, the rationale for the argument is merely a restatement of the conclusion in different words.

example: The Bible is the word of God. We know this because the Bible itself tells us so.

example: You are a disagreeable person and, if you disagree with me on this, it will only further prove what a disagreeable person you are.

14. APPEAL TO AUTHORITY: (ipse dixit also called ad verecundiam sometimes) attempts to justify an argument by citing a highly admired or well-known (but not necessarily qualified) figure who supports the conclusion being offered.

example: If it’s good enough for (insert celebrity’s name here), it’s good enough for me.

example: Laws against marijuana are plain silly. Why, Thomas Jefferson is known to have raised hemp on his own plantation.

15. APPEAL TO TRADITION: (don’t rock the boat or ad verecundiam) based on the principle of “letting sleeping dogs lie”. We should continue to do things as they have been done in the past. We shouldn’t challenge time-honored customs or traditions.

example: Of course we have to play “pomp and circumstance” at graduation, because that’s always been the song that is played.

example: Why do I make wine this way? Because my father made wine this way, and his father made wine this way.

16. APPEAL TO THE CROWD: (ad populum or playing to the gallery) refers to popular opinion or majority sentiment in order to provide support for a claim. Often the “common man” or “common sense” provides the basis for the claim.

example: all I can say is that if living together is immoral, then I have plenty of company.

example: Professor Windplenty’s test was extremely unfair. Just ask anyone who took it.

17. STRAW MAN: stating an opponent’s argument in an extreme or exaggerated form, or attacking a weaker, irrelevant portion of an opponent’s argument.

example: A mandatory seat belt law could never be enforced. You can’t issue citations to dead people.

example: What woman in her right mind could truly desire total equality with men? No woman wants the right to be shot at in times of war, the right to have to pay alimony, or the right to have to use the same restrooms as men.

18. SLIPPERY SLOPE: (sometimes called a snowball argument or domino theory) suggests that if one step or action is taken it will invariably lead to similar steps or actions, the end results of which are negative or undesirable. A slippery slope always assume a chain reaction of cause-effect events which result in some eventual dire outcome.

example: If the Supreme Court allows abortion, next think you know they’ll allow euthanasia, and it won’t be long before society disposes of all those persons whom it deems unwanted or undesirable.

example: If I let one student interrupt my lecture with a question, then I’ll have to let others and, before long, there won’t be any time left for my lecture.

19. APPEALING TO EXTREMES: A fallacy very similar to slippery slope, which involves taking an argumentative claim or assertion to its extreme, even though the arguer does not advocate the extreme interpretation. The difference between the two fallacies is that appealing to extremes does not necessarily involve a sequence of causal connections.

example: Husband to ex-wife: Well, if you want to be completely fair about dividing everything up, you should get one of my testicles and I should get one of your breasts!

example: Debtor to creditor: Hey, you’ve already repossessed my car and my television. Why don’t you just draw a quart of blood or carve a pound of flesh from my heart too?

20. HYPOTHESIS CONTRARY TO FACT: This fallacy consists of offering a poorly supported claim about what might have happened in the past or future if circumstances or conditions were other than they actually were or are. The fallacy also involves treating hypothetical situations as if they were fact.

example: If you had only tasted the stewed snails, I’m sure you would have liked them.

example: If Hitler had not invaded Russia and opened up two military fronts, the Nazis would surely have won the war.

21. NON SEQUITAR: (literally means “does not follow”) in a general sense any argument which fails to establish a connection between the premises and the conclusion may be called a non-sequitar. In practice, however, the label non-sequitar tends to be reserved for arguments in which irrelevant reasons are offered to support a claim.

example: I wore a red shirt when I took the test, so that is probably why I did so well on the test.

example: Mr Boswell couldn’t be the person who poisoned our cat, Truffles, because when I used to take Truffles for walks he always smiled and said “Hello” when we walked by.

22. RED HERRING: attempting to hide a weakness in an argument by drawing attention away from the real issue. A red herring fallacy is thus a diversionary tactic or an attempt to confuse or fog the issue being debated. The name of the fallacy comes from the days of fox hunting, when a herring was dragged across the trail of a fox in order to throw the dogs off the scent.

example: accused by his wife of cheating at cards, Ned replies “Nothing I do ever pleases you. I spent all last week repainting the bathroom, and then you said you didn’t like the color.”

example: There’s too much fuss and concern about saving the environment. We can’t create an Eden on earth. And even if we could, remember Adam and Eve got bored in the Garden of Eden anyway!

23. INCONSISTENCY: advancing an argument that is self-contradictory, or that is based on mutually inconsistent premises.

Example: A used car salespersons says, “Hey, you can’t trust those other car salesman. They’ll say anything to gt you to buy a car from them.”

Example: A parent has just read a child the story of Cinderella. The child asks, “If the coach, and the footmen, and the beautiful clothes all turned back into the pumpkin, the mice, and the rags, then how come the glass slipper didn’t change back too?”

 

Posted by: Aakash Barot | December 12, 2010

Questioning the best skill – Sales

Open-ended questions are one of the most important tools for those who sell (as long as you listen).

They help you gather information, qualify sales opportunities, and establish rapport, trust and credibility.

The key here…

Ask the question and let the prospect/ customer give you their answer.

No leading.
No prompting.
No interrupting.

 

Information gathering

What prompted you/ your company to look into this?
What are your expectations/ requirements for this product/ service?
What process did you go through to determine your needs?
How do you see this happening?
What is it that you’d like to see accomplished?
With whom have you had success in the past?
With whom have you had difficulties in the past?
Can you help me understand that a little better?
What does that mean?
How does that process work now?
What challenges does that process create?
What challenges has that created in the past?
What are the best things about that process?
What other items should we discuss?

Qualifying

What do you see as the next action steps?
What is your timeline for implementing/ purchasing this type of service/ product?
What other data points should we know before moving forward?
What budget has been established for this?
What are your thoughts?
Who else is involved in this decision?
What could make this no longer a priority?
What’s changed since we last talked?
What concerns do you have?

Build rapport, trust & credibility

How did you get involved in…?
What kind of challenges are you facing?
What’s the most important priority to you with this? Why?
What other issues are important to you?
What would you like to see improved?
How do you measure that?

 

 

Posted by: Aakash Barot | June 14, 2010

Relationship – Sales

Build Customer Loyalty
The key to a successful business is a steady customer base. After all, successful businesses typically see 80 percent of their business come from 20 percent of their customers. Too many businesses neglect this loyal customer base in pursuit of new customers. However, since the cost to attract new customers is significantly

more than to maintain your relationship with existing ones, your efforts toward building customer loyalty will certainly payoff.
Here are ten ways to build customer loyalty:
Communicate. Whether it is an email newsletter, monthly flier, a reminder card for a tune up, or a holiday greeting card, reach out to your steady customers.
Customer Service. Go the extra distance and meet customer needs. Train the staff to do the same. Customers remember being treated well.
Employee Loyalty. Loyalty works from the top down. If you are loyal to your employees, they will feel positively about their jobs and pass that loyalty along to your customers.
Employee Training. Train employees in the manner that you want them to interact with customers. Empower employees to make decisions that benefit the customer.
Customer Incentives. Give customers a reason to return to your business. For instance, because children outgrow shoes quickly, the owner of a children’s shoe store might offer a card that makes the tenth pair of shoes half price. Likewise, a dentist may give a free cleaning to anyone who has seen him regularly for five years.
Product Awareness. Know what your steady patrons purchase and keep these items in stock. Add other products and/or services that accompany or compliment the products that your regular customers buy regularly. And make sure that your staff understands everything they can about your products.
Reliability. If you say a purchase will arrive on Wednesday, deliver it on Wednesday. Be reliable. If something goes wrong, let customers know immediately and compensate them for their inconvenience.
Be Flexible. Try to solve customer problems or complaints to the best of your ability. Excuses — such as “That’s our policy” — will lose more customers then setting the store on fire. Read our 60-Second Guide to Managing Upset Customers for more information.
People over Technology. The harder it is for a customer to speak to a human being when he or she has a problem, the less likely it is that you will see that customer again.
Know Their Names. Remember the theme song to the television show Cheers? Get to know the names of regular customers or at least recognize their faces.

Posted by: Aakash Barot | March 30, 2010

Being Assertive

Whether you are a senior staff member or brand new to a job (Like I am right now), it can be difficult to speak up when you see something wrong. However, not doing so can have deleterious consequences for your company, and your career. Here are the top three rationalizations for keeping silent and how to confront them:

It’s not my job.
You don’t have to be a seasoned staff member, an expert, or have formal authority to raise a flag. Doing the best thing for the company is always your job.

It’s not a big deal.
If you’re telling yourself that, it probably is a big deal. Instead of downplaying the severity of the issue, focus on trying to find a resolution.

It’s standard practice. (the most important one – My boss told me to read First Break all the rules.. So am just following it)
Even if your company has always done it a certain way, if it’s creating a problem now or in the future, challenge the status quo.

Posted by: Aakash Barot | March 16, 2010

2010 Trend on cause marketing

‘Eco-Friendly’ is replacing “Luxury” as the new status symbol (HONDA). More than twice as many global consumers say they would rather drive an eco-friendly car (67%) than a luxury car (33%), and an even larger percentage would prefer to live in an eco-friendly house (70%) vs. merely a big house (30%), according to results from this year’s goodpurpose study, conducted by PR firm Edelman. (source: Article)
We have a good long list of companies diverting their marketing communications towards a cause. Like Idea to save paper, Aircel to save tigers, honda for eco- drive, Tata tea for Voting to name a few.

When it comes to Local vs. Designer Brands sentiment also appears to be moving away from well-known national and international designer brands in favor of supporting local businesses and products. While 69% globally would rather have a brand that supports the livelihood of local producers than a designer brand (31%).

Another 57% of consumers say a company or brand has earned their business because it has been doing its part to support good causes. Asian countries China (85%) and India (84%) had the highest scores in this area, the survey found. Additional findings about brand preference:
• 67% of consumers say they would switch brands if another brand of similar quality supported a good cause. These numbers are highest in Brazil (83%) and Italy (74%).
• 83% are willing to change consumption habits if it can help make the world a better place to live.
• Though twice as many people would rather drive a hybrid car than a luxury car, preference for hybrids is significantly higher in Japan (89%) and France (89%).
• 68% of global consumers and 80% of those in the US say they are “okay” with brands that support good causes and make money too:

CSR Marketing

Marketing with a Cause

I’m optimistic about business planning for 2010, and I’m expecting it to be a good year. People are going to do more and better business planning. This is the year for getting key planning elements defined and understood, for regular plan review and course correction, and for more focus on the planning process. All of which means, in a nutshell, that more businesses will benefit from better planning processes. Ultimately, that means more businesses, more jobs and more success.
Why? Three factors:
Factor No. 1: The natural backlash of the ‘don’t plan’ fad
It’s silly, really, but contrarian is cool. So if you look, you can find people (who should know better) bashing business plans. Investors supposedly don’t read them, and some of the most successful startups didn’t have one. The logic here is a lot like saying healthy eating and regular exercise aren’t valuable because some people exaggerate one or the other.
Of course, the kernel of truth in all this is that real business planning is about management, not about a one-time-use document that’s drafted and then left in a drawer. So the whole bit about the misuse of the document is irrelevant.
This underlying truth is precisely why I’m saying business planning is coming up in the world. The more you see experts harping about the straw-man business plan that wasn’t that useful, the more we’re going to see people turning to real business planning because they need it. Business planning isn’t creating a one-time-use document; it’s about managing better and navigating a company through dangers toward long-term goals.
Factor No. 2: Back to planning fundamentals
Trends are taking us back to fundamentals. In the case of business planning, it was never really just about the plan. Consider these two basics of business:
• Form follows function. When you get down to business basics, the plan should only be as big as it takes to meet the business need. If you have the need to show a plan document to some outsider, you might have to do the full formal thing. But most of us just need to manage better. For this, a much smaller, simpler plan coupled with a planning process to build in regular review and course corrections is sufficient.
• Planning is about managing change. Laughably, some anti-business-plan sentiments argue that a business plan reduces flexibility. In truth, good planning increases your ability to manage change by providing you clear visibility of how everything links together. For example, when sales are different than projected in the plan–and they always are–you have tools for making adjustments to expenses, which means that good business planning helps your company manage rapid change better.
Factor No. 3: New age of accountability
Recently, some smart person said we can drop the “virtual” from virtual business, because it’s just assumed these days. We work online from different computers. We travel. We work remotely. It’s part of the age.
Meanwhile, what happens to accountability? What has to happen is metrics, measurement and keeping track of things. You can’t assume that showing up is enough anymore; things have to get done. And that means getting done remotely, or virtually, or wherever and whenever.
And that is a matter of planning: real planning, tracking, managing and following up. Set the steps down somewhere accessible, and then meet regularly to review and revise.

Posted by: Aakash Barot | November 29, 2009

Customer Buying Behaviour

Here comes a quick summary of what i have learned from my job as marketing professional about the customer behaviour.

This is interesting and yet extremely powerful which can be used for daily reference, It would be extremely helpful for the one in Sales or Sales Training as well. 

Customer Focus (WIIFM – What’s In It For Me):

  • A Solution (product solves a problem)
  • Features/Benefits (improves on/adds to current solution)
  • Performance
  • Comfort/Security
  • Image
  • Quality
  • Price (some lowest, some best value)
  • Relationship (just buy from certain businesses/business associates)
  • Service/Warranty (Return policies, warranties, turnaround time)
  • Selection
  • Location
  • Tradition (habit)
  • Innovation (new innovative products)
  • Emotion (makes them feel good, impress others, show love/appreciation)
  • Convenience

Recognize Why Customers Don’t Buy:

  • Fear of Loss
  • Lack of Trust
  • Lack of Comfort
  • Lack of Quality
  • Not a Viable Solution
  • Lack of Need
  • Contrary to Customer’s Image
  • Not Important
  • Has a Defect
  • Bad Past Experiences
  • Prefers Another Product

Relationships Customers Look For:

  • The Coach/Expert
  • Friendly/Caring
  • Have Same Goals as Customer (customers like to believe your goal is to help them–not take their money)
  • Relationship Marketing (establish a sense of being related)

Customer Motivations:

  • Goal Oriented Motivation (saves time)
  • Image Oriented Motivation (biggest, best, exclusive, expensive)
  • Useage Oriented Motivation (product is best for very specific use)
  • Entertainment Oriented Motivation (adventure, entertaining)

Customer Hot Buttons:

  • Tell the Truth (stats, charts, visual demos, specific claims–thicker, spicier sauce)
  • Get Real (customers buy on quick impressions–tell the truth & get real)
  • Drama (unbelievable offers–any part free if not available, dramatic products)

Action Steps:

  • Find a point to specialize on – find a reason for people to buy that no one else is providing
  • Look at your competitors – list the reasons people buy from each
  • Look at reasons that no one is addressing – see whether they would apply for your business
  • Evaluate relationships, motivations & hot buttons used

By:

Aakash Barot

Marketing Tools

Tools for understanding Customer Behaviour

Posted by: Aakash Barot | November 28, 2009

Marketing Communications

Among the most important skills in marketing are communication
and promotion. Communication is the broader term, and it happens
whether planned or not. A salesperson’s attire communicates, the
catalog price communicates, and the company’s offices communicate;
all create impressions on the receiving party. This explains the
growing interest in integrated marketing communications (IMC).
Companies need to orchestrate a consistent set of impressions from
its personnel, facilities, and actions that deliver the company’s brand
meaning and promise to its various audiences.
Promotion is that part of communication that consists of company
messages designed to stimulate awareness of, interest in, and
purchase of its various products and services. Companies use advertising, sales promotion, salespeople, and public relations to disseminate
messages designed to attract attention and interest.
Promotion cannot be effective unless it catches people’s attention.
But today we are deluged with print, broadcast, and electronic
information. We confront 2 billion Web pages, 18,000 magazines,
and 60,000 new books each year. In response, we have developed
routines to protect ourselves from information overload. We toss
most catalogs and direct mail unopened into the wastebasket; delete
unwanted and unread e-mail messages; and refuse to listen to telephone
solicitations.

the glut of information is leading to attention deficit
disorder (ADD), the difficulty of getting anyone’s attention.11 The
attention deficit is so pronounced that companies have to spend
more money marketing than making the product.

As a result, marketers need to study how people in their target
market allocate their attention time. Marketers want to know the
best way to get a larger share of consumers’ attention. Marketers apply
attention-getting approaches such as high-profile movie stars and
athletes; respected intermediaries close to the target audience; shocking
stories, statements, or questions; free offers; and countless others.
Even then, there is a question of effectiveness. It is one thing to
create awareness, another to draw sustained attention, and still another
to trigger action. Attention is to get someone to spend time focusing
on something. But whether this leads to buying action is
another question.

Older Posts »

Categories