Published Date(This is one of a continuing series of articles designed to introduce readers to the Service Corps Of Retired Executives, SCORE. They are prepared by Dick Ficke, chair of the Mount Washington SCORE chapter.)
In the last article, we discussed the first four sections of the business plan (T.O.C., Executive Summary, General Company Description, and Products and Services. Now we are going to get into the marketing and operational plan aspects of the business plan. Their significance lies in the fact that they are the foundation for the subsequent financial sections that will be discussed in the third series of these articles.
Section Five – Marketing Plan: A quick distinction is necessary here. You would be surprised as to the number of people who think advertising is the same thing as a marketing plan and confuse the two. Advertising is just one aspect of marketing.
I'll spend just a few words here because future articles will specifically address the anatomy of a marketing plan itself. Suffice it to say, this is where you are going to do a great deal of research. No matter how good your product or service, your venture will not succeed without effective marketing, part of which is research. You will be conducting both primary (gathering your own data) and secondary research (data obtained from others, such as trade associations, online, libraries, etc.). In addition to research, you will gather facts about the economics of the market you are entering. You will discuss your product, this time in terms as how a potential customer will view it. Who is your customer and who is your competition? You will map out a sales strategy and address pricing that will become the basis for the all important sales forecasting and projections. Basically you have to know the environment you are working in. Remember Professor Howard Hill in the Broadway and movie musical, "Music Man"? His signature spiel was, "You gotta know the territory!"
Section Six – Operation Plan. Now you are getting into the nuts and bolts of your operation, be it a product or service. You will be explaining the daily operation of the business, its location, equipment, people, processes and surrounding environment. Describe your location in terms of physical requirements, access, cost of operation and any legal issues (permits, zoning, insurance, environmental, etc.) that may be an issue. You may also be dealing with personnel issues, number of employees, skilled/unskilled, pay structure/benefits, training methods, where you will find the personnel you need, crafting job descriptions, task allocation, there may be schedules and written procedures that have to be devised. It's also time to think about your management style.
If this is going to be a retail business or service that involves supplies, what will be your inventory? What will be the value of your stock, i.e., what is your inventory investment? What will be the rate of turnover — how does this compare with industry averages? Will the seasons be a factor, and what sort of lead-time will you need for ordering?
Regarding supplies, who will be your suppliers? Names/addresses; description of inventory furnished, credit and delivery policies, history and reliability are all factors to be addressed. Maybe you should have more than one supplier if you are dependent upon critical items.
What will be your credit policies? Do you plan to sell on credit (and is it necessary)? Who gets credit; will you have prompt payment discounts; what will be your cost to extend credit (have you built those costs into your pricing)? If you do extend credit, it's probably a good idea to chart the age of the receivables so you can identify trends/problems. How will you deal with the slow payers?
Same procedure applies to your accounts payable. If you pay too early you may be impacting adversely on your cash flow, but late payments may affect potential discounts and can damage your credit.
Starting to get complicated, isn't it? Wait 'til the next article when we start talking about management and finances!
For more information on SCORE or how you can become a volunteer to help others, visit www.mtwashington.score.org.