Sunday, June 21, 2009

SMEs - Step 8 more detail on the marketing plan

When preparing the marketing plan as part of a business plan, a key component is the income budget. The idea is that the marketing department predict sales and therefore need to prepare a sales and cost of sales budget for the financial department. This will include advertising and the rest of the marketing budget as well.

It is critical that the sales budget be done first if a SME, or by the two different departments, marketing and finance, if a larger business.

Too often SMEs make the mistake of juggling sales to meet the overheads. This is a recipe for disaster. The first budget is normally based upon your understanding of the market, and therefore should not be altered to "make ends meet". Go with your gut feel if you are an SME, as quite often it is all you have to go on, as you most likely do not gather and keep marketing data for analysis.

If you find that there are insufficient sales to meet your overheads and desired profits, then review your strategy and see what can be done to change your strategy to improve sales. There must be a change of strategy to increase the sales, not simply a change in sales.

Remember this important part of the process when doing your marketing plan - it could be the difference between success and survival.

Sunday, June 14, 2009

SMEs - Step 8 the marketing plan

Marketing is the key to business success, because marketing drives revenues.

No matter how well run your business is, without sales there is no business. So the focus on the marketing plan is critically important. For those who want to know more, read Kotler. He presents marketing in a simple to understand format.

Marketing is best when it is proactive rather than reactive. The purpose is to get ahead of your competitors by creating competitive advantage. This means knowing and understanding your competitors extremely well. Do you know yours? Do you know how they will react to your efforts to gain market share? How can you gain market share without creating a war with your competitors? Therefore we will look at different aspects of marketing over a period of time.

Marketing is such a deep subject that it is impossible to discuss in depth in a weekly blog. Start reading Kotler and Michael Porter. Understand the use of Ansoffs model together with Kotlers synergy rules and the BCG matrix.

Marketing is not difficult and complex, to the extent that it cannot be done by the SME owner. It is simply that it requires full attention in an ongoing manner. It is not something that happens on its own, but requires constant attention and tweaking to meet changing circumstances.

Sunday, June 7, 2009

SMEs - tips for the strategy process

SMEs are generally terrible at planning. I use an example with my students. Would you leave work, go home, pack whatever clothes are in the cupboard, take whatever cash is in your pocket, get in your car, drive until you run out of petrol, and then have a holiday wherever you run out of petrol. The answer is always no. And yet most SME owners run their businesses in this way.

They simply arrive each day in the hope of sales arriving. There is no plan. No strategy. No direction. There is simply ever-fading hope.

You need to read as widely as possible in order to ensure your strategy is informed by your environment. A PESTEL analysis is not a once-off annual event, but rather a way of life. It is about knowing and understanding what is happening at all times. How often do you hear businesses who are in trouble state "I just did not see it coming. Suddenly ....". Remember nothing is "suddenly". It is always announced in advance. Even the current global financial crisis was being talked about in advance.

So read a book or two on strategy. Gary Hamel is a strategy author who can give you some good tips and insights.

Read, read, read!

Wednesday, June 3, 2009

SMEs - Step 9 in the business planning process

SMEs are renowned for missing the detail, but this is a detail step that makes it all worthwhile.

Once you have completed the business plan, especially Step 8 which is the Operational Strategy, you must assess the projected financial position, and then decide if the business will achieve your harvest plan. If not you have to decide whether to accept less or whether you will look elsewhere.

This important step cannot be avoided or ignored, because to do so, is to do so at your own peril. Doing this with a client once, he realised it was impossible to achieve his harvest plan with this business. His decision was to "learn to live with less". This is not an entrepreneur speaking, and frankly it is quite likely he will get exactly what he asked for, or less. Remember, it is seldom that targets are achieved or exceeded, so aiming low is a recipe for disaster.