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.
Showing posts with label business plan. Show all posts
Showing posts with label business plan. Show all posts
Sunday, June 21, 2009
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.
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.
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.
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.
Sunday, May 17, 2009
SMEs - Step 5 in the business planning process
The last step in the corporate strategy is the environmental analysis, more commonly known as the PESTEL analysis.
This could arguably be done earlier in the corporate strategy process, and in fact should best be done as part of each and every step of the corporate strategy process. This environmental analysis is crucial to success, as these external factors are outside the control of management and consequently it is imperative that management are aware of their possibly impact on the corporate strategy.
Too often businesses become introspective and consequently fail to take cognisance of the external factors that surround their businesses, and then they later wonder what caused their businesses to fail.
For the uninitiated it is Political, Economic, Social/Cultural, Technological, Environmental and Legal environments which are to be monitored.
This could arguably be done earlier in the corporate strategy process, and in fact should best be done as part of each and every step of the corporate strategy process. This environmental analysis is crucial to success, as these external factors are outside the control of management and consequently it is imperative that management are aware of their possibly impact on the corporate strategy.
Too often businesses become introspective and consequently fail to take cognisance of the external factors that surround their businesses, and then they later wonder what caused their businesses to fail.
For the uninitiated it is Political, Economic, Social/Cultural, Technological, Environmental and Legal environments which are to be monitored.
SMEs - Step 7 in the business planning process
The first six(6) steps are in essence, the corporate strategy of the firm. Step seven (7) onwards is the business strategy. This is the nuts and bolts, how it must be done strategy, in order to achieve the broader corporate strategy.
The second part of the business strategy, Step 7, is the setting of objectives. These are the specific items we wish to achieve in the current financial year. Objectives are distinguished by the fact that they have an expected completion date, and a measurable outcome. Ideally when setting objectives, the cost of achieving the objective must be measured against the value it will generate for the business, and if it shows a negative outcome, then it must be removed as an objective. Beware expending resources on objectives that add very little value to the firm.
Objectives must preferably be large, audacious and should generate a noticeably positive effect on the firm.
The second part of the business strategy, Step 7, is the setting of objectives. These are the specific items we wish to achieve in the current financial year. Objectives are distinguished by the fact that they have an expected completion date, and a measurable outcome. Ideally when setting objectives, the cost of achieving the objective must be measured against the value it will generate for the business, and if it shows a negative outcome, then it must be removed as an objective. Beware expending resources on objectives that add very little value to the firm.
Objectives must preferably be large, audacious and should generate a noticeably positive effect on the firm.
Sunday, May 10, 2009
SMEs - Step 4 in the business planning process
Goal setting is normally focused on the 3 year (medium term) horison. (Remember that the timelines vary at times from author to author).
Goals are our medium term intentions, and they are required to provide us with more focus on what must be done in order to achieve our vision and mission in the longer term. These require a lot of thought as they provide the bridging between the business strategy and the corporate strategy.
Goals should not be too many in number, and should bridge the present and the future. They must be well thought out.
Goals are our medium term intentions, and they are required to provide us with more focus on what must be done in order to achieve our vision and mission in the longer term. These require a lot of thought as they provide the bridging between the business strategy and the corporate strategy.
Goals should not be too many in number, and should bridge the present and the future. They must be well thought out.
Sunday, May 3, 2009
SMEs - Step 3 in the business planning process
So far you should have decided on a harvest strategy (Step 1) and on your business model (Step 2). In Step 3 we move to the next item that has to be addressed. Setting the Vision and Mission.
The setting of the Vision, Mission, Goals and Objectives must be seen as having a funnel effect, where the Vision is at the broadest part of the funnel, in other words the biggest picture on where the business is intended to get to in the far future, and the Objectives as the narrowest part of the funnel, the smallest picture on where the business is intended to get to in the short term future, normally considered the current financial year.
The Corporate Strategy would normally end at the completion of the PESTEL analysis (Step 5)and the Business Strategy would include Steps 6 through 11.
So to return to Step 3, the setting of the Vision and Mission. The Vision should look at where and what the enterprise wants to be in the far future. This will vary in time. Some enterprises think a 10 year horison is fine, while some, like the Japanese think a 50 year horison is fine.
The Mission statement is normally considered as a nearer term concept of where the business will want to be in say 5 years, bearing in mind that the strategy may involve enormous change in the enterprise which will evoke an evolving strategy.
Look at the following examples:
Toyota Vision
"To become the most successful and respected lift truck company in the U.S."
Toyota Mission
"To sustain profitable growth by providing the best customer experience and dealer support."
McDonalds Vision
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
McDonalds Mission
"To be our customers' favorite place and way to eat."
Hopefully this gives an insight into what a Vision and Mission statement should look like.
The setting of the Vision, Mission, Goals and Objectives must be seen as having a funnel effect, where the Vision is at the broadest part of the funnel, in other words the biggest picture on where the business is intended to get to in the far future, and the Objectives as the narrowest part of the funnel, the smallest picture on where the business is intended to get to in the short term future, normally considered the current financial year.
The Corporate Strategy would normally end at the completion of the PESTEL analysis (Step 5)and the Business Strategy would include Steps 6 through 11.
So to return to Step 3, the setting of the Vision and Mission. The Vision should look at where and what the enterprise wants to be in the far future. This will vary in time. Some enterprises think a 10 year horison is fine, while some, like the Japanese think a 50 year horison is fine.
The Mission statement is normally considered as a nearer term concept of where the business will want to be in say 5 years, bearing in mind that the strategy may involve enormous change in the enterprise which will evoke an evolving strategy.
Look at the following examples:
Toyota Vision
"To become the most successful and respected lift truck company in the U.S."
Toyota Mission
"To sustain profitable growth by providing the best customer experience and dealer support."
McDonalds Vision
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
McDonalds Mission
"To be our customers' favorite place and way to eat."
Hopefully this gives an insight into what a Vision and Mission statement should look like.
Sunday, April 19, 2009
SMEs - step 2 in the business planning process
The second step in preparing a business plan for an SME is the business model.
The business plan requires you to define what you intend to sell to whom, and how you intend to do so, with the intention of making a profit. This sounds simple but can be complex in a business with many divisions or products.
Take the example of a computer store. Is the core profit of the business achieved through selling the product or through servicing the product and the client once the warranty has ended? It is important to know this, so that appropriate pricing and marketing strategies are defined and applied in advance.
The business will fail if both sales and service both discount their prices in the mistaken belief that the other is making the business' profit. So the model is an important component in assessing the future viability of the business.
The business plan requires you to define what you intend to sell to whom, and how you intend to do so, with the intention of making a profit. This sounds simple but can be complex in a business with many divisions or products.
Take the example of a computer store. Is the core profit of the business achieved through selling the product or through servicing the product and the client once the warranty has ended? It is important to know this, so that appropriate pricing and marketing strategies are defined and applied in advance.
The business will fail if both sales and service both discount their prices in the mistaken belief that the other is making the business' profit. So the model is an important component in assessing the future viability of the business.
Wednesday, June 4, 2008
SMEs - business planning and the format (2/2007)
There has been some discussion on the topic of whether a business plan is necessary. but the real issue in mond mind is only one of whether to document the business plan or not. However, whether you believe a business plan should be in writing or not, you still need a format to work to.
A wide variety of formats exists but the one I have found covers all the critical success factors in business is as follows. This is the one I use and teach my clients and students when lecturing.
* Business model
* PESTEL analysis
* SWOT analysis
* Marketing plan
* Human resources plan
* Financial plan
* Harvest plan
Business model - How will this business make it's core profit. It helps to keep the business focused on the key areas and not get distracted.
PESTEL analysis is the external environments which we need to understand, in order to know what their impact on our business might be. They must be considered in the local, regional, continental and global context. The acronym applies to the Political, Economic, Social and cultural, Technological, Environmental and Legislative environments.
SWOT analysis is the internal analysis of the entrepreneur's and the businesses Strengths and Weaknesses, and then using them to consider how the environmental issues will impact negatively as a Threat or positively as an Opportunity for the business.
Marketing plan is the plan on how to grow your business. Read Philip Kotler for more assistance on this subject.
Human resources plan looks at what people and skills you will need to achieve your growth, and allows you to plan for how you will get the skills/people.
Financial plan looks at the financial implications of the marketing and human resources plans.
Harvest plan looks at who will want to buy the business in the future, what the buying triggers will be and what you are likely to want to sell for. This then allows you to decide at what point you will sell the business and harvest the wealth you have created.
Rob Smorfitt
A wide variety of formats exists but the one I have found covers all the critical success factors in business is as follows. This is the one I use and teach my clients and students when lecturing.
* Business model
* PESTEL analysis
* SWOT analysis
* Marketing plan
* Human resources plan
* Financial plan
* Harvest plan
Business model - How will this business make it's core profit. It helps to keep the business focused on the key areas and not get distracted.
PESTEL analysis is the external environments which we need to understand, in order to know what their impact on our business might be. They must be considered in the local, regional, continental and global context. The acronym applies to the Political, Economic, Social and cultural, Technological, Environmental and Legislative environments.
SWOT analysis is the internal analysis of the entrepreneur's and the businesses Strengths and Weaknesses, and then using them to consider how the environmental issues will impact negatively as a Threat or positively as an Opportunity for the business.
Marketing plan is the plan on how to grow your business. Read Philip Kotler for more assistance on this subject.
Human resources plan looks at what people and skills you will need to achieve your growth, and allows you to plan for how you will get the skills/people.
Financial plan looks at the financial implications of the marketing and human resources plans.
Harvest plan looks at who will want to buy the business in the future, what the buying triggers will be and what you are likely to want to sell for. This then allows you to decide at what point you will sell the business and harvest the wealth you have created.
Rob Smorfitt
Subscribe to:
Posts (Atom)