For an organization to be competitive in saturated markets, entrepreneurs need to demonstrate to investors a comprehensive business plan that explains why their organization will be successful. These business owners need to provide investors with short-term and long-term objectives that explain why and how this organization will overshadow the competition. Are you filing a market gap or are you enhancing an already established product?
A business plan serves as a blueprint that demonstrates how the entrepreneur will handle phases such as startup, growth, maturity, transition and succession; this plan will explain your proposal and explain how the entrepreneur will handle cash flow.
Business Overview
When securing financing, lenders want to know how and where you will apply your monies to make your business thrive. These groups want to see your business plan before giving you financing. They are typically looking for a 10% return on investment (ROI). They’ll want a timeframe for ROI, so business plans need to be precise and comprehensive.
Entrepreneurs must demonstrate that they have created a business plan that addresses everything from marketing, sales, and operation strategies to acquiring a physical location and explaining how their firm will attain market penetration that leads to a break-even point. A plan demonstrates a sales forecast and financial projections. The plan must be able to explain why certain actions were chosen over other options.
A plan will sometimes have flaws; this is a part of the process requiring entrepreneurs to be detail- oriented. While the plan addresses marketing processes - capital needs and ROI - entrepreneurs will likely find flawed concepts. Ensure that your business plan addresses all scenarios before presenting the plan to the business world that needs reassurance that the entrepreneurs are driven to succeed.
One thing must be clear: the entrepreneur must demonstrate how their organization will address a market gap – the concept that the needs of customers are not being met – and how their organization will fill this need through demographic and psychographic research that identifies consumers with pin-point-accuracy.
One of the most common mistakes by entrepreneurs is to not define the target audience. The goal for entrepreneurs is to conduct a competitive analysis that describes the products created by the company. This is the company position and it should be different from the competition. What is the value of your product? This should describe the wants and needs of target audiences and sub-audiences.
Market Niches
The marketplace is fueled by competition and entrepreneurs must identify competitors through market research. Market niches can be lucrative. There are market niches such as conscious consumers who are willing to modify their shopping habits to help environmental concerns that embrace green alternatives. If you have a market niche, include this in your marketing plan.
For example, entrepreneurs identified a market gap by researching the needs of consumers concerned about the effects of plastic wrap on the environment. This niche identified plastics as pollutants that take up to 1,000 years to degrade. These products also have been linked to global warming, because the production of these products uses planet-warming fuels including gas, oil and coal.
One green company, Bee’s Wrap, identified an opportunity to sell green products within a niche looking for global sustainability in the form of alternatives to plastics such as Saran wrap and Glad wrap. The entrepreneur turned an idea into an alternative to plastic wraps.
Plastic wraps are used once before being thrown away. Bee’s Wrap can be used over and over again and, when thrown away, this product degrades without harming the environment, because it’s made from all natural products including organic cotton, beeswax, organic plant oil, and tree resin. The product is planet-friendly and cost effective.
Brand Positioning
If your product doesn’t fil a niche, you will need a marketing strategy that repositions the competition. This is a mass marketing approach for “me too” companies. Don’t be afraid to criticize competitors. Tylenol did this to aspirin. The Wise company did this to Pringles. Scope did this to Listerine. The goal is to change the positioning of the competition.
One way to sell products is to determine the motivations and personality traits of consumers. This approach identifies the wants and needs in the marketplace. It is the goal of an advertiser to turn these characteristics into a purchase. Marketers use demographics and psychographics to identify market segments.
Market Research
Market researchers use demographics to identify social subsections by grouping people according to age, gender, religion, education, nationality, and ethnicity. For example, age would be an important identifier when marketing canes. Gender is important when marketing high-performance motorcycles.
Market researchers use psychographics to pinpoint the needs of consumers by acknowledging values, desires, goals, interests, and lifestyle choices. For example, market researchers would need to identify the values of consumers when they are selling eco-friendly products such as organic cotton clothing. Demographics and psychographics can be used together to further identify precise market segments.
Monies
Once the marketing campaign has been established, the entrepreneur will need to demonstrate to lenders the forecast for future revenues and expenses. Entrepreneurs will use these projections to demonstrate to lenders how your organization will repay business loans.
The entrepreneur will present lenders with projected income statements, balance sheets and cash flow statements. One problem with business plans is unrealistic financial projections.
Specifically, entrepreneurs project sales and spending, focusing on recurring expenses, such as salaries and rent, and one-time purchases, such as machinery and vehicles. Furthermore, they create financial projections to help determine the potential for success. Nonetheless, entrepreneurs need to plan for contingencies. If entrepreneurs have created a comprehensive business plan that covers everything from financial projections, to research, to weaknesses, they can look forward to prosperity and giving back to communities.