Who Is Your Market?

 Describe your typical customer.

Age ____________________________

Gender _________________________

Family size ____________________

Annual family income ___________

Location _______________________

Buying patterns ________________

Reason to buy from you _________

Other __________________________

 Describe your market in geographic terms (e.g., county, state, national, etc.).
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 Describe your market in economic terms (single family, average earnings, number of children, etc.).
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How Large Is the Market?

 Total units or dollars ___________

 Growing ______ Steady ______ Decreasing ______

 If growing, annual growth rate _______________

Who Is Your Competition?

No small business operates in a vacuum. Get to know and respect the competition. Identify direct competitors (both in terms of geography and product lines) and those who are similar or marginally comparable. Begin by listing names, addresses and products or services. Briefly detail the following information concerning each of your competitors:

 Who are the nearest ones?

 How are their businesses similar to or competitive with yours?

 Do you have a unique "niche"? Describe it.

 How will your service or product be better or more saleable than your competitors?

 Are their businesses growing? Stable? Declining? Why?

 What can be learned from observing their operations or talking to their present or former clients?

 Will you have competitive advantages or disadvantages by operating from home? Be honest!

Remember, your business can become more profitable by adopting your competitors' good practices and by avoiding their errors.

To help you evaluate your potential success, candidly evaluate the following characteristics of your product or service (you may want to add more characteristics from your knowledge of your field). Use a scale of zero (theirs puts mine to shame) to 10 (mine puts theirs to shame).

Characteristic Score

Price _____
Performance _____
Durability _____
Versatility _____
Speed/accuracy _____
Ease of operation or use _____
Ease of maintenance or repair _____
Ease or cost of installation _____
Size, weight or colour _____
Appearance, styling or packaging _____

Total _____

A total score of less than 60 indicates that you might reconsider the viability of your product or service or think about how you can improve it. Over 80 points indicates a clear competitive edge.

What Percentage of the Market Will You Penetrate?

1. Estimate the market in total units or dollars.

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2. Estimate your planned volume.

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3. Estimate the volume of total market.

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4. Subtract #2 from #3.

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Line 4 represents the amount of your planned volume that must be taken away from the competition.

What Is Your Pricing?

The primary consideration in pricing a product or service is the value that it presents to the customer. If, according to the previous checklist of characteristics, your product is truly ahead of the field, you can command premium price. On the other hand, if your product is not unique but one of many similar products, you may have to lower your price to buy a share of the market and get a foothold. After you have established a market for your product, try raising the price. This is always risky and difficult. One rule will always hold: Ultimately, the market will set the price. Know your competitors' pricing policies. Send a friend to comparison shop. Is there discounting? Special sales? Price leaders? Make some blind phone calls to your competitors. Remember, though, if your selling price does not exceed your costs and expenses by the margin necessary to keep your business healthy, you will fail. Detail your pricing policy below.
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What Is Your Sales Plan?

Describe how you will sell, distribute or service what you sell. Be specific. Some common practices are outlined below.

Direct Sales

Direct sales are made by telephone or in person. The tremendous growth of individual sales representatives who sell by party bookings, door-to-door and through distribution of call-back promotional campaigns suggests that careful research is required to be profitable.

Mail Order

Specialized markets for mail order products have grown as more two-income families find less time to shop. Be aware of recent mail order legislation and regulations.

Franchising

You may decide to either buy into someone else's franchise as a franchisee or create your own franchise operation that sells rights to specific territories or product lines to others. Each option will require legal, financial and marketing research.

An excellent starting point if you are considering franchise involvement is the SBA publication Evaluating Franchising Opportunities. The International Franchise Association (IFA) also publishes a number of valuable aids in this field. Write to them at 1350 New York Avenue NW, Suite 900, Washington, D.C. 20005.

Distributors

You may decide to work as a local or regional distributor for several different product lines. Outline your sales plan below.

What Is Your Advertising Plan?

Each product or service will need its own advertising strategy as part of a total marketing plan. Before developing an advertising campaign for your business, review a few basic assumptions. By definition, advertising is any form of paid, nonpersonal promotion that simultaneously communicates with a large number of potential customers. The purpose of advertising is to inform, persuade and remind customers about your company's products or services. Every advertising activity should have specific goals. Common examples are

 To bring in sales orders or contracts.

 To promote special events, such as sales, business openings or new products.

 To bring in requests for estimates or a sales representative's call.

 To establish yourself before start-up and to get potential customer feedback.

Initial forms of advertising might include one or more of the following:

 Purchase and distribution of business cards to potential clients.

 Posting notices on free bulletin boards in area supermarkets or office complexes.

 A telephone survey of potential clients to alert them to your start-up plans.

To determine what types of advertising are appropriate and within company budget projections, carefully review your customer profile and write a clear statement of your advertising goals. The next step is to answer the following crucial questions about your advertising:
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What should be said about the business and how should it be stated?

 What media should be used?

 How much can be spent on advertising?

 How can the advertising program be implemented?

 How can its effectiveness be measured?

Address the following areas in selecting the types of media for your advertising.

 Trading area -- Do you plan to serve or sell to an industrial market, a national market, a neighborhood or a specialized market? Describe your market area.

 Customer type -- What does your potential customer read or listen to? Where? How often? What image of your product or service does the media you are considering suggest? Does it fit your customer? Describe your customer.

 Budget restrictions -- How will the amount of money you have to spend limit the media you can use? How can you spread your budget over a year to give a repetitive, continuous message? While you may have to spend more at the start, a useful guide is that advertising should not exceed 1 or 2 percent of sales. How much are you willing to invest in advertising in the first year?

$ ______________________________________

Break this amount into monthly or quarterly installments.

$___________per month
$___________per quarter

 Continuity of message -- How will the type of product or service, customer profile and seasonal buying patterns affect your choice of media and the frequency with which you advertise? Explain.

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 Past performance -- What is the track record of the advertising media you are considering for your type of business? What do your competitors use? What does your trade association suggest? Record appropriate comments.

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(Source: PART II -- THE MARKETING PLAN - http://www.sba.gov/library/pubs/mp-15.doc )