Business plan information is in ready supply on the internet. Entering the phrase "business planning" as a search term in one search engine produced almost 90,000 matches. The real challenge is to sift through all this information to find what is truly useful. Starting an entrepreneurial venture is challenging enough without having to spend days wading through sites trying to find what you need to put together your plan. In this feature we will take a look at some of the best of the resources available, including good places to find the information you need to put in your plan.
My article on Business Plans provides a basic format for a business plan. Much of the information that goes into the plan is based on how you envision the business functioning. However as that feature notes, the most difficult sections of writing a plan often are those in which you define the market for your product and the competition. To do this, you will need to provide answers to the following questions:
- Who your customers are by their age, sex, income/educational level and residence (or if this is a wholesale business, by industry, size of business, location)?
- What is the size of your customer base by the categories above?
- Who are your direct competitors?
- Who are your indirect competitors (products that aren't the same as yours, but are an alternative for your customers; for instance, a train is an indirect competitor for an airline, whereas different airlines are direct competitors with each other)?
- What is the history of the market for your competitors?
- What are the strengths and weaknesses of your competitors?
- What economic, legal, government, and environmental factors affect your product or service (such as trade area growth, industry health, economic trends, taxes, and rising energy prices)?
The more you do your homework in this section of the plan, the more accurate your financial projections of sales will be and the more fundable your business will be to investors. Time spent here will be well worth in it in terms of the long term viability of your business. Let's take a look at how you find some of these answers.
The biggest challenge with answering these questions is coming up with accurate information for your particular business situation. For instance, you may be selling books in your local community. How would you estimate your customer base? Is everyone within a certain number of miles a potential customer? Perhaps. So census data by age, sex, education and income would be a good start. However, if you want more realistic information, you may want to look at national book sales information which may be available from one of the book sellers associations. If you find data that suggest hypothetically that 60 percent of the population buys at least one book a year, you can refine your estimate from the population accordingly. The more detail you can uncover, the better your estimate will be.
Another way to estimate would be to locate national, specialized survey information on your business. For instance, you might find a survey that reports the types of people most likely to buy 10 books a year, perhaps parents. Census data is available by household type for counties. From that information, you can not only estimate the numerical base for sales more accurately, but you can also learn where you should target your advertising for your best sales.
For competitive information, you start with determining what products will compete with yours. Then you start with databases of businesses to identify names of competitors. For a local business that might be the yellow pages. For a national business that might be a directory of incorporated businesses which is available on the internet or at your local library. It is easiest to obtain this information if it is a publicly traded company because certain corporate information must be provided to the public, making your research much easier. If your competitors are not publicly traded, finding answers is a little more challenging. Fortunately, every business files tax returns and many participate in Department of Commerce and Department of Labor surveys. Contacting governmental agencies for statistical information on your type of business may give you basic categorical information which may be less specific, but will at least open the door to making reasonable estimates of the characteristics of your competition.
While many of these examples are written using United States data resources, many countries provide similar resource facilities. Use these discussions of examples of the type of information you might look for on a national level in your particular country or if you are planning on conducting business globally.
Collecting such data should become an ongoing quest. You need to know your industry to anticipate shifts in competition and in consumer spending. Knowing that a shift is occurring allows you to modify your business to meet the new competition or marketplace preferences. That is what keeps you successful in the longrun.