Business Plan Part III

· What is the total size of your market?

· What percent share of the market will you have? (This is important only if you think you will be a major factor in the market.)

· Current demand in the target market.

· Trends in target market—growth trends, trends in consumer preferences, and trends in product development.

· Growth potential and opportunity for a business of your size.

· What barriers to entry do you face in entering this market with your new company? Some typical barriers are:

· High capital costs

· High production costs

· High marketing costs

· Consumer acceptance and brand recognition

· Training and skills

· Unique technology and patents

· Unions

· Shipping costs

· Tariff barriers and quotas

· And of course, how will you overcome the barriers?

· How could the following affect your company?

· Change in technology

· Change in government regulations

· Change in the economy

· Change in your industry

Relevant market size

This is where we get specific. The Relevant Market Size should include calculations of your market size based on the best available data and research.

Include your projected market share and total market size. The total market size is the projected annual revenue that could be captured if your company attained a 100 percent market share.

Target Customers

Who will be buying your product or service? This section gets into the details of your target demographic.

Be sure to include as much demographic data as possible, but take care to present it in a summary fashion that is easy to digest. A little bit of planning goes a long way here, and visual aids can be a big help. Physical characteristics like gender and age are often important, but geography, salary and occupation (including buying habits and disposable income) are a must.

The description will be completely different depending on whether you plan to sell to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end consumer and the middleman businesses to which you sell.

Customer Needs

Based on the customer profiles laid out in the above subsection, explore the need that your targeted demographics experience. Most importantly, tie these needs to features and benefits of your product/service.

Remember that people don’t purchase products or services—they purchase solutions. Solutions are the answers to their needs, while the products and services that deliver those answers are simply means to an end. This part of your business plan demonstrates that you are in touch with your target demographic and that you are confident in the ways that your product or service answers the needs of your future customers. For example:

· Are the customers in your target demographic sensitive to price?

· Are they concerned more with value or with numerous features?

· Will they pay for speed, or are they willing to wait to save money?

· Where do they shop for comparable products or services?

The answers to these questions are not only vital to the success of your business plan pitch, but also to the success of your business once you are up and running.

Competitive Advantage

Be sure to include not just a list of your top direct competitors, but a profile of their strengths and weaknesses. Direct competition will likely be a component of your overall analysis.

While direct competitors are competing businesses that offer the same solutions to customer needs, indirect competitors fill the same needs with different solutions. Compile the same profiles for these competitors, but be sure to differentiate them from direct competitors.

Based on the profiles of the strengths and weaknesses of your direct and indirect competitors, this is the place where you state exactly what it is that sets your company apart. Investors don’t just want to know that you can keep up with and compete with the other players in your market, they want to know that your USP (Unique Sales/Service Proposal) can win.

How will your products or services compare with the competition? What are your competitive advantages and disadvantages? What will be aspects of your product offering that will make you more desirable than your competitors. What is your unique differentiation?