Got a Plan, Part II

So you’ve figured out your mission, or at least your new company’s mission, and the reason you’ve chosen this risky and usually nerve-wracking way of making a living, and you’ve managed to get your Mission Statement and Company Philosophy down on paper. It’s a good start; you’re well on your way to creating an actual business plan.

Next, you probably want to consider what it will take to get your company off the ground. How much will each dog biscuit cost to produce? How much can you reasonably expect to sell one for? If you subtract all of the costs from the sale price (don't forget the sales tax!) you should get the gross revenue from each biscuit; how many of them will you need to produce in order to make a living? Can you bake that many in your kitchen, or will you have to invest money in a bakery (incurring the additional costs of rent, utilities, equipment, and so on)? Can you produce enough product by yourself, or will you need to hire staff to help you? How will you sell the product, and to whom? And if you are busy selling dog biscuits, either to retailers who want to carry your product or directly to dog owners, who is going to be baking the biscuits?

Collectively, these questions will drive the operational design of your company. Once you have your costs and production volumes worked out, the next question is probably if there are enough people who will be willing to pay $1.50 per biscuit for your product when Milkbone will sell them a box of them for $2.99? Determining how many potential customers there are and figuring out how to tell them about your new product will become the core of your marketing plan. You will probably also want to know how many other companies make such products, and how they market their products; this will be the basis for your competitor analysis.

A close look at the market will also help you to determine who your customers will be, and what demographic groups they will fall into. In the case of the gourmet dog biscuit bakery, it seems clear that two defining factors will be #1. Dog Owners and #2. People who can afford to feed their dogs biscuits at $1.50 a piece. Where do especially well-healed dog owners look for information on their purchasing decisions? I don’t know, but one way to find out would be to follow your competition and see where they advertise. Another possibility would be to identify people who fall into your key market segment and see where they get information for their other purchasing decisions. This will enable you to select the advertising channels that go into your marketing plan, and explain how you are going to offer greater appeal than the competition in your competitor analysis.

Now, I will be the first to admit that it takes a bit of practice to write all of this up in the correct format, with the proper language and pretty graphs that show what you are planning to do, charts and tables that prove you can make money doing it, and a budget that proves that you will make money in the process. After all, I have made my living teaching people how to do these things, and occasionally by doing it for them. And perhaps that's why I find the idea of someone with no training, no experience, no guidance, no forethought, in fact no clue whatsoever attempting this process on the spur of the moment so completely appalling.

Because I do know what it takes to launch a new business – and how many otherwise worthwhile ventures will fail because they never had a plan, and never thought to write one…