Business Plan Series: Part 7 – Sales and Marketing – Sales Strategy

Last time in Part 6, we discussed how to discuss your marketing strategy with investors. This included your approach, penetration strategy in addition to growth and communication strategies. But what is marketing without sales? Many say sales is marketing with actually asking for the close. I disagree and while they are closely intertwined the skills and goals are completely different.

Marketing strategy deals with broader markets but the sales strategy focuses on the individual..

Sales Strategy is separated into four major areas in the Sales and Marketing section. They are:

1.) Direct Sales Force Strategy
2.) Indirect Sales Channel Strategy
3.) Sales Prospecting Strategy
4.) Sales Campaign Strategy

So let’s talk about the first one, Direct Sales Force Strategy. This is about demonstrating how a direct sales channel is internal and is focused on signing new customers. The advantages to this approach allow a company to focus resources like account managers and bonus them based on achievable and measurable goals. The disadvantage is the overhead entailed with managing a direct sales force and waiting for them to produce. One approach to this strategy is to find more experienced sales managers who have sold in a respective industry and for entry level sales people to be trained and molded to sell your product(s). You also need to discuss compensation which includes possibly a base salary and a bonus based on performance. You should show growth numbers and plans to leverage that increase in staff.

Related to the “Direct” approach is the Indirect Sales Channel Strategy. This is really focused on the various sales channels you can leverage to increase your sales success. For example, this could be resellers, franchise partners and licensed partners. You will want to discuss the type of partners, how many and the regions you will leverage and the growth strategy attached to the revenues you expect these indirect channels will produce.

Once you have defined your sales channels it will be time to craft the proper processes to do prospecting. This Sales Prospecting Strategy will be supported by a direct sales force, indirect sales channels and supported by direct mail, web advertising, and search engine placement. To build our sales prospects to a quality level, one strategy is to offer free access or use to the first group of clients (10 or 100) that sign with you. You should identify how you will create these lists of prospects. Sources include membership directories, trade show lists, Hoovers and even D&B.

Finally, you will connect the dots of how you will utilize your direct sales force, indirect channels and prospecting processes to run campaigns that are effective and meet the numbers set in the financial projections. This Sales Campaign Strategy is designed to layout a clear direction in which to maximize all resources at your disposal with clear campaign ideas, messages and target markets/customer groups.

As you write these subsections always keep in mind how sales leverages marketing and supports the long term goals of the company. We will cover Operations next time in “Part 8-Operations Strategy and Processes”.

Business Plan Series: Part 6 – Sales and Marketing – Marketing Strategy

Last time in Part 5, we discussed how to evaluate and present the competition in a manner that allows your company to stand out. Now that you have covered who you company is, what it provides and how you stack up against the competition, it is time to show how you market and sell it to the rest of the world.

Part 6 and 7, will cover the Marketing Strategy and Sales Strategy which is usually combined in a business plan. This is to allow sufficient discussion in each area and not make the posts extremely long.

Marketing Strategy is separated into four distinct areas in the Sales and Marketing section. They are:

1.) Market Profile and Approach
2.) Market Penetration Strategy
3.) Market Growth Strategy
4.) Market Communication Strategy

So let’s talk about the first one, Market Profile.
Market Profile is the discussion of the types of customers in your initial markets. This sets the stage for how and why you will market to them in various ways. You should talk about how many potential customers exist that you could sell to. You should discuss how big the market potential is and how much of that you think you can capture. Be sure to be able to back up your numbers and not say things like “1% of a $1 billion market”. That won’t work and no one will take it seriously.

Next up is Market Penetration Strategy and the focus is how you will use your unique value or selling propositions to create a compelling story that sells your customer on your business. The whole point is to discuss how fast and how deep you can get in there and market to acquire new customers.

Once you enter the market, you need to grow our current and future opportunities. This is the Market Growth Strategy and includes both retaining and acquiring customers through various growth strategies. These growth strategies can include expanding product and service offerings, expanding into new verticals or even expansion through new locations or franchising.

As you continue executing your marketing strategy, you will need a solid communications strategy that includes public relations, product marketing, creating tactical selling tools and an online marketing strategy.

As you write these subsections always keep in mind how this ties into an overall selling strategy and we will cover this next time in “Part 7-Sales and Marketing Strategy-Sales Strategy”.

Business Plan Series: Part 5 – Competitive Landscape

Last time in Part 4, we discussed how to present your products and services. It was important to follow up the problems with your solution but in this part, Part 5, we will attack the competition – the competitive landscape.
This section covers how you are differentiating yourself by describing the competition and why you will stand out from them and beat them in the long run.

There are a few key sections of the competitive landscape in a business plan.

The first is Competitive Analysis Summary. The point of this section is to give some one reading this without diving into the details the top points and reasons that your company is different and beats the competition. Hopefully, this section will be compelling and interesting enough that people will read into it more. Most likely, people will not read to deep into the competition but it is there for review when necessary and is an exercise you must complete.

The second is Competitive Analysis Matrix. This can be done in table format with the main competitive areas and companies on different axis. Many times people will spin the diagram so your company has all the boxes checked. Don’t do this. Be honest and recognize the 800lb gorilla. Don’t fear them, understand how to beat them.

Once you are done the summary you must go into more details regarding competitive advantages and competitive disadvantages. Hopefully, the advantages will out weigh the disadvantages.

Competitive Advantages
are the ways that you stand out from the competition. Examples could be the following:

  • Integrated Payment Processing for Credit Cards and Checks/Wire Transfers
  • Streamlined marketing systems that integrates popular third party data
  • High performance reporting and business intelligence analysis capabilities
  • Ability to market in real time
  • Providing a branded and personalized portal interface for X
  • Building a patented technology to be licensed and integrated with major technology platforms and portals
  • Flexible foundation technology designed to expand into other types of alternative services
  • Providing an outsourced call center to assist companies with customer service requests and after hours client management
  • Ability to leap frog our competitors who have designed their systems on an outdated business model

Competitive Disadvantages are the threats and adversity you must overcome from the competition. Examples could be the following:

  • Segment is extremely fragmented making any type of scale difficult
  • Our market penetration is shallow at this point
  • Our track record and reputation in the industry is unknown
  • Product Development in proof of concept phase behind one competitor
  • Larger competitors could invest lots of money to compete very quickly

Last on in this section is the best way to wrap it up. This are the Barriers to Entry that will make you a real threat to the competition. Examples could be the following:

  • Low cost offering of superior technology to lock in a provider network
  • Patentable technologies for license to other providers
  • Personnel with deep industry knowledge and extensive contacts
  • Current customer inertia from our current network
  • Existing relationships with vendors and providers
  • Deep network of partners and managers

NEXT TIME: MARKETING AND SALES STRATEGY– After you have explained how competitive your products and services are you will need to discuss how you will market and outsell the competition. Since both are so involved, we will separate them into two parts to focus and cover the material the right way.

Writing for B5 Media – Come on over to Startup Spark

Hello all, just wanted to let you know that I have been offered an opportunity to write for a great blog on the B5 Media Network.

The blog is called Startup Spark and is similar to Venture Files but is a broader version on all types of entrepreneurship.

I invite you to check it out and subscribe. This blog will continue but in the coming months I will be focusing this blog more on innovation topics and will be unveiling a new design.

So keep reading Venture Files and add Startup Spark to your feed reader and your daily viewing.

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Business Plan Series: Part 4 – Products and Services

Last time we discussed what you should put in the company overview section and the different formats it may take depending on the stage of your company.

In this part, Part 4, we will get at the heart of your company – its products and services.

This section covers what you provide to customers and how you deliver it. It is the reason you are in business. There is something here you decided would revolutionize a market, fill a need that has been desperately looking for a solution or provide something that rides a hot trend.

In most cases you will want to answer in an summary format what your company is providing and why it is so different. This should catch the reader’s attention and make them want to read the detail supporting your intro paragraph.

After you have caught their attention and told them how and why your offerings are so great/revolutionary/needed, you need to include the following things:

Product Offerings – This describes your products in more details and should communicate why you are unique. If you are not providing a physical product (i.e. widget, web site) then go right to the next part.
Service Offerings – This covers the services you offer and really needs to communicate how you are going to stand out because services are not as tangible. If you are providing products this is where you discuss services that support the product and complimentary services that will increase your revenue potential.
Pricing and Revenue Strategy – After you have discussed what you are offering you should discuss how you are pricing everything and how you are going to go about making money with these product and service offerings.
Goals and Objectives
– This is the place for major milestones including your pricing and revenue strategy, customers and other important metrics.
Methods and Differentiation – Here is where you really need to show how you will stand out against competitors and differentiate your company as a whole with its products and services.
Relationships and Partnerships – This section is to build on your offerings and demonstrate your success and reach with important vendor relationships and partnerships/joint ventures you have established to increase your revenue potential. You might also want to include customers and important case example to demonstrate the success your offerings have already achieved.

NEXT TIME: COMPETITION– After you have explained how compelling your products and services are you will need to discuss the who else it out there doing something similar and how you will stand out and beat them.

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Business Plan Series: Part 3 – Corporate Overview

Last time we discussed the importance of analyzing the market and setting up the problem(s) that exist so you can address.

Some cases you will want to answer in a shorter format what your company does and the problems it is fixing. This also the time to discuss vision and overall goals. This is what many call the “Company Overview”. Think of it like a birds-eye view of the company as it currently exists and where you envision it to be in the future. This is almost a quasi executive summary because you are trying to tie a number of elements into a picture that people understand and see where you are coming from.

You need to include the following things:

Company Description – This is a paragraph or two that is the core message and history of the company and if people read only this they should get what you are trying to do.
Mission – What are the guiding vision points for this company? Provide X, Support Y?
Goals and Objectives – This is the place for major milestones including revenue, customers and other important metrics.
Structure – This is for legal and tax structure plus owners/stockholders
Core Competencies – This is to close up the section with powerful value propositions and differentiators that will go into more depth in the the sales and marketing section. Right now it is about showing that you have the resources and wherewithal to build the business.

You might also want to include investor and company highlights to build the story you are trying to tell.

NEXT TIME: PRODUCTS AND SERVICES – After you have explained how compelling the problems and needs are and your vision for the company you will need to discuss the solutions your company provides to answer the problem.

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Business Plan Series: Part 2 – Market Analysis

In my previous post I discussed the basics of framing your plan and how to set it up.

Moving forward, I would like to take more of the startup/entrepreneur/VC type of plan approach and start with the market analysis. This is because if you started with the corporate overview there wouldn’t be a whole lot to talk about at this point and if there was and there were prior rounds of funding I might start with that. If you are doing something really different you need to give it context and tell the story of why you should exist. I will of course cover the Corporate Overview section later.

You will also notice that I skipped the Executive Summary. Since it is a summary of everything I will talk about this last once we have covered all of the sections.

There are some basic things you should try and answer with the market analysis:

  • Do you have a market?
  • Is there a viable niche that makes sense to focus on first?
  • Does your product or service fill a need or solve a problem?
  • Can you appeal to cross-segments within your market by highlighting different aspects of your product?
  • How should you price your product or service?
  • Who are your potential customers? What are the various customer profiles?
  • How will you deliver your product to the customer?

I break down the Market Analysis into four sub-sections:

  1. Market Overview – describe the market you are in or the market you are planning to enter: product coverage area, environment, additional product area if necessary and potential customers.
  2. Market Background – This provides historical data (i.e., market size, demographics, psychographics), needs and trends; buying patterns; preferences and market growth
  3. Market Challenges – Here is where you analyze data and focus on the unique issues that create the challenges and problems you see could be solved.
  4. Market Opportunity – This is where you used data in the previous to explore the problems and expose the opportunities that exist to discuss the opportunities to be solved.

NOTE: Remember to properly cite your sources of information within the body of your Market Analysis as you write it. You and other readers of your business plan will need to know the sources of the statistics or opinions that you’ve gathered from others. This is important that they see that the basis for your analysis comes from well known sources.

NEXT TIME: COMPANY OVERVIEW – After you have explained how compelling the problems and needs are, you will need to pitch who you are and what you do.

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Business Plan Series: Part 1 – Framing your plan

First, let me start by saying that by the time you are done with your business plan your first draft will look completely different than the one you share with everyone.

There are a few different forms that your business plan will take:

Business Plan Type #1 – Business Plan for You
Essentially a data dump with headings, this is the one that gathers your thoughts and gives you peace of mind if you are a “J” on the Myers Briggs. I always think that these should be written first because it is essentially a knowledge dump and since there is no audience but you there are no limitations.

Page Range: NONE

Business Plan Type #2 – Business Plan for Internal Strategy and Operations
I call this type of plan the “roadmap plan”. Think of this a providing your company and board with a look inside your brain and the brains of your management team. This type of plan is about alignment and communication of vision. It goes into deeper depth of product roadmaps, long term operations and greater performance planning. This means that the products and services section along with the competitive and operations sections will go a level deeper.

Page Range: About 60 pages but it depends on the maturity of the business so it could be longer.

Business Plan Type #3 – Business Plan for Investors and Raising Capital
This plan is what I call the “money plan” and many VC’s will say that they don’t read them, most see the value in them and all say that the exercise is necessary and important to address any issues that may arise in due diligence. Just because investors may not read them doesn’t mean you don’t have to do them. While this may be true for more experienced investors and an executive summary is good enough, you can bet that those on the the committee who need to be convinced to approve the investment will want to read it and the associates at the firm will be reviewing it in detail and putting their “quant jock” hats to run the numbers to see if something weird pops up.

Granted, this type of business plan is half sales pitch/half business strategy and it must communicate that not only is there a market for your products/services but that there is a HUGE need for your product, it is scalable with the right investment, you have an A-team to execute and that you will be able to exit for a large amount that will see a double digit return on their investment.

Page Range: About 15-30 pages depending on how developed the business is and how complex the product/service offering is that you are providing.

Because each version of the plan has a different audience you will want to start it differently. Granted, the Executive Summary comes first but for an operational business plan it is good to start with the company summary to establish the vision and mission for internal reader. They want to have context and see how you are going to execute on the vision and plan you have placed in front of them.

For investor focused business plans you need to start with the problem which means that you need to talk about the market and the analysis you have done to conclude there are problems which will lead to the next section about how you will solve them. So start with Market Analysis. You might need to educate some investors on your market so don’t assume they know your business or sector.

There are many different books and resources with their own format, I don’t prescribe to one but I would include, not in any particular order, the following to start with:

  • Market Analysis
  • Management Team
  • Competitive Analysis
  • Operations
  • Implementation Plan
  • Products and Services
  • Marketing and Sales Strategy
  • Technology and R&D
  • Financial Plan and Projections
  • Funding Requirements and Exit Strategy

Making this a team exercise
I have found personally that when you are a lone entrepreneur, you have no one to do this with but yourself. As you add people to the management team and advisors get more involved they become critical to bring in different expertise and perspectives to make the plan complete and presentable. If the team is established, I find that this is the best way to have an off-site strategy meeting. You should have each one of your management team take a crack at writing the plan or improving on the previous one. Publish an outline they have to stick to but other than that, they are on their own. It will be interesting to share and extract the points that everyone likes and can debate about. You are the ultimate and final decision make but this is far better than having people work in a vacuum in their departmental silo.

Also, hire a third party to run the session, gather notes and lead the session. You don’t want to be doing two jobs and participating is far more important than managing the meeting.

NEXT TIME: We discuss “Market Analysis”. Most plans need to detail the situation, the problems and the market potential.

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New Series: Practical Advice for writing a Business Plan

I have been thinking a lot about how many entrepreneur’s ask “should I write a business plan?” and regardless of what you think should go in one or what format it may take, the answer is essentially yes.

Then I started to look at all my previous business plans and those I have advised on and reviewed for feedback. Most were written for the purpose of presenting to investors with varying degrees of success. The others were operational and an exercise in strategy and vision to ensure that everyone understand where the company is going so there is proper execution.

Now there are many people that are WAY MORE knowledgeable about writing these types of documents and many have written good blog posts on “writing business plans“. What I would like to do is take a look at this document and provide all of my readers out there with some real practical lessons and how it should be written if it is an internal use document or one for investors.

Look for this start next week and I will do about a section a week. For those of you out there with experiences to share, comment away. For those of you who have written them I hope to make you laugh and I look forward to your perspective and anecdotes.

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