5. Knowing Your Customers
Hopefully these are not what your typical customers are going to look like, but this is a crucial part of your business plan whoever they are. However brilliant your product or service is, it only has worth as a business idea if someone is prepared to buy it. You have to have a clear idea of who your customers are and what the potential market is for your business.
Your customers will either be individual consumers, businesses or both. In this section you need to outline who your customers are in as much detail as possible. If they are businesses, what business are they in, where are they located and how big or small are they likely to be? If you are aiming at individual customers, what age are your typical customers, where do they live, what income groups do they belong to and what else can you say about their lifestyle and what motivates them?
Some businesses have a potentially worldwide customer base, others aim at specific countries and many are primarily targeting very local customers. You need to state clearly in you plan where your customers are based. If you plan to expand your customer base as your business develops, then put that in your plan and be specific about how and when this expansion will happen.
You must include in this section an explanation about why your customers will want to use your business. This is very important so you must be clear about the reasons why the people you have identified will have a need that you are able to satisfy better than anyone else.
As part of describing who your customers are, you should be able to define the things that have an impact on your customers’ buying decisions. This part of your business plan has to demonstrate that you understand what influences your potential customers when they are making a purchase. Consider things like big brand names they will be aware of, choosing a business because it is local to them, looking for someone they feel is very experienced, being influenced by trends and what is fashionable, etc.
The most useful thing you can say in this section is if you have already made sales of the product or service you are providing. Clearly there is no better proof of demand then a track record of existing sales or a waiting list of orders. This will be very helpful if you are pitching to investors for funding and need to convince them that there is a market for what you are offering. If you are fortunate enough to have made sales you should include a list of clients in your business plan. If you have significant orders then you should be ready to provide written proof of such orders to anyone you are seeking investment from. These can be included as an Appendix to your plan.
6. Knowing Your Competitors
Every new business must have a good understanding of who it is competing with and you need to use this section to demonstrate this understanding. You business competitors are any other company providing what you are offering, or something very similar. Think about who your most significant competitors are. These are likely to be the ones most close to you in terms of location, offering, price, etc.
Use this section to create a table that sets out some key facts about each of your main competitors. How many main competitors you have will depend on the business sector you are in, but just focus on the top five or six. Make sure you have done enough research to not miss off any company who could be seen as a major competitor in your field.
For each of your competitors, give details of their name and location, what service/product they provide, their prices, the size of their company, what their main strengths are and what their main weaknesses are.