How to Write Business Plans That Answer the Right Questions
Who Are Your Customers?
The target customers must be defined, described, and segmented within the customer analysis section of the business plan. The definition of target customers should be simple, stating in a sentence or two the general characteristics of customers. The description should go further into the demographics (gender, race, age, marital status, etc) and psychographics (needs, values, aspirations, etc) of the customers. The segmentation should break the customer market into as many groups as necessary. A rule of thumb to know if a group of customers should be an additional segment is to find if they will require a different type of marketing to be reached. If so, they can be considered another segment.
Who Are Your Competitors?
Likewise, your competition should be defined in general and then specific, top competitors described fully. Competitors can be any other product or service which your customers will have as a choice to use rather than your product or service. Competitors are not only limited to businesses. For example, the United States Postal Service, a government agency, can be considered a competitor of Federal Express or United Parcel Service. Tap water, provided by city pipes, is a potential competitor or substitute for bottled spring water.
Who Will Run the Business?
Merely stating that the partners will hire an experienced manager to direct the company will not give investors much confidence. If there is a need to hire additional managers, provide a detailed description of the skills, experience, and qualities you will look for in that hire and what incentives or compensation you will offer to find and hold on to that employee. If the partners will be the company's managers, their relevant experience and skills must be described to show how well suited they are for the roles they are to play in the company.
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