activity: the business planning process

You may remember Neil from the activity: 4 university friend catch up, in this activity we revisit Neil and his business – it may pay to revisit the earlier activity. Initially, Neil’s motivation for starting his own business was a lifestyle choice and then the challenges and fun of running a boutique marketing consultancy became his raison d’être. With time he has built up a reputation of being a triple bottom line expert.

In this activity Neil has accepted an invitation to join a panel at the Small-Medium Business Forum [SMB Forum] at a city hotel. The SMB forum panel is made up of a Maddison – a finance consultant, Frank – a management consultant, Graham – an IT consultant, and Neil as the marketing consultant – plus the panel host – Robyn.

A few weeks after the forum one of the other panel members, Maddison, approached Neil with a business proposition. 

Scenario: The panel host, Robyn, welcomes the forum attendees and acknowledges that each person may be contemplating a new business or recently started a new venture. Robyn, then welcomes the 4 panel members, introduces the panel members and outlines the area of expertise of each panel member. She then invites each panel member to provide their specific business advice to attendees who may be contemplating a new business or have recently started a new venture.

The first panel member was Maddison who provided finance advice outlining the 3 most common mistakes that startups make and how to avoid these mistakes, Frank then provided 5 tips for effective management.

The invitation made it clear that the panel should avoid ‘self promotion’ during their presentations. Neil agreed to these terms and believed that ‘spruiking’  for business at an event where the emphasis was on advice, was a little crass. The first two panel members had stayed on track. However, Neil felt that Graham, the IT consultant [who wore leather shoes without socks], was an enthusiastic self-promoter and overstated the organisational benefits of ‘digital marketing through social media’.

Easily bored, Neil’s mind wandered during Graham’s presentation as he compared the term ‘destination marketing’ with ‘digital marketing’ he understood how a destination could be marketed but he failed to see how a digital could be marketed – surely this is poor English – digital is an adjective – marketing is a verb. Although, in everyday conversations most referred to it as digital marketing, Neil preferred to think in more holistic sense as marketing through technology – software as a service and if you were marketing technology products then that would be marketing of technology.

His day dreaming was interrupted by Robyn the panel host who provided a summary of Graham’s presentation. We have just learned 1] To acquaint yourself with today’s technologies 2] create an online presence 3] make a review of online analytics part of your daily routine. ‘Neil, you are considered an expert in digital marketing what are your views on digital marketing for the small business owner – is it the game changer that Graham was presenting?’

Neil contemplate the question and decided to leave his daydreaming semantics for another time maybe with Bernadette, Claire, and Joseph – his friends from uni. He stated ‘these are certainly exciting times and marketing practitioners have new tools in their toolbox, however, marketing has some fundamental and immutable concepts – quality, value, satisfaction, trust – etc, however, rarely can a strategy or a tactic be applied universally and whilst technology is an important part of balance diet it is not the only source of energy’, however, I agree with the 3 points in your summation.’

He was about to elaborate when Graham jumped in and stated ‘have you been living under a rock? – the world has gone digital and you are either part of the future or part of the past, in my consultancy … ‘

The panel host held up her hand and stopped Graham mid-sentence, ‘Sorry Neil you were about to say.’

Neil knew he had to quickly assert his credentials, ‘Graham may I ask … do you have formal business qualifications?

Proudly Graham stated ‘No – but in today’s IT world – you really don’t need them.’

Maddison smiled at Neil and simply said ‘touche’.

Neil continued with a gentle tone ‘What Graham was attempting to convey was that, today, there are many new tools available to small business owners and, in my view, it is about selecting the right tools – the right media – for the job and your budget. However, If you are considering starting a business then I think that there are a number of more pressing considerations that need to be explored.’

The panel host thought that Neil’s opinions would add value to the forum and asked Neil to elaborate.

Neil continues, ‘I believe, that the motives for starting a business vary considerably, however, once someone commits to starting a business there are three paths that people take. The most popular path and the one that I have adopted is based on the belief that ‘as a consequence of best satisfying my customers’ needs then I will be best placed to satisfy my needs’ – this is generally referred to as the marketing concept. Over the years I have found that most people who start a business are on a continual quest to best satisfy, they have this as an innate quality, it is part of their personal philosophy, however, understanding ‘what is best satisfying’ requires a deep understanding of consumers and the market.

Frank chipped in ‘Neil, I agree, I guess I am 20 years older than you and I have to say that in my years as a business consultant most people go into business with the belief that if they provide good customer service then their customers will reward the business with positive word of mouth – it is this service that customers provide to a business that determines whether the business will be successful or not and this needs careful strategic planning and tactical implementation.’

Neil ‘Wow – I have never considered word of mouth and referrals as a service that customers provide – thanks Frank. Sure – human needs have changed little in 12,000 years, however, the dreams, desires, and demands of consumers are continually evolving. Therefore, success in business is firstly about understanding the fundamental needs of the people you will serve, then understanding their dreams, desires, and demands. Furthermore, understanding that what was true yesterday, may not be true today, and probably not true tomorrow. In fact, what was a strength yesterday may be a weakness tomorrow. So my advice is never assume you know your customer or the market.’

‘Once we understand what is best satisfying the next step is to understand ‘who will it best satisfy’. Clearly, a consumer’s dreams, desires, and demands are personal and so are their perceptions of quality and value; perceptions are based on the consumer’s ability and willingness to enter an exchange.’

What is best satisfying and for whom is critical as this is the basis of designing and developing a unique product value proposition. Some use the word ‘creating’ but I prefer ‘designing and developing’ as it implies a degree of rigor to the process – a more scientific exploration of the customer, the organization, the market, and the product. Keep in mind, what may be a best satisfying product for one customer group may not be best satisfying for another. Therefore, attracting the wrong customers may provide a short-term gain but long-term pain. Dissatisfied customers suck the life out of a business – the costs of recovery and the effects of negative word of mouth. You need to be crystal clear on who you are best satisfying and avoid the rest.’

‘Advertising is important, however, I think, an advertising campaign, regardless of the media, without rigor may be more than a waste of money – it may be fatal. This is especially relevant today where consumers can name and shame on social media.’

The panel host thanks Neil and provides a summary – ‘We have just learned to think 1] best satisfy and for whom, 2] make a promise of how your product presents a unique value proposition, 3] always deliver on promises and 4] think long-term. Maddison, from a finance perspective what are your thoughts.’

Maddison thanks Neil and playfully adds ‘for the record I did a double major in finance and marketing.’ This comment attracts some laughter from the attendees.

Maddison, happy with her little quip, continues, ‘From a finance perspective, and I think most marketing practitioners would agree, that your target market must be large enough to sustain your business. So if you wish to start a business and remain a micro business, which is entirely fine, then your unique product value proposition should be directed towards maximising your income. If, however, you wish to grow the business, you may need to adapt your unique product value proposition and adapt your target market selection. Keep in mind your target market must be able to sustain your growth objectives without a reliance on discounting, and constant sales promotions. I am interested to know other panel members opinions, but, I generally recommend that 60% of external communication should be spent on strategically building the brand and 40% spent on meeting tactical objectives. Also, in established businesses I recommend that all bonuses paid to sale people are contingent on achieving predetermined customer satisfaction objectives.

The panel host thanks Maddison and provides a summary – ‘We have just learned 1] It is OK to be a micro-business, 2] if you wish to grow you will have to adapt, 3] 60% brand building 40% sales revenue 3] link all bonuses to customer satisfaction. Frank what are your thoughts?’

Frank stated ‘I agree with Maddison, personally, I am a little skeptical on social media as ‘the silver bullet’ for business, but, I am certainly not saying it is a fad, and as Neil stated it is an important part of a well-balanced diet it is fine – however, I have found social media is particularly good for internal team building and staying close to partner organisations – we have a Linkedin Group and from a management point of view I believe that internal quality is beginning of external quality. Also, when recruiting I always look at someone’s LINKEDIN profile. But, digital marketing is not really my area of expertise. However, I consult for a retail fashion group and found that following customers on Instagram has reduced the number of ‘wear and return’ incidents. I do agree that business requires clear objectives and rigor and would like to add that creating, sorry designing and developing, a business plan is vital and a priority for those considering starting up –  there is an old adage ‘if you fail to plan you plan to fail’.

The panel host thanks Frank and provides a summary – 1] Be skeptical but not recalcitrant, 2] external quality begins with internal quality, 3] think outside the box regarding the use of technology 4] plan or fail.’

One of the attendees has raised her hand she asks, ‘Frank, thank you and the other panel members, but, I have to admit I really don’t know where to start the business planning process – it is like it is a secret that is never shared. Could you give me any advice?’

Conscious that they were now out of time Robyn announces ‘If we have learned on thing today it is that planning is the small business owner’s dilemma. I am sure that if you wish specific business advice our 4 panel members would be welcome you as a client. On that note, please join us for tea, coffee, and a chat in the hotel foyer and if you found today insightful please follow us on …. .’

Neil, Frank, and Maddison are walking to the hotel foyer when an attendee strikes up a conversation. ‘I am an IT guy and I agree with what you all had to say, I guess every industry has their cowboys. Most of my efforts are spent providing software solutions to enable good businesses to be more effective and efficient.’

Business cards are swapped and LINKEDIN connections made.

Two weeks later Neil receives a text from Maddison asking if she could buy him a coffee. He suggests the coffee shop near his office.

Madison states that she has recently returned to work after maternity leave. She now questions whether working for a large consultancy is good for her, her child, or her husband. She was thinking that maybe she and Neil could discuss starting a new consultancy aimed at helping small and medium businesses to undertake the CADDIE process.

Over the next few weeks they work on developing a marketing audit pro-forma, that collects the COMP factors and presents the information needed to analyse the attractiveness of a market and an organisation’s ability to compete.

They bring Neil’s university friends Bernadette, Joseph, and Claire into the conversation. As a favour for Neil each friend agrees to take the marketing audit pro-forma and critique it.

• Bernadette applies the marketing audit pro-forma to the organisation she work for with her MD. He thinks that it is useful, thought provoking and a good first step in the business planning process. However, they felt the cost of collecting information could be reduced if the pro-forma was available on-line. The MD feels that by checking certain boxes the pro-forma could be self-modifying.
• Joseph takes the marketing audit proforma to Sam  the marketing manager of an automotive retailer]. Sam thinks that marketing audit pro-forma is an excellent tool, although it does bring back memories of ‘marketing assessments past’. Sam thinks that being generic there are some questions that need to be modified for B2B and B2C. Sam would like to see an applied example and the organisational benefits.
• Claire works through the marketing audit pro-forma with her friend, Julie, the manager of an independent supermarket. Julie thinks the marketing audit proforma is very helpful and highlights areas she had never considered as she is busy working in her business and a document such as this could provide guidance as to where she should focus and be able to work on her business.

Tasks: With the above scenario as the basis of discussion, complete each task with the objective of demonstrating your learning of themarketingconcept [e-book].

Statement: Neil and Maddison are estimating the viability of a consultancy to provide guidance on the business planning process to small-medium enterprises [SME]. Joseph [Neil’s friend from university] recommended that, if this new venture is based on communicating the value of a rigorous [CADDIE] business planning process; then Neil and Maddison to be able to confidently recommend their processes, should undertake the CADDIE business planning process and be able to demonstrate, to future clients, the steps that they undertook and the benefits they received. 

Task 1: Using this scenario as an example outline the [CADDIE] business planning process that Neil and Maddison should take to ensure that through the business planning process this new business proposition is sound.

Statement: To be successful every business [B2B or B2C] needs a unique product value proposition [UPVP] to communicate how the product is distinctive, discernible, and desirable. 

Task 2: In a B2B product such as the one that Neil and Maddison are considering, discuss the importance of designing and developing a unique product value proposition and how would the marketing concept, a marketing philosophy, and the nurturing of a marketing culture influence the process.  

Statement: In some ways this new venture is a new product to existing clients [low in risk] and will be providing an augmented product for Neil’s existing clients. Furthermore, some of the start-up costs associated with a new venture are minimised by locating the new venture in Neil’s existing premises.

Task 3: Using this scenario, outline how achieving the 9 key objectives of marketing practitioners will impact on the viability of this business.

Statement: Bernadette and her MD suggested that if the proforma to collect COMP information was downloadable via a password protected website the cost of collecting the information may be reduced and the process may be more efficieng and effective.

Task 4: Demonstrate your understanding of price and pricing and what other factors should Neil and Madison consider when designing and developing this new product.