skip to main |
skip to sidebar
by: Dave Lavinsky
The Customer Analysis section of the business plan assesses the customer segments that the company serves. In it, the company must 1) identify its target customers, 2) convey the needs of these customers, and 3) show how its products and services satisfy these needs.
The first step of the Customer Analysis is to define exactly which customers the company is serving. This requires specificity. It is not adequate to say the company is targeting small businesses, for example, because there are several million of these types of customers. Rather, the plan must identify precisely the customers it is serving, such as small businesses with 10 to 50 employees based in large metropolitan cities on the West Coast.
Once the plan has clearly identified and defined the company’s target customers, it is necessary to explain the demographics of these customers. Questions to be answered include: 1) how many potential customers fit the given definition? is this customer base growing or decreasing? 2) what is the average revenues/income of these customers? and 3) where are these customers geographically based?
After explaining customer demographics, the plan must detail the needs of these customers. Conveying customer needs could take the form of past actions (X% have purchased a similar product in the past), future projections (when interviewed, X% said that they would purchase product/service Y) and/or implications (because X% use a product/service which our product/service enhances/replaces, then X% need our product/service).
The business plan must also detail the drivers of customer decision-making. Sample questions to answer include: 1) Do customers find price to be more important than the quality of the product or service? and 2) are customers looking for the highest level of reliability, or will they have their own support and just seek a basic level of service?
There is one last critical step in the Customer Analysis -- showing an understanding of the actual decision-making process. Examples of questions to be answered here include: 1) will the customer consult others in their organization/family before making a decision?, 2) will the customer seek multiple bids? and 3) will the product/service require significant operational changes (e.g., will the customer have to invest time to learn new technologies? will the product/service cause other members within the organization to lose their jobs? etc.).
It is essential to truly understand customers to develop a successful business and marketing strategy. As such, sophisticated investors require comprehensive profiles of a company’s target customers. By spending the time to research and analyze your target customers, you will develop both enhance your business strategy and funding success.
About the author:
As President of Growthink Business Plans, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share.
by: Dave Lavinsky
While most companies seeking venture capital initially think about angel investors and venture capitalists, a large alternative source of financing is federal grants and loans. The two largest federal grant programs are run by the Small Business Administration (SBA), and by Small Business Investment Companies (SBICs).
An SBA loan, regardless of whether it is a direct loan from the SBA, or, as is more common, a bank loan guaranteed by the SBA, is essentially a bank loan. The benefit of it versus a traditional bank loan is the rate. SBA rates are typically much less than traditional business loan rates.
In most cases, in a guaranteed SBA bank loan, the SBA guarantees 90 percent of the loan will be repaid to the bank. As such, banks are at much less risk than in most other loans, and are a bit more flexible with regards to who they offer these loans. However, the SBA usually requires the founders of the company to personally guarantee the loans, which makes them risky should the venture collapse.
Alternatively, Small Business Investment Companies (SBICs) are privately organized corporations that are licensed and regulated by the SBA. Small or emerging businesses which qualify for assistance from the SBIC program can receive equity capital and/or long-term loans from these companies. Essentially, these companies provide their own capital, which is supplemented by federal funds, to the companies they fund.
Interestingly, U.S. taxpayers benefits from the SBIC program as tax revenues generated from successful SBIC investments have more than covered the cost of the program. Likewise the program has created hundreds of thousands of jobs.
In summary, SBA and SBIC financing are viable alternatives to financing from angel investors and venture capitalists and should be considered in the capital raising process. Similarly to angel and VC financing, companies seeking SBA and SBIC financing need a strong management team and value proposition, and a highly professional and compelling business plan in order to raise the capital they need.
About the author:
GT Business Plans has developed over 200 business plans for clients that have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. GT Business Plans is the sister site of GT Venture Capital
by: bb lee
by BB Lee (C)2005
mailto:editor@smallbizbitsnews.com
In a previous article appropriate steps to start a
home based business were discussed.
This important article will review the 5 top mistakes many
home based business owners make that might evolve into a great
success story.
Warning! This approach is not for everyone. One theory is readers
will learn a new way of thinking and perhaps propel their
business ideas into motion.
Let's get started with the list!
1. Business Plans. Many article's online vow by the
business plan. Every new business owner must draft a
business plan if they want to succeed.
One successful business owner online never thought of
drafting a business plan. He learned the hard way.
He made many errors but claimed the learning experience
was a powerful teacher.
He further stated the lessons he learned were better
than any course in business school or college. He soon
learned how to deal with the many ups and downs in the
business world. Dealing with frustration. All things
you learn from the school of hard knocks.
2. Education. Once again many experts think several degree's
are the key to immediate success in any chosen field. Many
successful entrepreneurs never went to college. And quite
a few barely finished high school. Success is not always in
the books you read but in how you deal with your
business in the real world.
3. Rushing. Experts believe you should take your time
and wait to select the proper business for you and
your background or education. Taking time to study the
various ideas is key to success. Others see an opportunity
and immediately grab it.
4. Over confidence. Believing you will be successful and
ignoring negative opinions from friends and family. Family
might have good intentions, wanting to save you from making
an error in judgement, but they might throw a
wrench in your business idea. Halting the business venture
altogether.
5. Unrealistic view. Always seeing the good side. Thinking
positive. That yes you can succeed in this business. Positive
thinking is an asset every self employed business owner
should own. Many business owners with a positive outlook
continue striding forward where others simply give up.
That's the list. It bares repeating that going against expert
advice is not for every new entrepreneur. But many new home biz
owners found great success in following their own path.
------------------------------------------------------------
BB Lee is Editor And Publisher of SmallBizBits News!
If you like this article subscribe to SmallBizBits Now! For
new articles, advice, tips, unique start-up ideas, ebooks, reports.
Visit: http://www.smallbizbitsnews.com
mailto:editor@smallbizbitsnews.com
------------------------------------------------------------
About the author:
Visit: http://www.smallbizbitsnews.com
mailto:editor@smallbizbitsnews.com
