Business Plan Tutorial, Part 2
Know Your Customers

Tutorial Part 1 2 3 4 5 6 7 8 9

Intro

Many people get discouraged when they consider business planning activities. Doing it right involves work and takes time away from your other tasks. A lot of people can't find the time to do it in one burst of activity. For that reason, we're breaking this business plan tutorial into nine sections so that you can pace yourself and make reasonable progress while still taking care of everything else you do. If you're just getting started, see Part One. The plan itself will cover: 

1. Product or Service and Business Description
2. Know Your Customers
3. Market Research
4. Competitive Analysis
5. Financial Projections
6. Management: Acquiring the team you need.
7. Marketing Plan
8. Exit Strategies
9. Executive Summary  

Know Your Customers

Want to make the sale? You've got to know your customers! Sometimes the smartest business people do everything else right about their business plan but have only a vague idea about who is going to buy the product. Unless you're talking about every possible product that fills a basic human need, like food, the correct answer is NOT everybody! As soon as you start considering a specific product or service, you'll find that there are some people or businesses that have no need for it or would prefer another choice to the one you're giving them.

If you have a product or service that you're planning to sell, make a list of everyone that could possibly buy it AND why they'd buy it. It's okay to be a bit goofy and off the wall at this point. Think outside what "everybody" knows. So if you want to use large enough quantities of Grandma's Gelatin recipe to instantly solidify Lake Michigan for special occasions, write it down! You'll have wedding planners and evangelists on your list and we'll deal with the Environmental Protection Agency later.

What questions should you ask? You need to know exactly who they are, although at this point you will probably not identify individuals or organizations specifically. You may know that Oscar Grouch of 1001 Sesame Street is a potential customer, but right now you use that information to describe the class of potential customers rather than developing a prospect list. However, it's a good idea to talk to Oscar about what you're going to be doing and find out if it's something he'd be interested in buying. Describe your targeted customers in detail. Please keep in mind that the customer may not be the user! Grandparents buy presents for grandkids, purchasing supplies accounting with toner cartridges for printers. 

1. Is the user also the person or organization that will buy the product? (You've got to know who can say yes!) If the buyer is also the user, you only have to answer the rest of the questions for her. If the buyer is not the end user, then you've got to evaluate both the buyer and the intended user.
2. Is your customer an individual?
3. Is your customer an organization?
4. Is your customer male?
5. Is your customer female?
6. What age range or ranges do your potential customers fall into?
7. Where are your customers?
8. How quickly do they need the product?
9. For what purposes are they going to use this product or service?
10. How are they currently meeting this need or want?
11. What are they willing to pay for the product?
12. What kind of quality do they want?
13. How are you going to let them know about the product or service?
14. How are you going to make them try it?
15. How are they going to pay for it?
16. Do they need customer support?
17. How much will they pay for it?
18. What kind of warranty do they want? Are they going to use it often, occasionally or is this a one-time buy?

Tutorial Part 1 2 3 4 5 6 7 8 9