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BUSINESS BASICS CHANNELS  |
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:
Part 4: Get the Scoop On Your Competition In our business tutorial parts 1 - 3, you defined what your product or service is and decided who your customers are going to be. You know the potential size of your market and you know its boundaries. Now it's time to scope out the competition. Make a list of your competitors. This includes the big ones and the small ones. If your business is going to be in your town, you can start by picking up the phone book. Think about all of your potential competition, though. If you're putting together a takeout/delivery pizzeria, you need not only to check out the pizza places but also every other restaurant that delivers or packages meals "to go" in your price range. Obviously, if you're selling $12 pizzas, the gourmet restaurant that sells $55 take-out meals is not direct competition. You'll also need to check out delivery services, such as "Take-Out Taxi." Check Them Out! This can be fun as well as informative. One of the best ways is to become a customer of your future or current competitor. This can get rather expensive for you, so you don't need to exhaustively check out every one of their pizzas...or have a muffler installed at 12 different places on your car. What you'll want to do is get the experience of being their customer. A check-out sheet on Bernie's Pizzaria might include: Name of Establishment: Bernie's Pizzaria Now you get to look at evaluating what they do. How long did it take them to answer the phone? Did they get your order right the first time? How long did it take them to get your pizza delivered? Was the delivery person courteous? How was the quality? In evaluating each of these qualities, you should also compare what Bernie's is doing with what your pizza place is doing. Or with what you're planning to do. Make a list of each of the items that you think your customers will find important. Pay particular attention to anything that happens to irritate you. Now you get to do some intelligent "guestimating." If Bernie's is your most direct competitor, try to estimate what his sales are and what his big business days are. What you want to get is a list of each of your competitors, know who owns them and rank them from best to worst. It'll be easy to get customers from the worst of them, difficult to get customers from a good competitor. Make a list of each competitor's strengths and list their weaknesses. Now, it's time for you to consider the opportunities that they present. Looking at each competitor, see if you can spot the holes in their plans and execution. Does Bernie's deliver most of their pizza late? Is their delivery driver a jerk? You, my friend, have been given a major opportunity. Figure out where most of Bernie's customers are and deliver advertising to them, promising hot, fresh and fast pizza. If you back it with a guarantee (or your next pizza is FREE!), you'll get them to try your pizza. Make it good enough and you'll have new customers. Bernie is going to want to retaliate. That's a threat. You need to think about what you'd do if you were Bernie, and this upstart stole a lot of your customers. If you know what Bernie is likely to do, you'll be able to spot it when it happens and respond to it. In this case, Bernie is likely to respond by offering a price cut, most likely with coupons. That's because it may be too hard to change his entire system to provide hot, fast pizza. What are you going to do if he starts offering $5 off on every order of a large pizza? That will depend on what you think Bernie can do and can deliver and also on how important you think his response will be to the customers. A bad, cold pizza at $5 off may have some takers, but it won't be most of the customers. They'll still want a hot, fresh one. So you respond by continuing to offer them hot, fresh, fast pizza. Don't cut your prices but you may want to consider offering a frequent buyer bonus--maybe a nice warm big chocolate chip cookie with their pizza. So now you've got your list of competitors, where they are and what they offer. You know what they do well and you know where they often disappoint their customers. That's the basis of this section of the business plan. In 1 - 2 pages, list your competitors and divide them into the serious ones and the light-weights. List their strengths and weaknesses and how you plan to take advantage of their weaknesses and respond to their defenses. Good job! Now you're getting a strong feel for what it's going to take to make your business take OFF! |
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