Describing your target market (eg young adults, pensioners, vegetarians) in detail is an effective way of demonstrating your awareness of exactly who will be making up the majority of your customers. Your sales will largely be decided by the take up of your product or service by this sector of the population.
Business success is often determined by the ability to tap into a niche market. Therefore, detailing any specific segments of your target market (eg urban-dwelling vegan pensioners, children who play the piano) that will be particularly attracted to your offering can provide a better idea of the potential of your business. It can also make the marketing plan easier to draw up.
Digging deeper into the demographics of your chosen market segment will allow you to focus even more clearly on your goals and prove to an investor that you have done your research. There is a whole range of demographics to choose from, including gender, age and income range, occupation and level of education.
Finding out the worth to your business of the population who fulfil the specific set of demographics (ie the total number of people multiplied by the cost of your offering) can help you to ascertain some of your financial projections.
Know your enemy! Unless you’ve come up with a brand new invention, you’ll almost certainly have a certain number of competitors already out there. You should identify your most direct competitors and find out about the strengths and weaknesses of their products, services and business operations.
Choosing a sensible pricing plan is crucial and will often determine your success upon entering the market. Even if you offer superior quality or higher levels of service compared to competitors, initially you are likely to be judged on how your pricing compares. Once you’ve established yourself, you can reassess these levels.
There is a broad range of marketing and sales techniques to choose from, including advertising in newspapers or magazines, various types of online marketing and traditional direct mail. Certain forms of marketing will be more effective for your particular product and target market so you need to choose the most appropriate methods. Also, bear in mind the costs involved. For example, unless you have a significant budget, TV advertising will be out of the question.
Separate from the sales techniques you deploy is the sales process itself. If you run a shop or cafe most transactions will probably be done over the counter. On the other hand, you may decide to have a purely online presence. Alternatively, you may wish to adopt a dual approach, allowing customers to come and view your products in a store and go home and order for delivery on the internet or by phone.
If you have already done some legwork and found potential customers who have expressed an interest in your product - particularly if they have provisionally agreed to a deal letter of intent - include the relevant details in this section of the Business plan. This will give investors confidence that your idea 'has legs'.