The Three Parts of Your Business Plan - Part 2 of 8
Tim Berry introduces the situational analysis and discusses both internal and external forces that will help you determine your course. Defining your market is a key part of this process. Duration: 4:18
Developing your business plan divides roughly into three parts. The first of these is the situation analysis, looking at where your business is right now, what are the factors affecting your business. A good place to start is the SWOT, standing for strengths, weaknesses, opportunities, and threats. Strengths and weakness are internal factors of your business. Opportunities and threats are external.
For example, a restaurant in a well-traveled downtown area. Location. Parking. Reputation is a strength. The chef is a strength. But the restaurant has a small size and no separate bar. All of these factors are internal. Looking at opportunities, the second location might be an opportunity. New competition is a threat. Shopping mall reduces traffic. New menus are an opportunity. Hotel closures might reduce traffic, and catering is a new business opportunity. This is just one example. Take some time. Get your team together and do this with your own business.
The most important element of your situation analysis is your own market. You really need to know your market, and that's where you get amazing benefits from business planning even for the ongoing company without the need to take a business plan to the bank or get investors. At least once a year, you should take a step back from the business and look again at the market that you're selling to. As you study your market, think about segmentation, which is the process of dividing your market into useful, manageable groups. Most markets divide and the study of that segmentation can give you clues to where to focus and how to prioritize to improve your business and address your markets better and more strategically.
You can use this simple market analysis checklist to go through the main things that you need to know about your market. You don't have to be hiring outside market research if you can do this yourself. Get on the telephone. Look at the Internet. Study your market. It's worth it. At least once a year a business ought to take the time to understand its market as it exists now and as it's changing in the future. Understand positioning in your market. Understand the factors that help your customers position you against your competition for the various factors that might affect their purchase.
Look at this example for breakfast. Whatever the variables are for your business, positioning will help you understand, prioritize, and focus. How are you positioned now? How is your competition positioned? What does that mean to your customers? Determine the keys to success in your business. This helps you to focus and prioritize. This should be two maybe three main points, points like location for retail or repeat business for consulting, the main things that drive your business and make it successful. Understand your core competency. What is one thing that your business does really well that sets it apart from competitors and is something on which you might base your growth and your future strategy?
Finally, make sure that you understand your competitive advantage. This may be similar to core competency and maybe not depending on the way you play your business. Every business though should be able to explain simply and clearly what gives it competitive advantage. So here, we can summarize the situation analysis with these key points you can use to go back and develop your own plan.