Last time we talked about the importance of creating a business plan. There are lots of reasons for not doing so—I don’t have the time to create a plan, I don’t think it will be useful for me, I don’t know where to start, etc. The excuses are plentiful. On the other hand, it is difficult not to be successful if you have created a carefully thought out business plan. Not having a business plan is the most common error made by unsuccessful businesses.
In creating your business plan, we have discussed the need to set forth a mission statement, business description and general market analysis.
The next step is to focus on your potential competition. Why? Very, very few businesses will be so revolutionary in direction that they will not have competitors. Even if only a part of your new business is competitive with others, your job as the business owner is to find out everything you can about your competition. The good news is that this involves “sweat equity” or your own legwork; the bad news is that it takes time to analyze the competition.
What are you trying to find out through your analysis of competitors? Basically, you are trying to gauge who wants your product or service, how much they want, what they will pay and how competitors will respond. You will base your answers to these questions on your analysis of the competition.
Let’s say, for example, that you want to open a restaurant in Chesapeake Beach. It’s logical to assume the first step in your analysis of competitors is to find out everything you can about all the other restaurants in the area. Pick a five mile radius and identify the restaurants in that area. What do they serve, who are their customers, what is the price range of products they offer, what makes them successful or unsuccessful? What does their ownership look like?
As you progress in your knowledge about the competition, you may see underserved areas that you can use to distinguish your business. For example, could your new business serve food that is not served by other restaurants within the five-mile radius?
Don’t neglect the direct approach. Talking to other business owners, whether or not they are your direct competitors, will help you understand the overall market in your area. You are sure to be surprised by the generosity of many of your fellow small business owners who will share their ups and downs with you—find the owners of competitors, make appointments to talk to them about your plans to open a business, discuss their successes and failures. You will not only gain valuable information, you will introduce yourself to the business community.
In a small business community, it is critical that you find a way to reach out to all the other small businesses in the area. You can do this by joining a business group. Joining a local business group will give you access to a range of small businesses in your area and information on the issues all the businesses face in your area. Moreover, networking is the key to increasing your business—your ability to instantly network with other members of a local business group will help you grow your business—remember, it isn’t who you know, it’s who they know.
Research with your feet. Dine at the competition’s restaurants, observe the wait staff and ownership, review the menu items and prices, get a feel for how the customer is treated by the restaurant. Learn about the atmosphere of the restaurants, their décor. Do they offer something special, like music, to attract customers? When are the restaurants busy? Do they offer coupons, free food, etc. to attract business? Where do they advertise and what is the cost of doing so?
Talk to your local banker about your business, the market and the competition.
Once you have collected the information on the competition, create the marketing plan for your business. This will answer the question “How do I get customers.” Look at all forms of advertising, from print to social media, creation of a website or an app. Look at advertising costs and the likelihood that the advertising you do will result in reaching your targeted customers. Integrate networking in your marketing plan. And, don’t neglect the concept of keeping the customers once you get them. Think about rewards for your customers who refer others.
Creating a marketing plan for your business will put you a long way ahead of the competition—even if you change the direction of your marketing, having a place to start is critical.
About the Author: Lyn Striegel is an attorney in private practice in Chesapeake Beach and Annapolis. Lyn has over thirty years experience in the fields of estate and financial planning and is the author of “Live Secure: Estate and Financial Planning for Women and the Men Who Love Them (2011 ed.).” Nothing in this article constitutes specific legal or financial advice and readers are advised to consult their own counsel.