Product Mix – Designing Products and Services for the Consumer

Strategy Plan One

May 17, 2012 

Product Mix

Determining what your business will offer for products and service to your markets is definitely a business and marketing art form.  Detailed business plans and marketing plans must be completed before entrepreneurs and companies launch their products and services.  An entrepreneur must design their suite of products and service with the overall goal of meeting the needs of the consumer base, and obviously to generate revenue for a successful, sustainable business.

Some of the questions you will need to answer include what products and services you will offer consumers, whether those products and services meet their needs, and at what price point is the customer comfortable with (buy-in).  How does one determine what is needed, the value of product or service, competition, price point, sales avenue, etc.?  Detailed marketing plans will help drawn out and plan the products and services mix.  Prior to the marketing plan development, you will need to develop some marketing research methods to extrapolate some information and data from your potential target markets.

Surveying your Markets to Determine Product Mix

Conducting your own due diligence in planning processes is critical to successful developing and implementing plans.  Surveying is one way to gauge the level of interest, the level of need, and economics and business aspects of your proposed products and services.  Whether you conduct the survey or engage with a professional marketing firm to complete those tasks, surveyed information can inform the decisions you need to make around your mix of products and services.

Product Mix – Marketing Plan

Armed with fresh, relevant data from your surveying efforts, you should be able to draft up a solid marketing plan that reflects your potential product mix, price points, competition concerns, and placement of products.  Your marketing plan should go into the depth required to explain revenue generated from such product and service mixes, and the Return on Investment in marketing activities to promote those products and service.  It will be extremely important to implement your marketing plan and to measure the results.  Reviewing the results will give you an opportunity to analyze whether your plan was working or not, and if you achieved the projected return and benefits from you marketing activities mix.  This also gives you the ability to revise and implement a better plan in the future.

Marketing Budget

Great marketing plans must be funded.  Ensure that as you plan, you also plan a marketing budget to cover marketing expenditures.  Only a few activities can be achieved at very low-cost, but some marketing activities are going to require you to plan and to provide part of your budget towards marketing.  As you fund marketing activities, you also need to determine your return on investment in those marketing activities.  For example, social media marketing is only one of many avenues that may generate a return.  Measure results and revise your marketing plan accordingly.  You may be surprised on the differential in returns between marketing activities and that may change your focus towards more support in one marketing activity category.

Designing Your Product Mix – Tips

• Always start with the why – why are we conducting these business activities, why do we think these product and services meet the needs of consumers
• Obtain solid, objective, external information from your markets, customers
• Undertake surveying to obtain market data
• Analyze your market data
• Form business plans and marketing plans based on solid outside information
• Call upon a marketing professional to strengthen your product and marketing mix (ask the professional)
• Remember that a high level of due diligence is required and that effort will be reflected in the actual results achieved. 

You may find that hitting the right markets with the right mix of products and services, timed accurately may be achieved through trial and error.  Very few successful companies and marketing strategies hit the nail on the head from the start.  Through conducting due diligence, and your readiness to adapt to the changing environment, will provide you with much better results.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

Effective Decision Making Processes Integrated at all Business Levels

Strategy Plan One

April 27, 2012 

Effective Decision Making Process

Every business opportunity, every operational activity, and every financial budget requires decisions.  Decisions can be made in an ad-hoc, instantaneous manner, but we have all encountered challenges that occur after a snap decision.

Effective decision making processes set the stage for standards for making the right decision, involving the right people in your organization, with appropriate tools and mechanisms.  Great effective decision making processes will make your organization and professionals more responsible and accountable for decisions made

As an entrepreneur you will develop procedures that will need to be done to make a decision.  You will integrate specific staff members, at all levels, into the decision making process that will make a better informed, effective decision.

Elements of Effective Decision Making Process

Similar to a strategic planning cycle, decision making processes follow a set of steps:

1. Identification of the Issue
2. Development of options to resolve
3. Selection of the best option
4. Recommendation of the option
5. Approval of the proposed solution
6. Implementation of the best option
7. Measurement of result
8. Revision of the process / options 

You will determine who on your team should be involved and should participate in decision making.  You will want to involve those who are functional specialists who will inform you on the best operational, ground-level solution and what the implications are.  You will also want to involve unit managers and supervisors who can recommend the best option after being informed by their area experts.  Keep in mind, you want to have a streamlined decision making process and not to include too many.   Less is best when decision time frames need to be considered or if client services are impacted by decision time frames.  You can still develop a highly accountable decision making process with select staff, streamlining approvals through one stream of employees.

Effective Decision Making Processes – Determining Priorities

Decisions need to be prioritized, with reference to many factors that do go into why decision need to be made and to determine which decisions need to be focused on and approved first.

You may determine priority decisions be made by the following factors:

• Time factor or time limiting
• Emerging, immediate needs
• Client service focus
• Financial impacts
• Risks to the organization

Effective Decision Making Processes – Risk Management

A strong and embedded effective decision making process in your business will minimize the risk to all aspects of your business along the way.  As mentioned the stronger your decision making process, the more accountable your staff, units, managers and the business itself will be.  As a good planning practice, you should develop your business plan to reflect effective decision making processes at operational, management and corporate levels.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One

Revenue Forecast – Factors and Projection Models

Strategy Plan One

April 12, 2012 

Revenue Forecast – Overview

In one of your key business planning activities you will need to accurately project revenue streams. As part of revenue management, the information on your revenue forecast would be your strongest indicator in your business plan.

Your revenue forecast will illustrate how successful your financial situation is projected to be.  Investors, partners and bankers will be reviewing how you arrived at your numbers, at how you justified revenue and sales levels.  Your forecasting will need to be more than just an educated guess, however, an educated, experienced background is essential to forecasting.

Everything in your financial and business planning will be centered on revenue numbers, from estimating variable and fixed expenditures, to determining the amount of debt that can be serviced with the projected revenue levels.  So many factors, differing in various industries, need to be included in revenue projections.  Integral to forecasting revenue, your marketing plan will include some factors and will need to incorporate market potential information.

Revenue Forecast – Tools

Spreadsheets and calculators can assist in a formula based approach, but some are generic and do not take into account industry specific factors and differing revenue projection models.  In essence, you will need to incorporate specific factors into your calculations and run differing simulations to capture all potential circumstances.

The following describes some of the various factors and models to determine your revenue forecast:

Revenue Forecast – Based on Historical Financial Data

If you are forecasting revenue for an existing business, revenue projection may not be as difficult as you may think.  There is a historical track record of data for existing businesses to build on.  In reviewing revenue and sales trends in the historical financial data, you can estimate the ongoing continuous trend forward.

When reviewing and analyzing financial trends, pay attention to the rate of growth or rate of change in revenue and expense categories.  The rate of change must be taken into consideration, and don’t rely on a calculation of straight-line revenue projections.  If negative growth or declining trends are showing, differing strategies may need to be developed to get trends back on the right track.

Using Intelligence for Your Revenue Forecast

As an experienced entrepreneur you may carry some intelligence from past employment, from operational and management experience.  If your experience was industry specific and applicable to your start-up or existing business, you may have the intelligence to develop some close to accurate projections.

You may also be able to surround yourself with professionals that also have this intelligence.  We are not suggesting that you steal information from a competitor, but acquire professionals that are well-versed in a certain applicable industry, that have an innate ability to complete an accurate revenue forecast.  Accountants also specialize in this area but will need access to information and intelligence on the industry and markets.

Revenue Forecast – Industry Standards Data

Revenue models can be generated from using the industry standards data.  Loads of generic industry data has been compiled for decades.  The US Census Bureau is also a good source for industry data to base your projections on.  In Canada, you may want to search through Statistics Canada for general industry data.  Note that utilizing this data is more along the lines of a theoretical, averaging approach and may not take into consideration the factors of your specific business circumstances, area and markets.

Marketing Information for Your Revenue Forecast

Good potential sales data can be obtained from surveying your potential customers and potential markets.  You can base your revenue forecast on the total market and on your estimated market share.  If you have excellent relationships with your potential customers and there is a mutual agreement to supply products or services you may be able to sign into a preliminary agreement, or Letter of Intent (LOI) for future sales.  You can definitely extrapolate more solid information from this for your projected revenue and sales.

In addition to your own surveying efforts, you can obtain the services of a marketing company to do the work for you or to provide you will more specific market information for you to base your projections on.  Depending on the firm used and type of information obtained, this would be an additional reliable source of information, and more valuable to your revenue forecasting.

Tips to Assist in a More Accurate Revenue Forecast

• Be realistic, and plan modestly
• Generate projection scenarios, from conservative to optimistic
• Back all projections with information to make it more objective
• Use multiple information sources in developing projections
• List your assumptions and justification for your numbers
• Seek advice and feedback on your information
• Develop strong relationships to build in LOI, MOUs with potential customers to assist in revenue projections
• Adjust wherever needed and frequently; the more effort you put in the better the forecasting will get.
• Remember this is not a perfect science but are tools for estimating

Using a fusion of models and factors indicated above may result in more comprehensive, more accurate revenue forecast.  Ensure you complete the due diligence required on detailed business planning, including using revenue projection models to minimize risk, and you will experience actual results closer to your financial projections and goals in the future years.

Strategy Plan One

http://strategyplanone.com

Business information, resources and tips for the entrepreneur

© 2012 Strategy Plan One