It’s time to roll up your sleeves. Let’s get started building out a plan for your business.
Step 1. Value Proposition.
Value Proposition:
A value proposition refers to the value a company promises to deliver to customers should they choose to buy their product. A value proposition is part of a company's overall marketing strategy. The value proposition provides a declaration of intent or a statement that introduces a company's brand to consumers by telling them what the company stands for, how it operates, and why it deserves their business.
A value proposition can be presented as a business or marketing statement that a company uses to summarize why a consumer should buy a product or use a service. This statement, if worded compellingly, convinces a potential consumer that one particular product or service the company offers will add more value or better solve a problem for them than other similar offerings will.
A company's value proposition tells a customer the number one reason why a product or service is best suited for that particular customer.
A value proposition should be communicated to customers directly, either via the company's website or other marketing or advertising materials.
Value propositions can follow different formats, as long as they are "on brand," unique, and specific to the company in question.
A successful value proposition should be persuasive and help turn a prospect into a paying customer.
Step 2. Marketing Strategy & Plan
Marketing Strategy:
A marketing strategy refers to a business's overall game plan for reaching prospective consumers and turning them into customers of their products or services. A marketing strategy contains the company’s value proposition, key brand messaging, data on target customer demographics, and other high-level elements. A thorough marketing strategy covers "the four Ps" of marketing—product, price, place, and promotion.
A marketing strategy is a business's game plan for reaching prospective consumers and turning them into customers of their products or services.
Marketing strategies should revolve around a company's value proposition.
The ultimate goal of a marketing strategy is to achieve and communicate a sustainable competitive advantage over rival companies.
Marketing Strategies vs. Marketing Plans:
The marketing strategy is outlined in the marketing plan, which is a document that details the specific types of marketing activities a company conducts and contains timetables for rolling out various marketing initiatives.
Marketing strategies should ideally have longer lifespans than individual marketing plans because they contain value propositions and other key elements of a company’s brand, which generally hold constant over the long haul. In other words, marketing strategies cover big-picture messaging, while marketing plans delineate the logistical details of specific campaigns.
The marketing plan details the strategy that a company will use to market its products to customers.
The plan identifies the target market, the value proposition of the brand or the product, the campaigns to be initiated, and the metrics to be used to assess the effectiveness of marketing initiatives.
The marketing plan should be adjusted on an ongoing basis based on the findings from the metrics that show which efforts are having an impact and which are not.
Step 3. Finance, Revenue Streams and Operating Expenses.
Revenue Streams:
Revenue streams are the various sources from which a business earns money from the sale of goods or the provision of services. The types of revenue that a business records on its accounts depend on the types of activities carried out by the business.
Generally speaking, the revenue accounts of retail businesses are more diverse, as compared to businesses that provide services.
Cost of Goods Sold (COGS):
Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company. This amount includes the cost of the materials and labor directly used to create the good. It excludes indirect expenses, such as distribution costs and sales force costs.
Cost of goods sold is also referred to as "cost of sales."
Cost of goods sold (COGS) includes all of the costs and expenses directly related to the production of goods.
COGS excludes indirect costs such as overhead and sales & marketing.
COGS is deducted from revenues (sales) in order to calculate gross profit and gross margin. Higher COGS results in lower margins.
Operating Expense:
An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX, operating expenses include rent, equipment, inventory costs, marketing, payroll, insurance, step costs, and funds allocated for research and development.
Step 4. Staff & Company Culture.
Culture:
Business culture refers to the set of behavioral and procedural norms that can be observed within a company — which includes its policies, procedures, ethics, values, employee behaviors and attitudes, goals and code of conduct. It also makes up the “personality” of a company and defines the work environment (e.g., professional, casual, fast-paced).
Other elements that make up company culture include management style, expectations, company goals, local and national government policies, benefits/perks, opportunities to advance, the way employees feel about the work they do and disciplinary action methods your business uses.
“According to an Indeed survey, 72% of job seekers say it’s extremely or very important to see details about company culture in job descriptions.**
Hire the right people:
The most important part of building and maintaining a positive business culture is to employ the right people. Skills and talent are just a few things you should look for when screening applicants. It’s also important to look at the applicant’s ability to adapt to and embrace your company’s values. More importantly, most people have the tendency to cooperate and work well with people they agree and share similar personal values with.
When hiring employees, look for “culture add” instead of “culture fit” when hiring employees to make sure your teams are diverse and inclusive.
Step 5. Setting Goals
Short and Long Term Goal Setting:
Your business goals should encompass both the short-term and long-term success of the organization because they have a direct relationship with each other.
When establishing your long-term goals, it's important to keep in mind why you went into business in the first place. Was it to build wealth? Was it to slow down and work at your own pace? To make a difference in your community or world? To pass something on to your children or grandchildren? The initial motivation to start your own business serves as the foundation for your long-term goals. As an example, if you started a business to build wealth, you might have a goal of achieving specific revenues five years from now.
Once you've established your long-term goals, think of your short-term goals as milestones or building blocks to achieving your long-term goals. What will you need to accomplish in each quarter to reach your five-year revenue goal? What steps will you need to take or what boxes will you need to check to get there? These become your short-term goals. In the revenue example above, short-term goals might include building clientele, expanding the business to additional platforms, or growing your service line.
What Business Areas Should I Set Goals For?
There's no central goal to all small businesses, so it's important to think about who you are as an organization, where you hope to go as you build your business, and what it'll take to get you there.
Key areas of focus include:
Growth: Building your clientele, expanding your workforce, growing your reach, opening new offices, or expanding globally all address business growth.
Operational: Operational goals include goals around efficiency, quality, product, service, or innovation. These goals can help ensure your business operates in a way that drives growth and revenue and organically supports customer and employee satisfaction.
Profit: Nearly every small business should take revenue or profit into consideration when setting goals, as financial feasibility is critical for continued business. These goals might surround revenue, pipeline, expenses, or profit margin and typically increase over time.
Customer Service: Customer service goals help you stay focused on meeting the needs of your stakeholders and typically include both customer satisfaction and retention measurements, as well as employee engagement measures when applicable.
Social: Social goals address your desire to drive social change and might include goals surrounding your carbon footprint, efforts toward social justice, or community involvement.
Remember to incorporate key stakeholders when setting goals, and then clearly communicate those goals to the entire team who will work to help achieve them.
How to Set Small Business Goals Using the SMART Framework
Most business owners are familiar with the SMART framework for setting goals, but an in-depth understanding can help you set goals that have the highest chance of driving behaviors and decisions to accomplish desired outcomes.
In the SMART framework, goals should be:
Specific
Measurable
Achievable
Relevant
Timely
Specific goals are clear. For example, rather than a goal of "grow revenue," you might set a goal of, "grow revenues by 10% from $500,000 annually during the 2021 fiscal year to $550,000 annually for the 2022 fiscal year." When you set specific goals, it's easier to determine what steps you need to take to achieve them—and then whether you've achieved them or not.
Measurable goals can be easily measured using data available to you. For example, setting an employee engagement goal before you've implemented an annual survey or another measure of engagement makes it difficult to determine whether your efforts have paid off. Measurable goals typically include a numeric factor: Increase by 10%, improve the score by 1.5, or increase profit by $10 million, for example.
While you may be tempted to set sky-is-the-limit goals, ensuring they're achievable is key to taking the steps necessary to get there.
Relevancy is also a crucial component of an effective goal. If you went into business with the single goal of bringing new and desperately needed jobs to your community, you might not set goals around decreasing full-time equivalent hours (FTE) or improving productivity. Instead, your goals should be focused on building revenue so you can continue to create meaningful, lucrative work for your neighbors.
Finally, timely or time-bound goals make the timeframe clear so you can take the right action at the right time to drive growth and development. How might a goal of opening another office change the way you work in comparison to a goal of opening a second location within six months?
When it comes to setting goals using the framework, start with the vision and then add/take away until you reach a goal that answers these questions:
What exactly are you aiming to do?
How will you measure success? By exactly how much?
Is it possible for these people to achieve this in the timeframe and with the resources they have?
How does this relate to your vision?
When do you expect to achieve it?
Create Your Business Canvas
The work you have done so far has prepared you to create a canvas for your business. In this exercise, you want to make sure you have the right answer, as this is something you will use going forward when launching your business and raising money. Be sure to set aside a few hours and dig deep. This will take time, however it is foundational to the success of your business.
