Lack Of Good Marketing Plan Can Doom Business Ventures

There’s an old adage that asserts “nothing happens ‘till somebody sells something.”

Most successful entrepreneurs agree. They value the role of marketing and appreciate the need to have - and follow - an up-to-date, relevant marketing plan.

Q: I’ve been in business for almost a year and am just getting around to developing a marketing plan. My business is still small and my resources limited. Never having done this before I don’t know what to include in my plan. Can you help?

A: You’re about a year late, but better late than never. A documented program to guide your marketing effort is arguably the most important tool you’ll wield during your firm’s start-up phase (assuming you also did some careful financial analysis before you commenced operations).

Your library and the Small Business Administration have a number of publications available that explain the most essential components of a marketing plan.

There are no shortcuts. The best approach is to take a day off, sit down with a pad and pencil, and start thinking - realistically - about the best markets for your firm.

Think about the flow of sales you’ll need to survive, and about the gross profit margins that will be required to pay the bills. Then trace your actual sales to-date to their origins and try to determine why you got the business … why your product or service was chosen.

Finally, start strategizing about how you can expand these sources - or make substitutions - and increase the product flow.

Importantly, a marketing plan should identify your “targets.” What kind of customers do you want to attract?

You must identify your potential revenue sources - by name and address if possible - before you launch.

You’d be surprised how many would-be entrepreneurs launch their businesses without having a firm grip on the size and responsiveness of the market they hope to cater to. Understandably, most remain in the “wannabe” status forever.

The majority of small firms do best by appealing to a “niche” market, a small manageable segment of consumers that share similar psychographics, tastes, wants and needs. A niche is just a piece of a larger market, but a chunk whose size and requirements can be satisfied by a small, fledgling firm.

A narrow focus will let a firm like yours tailor and fine-tune its approach and delivery efforts for maximum effect.

Remember, though, the submarket segment you target has to be large enough to make economic sense.

Next, think about how you will position your firm to appeal to the consumers in your preferred segment. Your company has to look, feel and act in a way that strikes a chord with the unique requirements and proclivities of your targets.

This requires more than slick advertising. The things you do - and the way you do them - will give your firm the “persona” that will be embraced or shunned by your consumers. Pricing, sales techniques, quality standards, service, and convenience will all contribute to the kind of personality that will win the hearts and minds of your desired customers.

But this takes a lot of thought and effort. And the strategy that results should be carefully recorded so you don’t stray off course.

Q: My brother-in-law wants me to buy some shares in his business. How much financial risk will I be exposed to if his venture blows up?

A: None beyond your original investment, if you remain just a careful shareholder.

Under certain circumstances, the courts can hold officers or directors responsible for financial damages as a result of litigation. If you just own a piece of equity and don’t act as an agent of the firm or sign any documents purporting to represent the firm or guarantee its obligations, you are on pretty safe ground.

However, be sure the corporation has sufficient capital to warrant justifying the risks it is taking. Some courts have made shareholders personally liable for damages incurred by a firm that was improperly capitalized to begin with.

My ol’ uncle Ollie was just a simple shareholder in Exxon and that’s why he never worried about going down with the ship during that company’s stormy days in court several years ago.

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