defining your business goals and its goals your business goals.pdf · until you can clearly...

Defining Your Business Goals and Its Goals

Business Description

Goals and Results

Business Offerings Marketing

Finances

Personnel Management

A CorNu Enterprise Educational Product

B I Z B I T E C O N S U L T I N G G R O U P

Defining Your Business and Its Goals

Every effort was made to ensure that these materials comply with the requirements of copyright clearances and appropriate credits. CorNu Enterprises Inc. will attempt to incorporate in future printings any corrections communicated to it.

Copyright 2004 CorNu Enterprises

1412-621 Discovery Street Victoria, BC V8W 2X2

All Rights Reserved Printed in Canada

Table of Contents How is this module organized?.iii Suggestions on how to use this module ..........................................iv The six-pointed star ....................iv

Defining Your Business and Its Goals.......................................... 1 Business Description ................ 1

Introduction..................................2 Business description ....................3 Why write business descriptions?........................................................3 Other uses of the business description.....................................6 One method of how to write a business description.....................7 Summary........................................7

Goals and Results..........................9 Introduction............................... 10 Writing the goals and results ... 11 Monitoring the business plan—goals and results ........................ 15 Uses of goals and results.......... 16 Summary..................................... 16 Other products and modules for sale............................................... 18

Glossary of Terms ................... 19

B i z B i t e C o n s u l t i n g G r o u p

Defining your business & its goals © i

CorNu Enterprises Inc. Disclaimer

The personal experience of the content specialist, Graeme Robertson, forms the bases for this material. The company, 6023207 Canada dba CorNu Enterprises Inc. makes no representations or warranties regarding the use of this material in whole or in part and assumes no liability for any claims, losses, or damages arising from the use of the material. The use of this material (in any way) should not be construed as taking professional advice from the author or CorNu Enterprises Inc.

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This material is the intellectual property of BizBite Consulting Group, and is presented as a 6023207 Canada dba CorNu Enterprises Inc. product with the authorization of the author. International copyright law protects this product.

The purchasers of this material may only use it for their personal use or, as a training tool, within their business. It is illegal to copy, modify, or transfer this material, any other materials presented as a CorNu Enterprises product, unless authorized to do so in advance.

Any modification or merged portion of this or any other CorNu Enterprises course, in whole or in part, is prohibited except as authorized in advance by CorNu Enterprises. If you transfer possession of any copy, modification, or merged portions of any CorNu Enterprises materials without authorization, you may be liable for prosecution and CorNu Enterprises may take legal action against you and/or your company.


Defining your business & its goals © ii

Credit Page

The founders of BizBite Consulting Group and developers of CorNu Enterprises dynamic approach to education are

Graeme Robertson and Dr. Shirley Chapman The following people contributed to this document:

Content Specialist JJJ... GGGrrraaaeeemmmeee RRRooobbbeeerrrtttsssooonnn

Graeme Robertson is a seasoned business management professional with over 30 years of experience. He has held senior positions in retail, wholesale, and distribution operations. Additionally, Mr. Robertson was Regional Manager for a national personnel-consulting firm and he has been actively engaged in business management consulting for over 20 years.

Designer and Developer DDDrrr... SSShhhiiirrrllleeeyyy CCChhhaaapppmmmaaannn

B. Ed. M.Ed. Ph.D.

Dr. Shirley Chapman is a veteran educator with over 30 years of experience. She is an expert in course/program design and development. Her experience covers public schools, colleges, and universities. Shirley is experienced in designing and developing training specifically for delivery via face-to-face, on-line (Internet), and manuals for organizations, colleges, and businesses. She is responsible for the page layout and format as well as the graphics in any materials that she designs.


How is this module organized?

We divided the Defining Your Business and its Goals into two major headings:

1. Business Description

2. Goals and Results

Within the module, the material is divided into these headings:

(Content of the section)

Uses Summary

Celebrate

Introduction

How to use this section New businesses

Existing businesses

Celebrate!

It is important that you recognize your achievements and celebrate each small step. Phone some friends and celebrate it. We will offer you opportunities to celebrate at the end of each part of the module. Have fun with them. We had fun creating them for you.

Defining your business & its goals © iii


Suggestions on how to use this module

This module is organized so that you decide:

In what order you want to access the various titles

What you want to ignore

How many times you want to revisit the material

Just return to the Table of Contents and click on what you want to read or review again.

The six-pointed star

We have depicted business and a business plan as a six-pointed star. Each part of the star represents a major aspect of your business and an important element of a business plan. Together, they form a complete view of your business and your business plan.

We have carried this star throughout all the BizBite Consulting Group products and all the modules.

As each new section is begun or completed, the appropriate part of the star is colored and the rest of the star is colorless. This may help you to see how a specific topic relates to the whole business and to remind you that it is part of the whole.

Defining your business & its goals © iv


Defining Your Business and Its Goals

Business Description

"The journey of a thousand miles starts with a single step"

Chinese Proverb

GGGlllooossssssaaarrryyy Each term that is used in this module is defined in the

Glossary of Terms (at the end of the module). You will notice that the first time it is used it is coloured green in Bold Italics.

Defining your business & its goals © 1


Introduction

A business description is a formal statement that describes your business to your customers/clients. It tells your customers/clients what you are providing them that have value. It does not have to be any longer than 1–3 sentences.

This section is written from the point of view of writing a business description for use in a business plan but there are other uses for it, too.

There are four major headings in this section:

1. Business description

2. Why write business descriptions

3. Other uses of the business description

4. One method of how to write a business description

How to use this material

New businesses

New businesses will likely spend much time writing a description of the business. Complete it after many of the other sections are finished. You may think you know what the business will sell and to whom, but you will have a much better idea after your research is accomplished.

Existing businesses

Existing businesses should read the following material and review their business description. You may decide to modify, change, or rewrite it. For each new business plan, you should review this part of it to ensure that:

Your description still portrays the business accurately

Your goals and results for the coming year reflect your existing business description



Business description

In a short paragraph or 2–3 sentences, describe your business.

What is it?

What are you going to do for your customers/clients?

This is often a very difficult task. It will take some effort to capture your thoughts in only 2–3 sentences but it is a very important process.

Choose your words carefully. This description should be written from the point of view of customers/clients and benefits of the offerings.

If you write this description from the point of view of how the client will benefit, you probably will focus your business on your customers/clients.

If you write this description from the point of view of what your business can do, you possibly will focus your business on what you can do.

No one really cares about what you can do. They do care about how buying from you will benefit them.

Avoid technical jargon; use simple words that are meaningful to the reader. Use a language that is meaningful to your customers/clients and that they understand.

Why write business descriptions?

However, you say, who is going to read my business plan beside me? Why bother writing a business description, I know all about my business.

Until you can clearly describe your business, you cannot set meaningful goals/results and make detailed plans for carrying out your goals/results.

Another important reason for writing this business description is that without clearly defining the core business activities, a business can very easily lose its focus. The result is becoming reactive to the marketplace rather than proactive to the marketplace.

You need to review this description of your business frequently especially when you are looking to make changes in the offerings that you are presently selling or adding to the offerings.

It is very common for businesses to gradually drift into doing all sorts of things that seem to be a good idea at the time but before long, they are off on various tangents quite unrelated to the core of the business.



The problem is that the 'tangents' all drain off resources that might be better used to enhance the core business. It is very important to think this through and frequently study the business description to see that the business does not get off on a 'tangent.'

Here are two examples of what happens when a business loses focus:

Example 1

A hardware company started with a focus on core business in general building materials and related hardware products. It was very successful and highly profitable in its local market.

Gradually, over a period of years, the business added divisions to the company that supplied furniture and appliances, television and electronics, lighting, floor covering, industrial tools and heavy machinery, such as tractors.

All of these divisions seemed like a good idea at the time. The hardware company rationalized that, by providing additional services to their existing customers, they would be more profitable and, at the same time, develop new markets.

The reality was that all of the business divisions they added were in markets already well served by businesses specializing in that type of business. The company's gross sales revenue increased with each division added to the company.

However, the expected profits did not materialize. In fact, the increased capital investment necessary to start and operate these businesses drained the resources of the company almost to the point of bankrupting the company.

Fortunately, in this case, the business sold many of the divisions, returned to the original core business and, in a short time, was again a profitable business.



Example 2

A small catering company started as a home-based business. It had no full-time employees. As the business grew and the workload on the owners increased, some work was contracted out on a piecework basis. The business was very profitable and enjoyed an excellent reputation.

Several private clubs approached the business and soon the business was catering all the special events. More staff was required and a few full-time employees were necessary. The business' gross revenues were much greater, the net profit dollars were greater; however, the net profit percentage of gross revenue was only two thirds of what it had been.

Soon, some of the clubs wanted to add a restaurant to their facility and, of course, they asked the caterer to run the restaurant on a contract basis. More investment was required as well as a full staff of people for each facility.

The resources of the business were now totally committed to a few customers/clients. The gross revenues increased tremendously but the company was barely breaking even. Additionally, the personal strain on the owner of the business was beginning to cause health problems.

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These examples are based on real cases and there is much more detail to the stories. However, the underlying message in both cases is that the businesses were allowed to drift away from the original business description and the core business.

They became reactive rather than proactive. It is not that growing the business and perhaps expanding into new markets is a poor idea but, doing so without doing extensive market research and preparing a business plan, can be disastrous.

Other uses of the business description

Where else can you use this description besides in your business plan? You will be able to use this brief business description in a number of ways:

1. Promotions (business brochures)

2. In marketing campaigns

3. When introducing your business in meetings, Chamber of Commerce functions or other meetings

4. When introducing yourself to others in face-to-face situations (meeting new clients, meeting other business people, meeting the competition or related business people, networking)

Until you are clear what your business is, you cannot tell others about your business.

Can you remember asking business people what they did and how they rambled? At the end, you still did not know what they did. Maybe they did not really know what they did either.

5. If you take this process one step further and summarize the brief description into a slogan of 3–6 words, you can print it on your business cards and letterhead; and use it in your marketing campaigns.



One method of how to write a business description

You might start by brainstorming. Write down everything your business does and will do. The next step might be to categorize the various ideas into larger groups. Then prioritize them: what is the most important kind of product or service that your business does, then, the second most important and so on. Circle or underline what is your core business.

Look at each category and indicate how the customers/clients will benefit by buying this kind of offering from you.

Examine what you have written and decide on what you think the customers/clients want to hear about you.

How does your business stand out from the rest of the competition?

How best can you tell others about your business?

Perhaps your business description only focuses on one core business activity.

Write your description. Refine it. Test it on others. Introduce yourself at the next meeting with your business description.

If people ask you questions about what your business does, you should examine what you have written. Perhaps it is not clear. It could be some of your words are misleading. Rework the description. Keep it simple. Test it again.

Recognize that this brief description must capture what your business is all about and it must send the correct message to the audience.

Summary

In this part of this module, we have examined the first component of a business plan/business description. We considered four aspects of the business description: the business description; the use of it in a business plan; some other uses; and how to write one.

Apply the following quotation to your business, business description, and the business plan.

The secret of success: We are what we say we are. What you think about is what you become.



Celebrate!!

Let's party

Invite the neighbors



Goals and Results



Introduction

Writing the goals and results is an important step in developing a business plan. They are a declaration of what you intend your business will focus on in the coming year (or determined length of the plan).

Goals and results are divided into three subsections:

1. Writing the goals and results

2. Monitoring the business plan—goals and results

3. Uses of goals and results

How to use this section

New businesses

If this is your first business plan, write the goals and results immediately after you have:

Completed your marketing research to determine what offerings

you are going to market in your business

Completed the client profile

Completed the market profile

Analyzed the competition and determined your business' competitive edge

Analyzed the financial feasibility of your selected offerings

Identified the offerings

Designed the marketing plan and target marketing plan

Now you are ready to plan your business and its first year by writing the business goals and results.



Existing businesses

If yours is an existing business, writing the goals and results comes immediately after you have:

Reviewed your company description

Reviewed your past year’s offerings, client profile, target market profile, marketing research

Updated your past research

Reviewed last year’s successes

Determined what needs to be accomplished this year

Researched the feasibility of your initial ideas for changes

After you have settled on the final decisions as to what changes, modifications or new directions that you want in the coming year, you are ready to write your new goals and results for the coming year.

Writing the goals and results

Setting goals and results provide direction for the business as a whole and, if appropriate, write them for each major segment of the business.

Goals are general statements and the results are the specific statements that define the goals in precise terms. It is a hierarchical system. The results often consist of dates, explicit dollars, and percentages.

There may be several results for each goal. Maybe try completing a result in March, another in June and a third in October. Perhaps there is a result for each market segment of your business.

1. Write a series of statements that express basic organizational goals for the coming year.

2. For each general statement or goal, list one or more specific results and a date for when they will be accomplished. You may need to add a percentage or dollar value as well.



There are six criteria for writing results. They are:

1. The results must be very clearly defined.

2. There must be no grey area or room for misunderstanding as to what is required.

3. The results must also be achievable.

4. The results must be time phased. It must be clear what period is being measured.

5. The results must be measurable in a clearly understood way.

6. The method of measurement should be defined.

Examples of results

1. To improve ___________ product by __________ (doing what) before _____________ (when).

2. To participate in the market _____________ (where) area more deeply by developing ___________ (how many) contracts by __________ (when).

3. To increase awareness about the product in ___________ (where) before ______________ (when) by _________ (how).

4. To raise the price ___________ (how much) by ________ (when) so they are within____ (percent) of the competitors' price.

5. To increase sales ________ (how much) by ________ (when).

6. All inquiries will be answered fully and completely (how) within _______ (time frame) by _________ (who).

Another example

A building materials company has an organizational goal to increase their total gross sales. 1. One specific result is to:

Increase the gross sales volume to $5,000,000 by December 31

2. Another specific result is to: Realize a gross margin (GM) of 20% by December 31 The total gross sales volume is divided among its market segments

Below is an organizational chart of a building materials company that has five market segments. Using the retail market segment as an example, the chart also indicates the areas that a business plan might need to address thus the company can achieve its goal and two results.



The profit contribution to the business of each of these market segments will be different. There may be a result for each of the market segments.

Once the results are written, the building material company owner or manager will take each of the above headings and write out the steps in detail of how the managers will accomplish them. The detail should include the start and completion dates.

This detail is included either in the business plan itself or in the Appendix.

One heading listed above is 'marketing strategies.' The building materials owner might ask the following sample questions to assist her/him in developing a detailed plan for this market segment.



You, too, might use these questions to aid you in planning for a marketing result. Add to, modify, and customize this list of questions.

Example of marketing strategy questions What marketing strategies do you need? How they will be used? How much will they cost? What has to happen before they are implemented? List the steps.

What has to happen while they are being implemented?

Describe the marketing strategies that you are going to use.

When will they be implemented? When will they be completed? Who will be in charge of implementing them?

Try to think of everything that must be accomplished during the year to achieve that goal and series of results. Plan in detail how you and staff will implement them. Use the above questions to trigger a series of questions that you can use to help in developing a detailed plan for accomplishing your goals and results.

For some business owners or managers, this process will come easy but, for others, this is an unknown process. The latter group prefers to work under an immediate deadline (crisis) or by instinct.

However, a captain of a ship does not wander out into the ocean without a complete plan. A plan that includes knowing that the ship has enough fuel and food aboard, knowing the length of time it will take to reach the destination and knowing where the ship is going. Is your business any different?



Monitoring the business plan—goals and results

After the business plan is completed, think of ways you can display the detailed plan in a way that it is easily monitored or tracked. Perhaps it is a spreadsheet with the goals and various results listed. You could display the months of the year or the various headings on the horizontal axis. What headings will you write on the vertical axis for each result? They may be different headings for each result.

When your spreadsheet is completed, you may find that it will indicate that there are too many deadlines for the same period or that some of them are intruding into some of your busiest business times. Indicate on your spreadsheet, who is responsible for the various steps or tasks. Use colour.

Post the spreadsheets on the wall of the office for easy viewing and monitoring. As the year progresses, you might cross off the completed results, tasks, or deadlines. It is always good to know when something is completed and how much is left to do.

If posting your goals and results on a wall is not a feasible idea, what can you do that will work for you? You might schedule all the start and completion dates in your scheduler on the computer.

By monitoring the progress of each goal and its specific results regularly, you will be able to celebrate the successes, make mid-course corrections, or modify the goals or results. You can note the things that you forgot in your initial plan or changed during the year, hence when you write another business plan, you can benefit from this experience.

At the end of the year, it is too late to check the goals and results. Moreover, it is a waste of time to spend time planning the year and never to look back at it. It is very important to celebrate the successes, large or small. Build on your successes and learn from the required changes or corrections.



Uses of goals and results

There are several other uses for developing goals and results on a yearly basis:

1. You can develop detailed plans for implementation throughout the year.

2. You can forecast the expenses for the year and, if need be, make credit or loan arrangements before requiring the funds.

3. You can order supplies or equipment well in advance of needing them.

4. You can hire and train personnel before you need them rather than on the day, they start work.

5. You can market your offerings in appropriate time frames.

6. You can assign tasks to others and train them to do them; consequently, you are not trying to do everything.

Summary

We have examined goals and results as part of the business plan. We have explored how they play a major role in planning for the coming year. From these goals and results, you can make detailed plans that will allow you to build for success.

More importantly, applying goals and results to your business brings order and organization to a world that seems to be, at times, chaotic or topsy-turvy.

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Celebrate!!

Another step completed

So, go out and get some exercise



Other products and modules for sale

Other modules available on this web site deal specifically with aspects of business planning research and analysis. For complete, in depth treatment of business planning the BizBite Consulting Group product The Business Plan also is available. For detailed information on the content of these products, please go to ‘Product’ on the menu bar on the web site.



Glossary of Terms

Business plan—describes the business and identifies the core business' activities that will occur over a period of time-usually 3–5 years. The business plan details the company objectives, how they will be accomplished, the resources it will take, and what results are expected.

Gross margin (GM)—the money left to cover the expenses of selling the offerings and operating the business. Same as Gross Profit Margin defined below.

Gross sales—the total amount charged to all customers/clients during a time

Market—is a place where buyers and sellers come together. The number of people and their total spending—actual or potential—for your offering(s), within the geographic limits of your distribution capability

Marketing mix—the controllable variables the business puts together to satisfy this target group. It has four components: product, place, price, and promotion. These components are sometimes referred to as the four P’s of marketing.

Marketing plan—a written statement of a marketing strategy and the time-related details for carrying out the strategy.

Market segment—a relative homogeneous group of customers who will respond to a marketing mix in a similar way.

Marketing strategy—specifies a target market and a related marketing mix. It has two parts: target market and marketing plan.

Offerings—the products and services that a business provides its clients/customers

Product—the needs satisfying offering of a business. It includes physical goods, services, features, quality level, installation, instruction, warranty, product lines, packaging, and branding.

Promotion—communicating information between seller and potential buyer to influence attitudes and behaviour. That includes promotion blends, salespeople, advertising, sales promotion, and publicity.

Profit—a business' earnings after paying all expenses.

The excess of the selling price over all costs and expenses incurred making the sale. In addition, the reward to the entrepreneur for the risks assumed in the establishment, operation, and management of the business enterprise



Target market—is a homogeneous (similar) group of customers to whom a company wishes to appeal.

The specific individuals, distinguished by socio-economic, demographic, and/or interest characteristics, who are the most likely potential customers for the goods and/or services of the business.

Target marketing—a marketing mix that is tailored to fit some specific target customers/clients.


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