I posted this Friday on Planning Startups Stories. I’m posting it here as well, because it’s so exactly related to my main topic. Tim.
Think of it as the heart of the business, like the heart of the artichoke: it’s a group of three core concepts that can’t be separated. Market, identity, and focus. Don’t pull them apart. It’s the interrelationship between them that drives your business.
I’ve been working on this in the context of business planning, particularly the “just enough” planning I’ve been writing about lately, which I’ve also called the “not so big” business plan. Somebody I know and respect suggested that the heart of a business plan is the marketing plan, and that led me to thinking about the heart of the artichoke.
Like the leaves of the artichoke, the rest of the plan is vital and it surrounds the heart. The rest of the plan is a matter of metrics, milestones, assumptions, responsibility and accountability, dates, deadlines, budgets, and of course financial projections to support cash flow. The heart of it, however, is that trio.
And I realize that it goes beyond business planning. The heart of the planning is the heart of the business itself. The trio at the core is what drives the business.
The market is about knowing and understanding your customers. John Jantsch, of Duct Tape Marketing, starts with the profile of the ideal customer. Give your ideal buyer gender, age, family status, economic status, and you can begin to predict what media she reads, what message will reach him, etc. That’s true as well for companies and businesses as buyers.
I’ve emphasized what I call “the essential why they buy.” For example, famous marketing guru Theodore Leavitt pointed out that people don’t buy drills because they want drills; they want holes. Some people choose a restaurant for convenience, some for price, some for special occasions, Some want loud, some want quiet. My company sells business plan software to people who want the planning, not the software.
All of this is about understanding the market. You want to know as much as you can about what your potential buyers are like, where they are, what they do, why they want you, and how many of them are there. You have to know your customer and why they buy, you have to understand that in order to build the right messaging, and you have to get the right message to them. You also want a reality check, asking yourself if there are really buyers out there. Will people spend money for what you offer? Where are they spending that money now? Who else offers them competing solutions?
Ideally you want to know your market well enough to do some numbers and forecasts. This is particularly important for a new business, and even more so when you need to convince investors or bankers to believe in your business. For the small startup, you may not have to demonstrate market to outsiders. As long as you’re sure of it yourself and prepared to bet your startup on it, that’s enough.