NZTE Export News, February 2011

Along with already breaking your New Year resolutions, you are probably being nagged by your accountant or other advisors about your business plan for the coming financial year. Especially the export sales and marketing part.

“Business plan” must be one of the most dreaded phrases in the corporate dictionary. Only restructuring, downsizing or bankruptcy are feared more than the annual punishment that is producing the business plan. Why do we hate them so much, and are they necessary at all?

Why do business plans cause us such pain? Maybe it is because plans are seen as so incredibly sacred – the hallowed strategic plan, asset plans, financial management plans, sales and marketing plans.

Some worry more about producing the document than what it actually means for their business. Look at local government: the Auckland City Council’s last 10 year plan was 543 pages, but does that mean their performance is substantially better than an organisation with a less comprehensive document?

It is also easy to get obsessed with the process of creating a plan. Gathering piles of data, having great brainstorming sessions on SWOT (strengths, weaknesses, opportunities, threats), creating endless KPIs (key performance indicators) or developing clever new promotional taglines.

While gathering the necessary information is important, too much data can make it difficult for us to determine what’s really important. What we miss is thinking clearly about what our business is trying to achieve, why it exists.

Another common problem is thinking we can plan everything down to minute detail. As failed planned economies like North Korea have discovered, the world’s simply too complex. Building a business plan that will reflect your business for the next 12 months is like trying to achieve the perfect weather forecast.

Then there are those that eschew plans entirely. “I haven’t got time to plan I’m too busy selling/marketing/managing etc”. For them the annual planning process is too slow; doesn’t allow the business to react to changes; is based on linear, predictable thinking and suppresses innovation; or are simply accountants’ tools, all numbers but no reality.

Is the answer to the pain of business plans to have no plans at all? Are they important to marketing your business well?

An export marketing plan isn’t essential, but without some marketing planning you are seriously limiting your chances of success. To quote legendary United States general, and later President, Dwight Eisenhower: “In preparing for battle I have always found that plans are useless, but planning is indispensable.”

Planning isn’t about fancy bound documents filled with buzzwords and graphs, it is primarily the act of thinking about what you want to achieve as a business. It is a process of determining how you will allocate your resources (time, money, activities etc) to achieve a desired goal. How you communicate that, whether in a document or on a table napkin, is another matter.

A key to planning effectively is using good external information. You need to do the work on understanding what your market is and how you are going to satisfy its needs.

Like the gold prospector looking to strike it rich, you want to know enough to be in the right valley with the right equipment before you set-up camp and start digging. It doesn’t guarantee you will strike gold, but you will have a better chance.

The more you understand the customer’s world the better planning decisions you can make. About product features, market selection, distribution channels etc. Better decisions mean products that sell more profitably.

So why do so many of us dive into planning a new venture without more than a cursory glance at the people expected to impart money for the pleasure of buying it?

As humans we have a tendency to assume that we know what others will like. We encounter a problem in our daily or business lives and find a solution to it. We quickly assume the way we solve that problem will be what others will like.

There are hundreds of software, electronics and engineering exporters in New Zealand with great ideas and new products. Too many have insufficient knowledge about the market or person who will buy them. There are examples of local companies who have invested in building a product to discover that the problem it aimed to solve wasn’t really an issue outside of New Zealand. Or others who find their product requires enormous change on the part of buyers to adopt.

A wealth of detailed and reliable information is available on the internet - if you are careful about the sources you use. You can find the number of buses plying suburban Sydney streets, including their size, make, year of manufacture, cc rating, capacity and typical routes; the number and location of orthopaedic surgeons in the United States; even the profit and loss statements for a competitor located in the United Kingdom.

You can’t, and shouldn’t, do everything online though - engaging with some ‘real’ people is critical. It doesn’t require large scale market research; a few in-depth conversations with some customers or target customers will give you some powerful insights.

Research doesn’t need to be laborious and expensive, or deliver results with scientific certainty. Just having some data on your market is far better than having none.

Talking to customers, prospects, distributers, journalists and other stakeholders in your market is a good start. The more you know the more obvious the answers to your questions will become.

For example, you might be trying to determine a new pricing strategy. At what level should you set your price? That depends on a number of factors such as your customer’s view of the ‘market’ price, their perception of the value your product offers, how big the problems they have are. The more you know about these factors the easier it is to decide on your pricing approach.

Instead of getting bogged down sitting in your boardroom trying to write a plan, open the doors, get out into the world and talk to your market. Planning will have never seemed so much fun.

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