3.0 Mktg. / Sales / Distr.
HOW TO PRESENT A BUSINESS PLAN >> Each section contains key Action Items located within the downloadable Action Guide >> Click to Download Action Guide.
In the last segment we talked about the first part of the four-part presentation: how your product or service addresses three fundamental questions:
- Question 1: what is the marketplace’s unmet need?
- Question 2: how does your product or service address this unmet need in a new and better way that customers will find valuable?
- Question 3: in what ways does all of this really matter?
Having done this, your task in the second part of your presentation is to address marketing, sales, and distribution. As I mentioned in the first segment, entrepreneurs oftentimes give this subject very little attention. I believe there is almost a sense that if a new product is developed that meets marketplace needs in a better way, it will almost literally fly off the shelves. Actually, the better picture to describe is that customers will beat down the walls to get the needed product, and everyone will live happily ever after.
The cold, hard reality is this almost never happens. Actually, there is an even more important reality that you, the entrepreneur, must confront. Even if you are convinced that the new product will fly off the shelves, your audience of potential investors is equally convinced that is absolute nonsense! In the game of persuasion you’ve undertaken, that’s all that really matters. You must develop a case that will overcome the innate skepticism of your audience that your new product or service can, in fact, be distributed successfully. Let’s talk about how you’ll do this in a few slides in a few minutes. Of course, we need to keep Guy Kawasaki’s 10/20/30 principle in mind.
The first thing you need to think about is how your product or service will be “positioned” in the marketplace. Let me suggest the possible answers:
- Alternative A: it will be a product which addresses an unmet need in a completely new way/and or permits the customer to do things he or she never could do before.
- Alternative B: it solves an existing problem in a new way but at a substantially lower cost than competitive alternatives
- Alternative C: it provides a new level of customer convenience or service never before possible.
Each of these alternatives is quite different from the other. If you have an alternative A product, you have a real marketplace innovation. You’ll probably be able to obtain a premium price for the product. An example of such a product is each successive new generation of computer chips introduced by Intel or AMD: the product permits users to do things not previously possible, for example, play ever more sophisticated games or crunch numbers ever faster than before. Products like this can command premium prices because they permit things to be done that weren’t possible before.
An alternative B product is essentially the same as a current product, but one that can be produced for significantly less than the current product. This can’t be a price reduction of 5% or 10% but must be one that is dramatically less. Such a price reduction may be due to a new production process introduced by your company. Products with such new pricing characteristics will be of interest because they can dramatically increase the size of a marketplace. Potential customers who were previously priced out of the market will now consider the product. At the same time, new applications may become possible because the product can substitute for other marketplace offerings. An example of such a product is a new mobile phone that can be sold for dramatically less money. It will permit sales of the product in new markets.
An alternative C product is one that can compete in terms of better service and support characteristics. An example of this is a new retail store that can offer a higher level of customer experience than an existing store. The stores carry more or less the same merchandise, but it is offered in a new and unique way.
Nearly all new products or services fit into one of these categories. Your first task is to make clear to your audience where your new company fits. You’ll want to describe why you fit in that particular category. Be very careful about saying you fit in more than one of these three categories as the skepticism meters of your audience will skyrocket! Your next task is to describe how your product or service will be distributed. Will it be sold by a direct sales force, by distributors, or some other way? This is, I believe, the most common failing of business plans I’ve seen. Little attention has been paid to how the product will be distributed.
This is an area where the skepticism meters of the audience tend to go way, way up. The reason is because the new company with the new product must overcome a whole range of forces in the marketplace that will tend to prevent success. First, unless you are introducing a completely new type of product, there will be a distribution network in place selling an alternative. The existing distribution network must be convinced to carry your product. You must describe why it’s in their interest to do so. Fortunately or unfortunately, the status quo tends to win out here. Quite simply, in a short period of time, you’ve got to explain your strategy for gaining distribution of your new product. More particularly, you’ll need to overcome the innate skepticism of your potential investors.
If your product is brand new, you say, you don’t have to get into an existing distribution network. That may well be true, but then you face the often more daunting task of building your own distribution network. This isn’t easy. Your task, then, is to explain to your audience how, in fact, you realistically can develop a new distribution network, what it will cost, and how long it will take.
ACTION ITEMS: Complete the Action Items in your Action Guide.
1) How will you realistically develop a distribution network for your product or service?
2) What will it cost to develop your distribution network?
3) How long will it take to develop your distribution network?
Besides positioning and distributing your product, you face the problem of making the marketplace aware of your new offering. Again, too often, entrepreneurs underestimate the cost of making the marketplace aware of their new product or service. This isn’t to say it can’t be done, only to point out that your audience will be skeptical, so you need to come up with good answers to this.
This is a very good place to talk about your competition. Mention who you believe are your key competitors and how your product is positioned against those products. If your product is truly innovative, whatever you do, don’t say that you don’t have competition. Your audience will most likely immediately stop listening and tune you and your company out. No matter how innovative your product, you always, always have competition! If you truly have a new category product, your competition is called the “status quo” – doing nothing. The status quo can be a very tough competitor. Just ask all of the software innovators who’ve come up with dramatically new and better products that have gone nowhere because of this. I have a personal example to share. A business partner of mine has been associated with a company that has a highly innovative solution to provide software data security. It is breath-takingly innovative. Literally, tens, if not hundreds, of millions of dollars have been poured into getting this company’s products accepted by the marketplace. Unfortunately, most of that investment has gone for naught. While the company’s product is, indeed, blockbuster innovative and probably without peer, it has gone nowhere because potential customers aren’t willing to pay the cost of switching from their current products. This is a perfect example of the need to describe a way to overcome the “status quo” competitor when presenting a business plan.
What do entrepreneurs tend to do poorly when talking about marketing, sales and distribution? The key overall mistake I find is that they don’t talk about the subject much at all. Don’t make the same mistake. If they do talk about it, they tend to talk only about marketing. They’ll talk about how their product is positioned in the marketplace. In other words, they’ll say whether they’ve got a product that is innovative, is offered at a new lower price point, or offers new service features. Unfortunately, they’ll stop at that point and fail to address sales and distribution. Don’t make the same mistake.
This is potentially a very good place for a story. If possible, tell a story about your experience with distributing your product. Make sure it’s a good story. The benefit of a good story here is that besides being more memorable, it will help to validate in the minds of your audience that you have a product that can be distributed. What might a good story be like? Here are some thoughts:
- A story about how your direct sales force likes selling the product versus other products
- A story about how your distributors benefit from being able to carry the product
- A story about how a new market segment has been opened up because of your new market price point
Go ahead and pause the audio, then develop some potential stories you might tell about distribution.
ACTION ITEMS: Complete the Action Items in your Action Guide.
List three story ideas to demonstrate distribution opportunities for your product.
1)
2)
3)
As in other parts of your presentation, you’ve only got room for a few PowerPoint slides. What might those look like? One slide might focus on your marketplace positioning. Describe how you’re positioned and why you believe this is appropriate. A very good way to do this is to use what’s oftentimes referred to as a market map. To develop such a map, think of two key parameters that are the basis for competition in your industry. Assume, for a moment, that those two parameters are product innovation and price. You can then create a Cartesian graph that has four quadrants on it. If product innovation and price are your two parameters, you’ll have the following four quadrants on your graph:
1) Quadrant one (upper right): high price, high product innovation
2) Quadrant two (upper left): low price, high product innovation
3) Quadrant three (lower left): high price, low product innovation
4) Quadrant four (lower right): low price, low product innovation.
Now place each industry competitor at the appropriate point on the Cartesian graph. What you should have is all, or nearly all, of your competitors in a different box than you, or at least you should be far away from the competition. Such a market map can be a highly effective way to show your audience where your company fits in the marketplace. It will take up a slide, but it can tell a profound story to your audience.
Your second slide should then address the issue of distribution. Here are some possible things you might do:
- Prepare a chart showing how products are distributed in the industry. Show how your product will fit into this distribution scheme.
- Prepare a chart showing the various distribution channels your company will use, focusing on which customers will be reached by each channel.
- Prepare a chart showing a phased rollout of distribution to different channels. For example, you might begin with one channel of distribution (e.g., a direct sales force), then add a second or third channel of distribution at a future date.
The important thing here is to show that you’ve given serious thought to the matter of distribution. Don’t gloss over distribution.
One of the other things I’m seeing more of is innovative use of the Internet to market and distribute products. The Internet has truly turned things upside down! If that is part of your distribution strategy, you might have a winner. What’s important to keep in mind, however, is that your audience may not understand this approach. They may have a good understanding of direct sales forces, multi-level marketing, and use of distributors, but new concepts such as selling through social networking may either cause their eyes to glaze over or lead them to be highly skeptical. Be prepared for either alternative. If you do plan to use social networking, be prepared to include a chart explaining how you envision this working. Try to use lots of graphics.
Of all four sections you have in your four-part presentation, this may prove to be the trickiest, so make sure you spend adequate time with it. On the other hand, more than any other section, I believe it has the potential to distinguish you from other presentations that your audience will see. Remember, a key objective for you is to distinguish yourself from other business plans being presented. As my salesman father said, your key objective is to get another meeting. The potential investors will only schedule so many follow up meetings. You want your company to be part of one of those meetings.
In the next section, we’ll talk about part three of your presentation: how your new venture will make money. Before you proceed on to the next segment, begin composing part two of your presentation:
- First, prepare two or three simple PowerPoint slides of what you want to present. As with the previous section, don’t worry about what the slides look like. Content, not appearance is what counts at this point.
- Create a “market map” slide
- Develop a distribution slide
- If applicable, create a third slide to “clarify” new market distribution strategies
- Second, either prepare a detailed outline of what you’ll want to say at this point or, better yet, write out your text. As I mentioned before, write or type in double space. You should produce about three written pages. Let the creative juices flow!
ACTION ITEMS: Complete the Action Items in your Action Guide.
Prepare two or three simple slides for this section of your presentation. As with the previous section, don’t worry about what the slides look like. Content, not appearance is what counts at this point.
A) Create a “market map” slide
B) Develop a distribution slide
C) If applicable, create a third slide for to “clarify” new market distribution strategies
Next, either prepare a detailed outline of what you’ll want to say for PART 2 or, better yet, write out your text. Go ahead and get started.
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