Page 77 - Business Plans that Work A Guide for Small Business

68 • Business Plans that Work

CUSTOMER

The defined market space you plan to enter and the target customer in that
space needs to be examined in detail. The entrepreneur needs to d efine
who the customer is by using demographic, psychographic, and behav-
ioral information. The better the entrepreneur can define her customer,
the more apt she is to deliver a product that the customer truly wants.
Venture capitalists often say that the most impressive entrepreneur is the
one who comes into their office and not only identifies who the customer
is in terms of demographics, psychographics, and behavior but can also
name who that customer is by address, phone number, and e-mail ad-
dress. When you understand who your customer is, you can assess what
compels them to buy, how your company can sell to them (direct sales,
retail, Internet, direct mail, etc.), how much it is going to cost to acquire
and retain that customer, and so forth. A schedule inserted into the text
that describes customers based on the basic parameters can be very pow-
erful. It communicates a lot of data quickly.
The key to understanding your customers is to really get to know them.
The best means of doing so, prior to launch, is to talk to them and ob-
serve their behavior. Many would-be entrepreneurs fail to talk to their
customers. They assume that, since they would be interested in their own
product, so would others. This is often a fatal assumption. We encourage
you to have informal conversations with your customers. If at all pos-
sible, observe them doing the activity or work that your product or ser-
vice would make better, easier, or more cost-effective. Taking such action
will help you modify your offering so that you can better meet customer
expectations. Lazybones is at an advantage since they have been selling
to college students for 15 years, and the current plan is to expand to
other campuses. You can see that Dan and his team really understand the
customer. They have identified the user (the student) and the payer (the
parent). As you read the customer section of the plan, you can also see
that they understand what hurdles they have to overcome to get students
to use their service (fear that clothes will be lost or damaged). The fact
that he has worked with his customers and learned what customer profile
best matches his likely users lessens the perceived risk that the franchising
expansion won’t succeed.
Talking to your customer is invaluable, but you can also gain insight by
talking to others who have knowledge of your customer. Talk to your po-