Monica asked:

I'm now enrolled in a marketing course about making a small business. The business I and my group have is a fast food dim sum with drive thru. However, I'm not quite familiar with how to manage this business. I understand that I'll need permits for all sorts of stuff, but I don't quite know how to do the financing and the market strategy. Could you give me some advice on this?

Julie King answered:

Building a marketing and financial plan for a new business is a highly involved process. Here are some ideas that might help you with the task at hand.

Marketing Strategy
What often works best with a small business is to start with good information, and then apply creative thinking and brainstorming to develop a unique marketing strategy.

The first step in building your strategy is to understand who will be your customers, where your business will be located, and what other competition already exists in your area. When looking at your competition, it helps to do a SWOT - strengths, weaknesses, opportunities, and threats - analysis, which will help you understand where your business will stand in the community.

As you fully identify the characteristics and needs of your customers, you will begin to identify unique things that your company can do to differentiate itself from the competition (ie. what opportunities exist). You will also begin to understand the type of environment that your customer will expect from you. For example, with a drive thru it sounds like you will be focused on take-out sales, so investing in a large interior space may not be cost effective. You may find that it makes sense to create an extremely stylish, inviting interior that is small .. even if your customers rarely eat inside, this will create a sense of the quality of your business and its products, which will affect your sales.

Once you have a good understanding of who your clients are, you can also design strategies to initially bring them into contact with your restaurant, and then to subsequentially bring them back. Consider what the competition is doing, and identify an offer that is better than the competition's to bring them in the door.

In all of your marketing efforts, remember to focus on the benefits, not the features of your business. For example, having a drive thru is a feature of the business, with the corresponding benefit being fast and food easy-pick up. I find it helpful to make a chart where I list the features in one column, and the corresponding benefits in another column.

Group brainstorming can be a very effective way to generate creative ideas, and to bring out the strengths and weaknesses of different ideas.

The final strategy will be pulled together once you have collected the necessary information, decided on a plan of action, and translated that plan onto paper. The result will be your marketing strategy!

Financial Plan
Developing a financial plan for a new business is always a challenge, because without any business history you can only make best guesses about the revenues and expenses such as the number of customers, average dollar value of each purchase, and costs of doing business that your business will incur.

Before you can develop a financial plan, you need good market research and you need to be able to picture all aspects of your business. Once you can do that, start by listing the various expenses your business will incur, and also the ways you will generate revenues. You probably have received templates from your class that you can use to categorize your cashflow and income statement projections, that will include sections such as revenues, indirect expenses, direct expenses, break-even points, net cashflow, etc. It's beyond the scope of what we can answer to go into the details for each of these aspects of a financial plan, but I expect that you probably have a textbook that will explain how to calculate the formulas for each of these projections.

I hope this helps, and wish you great success with your class!

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