Subsection of: Creating an Effective Business Plan

Adapted from content excerpted from the American Express® OPEN Small Business Network

Bella set out to evaluate and profile her customers, market, and competition by researching who currently buys biscotti and other gourmet desserts. Her field work included some time at coffee bars, gourmet shops and other fancy food emporiums observing who buys the bulk of gourmet cookies and biscotti. Because Bella makes biscotti in unusual flavors – Pistachio, Sesame Seed, and Macadamia Nut, to name a few, she paid special attention to sophisticated consumers who like to try the latest in gourmet foods. A trip to a local fancy foods trade show gave her an idea of what other firms were out there and who their customers were. Several hours spent in the local library reading trade magazines also provided her with extensive market and demographic data on gourmet food and biscotti consumers.

In her attempt to paint an accurate portrait of her target customer, Bella created three different profiles.

Choose the one you think she should include in her business plan:

Choice A:

Bella’s Biscotti will sell to the growing number of consumers in the Metro City area who like biscotti and are willing to spend money on it.

Choice B:

The population of Metro City has increased by 14 % in the last two years. The recent relocation of the technology firms XYZ Company and ABC Inc. also promises an influx of upscale, sophisticated consumers to the area. Metro City residents currently purchase biscotti from coffee stores and gourmet stores, and upscale bakeries. Bella’s Biscotti will target these customers by selling to fancy food distributors who in turn sell to the stores. Bella’s variety of flavors and packaging, made of recycled products, will make it appealing to this type of consumer. Using biodegradable shipping containers and packing materials will also save money and appeal to buyers at gourmet stores, which will help Bella break into the market.

Choice C:

Bella’s Biscotti will sell to the growing number of upscale professionals who live in the Metro City area. These consumers are single or married professionals, between the ages of 25-55, who have abundant disposable income and who buy gourmet items, in part, to indicate their worldliness. They travel frequently for vacation and enjoy trying new foods, especially ones they perceive as unusual or exotic. These customers buy biscotti and gourmet cookies for snacking at home, as gifts, and for entertaining.

You Chose A

While this description targets a regional area and is succinct, it is not detailed enough. What kind of Metro City residents will purchase Bella’s biscotti in particular? Are they old, young, professional, do they travel? How much disposable income do they have? Bella needs to make a list of the common identifiable characteristics her customers share. If you chose this one, use the Customer Profile Worksheet to create a list of your target customers’ characteristics before trying again. Think about how you would describe your target customers to a friend. Saying it out loud first can make a customer profile easier to compose.

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You Chose B

This description contains valuable information but very little of it belongs in the customer description section. Each section of a business plan must be narrowly focused in order to keep readers interested and communicate a business vision clearly. The details here about Metro City growth belong in the Market Size section, future potential markets and packaging information belongs in the Marketing and Promotion section, and details about where customers currently buy biscotti should be in the Competition section. If you chose this customer profile, try again after thinking about the characteristics that paint a picture of who will buy your product or service. You may want to write your customer description after you have completed other sections of this plan so that you are not tempted to include extraneous information.

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You Chose C

This description is the best choice for Bella because it paints a clear picture of her target customer. A regional target market is detailed enough for a wholesale business, and she provides demographic and lifestyle information about the consumer. She even provides some detail, but not too much, about the anticipated buying patterns of her target market. If you chose C, you are well on your way to creating your own customer profile.

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