9/19/11

Numbers Work But Something’s Missing: Business Planning (Part 6)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.


Recently I visited the Republic of Georgia. While there, I had the opportunity to meet a man who owned a company that sold bee products. His products included not simply honey, wax and serums but also specialty types of honey, hives and basically anything related to bees. The two hour tour of the facility was impressive, state of the art and high tech, demonstrating the science behind his products. He gave us information and detail in Russian which was translated for us by our daughter. We ended the tour in his showroom which was set up to demonstrate differences and educate. It was not really a store, nothing could be purchased. When we sat down to talk, the problems of the business came gushing out.

Several years into the business, he had basically drained his resources and cut staff to a skeleton crew, including eliminating all marketing and sales people. His business now needed an infusion of cash and he was seeking partners. He had really done his homework to ensure superior products that were different than his competition. The numbers for production, time to market, costs and sale prices were precise and well-articulated with vigilance to objectives, keeping variances within finite norms. We saw a lot of product inventory ready for shipping but learned that the amount we saw was only a small percentage of his capacity.

Here was a man who had done everything he could to have a stellar business which followed a plan but did not have an engine. We found that the sales force was only the owner. He had tried to engage different points of distribution including the largest store chain similar to Wal-Mart in the US. This chain and others were glad to sell his products but wanted to discount the price to both his company and to the consumer severely, forcing him to run a significant part of his production line with very little margin. He had also been trying trade shows but they were expensive and a long term investment in building relationships.

I started asking questions relative to the marketing portion of his business plan. He could show me numbers and state objectives, goals and performance but additional questions regarding business generation strategies and tactics were limited at best. He understood his business but not how to sell or work through others to create sales. These were not even a part of the plan.

He felt that because he knows the business best, he was naturally the best sales person. He also admitted that he did not have much time to sell as he has to run the business. Few businesses will survive or grow without a sales engine to propel them to their destination.

The business has wonderful growth potential due to the quality, uniqueness and extensive product line, but an engine is needed. The company and its production facilities are housed in a restored fortress on a major road at the entry to the capital city of Tbilisi. If you did not know what was there, you would never stop, there are no signs. Even our tour guide who is considered an expert on the area had no idea it was there.

A visit to their website shows the product line, facility and more. However, potential visitors to the site would have a difficult time understanding the products, seeing buying opportunities or even making contact unless they read Georgian or Russian. The language used in addition to Georgian and Russian in most Georgian businesses is English, but that is not an option on the site.

Consumer avenues of information are not a part of the plan, distribution channels in most cases would need to have a direct conversation with the owner and multiple obvious marketing opportunities are not even under consideration.

The bottom line is that there is a great business adrift in the sea of opportunity without an oar in the water.

When you are building your business plan, communicate your plans and objectives with someone that is not a part of your company and maybe does not know your business. They may see the challenge that is right in front of you, something you may be missing but is so close that it is hidden.

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