Cert IV Small Business Management WOB_1 REVIEWING THE EXISTING OPERATION If there is an existing business, you need to know how the state and capabilities of the present operation before beginning the marketing plan. A review of your current operation establishes a starting point from which lo develop your business plan logically. The purpose of the review is to: determine what resources you have to start with for planning realistic growth identify operating strengths and weaknesses for finding out what needs to be improved. An operational review involves: reviewing the physical operation reviewing the financial performance of the operation. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Physical operation review A comprehensive review of the physical operation will consider all aspects of the business-for example, marketing, production, purchasing and personnel. For each operating function, you should: • identify the type and quality of resources (e.g. personnel, equipment) in current use • identify your current business strategies • identify the current operating procedures in use • determine the adequacy of existing record systems. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Financial performance review A review of financial performance requires you to obtain both past and current finan­cial reports of the business. The three main financial reports on the performance of the operation are: • the annual income statement (i.e. profit statement) • the annual statement of cash flows • the annual balance sheet (i.e. statement of financial position). The information found in these financial reports should be compared over time and with industry averages to pinpoint strengths and weaknesses in your operation . Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Operating strengths Sales Sales are growing by an average of 6% each year and are better than the industry average. These results indicate that, overall , marketing strategies are effective. Gross profit margin The gross profit margin in selling prices has increased in the current year and is better than the industry average . This suggests an improvement in purchase supply terms and the maintenance of sound pricing policies for stock sales. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Operating weaknesses Net profit The net profit of the business has been decreasing each year and has been below the industry average for the last two years. This indicates that profit performance in the business is not being controlled properly. The main reason for the decline in net profit to an unacceptable level is the lack of control of rising operating costs. Net cash flows The net cash flows of the operation are declining each year and are consistently worse than the industry average. This is reflected in the reducing cash position of the business at the end of each year, which is also worse than the industry average . These problems are due to poor cash flow control systems. Specific reasons could include untimely debtor collections, slow stock turnover, payment of increased operating expenses or increases in owner's drawings. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Debt ratio The level of debt used in the operation, as measured by the debt ratio, has been increasing each year. The present level of debt is significantly above the industry average . The business should not undertake any more borrowings because the existing debt level is excessive. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 SWOT ANALYSIS Businesses exist in a dynamic environment that is changing continually. Due to the dynamic nature of the operating environment, you need to understand that environ­ment. Information on the operating environment must be collected and analysed so that you can develop objectives and strategies for your operation. From Figure 3.1, we can see that the operating environment for a business comprises: • the general business environment (external) • the specific industry environment (external) • the existing operation, if applicable (internal). You should do an analysis of the total operating environment for any business marketing plan. This analysis is sometimes referred to as a SWOT analysis-an analysis of business strengths, weaknesses, opportunities and threats. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 FIGURE 3.1 Operating environment Market the small business The Marketing Plan Existing operation 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 SWOT Analysis Tool 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 SWOT analysis In SWOT, strengths and weaknesses are internal factors. For example: S= a strength, it could be: Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service. 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 SWOT analysis SWOT cont’d... W= a weakness, it could be: Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors). Location of your business. Poor quality goods or services. Damaged reputation. 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 SWOT analysis SWOT cont’d.. Opportunities and threats are influenced by external factors O= opportunity this could be: A developing market such as the Internet. Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective competitor. 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 SWOT analysis SWOT cont’d.. T= a threat could be: A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product e.g. GST Footwear 2000 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Gathering Environmental Research Marketing research in practice: Consumer surveys showed that people wanted to see the actual product inside the pack Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Research techniques Market The small Business The marketing plan Syndicated services Marketing information systems ( MkIS) Where do organisations get information from? Marketing research studies Customer data bases 17/09/2018 Cert IV Small Business Management WOB_1

Gathering Marketing Information Primary Information versus Secondary PRIMARY: is collected first-hand for this project or study Will be current and relevant Degree of accuracy will be known Methods: surveys, observation, experiments, focus groups, in-depth interviews Qualitative versus quantitative methods SECONDARY: has been collected previously for another purpose. May not be relevant May be inaccurate Sources: government, industry bodies, internet, reports and previous studies Today some distinctions between primary and secondary are blurred 17/09/2018 Cert IV Small Business Management WOB_1

Gathering Marketing Information A Plan for a Marketing Research Study 1.Define the objective 2.Conduct a situational analysis End project and report results No Further study needed ? Yes 3. Plan and conduct a formal investigation 4. Analyse the data and present a report 5. Conduct a follow up 17/09/2018 Cert IV Small Business Management WOB_1

Primary Research Methods: Surveys Collects information from a large number of respondents Uses questionnaires Useful for what, when, where and how questions 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Observation Research Observations of current or previous actions Number of interviews Can be manual or mechanical Extensively used in web-site analysis and social media tracking Gives descriptive measures (= what, when, who) Does not measure causal ( = why) Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Secondary research The ABS www.abs.gov.au is the main source of available published statistical infor­mation. It is the official statistical reporting agency of the Commonwealth government and collects statistics on business, the population (via periodic national census) and the economy Australia wide. Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 The types of statistical information relevant to a small business researcher that are able from the ABS include the following: population statistics for chosen areas showing: population numbers population projections population characteristics such as gender, ethnic background, income level, education level, age and occupational status Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 industry statistics for selected industries in chosen areas showing: competitor and supplier characteristics such as number of employees, sales turnover, expense ratios and profit ratios the number of competitors and suppliers household expenditure statistics for chosen areas showing: - household characteristics by sex, family size, employment status, income level, education level and occupancy status - household expenditure patterns - household expenditure components Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 housing statistics for chosen areas showing: - rate of housing construction - housing types - housing costs - nature of occupancy • foreign trade statistics showing: - values of different commodities exported to selected countries - values of different commodities imported from selected countries Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Economic performance indicators that measure the performance of the general economy, including: - average weekly earnings unemployment rates consumer price index (CPI- an inflation measure) number of new car registrations National accounts such as gross national product, income and expenditure Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1

Cert IV Small Business Management WOB_1 Private research organisations; Private research organisations also provide useful statistic information Roy Morgan research http://www.roymorgan.com/ Market the small business The Marketing Plan 17/09/2018 Cert IV Small Business Management WOB_1