1. 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

2. 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

3. 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

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

5. 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

6. 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

7. 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

8. 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

9. 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

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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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

20. 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

21. Cert IV Small Business Management WOB_1
Secondary research
The ABS
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

22. 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

23. 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

24. 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

25. 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

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